Merck cements advantage in I/O with first-line approval

Dive Brief:

  • Merck on Monday won an expected approval from the Food and Drug Administration for its immuno-oncology flagship Keytruda (pembrolizumab) in first-line non-small cell lung cancer (NSCLC), giving the New Jersey pharma a significant leg up on rival Bristol-Myers Squibb.
  • Keytruda is the first anti-PD1 checkpoint inhibitor approved for use in previously untreated NSCLC, which is considered one of the largest cancer markets. The drug is only approved for use in patients whose tumors express the PD-L1 protein at levels of 50% or more, as measured by a diagnostic test. 
  • To date, Bristol-Myers' Opdivo (nivolumab) has run away with the I/O market, racking up sales nearly triple that earned by Keytruda. But a shocking failure in first-line NSCLC this summer opened the door for Keytruda to unseat Opdivo as the leading checkpoint inhibitor. 

Dive Insight:

Keytruda's approval in first-line NSCLC validates Merck's strategy of zeroing in on the patients whose tumors expressed high levels of PD-L1. Results first announced in August and detailed last month showed treatment with Keytruda helped lower the risk of progression or death by 50% compared to standard-of-care chemotherapy. 

In comparison, Bristol-Myers had attempted to show Opdivo worked in a much broader range of lung cancer patients, testing the drug in patients who had greater than 5% PD-L1 expression. But in a major surprise, Opdivo failed to beat out platinum-based doublet chemotherapy, erasing tens of billions in value from Bristol-Myers' market capitalization. 

While targeting only those patients with high PD-L1 levels limits Keytruda's potential market, it was a winning strategy for Merck and could give Keytruda the juice it needs to overtake Opdivo as the top-selling checkpoint inhibitor. 

Over the first six months of 2016, Opdivo has pulled in sales of over $1.5 billion while revenue from Keytruda totaled a more modest $563 million during the same period. Just given the size of its lead, Opdivo will likely still outpace Keytruda in the near-term, but first-line approval should significantly expand Keytruda's market.

When Bristol-Myers first announced Opdivo's failure, Evercore ISI analyst Marck Schoenebaum estimated the NSCLC market's value at about $12 billion, with first-line NSCLC accounting for over half of that value. 

Merck reports third-quarter earnings tomorrow. 

The FDA also updated Keytruda's label allowing the drug to be used as a second-line or greater treatment in patients with PD-L1 levels greater than 1%, based on results from another study.

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Filed Under: Regulatory / Compliance
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