Merck & Co. Inc. (NYSE: MRK), a global leader in pharmaceuticals and oncology research, announced on Tuesday a landmark funding agreement with Blackstone Life Sciences (NYSE: BX) to secure $700 million for the development of its experimental cancer therapy, sac-TMT. This strategic partnership underscores Merck’s commitment to innovation in the field of oncology and its efforts to expand its pipeline amid increasing competition.

Strategic Collaboration with Blackstone Life Sciences

Under the agreement, Blackstone’s dedicated drug development unit will provide a substantial portion of the funding needed to advance sac-TMT, an antibody-drug conjugate (ADC) designed to target cancer cells with high precision. Unlike traditional chemotherapy, ADCs deliver potent anti-cancer drugs directly to malignant cells, minimizing damage to healthy tissues and reducing side effects for patients.

The total funding is scheduled to be disbursed throughout 2026, providing Merck with the financial flexibility to accelerate late-stage clinical trials while maintaining a strong balance sheet. In return, Blackstone will be eligible for low-to-mid single-digit royalties on sac-TMT’s net sales, contingent on regulatory approval in the United States.

Sac-TMT: A Promising Cancer Therapy

Sac-TMT works by targeting the protein trophoblast cell-surface antigen 2 (Trop-2), which is expressed on the surface of various cancer cells. Previous clinical studies have shown that ADCs aimed at Trop-2 exhibit encouraging anti-tumor activity, offering new hope for patients with difficult-to-treat cancers.

Merck currently has 15 ongoing late-stage global trials evaluating sac-TMT across six tumor types, including breast, endometrial, and lung cancers. The company is strategically expanding its oncology portfolio as its flagship cancer drug, Keytruda, faces looming competition from lower-cost biosimilars in the coming years.

“We are making important investments to sustain our business for the future, while remaining disciplined towards maintaining an appropriate financial profile,” said Caroline Litchfield, Chief Financial Officer at Merck.

Exclusive License and Collaboration with Sichuan Kelun-Biotech

The development of sac-TMT is part of an exclusive licensing and collaboration agreement with Sichuan Kelun-Biotech Biopharmaceutical Co. Ltd. (6990.HK). Merck will retain full control over the development, manufacturing, and commercialization of sac-TMT, ensuring that Blackstone does not receive rights to the therapy beyond royalty payments.

This collaboration highlights a growing trend of strategic partnerships between pharmaceutical giants and private investment firms, aimed at sharing the financial risks of costly drug development while accelerating access to potentially life-saving treatments.

Merck’s Oncology Pipeline and Market Outlook

Merck’s focus on ADCs such as sac-TMT comes at a critical time for the company. With Keytruda facing biosimilar competition and rising pressure on pricing, diversifying its oncology portfolio is essential to maintain its market leadership. Sac-TMT represents one of the most promising candidates in Merck’s pipeline, with the potential to address multiple high-need cancer indications globally.

The partnership with Blackstone is expected to not only advance Merck’s research capabilities but also enhance investor confidence in the company’s long-term growth prospects. As the clinical trials progress, the pharmaceutical industry will be closely watching sac-TMT for its potential to become a next-generation targeted cancer therapy.