Kelun Pharmaceuticals to Receive Up To $1.4 Billion From Merck in Lowkey Deal

Chengdu-based Kelun Pharmaceuticals indicated that it is eligible to receive up to $1.4 billion from Merck and Co. for the exclusive rights to market an undisclosed treatment. Up to this point, both companies have remained mostly silent on the deal and its conditions. 

What We Know About the Deal

An official report from Kelun dated May 13 was published on the Shenzhen Stock Exchange website highlighting a few pertinent details of the deal. 

The translated document states that Kelun will receive an upfront, non-refundable payment of $17 million upon the effective date of the agreement and an additional $30 million upon signing the agreement. Additional milestone payments could reach $1.3 billion. 

Though the drug in question is not listed, the project is translated in the agreement as “Biomacromolecular Oncology Project A.” Under the terms of the deal, Merck will have the exclusive rights to market the mystery drug in regions outside of China. The agreement states that China includes mainland China, Hong Kong, and Taiwan. 

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Which Drug Could It Be?

Kelun’s website is not rich with information on product development or other news; however, Kelun’s United States-based subsidiary, KLUS Pharma, has some information about the company’s pipeline. KLUS is developing14 oncology-related drugs, 11 of which are in at least Phase 1 clinical trial, with the others in preclinical development.

One suspicious drug is SKB264, an antibody-drug conjugate that incorporates an anti-TROP2 (tumor-associated calcium signal transducer 2) antibody in Phase 2 clinical trials in the US and China. TROP2 is a protein that signals cells for self-renewal, proliferation, invasion, and survival. The protein is expressed in normal tissue but overexpressed in many cancers. 

In 2021, Merck partnered with Daiichi Sankyo to evaluate Daiichi’s TROP2-directed drug, Data-DXd, and Merck’s KEYTRUDA. Merck’s interest in TROP2-directed antibody technology could be a link between them and Kelun. 

Other potential links between Merck and Kelun include an interest in anti-LAG3 (lymphocyte activation gene 3) antibodies. LAG3 is a protein that negatively affects the regulation of proliferation and activation of T-cells. Merck’s LAG3-targeting drug, favezelimab, is currently in Phase 3 clinical trials, and Kelun’s A289 is in Phase 1 clinical trials in China. 

The connections don’t stop there. Kelun’s A166 is an antibody-drug conjugate that targets HER2 (human epidermal growth factor receptor 2) proteins in Phase 2 clinical trials. Merck received FDA approval in 2021 for its KEYTRUDA to treat HER2-positive gastric or gastroesophageal junction adenocarcinoma. HER2 is a protein that has the potential to promote the growth of cancer cells. 

While speculating is enticing, Merck’s rich history of oncology research and development alongside Kelun’s growing line of oncology candidates make it difficult to accurately predict the hidden aspects of the agreement. In time, hopefully, the companies will come forward and confirm or deny suspicions to provide a clearer view of their respective roles in oncology advancement. 

Author

Reed Slater