Daiichi Sankyo's Oncology Renaissance: Navigating Setbacks to Seize Market Dominance

The voluntary withdrawal of Daiichi Sankyo's patritumab deruxtecan (HER3-DXd) Biologics License Application (BLA) for non-small cell lung cancer (NSCLC) in May . . . might seem like a stumble for the Japanese pharmaceutical giant. Yet, a deeper analysis reveals a company leveraging this setback to sharpen its focus on high-value oncology assets, diversify its pipeline, and capitalize on near-term catalysts. With its ADC flagship Enhertu delivering transformative data at the 2025 ASCO Annual Meeting and strategic partnerships unlocking new avenues, Daiichi Sankyo is primed for a resurgence in shareholder value. Here's why investors should take note—and act now.

The NSCLC Withdrawal: A Necessary Pivot, Not a Failure

The decision to withdraw the HER3-DXd BLA after its Phase 3 HERTHENA-Lung02 trial missed overall survival (OS) endpoints underscores Daiichi Sankyo's commitment to rigorous clinical standards. While this removes a near-term revenue driver for EGFR-mutated NSCLC, the company has already pivoted to refine its strategy:
- Biomarker-driven R&D: By analyzing HERTHENA-Lung02 data to identify subpopulations where HER3-DXd delivers OS benefits, Daiichi Sankyo is ensuring future submissions are narrowly targeted and statistically robust.
- Pipeline Resilience: The ADC remains in 15 other oncology trials, including gastric cancer and breast cancer, where its safety and efficacy profiles remain intact.

This disciplined approach reduces future regulatory risks and aligns with trends favoring precision medicine.

Enhertu: The Engine of Oncology Dominance

The star of Daiichi Sankyo's pipeline, Enhertu (trastuzumab deruxtecan), delivered blockbuster data at ASCO 2025, reinforcing its status as a game-changer in HER2-targeted therapies:
1. First-Line Breast Cancer Triumph:
- In the Phase 3 Destiny-Breast09 trial, Enhertu combined with pertuzumab reduced progression or death risk by 44% versus the standard THP regimen. Median progression-free survival (PFS) hit 40.7 months, a staggering improvement over the control arm's 26.9 months.
- The survival trend (16% risk reduction in OS) and high PFS milestone signal a potential first-line standard of care.
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1. Gastric Cancer Breakthrough:

2. The Phase 3 Destiny-Gastric04 trial showed Enhertu extended OS to 14.7 months in second-line gastric cancer, a 30% mortality risk reduction versus chemotherapy. This positions Enhertu as a global leader in this indication.

3. Pipeline Depth:

4. Adjuvant/Neoadjuvant Settings: The Destiny-Breast05 trial (adjuvant) and Destiny-Breast11 (neoadjuvant) are advancing, with 2025 data expected. Positive results could expand Enhertu's addressable market to early-stage breast cancer.
5. Combination Strategies: Trials pairing Enhertu with checkpoint inhibitors (e.g., Keytruda) aim to unlock synergies in first-line gastric cancer and other solid tumors.

Strategic Diversification and Cost Management

Daiichi Sankyo is mitigating risks through strategic partnerships and operational efficiency:
- Subcutaneous Enhertu Formulation: A $300M+ deal with South Korea's Alteogen unlocks a faster, more convenient subcutaneous delivery method. This could boost patient adherence and market share in competitive markets like China and Europe.
- Safety Protocol Innovations: Real-world data shows that 75% of patients with grade 1 interstitial lung disease (ILD) can safely rechallenge Enhertu after steroid treatment. This reduces costly treatment switches and expands eligible patient pools.
- Cost-Effectiveness Narrative: While Enhertu's price remains high, its PFS and OS advantages over legacy therapies could justify value-based pricing models. Daiichi's collaboration with payers on outcomes-based contracts may ease reimbursement hurdles.

Near-Term Catalysts to Watch

• FDA Filings for First-Line Enhertu: Expect a BLA submission by mid-2025 for HER2-positive breast cancer, leveraging Destiny-Breast09 data. A Priority Review could fast-track approval.
• Global Regulatory Wins: The European Medicines Agency (EMA) may approve Enhertu in gastric cancer by Q4 2025, expanding revenue streams.
• HER2-Low Breast Cancer: The FDA's Priority Review for Enhertu in this indication (based on Destiny-Breast06 data) is set to conclude by August 2025.

Valuation and Buy Recommendation

Daiichi Sankyo's oncology portfolio is now anchored by Enhertu's multi-billion-dollar potential, with 2024 sales already exceeding $3.8 billion. The NSCLC setback is offset by:
- Pipeline Breadth: 15+ trials across 15 cancer types, with 8+ late-stage readouts by 2026.
- Strategic Agility: The Alteogen partnership and ILD management protocols reduce execution risks.

Risks: Enhanced competition in ADCs, potential price erosion in mature markets, and regulatory delays.

Verdict: Daiichi Sankyo's oncology engine is firing on all cylinders. With Enhertu's data dominance, diversified trials, and strategic cost mitigation, this is a rare buy opportunity in a sector where execution matters most.

Action Item: Add Daiichi Sankyo to your watchlist now. Near-term catalysts in 2025 could catalyze a multi-quarter outperformance cycle.

This analysis reflects research up to June 2025. Always consult a financial advisor before making investment decisions.