Merck to Pay Up to $22 Billion for Rights to Daiichi Sankyo Cancer Drug Candidates

Merck acquires rights to three Daiichi Sankyo cancer drug candidates for up to $22 billion.

Merck has agreed to pay Daiichi Sankyo $5.5 billion for the rights to co-develop and commercialize three of Daiichi's potential cancer drugs. The payment includes a $4 billion upfront cost and an additional $1.5 billion spread over the next 24 months.
The total cost of the deal could rise to $22 billion depending on the success of the drugs. This includes potential milestone payments of up to $16.5 billion contingent on future sales achievements.
The companies anticipate that these drugs could generate multi-billion dollar revenues by the mid-2030s, although the drugs still need to acquire regulatory approvals and prove to be commercially successful.
If the drugs get approved, Merck will have the rights to sell them anywhere in the world aside from Japan, where Daiichi Sankyo will retain sole rights for manufacturing and supply.
The agreement is projected to result in a pre-tax charge of $1.70 per share for Merck, leading to a reduction of earnings per share by about 25 cents in the first 12 months after the transaction is finalized.