Merck and Daiichi Pull FDA Filing for B7-H3 ADC in Lung Cancer

Merck and Daiichi Sankyo have withdrawn their FDA accelerated approval application for a B7-H3-targeted antibody-drug conjugate in certain small cell lung cancer patients, the latest setback for the two companies' ADC partnership.

Merck and Daiichi Sankyo have withdrawn their US application for accelerated approval of an antibody-drug conjugate aimed at B7-H3, a protein target found on the surface of certain tumor cells, in a defined group of small cell lung cancer patients. The decision, confirmed by the two partners, removes what had been one of the nearer-term regulatory events in an alliance that has already absorbed several disappointments.

Antibody-drug conjugates, or ADCs, pair a targeting antibody with a potent cell-killing payload, using the antibody as a delivery vehicle so the chemotherapy is concentrated at the tumor rather than distributed across the body. The class has been one of the most heavily financed areas in oncology this decade, and Merck and Daiichi Sankyo built one of its largest partnerships around it. Pulling a filing is not the same as abandoning a molecule, but it does mean the companies no longer expect the existing package to clear the agency's bar on its own terms.

What an accelerated approval withdrawal actually signals

Accelerated approval lets the FDA clear a drug on the basis of a surrogate measure — typically tumor shrinkage, rather than proof that patients live longer — on the condition that confirmatory evidence follows. It is the pathway most often used in hard-to-treat cancers where the standard of care is weak and the unmet need is obvious. Small cell lung cancer is a textbook example: it is aggressive, it relapses quickly, and options after first-line treatment are limited.

Because the pathway is conditional, it is also the one the agency has tightened most in recent years. Sponsors that cannot show a convincing confirmatory trial in progress, or whose response data look thinner on review than they did at submission, increasingly find it simpler to pull an application than to take a formal rejection. A withdrawal is a quieter outcome than a complete response letter, but for investors reading pipeline risk, the practical effect is the same: the near-term revenue line disappears from the model.

The withdrawal was reported by Endpoints News, which framed it as another setback in a collaboration that has produced more mixed news than either partner planned for.

The alliance economics behind the decision

Large ADC partnerships are structured around staged payments: an upfront sum, then development and regulatory milestones that trigger as each candidate advances, then sales-based milestones and profit sharing. That structure is what makes a filing withdrawal expensive in a way that does not show up immediately in reported earnings. A regulatory milestone that would have been triggered by an approval is not booked; the development spending that has already gone into the program is sunk; and the timeline on which any eventual payment arrives slides to the right by however long a confirmatory or replacement study takes.

For Daiichi Sankyo, which originated much of the ADC chemistry, milestone income from a partner is a meaningful component of how these deals were justified to shareholders. For Merck, the calculation is different. The company's oncology business is dominated by a single immunotherapy franchise facing a patent cliff later this decade, and the ADC alliance was one of the more visible attempts to build a successor portfolio. Each program that slips narrows the set of assets available to carry revenue across that transition.

Neither company has indicated that the B7-H3 program is finished. The target remains biologically interesting precisely because it is expressed on several solid tumors while being relatively sparse on healthy tissue — the property that makes an ADC payload tolerable. What has changed is the evidence standard the partners now need to meet, and the time and trial spending required to meet it.

How the shares sit going into the news

Merck's stock had been firm heading into the disclosure. MRK last traded at 148.78, up 0.54% on the day from a previous close of 147.98, with a session range of 147.48 to 149.98, as of the close on Friday, 25 September 2026. That gain matched the broad market almost exactly: the S&P 500 tracker (NYSEARCA: SPY) finished at $771.35, also up 0.54%, while the Nasdaq 100 fund (NASDAQ: QQQ) closed at $744.50, up 0.46%, and the Dow tracker (NYSEARCA: DIA) added 0.94% to $517.49.

In other words, nothing in the last recorded session priced in a pipeline disappointment. Large-cap pharma rarely reprices hard on a single withdrawn filing — the affected program is one line in a portfolio of dozens — but the cumulative effect of several setbacks inside the same alliance is the sort of thing that shows up in how analysts model the post-patent-cliff years rather than in a one-day move. Daiichi Sankyo, whose primary listing is in Tokyo, is the more concentrated exposure of the two: its ADC franchise is a far larger share of its expected future earnings than any single Merck program is of Merck's.

What determines whether the program survives

Three things will decide the fate of the B7-H3 ADC in small cell lung cancer. The first is whether the partners already have a randomized confirmatory study running that could support a full approval application later, rather than an accelerated one. The second is whether the safety profile in the withdrawn dataset was the limiting factor, since payload toxicity in heavily pretreated lung cancer patients is the recurring constraint across the ADC class. The third is capital allocation: with multiple candidates competing for the same development budget, the partners may conclude that the target is better pursued in a different tumor type.

Watch for the companies' next scheduled pipeline updates and any change in how they describe the program's status — a shift from "filing withdrawn" to "development discontinued" is the language that would settle the question. Until then, the practical read for shareholders is that one anticipated approval has come off the near-term calendar, and the burden of proving the ADC alliance's value has moved further out in time.

Key facts

• Regulatory action: Accelerated approval application withdrawn from the FDA
• Drug and target: Antibody-drug conjugate targeting B7-H3, in certain small cell lung cancer patients
• MRK last close: 148.78, +0.54% (as of 25 Sep 2026, 20:00 GMT)
• Market backdrop: S&P 500 tracker SPY closed at $771.35, +0.54% on the same session

Frequently asked questions

What did Merck and Daiichi Sankyo actually withdraw?

The two companies pulled their US application for accelerated approval of an antibody-drug conjugate targeting B7-H3 in certain small cell lung cancer patients. The application was submitted to the FDA and has now been taken back by the sponsors, meaning the agency will not issue a decision on that filing as it stood.

What is a B7-H3 antibody-drug conjugate?

B7-H3 is a protein found on the surface of several solid tumor types and relatively sparsely on healthy tissue. An antibody-drug conjugate links an antibody that recognizes that protein to a potent cell-killing payload, so the chemotherapy is delivered mainly to tumor cells. The approach is intended to widen the gap between efficacy and toxicity.

Does withdrawing a filing mean the drug is dead?

No. A withdrawal removes a specific application from FDA review but does not end development. Sponsors often refile later with additional data, pursue full rather than accelerated approval on the back of a randomized confirmatory trial, or redirect the molecule to a different tumor type. A formal discontinuation would be a separate announcement.

Why is accelerated approval harder to obtain now?

Accelerated approval clears a drug on a surrogate measure such as tumor response, on condition that confirmatory evidence follows. Regulators have tightened expectations that a confirmatory trial is well underway at the time of filing and that the response data are robust. Sponsors that fall short increasingly withdraw rather than receive a formal rejection.

How did Merck shares react?

There was no negative reaction in the last recorded session. MRK last traded at 148.78, up 0.54% from a previous close of 147.98, within a range of 147.48 to 149.98 as of the close on 25 September 2026. That matched the broader market, with the S&P 500 tracker also up 0.54% on the day.

Why does this matter more to Daiichi Sankyo than to Merck?

Merck runs a large, diversified oncology portfolio in which any single program is a small share of value. Daiichi Sankyo originated much of the ADC chemistry and its antibody-drug conjugate franchise represents a far larger portion of its expected future earnings, including milestone payments that are triggered by regulatory progress rather than by sales alone.

Sources

• Merck, Daiichi scrap FDA application for B7-H3 ADC in lung cancer — Endpoints News