ADCs at a Crossroads: Lessons from the Patritumab Deruxtecan Setback for Biotech Investors

The recent withdrawal of Merck & Co. (MRK) and Daiichi Sankyo's (4568.T) Biologics License Application (BLA) for patritumab deruxtecan marks a pivotal moment for investors in oncology drug development. The failure to meet overall survival (OS) endpoints in the HERTHENA-Lung02 phase 3 trial for EGFR-mutated non-small cell lung cancer (NSCLC) underscores the fragile balance between promising progression-free survival (PFS) data and the harsh realities of clinical outcomes. For investors in antibody-drug conjugate (ADC) pipelines, this setback raises critical questions about the strategic risks of relying on single-trial success, the resilience of oncology portfolios, and the long-term value of ADC platforms.

HER3-Targeted ADCs: A Double-Edged Sword

Patritumab deruxtecan's stumble highlights the precarious position of HER3-targeted ADCs. While the drug demonstrated statistically significant PFS benefits in earlier studies, the lack of OS improvement in the confirmatory trial has cast doubt on its clinical utility for this indication. Investors must now question whether HER3 overexpression—a biomarker prevalent in 83–90% of EGFR-mutated NSCLC tumors post-tyrosine kinase inhibitor (TKI) therapy—is a reliable target for meaningful survival gains. The setback could deter capital from HER3 programs unless sponsors can demonstrate robust OS data across multiple trials or biomarker-defined subsets.

Merck's oncology pipeline, however, remains resilient. The company's partnership with Daiichi Sankyo, expanded in August 2024, continues to advance other ADC candidates like ifinatamab deruxtecan (targeting IGF-1R in multiple myeloma) and gocatamab (a bispecific targeting HER2 and HER3). These programs, coupled with Merck's PD-1 inhibitor Keytruda (pembrolizumab), form a diversified oncology portfolio. .

Daiichi Sankyo: ADC Platform Value Under Pressure

Daiichi's ADC platform, which has produced patritumab deruxtecan and Enhertu (trastuzumab deruxtecan), faces scrutiny. While Enhertu's success in HER2-positive breast and gastric cancers has bolstered the platform's reputation, the patritumab withdrawal reveals its vulnerabilities. The company's strategy of testing patritumab in 15 cancer types—including gastric, biliary, and triple-negative breast cancer—suggests that the ADC's potential lies in broader oncology applications. Investors should demand transparency on biomarker-driven subgroup analyses from ongoing trials, as these could redefine the drug's value.

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The OS Imperative: A New Standard for Biotech Valuations

Patritumab's failure should recalibrate investor expectations. Relying on PFS alone—despite its role as a surroagte endpoint—is risky when OS, the gold standard, remains elusive. Biotechs with pipelines anchored in single-trial successes or narrow indications may face steep revaluations. Investors should prioritize companies with:
1. Phase 3 OS data across multiple tumor types.
2. Biomarker-driven strategies to identify responsive patient subsets.
3. Diversified ADC portfolios with candidates targeting validated pathways (e.g., HER2, TROP-2).

Call to Action: Rebalance Your Biotech Portfolio

The lesson is clear: ADC pipelines must deliver on OS or risk obsolescence. Investors should:
- Avoid overpaying for assets tied to single-indication PFS data.
- Favor companies with broad clinical programs (like Daiichi's 15-cancer trials) or partnerships (e.g., Merck's ADC collaborations).
- Monitor ASCO 2025 closely for OS data from key trials, including patritumab's HERTHENA-Lung02.

The withdrawal of patritumab's BLA is not an indictment of ADCs but a wake-up call. The field is now bifurcating: winners will be those who prove OS gains across diverse populations, while others will falter. For investors, the time to pivot toward evidence-based resilience is now.

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The ADC revolution is far from over, but its next phase demands rigor—and investors must be ready to reward it.