Jefferies analysts said on Jul. 30 that Daiichi Sankyo’s early-stage antibody-drug conjugate pipeline is not keeping pace with competitors, as the company faces a period of higher spending and lower operating leverage.
“Competition in ADCs is intensifying, while the early-stage pipeline remains thin,” Jefferies wrote in a Thursday morning note to investors. The firm has cut its estimates for Daiichi Sankyo, citing few remaining milestones for Enhertu, which was initially approved in December 2019 and marked a significant development in breast cancer care.
Jefferies noted that “ADC cash flow may also be nearing a peak, with most of Enhertu’s major regulatory and sales milestones already secured.” The drug “remains one of the most successful oncology launches in recent history,” according to Jefferies, with estimated peak sales exceeding 2 trillion yen ($12.28 billion).
Earlier this year, Daiichi reported that demand for its ADCs had fallen below minimum purchase requirements under existing contracts with manufacturing organizations. This led to $850 million in charges related to outsourcing and prompted the company to pull back from planned facility expansion. The next major asset for Daiichi is Datroway, approved in January 2025 for breast cancer and subsequently granted two more indications: non-small cell lung cancer and another breast cancer use. Jefferies anticipates Datroway could reach peak sales of 1 trillion yen ($6.14 billion), but revenue from both Enhertu and Datroway is shared with AstraZeneca.
Enhertu generated $2.96 billion combined revenue in the first half of the year; AstraZeneca received $1.72 billion of this amount based on its earnings report released Monday. Datroway brought in $225 million combined revenue, with $98 million going to AstraZeneca.
Daiichi has also partnered with Merck on a deal involving $4 billion upfront payments and up to $22 billion potential milestones; however, this revenue will also be shared between partners similar to previous collaborations. Key assets from this partnership have shown mixed results: ifinatamab deruxtecan (I-DXd) demonstrated varying response rates across clinical studies for small cell lung cancer patients, while patritumab deruxtecan did not receive FDA approval for locally advanced or metastatic non-small cell lung cancer as of June 2024.
“Enhertu is a global blockbuster and Datroway has significant potential, but the pipeline becomes progressively less compelling thereafter,” Jefferies wrote. “Beyond these programs, the pipeline remains thin at a time when competition across the ADC landscape is intensifying.”
Daiichi forecasts revenues reaching 3 trillion yen ($18.4 billion) and operating profit at 600 billion yen ($3.68 billion) by fiscal year 2030, according to Jefferies’ analysis; however, achieving these targets will require increased investment levels compared to previous years.
