With Opdivo in its sights, Merck's Keytruda nabs breakthrough tag in first-line lung cancer

Merck & Co. is officially on its way to eclipsing Bristol-Myers Squibb in lung cancer. Its immuno-oncology drug Keytruda won a breakthrough designation for first-line treatment, a multibillion-dollar opportunity to steal market share from BMS rival Opdivo.

The Keytruda submission, made in Europe as well, is based on data from the Keynote-024 trial, which showed that Merck’s PD-1 checkpoint inhibitor beat chemotherapy at staving off cancer progression and extending patients’ lives. The trial covered previously untreated patients with non-small cell lung cancer who tested positive for 50%-plus expression of the PD-L1 biomarker.

“Chemotherapy has been the foundation of first-line treatment for non-small cell lung cancer for decades,” Merck R&D chief Roger M. Perlmutter said in a statement, adding that Keytruda’s ability to prolong those patients’ lives “is welcome news.”

By contrast, Bristol-Myers’ Opdivo failed to hit its goals in a trial in previously untreated NSCLC patients, a surprise result that had analysts scrambling to revise their sales estimates for the two drugs. Keytruda and Opdivo were the first two drugs in their class to hit the market, and they’ve each racked up new indications to add to their initial approvals in melanoma.

Roche has since rolled out its competitor in the field, the PD-L1 drug Tecentriq. Last week, hopes for that drug took a leap after new trial data showed it was effective in lung cancer as well.

For all three meds, the lung cancer market is key. It’s among the most common cancers, so it represents a much bigger group of patients to target.

Keytruda’s first-line victory prompted big revisions to long-term sales forecasts for the drug as analysts shifted market share in lung cancer to the Merck drug from Opdivo. Keytruda’s peak sales forecast saw a boost of up to $2.5 billion, while Opdivo’s sank by slightly more than that.

It’s a big turnabout for Opdivo, which had been expected to dominate the checkpoint inhibitor field. Analysts had pegged the drug’s 2020 sales at $8.4 billion. So far this year, the Bristol-Myers med has maintained a big sales lead; Opdivo recorded $840 million in Q2 sales, more than twice Keytruda’s $314 million. The drugs’ first-half tallies were $1.58 billion and $563 million, respectively.

Bernstein’s projections have been at the high end, both for Keytruda’s gain and Opdivo’s pain. “[O]ur view has been that the upside to Merck’s Keytruda franchise will likely be greater than many investors are expecting, both near- and long-term,” Bernstein analyst Tim Anderson wrote in a Tuesday investor note. “This, almost by definition, comes at the expense of Bristol-Myers Squibb.”

Credit Suisse pegs Opdivo sales in the same neighborhood as Bernstein’s estimates: $8.5 billion in 2020 and more than $10 billion in 2023. Bernstein’s Keytruda estimates now stand at $7.8 billion by 2025, up from $5.35 billion.

Anderson has previously said that Keytruda’s ramp-up in first-line lung cancer patients “should be fast,” with an effect on sales “certainly occurring before year-end.”

Analysts and doctors have said that Keytruda is likely to not only gather in previously untreated patients, but to attract additional scripts in patients who’ve failed on prior regimens. They see the first-line benefits spilling over into second-line use, particularly as PD-L1 diagnostic testing increases.

Because Keytruda is FDA-approved only in patients who test positive for certain levels of that biomarker--and because doctors have till now been somewhat hesitant to run those tests before starting a PD-1 drug--Opdivo has been capturing the lion’s share of lung cancer sales. That’s a trend that’s expected to change.

A recent doctor survey bears this out: Respondents in the U.S. and Europe said they’re likely to use Keytruda more often in previously treated patients now. A large majority also said they’ll test for the PD-L1 biomarker more often as well.

Plus, more than 40% of the survey respondents said their perception of Opdivo has changed “significantly” or “very significantly” because of the recent trial failure. And, surprisingly, the doctors said they’ll experiment with Keytruda in patients who aren’t “high expressers” of the PD-L1 biomarker.

Anderson sees Keytruda gaining an edge in other types of cancer, too. Both drugs are approved in melanoma, and other indications are on their way as well. Keytruda has a brand-new clearance for head and neck cancer treatment, for instance; Opdivo is awaiting the FDA’s word on that use.

“Even in non-lung cancer tumor types, we think Keytruda could see an uplift to some modest degree,” the analyst wrote. “Broad familiarity in lung boosts the overall allure of the product, so when it comes to choosing a PD-1 for a different cancer like head and neck, Keytruda may come to mind first, all else being equal.”

In any case, Keytruda is the one to beat now. “We fully expect the market momentum to favor Merck’s Keytruda over the next several months,” Leerink Partners analyst Seamus Fernandez wrote in a recent investor note.

Special Report: Top 20 drugs by 2020 - Opdivo - Keytruda

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