Daiichi Sankyo said on the 8th that it expects an extraordinary loss of about 149.4 billion yen (about 1.397 trillion won) related to its 2025 fiscal year results. Of that, 95 billion yen (about 888 billion won) is an expense tied to adjustments in its ADC supply strategy.
The company aggressively expanded capacity after the commercial success of its blockbuster ADC cancer drug Enhertu. But with delays in developing parts of the pipeline and changes in demand outlook, it is now facing an expense burden, analysts said.
Earlier, the company delayed its annual results announcement to reflect the impact of the change in supply strategy. Investor concerns grew, and on the 24th of last month, Daiichi Sankyo shares fell more than 10% in a single day.
According to the company, the loss includes 75.7 billion yen (about 708 billion won) in compensation to contract manufacturing organizations (CMOs) and 19.3 billion yen (about 180 billion won) in impairment losses and compensation expense related to ADC facilities at the Odawara plant in Japan. The names of the CMOs were not disclosed.
Daiichi Sankyo has invested aggressively in the growth of the ADC market since Enhertu, an ADC therapy co-developed with AZ, won U.S. Food and Drug Administration (FDA) approval in 2019.
At the time, the company anticipated a surge in ADC demand, securing production lines through long-term supply contracts and even committing to minimum purchase volumes. With few CMOs capable of ADC manufacturing and its own capacity insufficient, it was a strategy to preempt potential supply shortages, the company said.
But the situation changed as clinical results and launch timelines for some key pipeline assets fell short of expectations.
Datroway, a TROP2-targeting ADC co-developed with AZ, showed limited efficacy in second-line treatment trials for Non-small cell lung cancer (NSCLC), prompting a revision of the FDA filing strategy. It was later approved last year with a limited indication focused on patients with EGFR mutations.
Patritumab deruxtecan, a HER3-targeting ADC co-developed by Daiichi Sankyo and Merck (MSD), failed to meet the overall survival (OS) endpoint in an EGFR-mutated Non-small cell lung cancer (NSCLC) trial, leading to the withdrawal of the application last year.
I-DXd, a B7-H3-targeting ADC that is a joint development candidate with MSD, is under FDA review as a treatment for extensive-stage small cell lung cancer. The review deadline is Oct. 10.
Industry watchers say this case shows that misjudging demand can directly lead to losses as the ADC cancer drug market grows. ADCs involve complex manufacturing processes and high facility setup expense, and clinical trial variables are significant, making the field one where changes in supply strategy can affect results.
For CMOs, cash losses are limited because they receive compensation from clients like Daiichi Sankyo, but they can be affected by lower facility utilization and opportunity costs. In the global market, Switzerland's Lonza, Korea's Samsung Biologics, Lotte Biologics, and China's WuXi Biologics and WuXi XDC are cited as leading ADC contract development and manufacturing organizations (CDMOs).
Daiichi Sankyo said it has established a new ADC supply strategy that reflects risk adjustments. However, it said it has not yet decided whether to adjust medium- to long-term production capacity due to high uncertainty.
☞ADC (antibody-drug conjugate)
A therapy structured by linking a potent anticancer payload to a tumor-recognizing antibody via a linker. When the antibody binds to a specific target protein on the surface of a cancer cell and enters the cell, the linker degrades and releases the drug, selectively killing the cancer cell. Representative examples include Daiichi Sankyo's Enhertu, Roche's Kadcyla, Pfizer and Astellas Pharma's Padcev, and Gilead Sciences' Trodelvy.