Although chemotherapy can be a very successful therapy for cancer, it takes a scorched Earth approach, killing healthy cells alongside tumours.

Medical researchers have dreamt of finding a “magic bullet” that will just target cancerous cells since at least 1900. Antibody-drug conjugates (ADCs) – complex molecules based on a biologically active cytotoxic (anticancer) payload – look like the best shot within oncology dealmaking.

More than ten ADCs have been approved and become commercially available this century, with around 100 in clinical trials to date. As a result of the segment’s potential, Big Pharma and investors have been pumping money into ADCs, both in North America and Europe.

European ADC for oncology deals began to boom in 2022, with six transactions worth EUR 1.2bn, according to Mergermarket data. This showed massive growth from one deal worth EUR 87m in 2021. Volumes fell again in 2023 and 2024.

One large deal this year comes from Tubulis, a German developer for ADC for oncology, which completed an upsized and oversubscribed EUR 128m Series B2 financing in March.

Buying spree

Interest in ADCs is likely to continue in the months and years ahead, according to Robert Florczykowski, portfolio manager at Third Dot, a fund focused on biotech. “There is still a long way to go before we reach saturation in this market.”

Big Pharma buyers are particularly focused on the more validated target companies, such as those behind ADCs targeting HER2 (a protein linked to breast cancer when it is over-expressed), HER3 (a protein linked to therapeutic resistance in numerous cancers) or Trop-2 (a protein that plays a role in tumour progression), Florczykowski said.

Next-generation ADCs, which are conditionally activated, also show promise, Florczykowski said. So do ADCs with dual cytotoxic payloads or bispecific antibodies (BsAbs) that can target two antigens simultaneously, he said.

Two paths

Large pharmaceutical companies haves two paths for deals: buying biotech companies or partnering with them, Florczykowski. M&A isn’t just focused on companies with late-stage clinical trials, but also less advanced ones with more novel targets or approaches, he added.

Names to watch include Tagworks Pharmaceuticals of the Netherlands, which is considering raising EUR 60m-plus in 2026 to finance cancer therapy development. Meanwhile, Pheon Therapeutics, a UK-based ADC specialist, raised USD 120m in May; and Alentis Therapeutics, a Swiss biotech company developing ADC treatments, raised USD 105m in 2023.

Healthcare dealmakers should expect to hear much more about ADCs in the years ahead, as companies like Tagworks, Pheon and Alentis inch closer to regulatory approval.