BMS leapfrogs Merck with Opdivo approval in lung cancer

Bristol-Myers Squibb ($BMY) may have been second to market with PD-1 drug Opdivo, but as of Wednesday, it's the first to snag a second go-ahead for the cancer fighter--and it's a big one.

The FDA has granted BMS an ultraspeedy approval to use the drug in advanced squamous non-small cell lung cancer (NSCLC)--an indication ISI Group analyst Mark Schoenebaum thinks could add $1 billion to $1.5 billion to the $5 billion a year in peak sales analysts already expect.

The OK officially puts Opdivo in front of Merck's ($MRK) melanoma drug Keytruda, which beat the Bristol-Myers treatment to market. While Merck, too, is working on a lung cancer approval, it doesn't plan to file until midway through the year, CEO Kenneth Frazier said in January.

For that reason, many analysts see BMS ultimately taking the PD-1/PD-L1 cake. Melanoma's a $3 billion opportunity for the class, and kidney, bladder, and head and neck cancers are each worth $5 billion or less. But lung cancer is far and away the biggest, with $21 billion in potential sales by 2022.

Of course, Bristol-Myers still doesn't have a nod for non-squamous NSCLC--it's working on that now, Schoenebaum wrote in a note to investors, and it's on track to complete the Phase III trial later this year. If it gets it--assuming the immunotherapy class reaches 80% market penetration and Bristol-Myers nabs a 70% share of that--second-line lung cancer sales could swell to between $4 billion and $5 billion.

But that doesn't mean the race is over for Merck. Bernstein's Tim Anderson has predicted Keytruda could arrive on the scene with a broader NSCLC label than Opdivo's, which could help it pick up some ground.

And when it comes to checkpoint inhibitors, even the last-place companies in the first wave of developers will be winners, according to Morningstar predictions. Its analysts figure Bristol-Myers can lock up a 37% share by 2022, with Merck garnering 26%, Roche ($RHHBY) pulling in 21% and AstraZeneca ($AZN) bringing up the rear with 16%--a piece of the pie worth $5 billion.

- read the FDA's release
- see FierceBiotech's take

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