What went right, what could have gone better and what's next for Merck & Co.
What went right…
Companies with a $150-billion-plus market caps make for awkward underdogs in the David versus Goliath metaphor, but that is what Merck & Co.’s Keytruda (pemrolizumab) was at the start of 2016 when Bristol-Myers Squibb’s Opdivo (nivolumab) had an inside track to becoming the dominant anti-PD-(L)1 mAb in the all-important front-line lung cancer setting.
However, the tables appear to have turned after Keytruda achieved significance in the Keynote-024 trial and Opdivo unexpectedly fell short in the Phase III CheckMate-026 trial, leading a physicians to tell FirstWord that the results would be a “tremendous boost” for Merck’s near-term trajectory in the first-line lung cancer setting.
In fact, the prospects for Keytruda benefited from a number of important readouts in other settings as well this year, including bladder, renal and head and neck cancers, along with Hodgkin’s lymphoma.
What could have gone better
Merck made its long awaited arrival on the hepatitis C (HCV) stage when its Zepatier (elbasvir/grazoprevir) was approved by the FDA in January, though the drug has yet to make significant in-roads in a market currently dominated by Gilead Sciences.
In addition, the failure of Eli Lilly’s solanezumab in the Phase III EXPEDITION3 trial may arguably have put a dent in the chances of success for other products targeting the amyloid cascade, including Merck’s BACE inhibitor verubecestat (formerly known as MK-8931), which is in Phase III testing for Alzheimer’s disease.
What comes next…
Much of the focus in 2017 will be on Merck’s ability to execute on the clinical and regulatory successes it enjoyed this year with Keytruda, which saw its share of the immune-oncology (I/O) market rise sharply to 24 percent in November from 19 percent in 3Q16, according to SunTrust Robinson Humphrey analyst John Boris.
Outside of I/O, investors will hope that the slack from some important patent cliffs – exclusivities will expire for products in dyslipidaemia drugs Vytorin/Zetia and antibiotic Cubicin – will be increasingly taken up by Merck’s HCV franchise, with sales for Zepatier projected to more than double next year. Much of the upside should come from contracting negotiations with payers and pharmacy benefit managers, though the company could potentially be in for a windfall if a recent court ruling that Gilead’s products infringe on Merck patents (acquired with Idenix) is not overturned on appeal.
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