Things for Merck (MRK) are looking really good after it had obtained its latest win for Keytruda. It reported positive news from its phase 3 study known as KEYNOTE-042, which treated patients with front-line non-small cell lung cancer (NSCLC). This piece of news will allow Merck to potentially target this market without the use of chemotherapy, Keytruda treatment alone as a monotherapy, which is a huge positive. A trial from Bristol-Myers Squibb (BMY) with Opdivo failed to be successful in the front-line NSCLC setting as a monotherapy. This bodes well for Merck and its future of Keytruda sales.
Phase 3 Trial
The phase 3 trial recruited a total of 1,274 patients who were randomized into two different dose groups. One group of patients were given 200 mg of a fixed dose of Keytruda every 3 weeks as a monotherapy, or an investigator’s choice of a platinum-based chemotherapy. One thing to note was that the patients treated had locally advanced or metastatic PD-L1 positive ((TPS 1%)) NSCLC. The primary endpoint of this study was overall survival. The trial met on this primary endpoint, but the actual data from this study will be revealed at an upcoming medical conference. In addition, the secondary endpoint of progression-free survival is still being evaluated based on the recommendation of the Data Monitoring Committee (DMC). In my opinion, this is a huge win for Merck for two reasons. It is the first to achieve positive results in this patient population without the use of chemo for starters. That means patients will not have to add chemo to their treatment regimen and experience harsh side effects. Secondly, this adds to Keytruda’s franchise which has been performing quite well in multiple studies in the lung cancer space.
Competitors
The overall survival in the study is not yet known, but Merck has confirmed that this primary endpoint has been met. The same can’t be said for Merck’s competitor Bristol-Myers Squibb. Back in August of 2016, Bristol-Myers Squibb reported that it had failed a phase 3 trial in patients with previously untreated advanced NSCLC. This was a huge blow for the company because it could have gone after this patient population with Opdivo as a monotherapy for those who had PD-L1 at 5%. Now that Merck has succeeded, it has proven that Keytruda appears to be stronger as a monotherapy in treating patients with lung cancer. The positive results from the KEYNOTE-042 are also important because they open up the market capability that Merck can target with Keytruda. Keytruda is approved by the FDA to treat patients with NSCLC who have not received prior therapies (front-line setting) and whose tumors show PD-L1 protein of 50% or greater. If this new indication is approved, it will open the door for Keytruda to target previously untreated NSCLC patients with PD-L1 protein between 1% and 49%. As you can see, this adds another large market segment for Keytruda in this patient population. These positive results were also a major boon to AstraZeneca (AZN) which is also attempting to find its footing in the NSCLC space with its immunotherapy drug Imfinzi. Thus far, Merck is considered as being the frontrunner in this space. It is estimated that Keytruda could earn peak sales of over $10 billion by 2023. Keytruda is a powerful drug from Merck, especially since it racked up $3.81 billion in sales in 2017. NSCLC accounts for approximately 85% of all lung cancer cases, and that means Keytruda has a golden opportunity going after this market.
Conclusion
The phase 3 trial met the primary endpoint of overall survival in this patient population. The risk still remains with respect to this trial because of two reasons. The first reason is that the overall survival number is not yet known. Despite that, Keytruda has proven itself as the first immunotherapy to achieve this endpoint in this patient population as a monotherapy. The second reason on why risk still remains is that the secondary endpoint of progression-free survival has yet to be revealed as well. Therefore, nobody knows if this endpoint will be met or not. That could then be a huge negative for Merck’s stock. Still, the main concern for the FDA, on whether it will approve the drug or not, will be based on the primary endpoint. That means it will not be based on how the secondary endpoint turns out. Since this trial has shown an overall survival benefit (the primary endpoint of the study), then I have no doubt that the FDA will likely approve Keytruda in this setting.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
