Benzinga | Jul 27, 2020 06:43AM EDT

AstraZeneca To Pay $6B To Japan's Daiichi As Part of Collaboration On New Cancer Drug

AstraZeneca plc (NYSE:AZN) announced Monday that it is collaborating with Japanese pharmaceutical giant Daiichi Sankyo Company, Limited (OTC:DSNKY) on a new cancer drug.

What Happened

The two companies have entered into a global development and commercialization agreement for Daiichi's antibody drug conjugate (ADC) DS-1062, a potential new medicine for the treatment of multiple tumor types, AstraZeneca noted.

DS-1062 is a type of drug that attaches powerful cell toxins to antibodies that link themselves to cancer cells but spare non-cancerous cells, which are otherwise damaged in chemotherapy sessions, according to Reuters.

The United Kingdom-based company said it would pay $6 billion in staged payments to Daiichi, with $1 billion to be paid upfront for the drug.

Both companies are said to be working on the development and commercialization of the ADC jointly all over the world, except in Japan, where AstraZeneca said Daiichi would maintain exclusive rights.

This is the second such collaboration by the two companies. In March 2019, they agreed to jointly develop and commercialize Enhertu, a HER2-directed ADC, on a global basis, except in Japan.

Why It Matters

The two companies are also reportedly cooperating on the supply of AstraZeneca's coronavirus vaccine in Japan. The British company recently released data detailing the positive efficacy of its chimpanzee-adenovirus-vectored COVID-19 vaccine, developed in collaboration with Oxford University.

Other companies in late-stage coronavirus vaccine trials include Johnson & Johnson (NYSE:JNJ), Pfizer Inc (NYSE:PFE) and its partner BioNTech SE (NASDAQ:BNTX), as well as Moderna Inc (NASDAQ:MRNA).

Price Action

AstraZeneca shares traded 0.7% higher at $56.21 in the pre-market session on Monday. Daiichi OTC shares closed 0.5% higher at $78.55 on Friday.