Merck Extends Its Lung Cancer Lead With Keytruda Trial
(Bloomberg Gadfly) -- It's a bit late for Christmas, but Merck & Co. just gave investors a gift.
The company announced on Monday that a combination of its key immune-boosting cancer drug Keytruda and an older chemotherapy helped newly diagnosed lung cancer patients survive significantly longer in a large trial -- a groundbreaking result that comes months earlier than expected.
The company appears to have cemented the most valuable head start in cancer.
Bristol-Myers Squibb & Co.'s Opdivo was the initial leader of five approved medicines in this highly lucrative category of cancer drugs. But Opdivo flubbed a trial in newly diagnosed lung cancer patients in 2016. Keytruda went on to gain FDA approval in the population both on its own and in combination with chemotherapy after a smaller earlier trial. Keytruda is now set to take a sales lead over Opdivo and Roche Holding AG's Tecentriq.
In late October, Merck appeared to crack the door for others to catch up in the biggest market available to these drugs, announcing that the results of its larger chemo-combo trial would potentially be delayed until 2019.
Investor concerns were heightened when rival Roche released early data in December for its own lung cancer combination trial and because the projected delay would give Bristol-Myers Squibb time to produce results of its own.
But Merck had good reasons for its potential delay -- it decided to look at whether its drug helped patients survive to match similar plans from its rivals and take away a potential advantage. The fact that results came so early only highlight that the company knew what it was doing.
Merck's news on Monday would have been positive no matter what. But its impact is magnified by the fact that its combo is already on the market in the U.S. Unlike its rivals, the company won't have to wait on the FDA to see the benefits of positive data; sales may begin ticking up immediately as doctors react to these results.
Roche and Bristol-Myers will now have a more difficult time catching up. They're absent from this market and will be for some time. Keytruda has been available for newly diagnosed lung cancer patients for 15 months and has produced successively stronger data at every opportunity.
Merck's rivals have also taken different approaches that may hold them back. Bristol-Myers has focused its research on a combination of Opdivo and a different immune-boosting drug, an approach that failed for AstraZeneca PLC last year and may have unwelcome side effects. Roche has added its older blockbuster Avastin on top of Tecentriq and chemotherapy, but physicians may not be convinced that the expense is justified.
These are key medicines for all three firms.
Opdivo is expected to account for 38 percent of Bristol-Myers Squibb's 2022 sales, and the company has a thin pipeline outside of its efforts to extend the drug's use. Keytruda is expected to account for nearly a quarter of Merck's 2022 sales as the company faces sales declines from several older products. Roche won't be quite as dependent on Tecentriq. But its largest and most profitable products are set to face competition and steep sales declines over the next decade. Any growth matters.
It's still not clear how long Merck's lead will last -- the company still hasn't released full data for this trial, and its rivals may surprise. Merck won't have the same kind of lead in Europe, where the chemo combo isn't yet approved.
Five of these drugs are on the market and more are on the way. Many overlapping trials are taking place, and any lead in a given cancer is likely to evaporate over time.
But even a finite lead can be exceptionally profitable in the drug industry, and Merck's in lung cancer has been rendered a bit less finite and substantially more lucrative.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
To contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.net.
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