Merck & Co.: Q2 highlights and key takeaways

Merck & co. presented its 2017 second-quarter results on July 28, with revenues exceeding analyst forecasts thanks to a strong beat from the PD-1 inhibitor Keytruda. Focus on the current and future performance of Keytruda in first-line lung cancer was sharpened in light of AstraZeneca's negative MYSTIC study data, with Merck ostensibly best positioned to benefit from this setback, while management provided additional thoughts on the PARP-focused deal between the two companies, which was announced in tandem with the MYSTIC update on July 27.

Momentum for Keytruda – and more to come?

Sales of Keytruda stood at $881 million versus $584 million in the first quarter and Merck continues to close the gap on Bristol-Myers Squibb's competing PD-1 inhibitor Opdivo (which generated sales of $1.1 billion and $1.2 billion in the first and second quarters of 2017, respectively). Utilisation of Keytruda in lung cancer accounts for 50 percent of global sales and first-line lung cancer usage now accounts for approximately half of all US sales, the company noted. Although the combination of Keytruda plus Alimta chemotherapy was approved by the FDA in treatment-naïve non-small-cell lung cancer (NSCLC) irrespective of PD-L1 status in May, management suggested that strong quarterly sequential growth for Keytruda was driven by increased adoption as a monotherapy in first-line NSCLC patients with tumour PD-L1 expression levels of 50 percent or higher, which commands a 26 percent share in first-line lung cancer across all therapies.

Regarding adoption of the Keytruda/chemo combination approved since May, management noted recent recommendation of this regimen in NCCN guidelines and positive feedback from physicians, but suggested it was too early to discuss specific market share. Given how comfortable oncologists are with using chemotherapy, Merck feels well positioned with its strategy, but would not clarify whether it anticipates utilisation of Keytruda/Alimta to be somewhat marginalised until positive Phase III data reads out from the Keynote-189 trial (which remains on track to top-line by year-end). Speaking a day earlier, management at Bristol-Myers Squibb said they expect their share of the second-line NSCLC market for Opdivo to decline towards the end of 2017 as first-line utilisation of Keytruda increases.

Physician Views Poll Results – Oncologists predict 'considered' use of Keytruda/chemo combo in first-line NSCLC

Merck is seeing a steady increase in PD-L1 testing, which is now clearly the standard-of-care approach, management said. They estimate that approximately three quarters of US patients are now being tested with two-thirds (on average) being tested in Europe, although testing rates vary from market to market. 

On a global basis, management provided no update on the regulatory filing for Keytruda plus chemotherapy in Europe, but said it was seeing a greater contribution of sales from lung cancer use outside of the US, including strong uptake in both the first- and second-line settings in Japan.

Anticipation grows for Keynote-189

With an initial look at AstraZeneca's MYSTIC study having come and gone, readout of Keynote-189 now moves into view as one of the next key clinical catalysts that will shape the market for PD-(L)1 inhibitor use in first-line NSCLC. Having caught rivals and investors by surprise by filing (and then securing approval) of the Keytruda/Alimta combination on the strength of Phase II data (from the Keynote-021 Cohort G trial), Keynote-189 is essentially a confirmatory study.

An important point to note is that Keynote-189's only primary endpoint is progression-free survival (PFS), with overall survival (OS) a secondary endpoint. This designs is somewhat risky as OS remains the gold-standard for approval, note analysts at Bernstein, but the potential benefit is greater powering towards the PFS endpoint. FDA accelerated approval of the Keytruda/Alimta combination on the strength of Keynote-021 – which only showed a PFS benefit and has since shown a trend towards OS – not to mention an EU regulatory submission on the strength of the same data, renders any possible risk attached to the study design as irrelevant, but highlights an important point made by R&D head Roger Perlmutter during the Q2 earnings call; namely that it will become increasingly hard to demonstrate an OS benefit in first-line NSCLC trials due to crossover, particularly with Keytruda acknowledged as an active agent in this setting. AstraZeneca has played down this risk as it waits for OS data from MYSTIC to mature, but analysts have cited crossover as one reason why hopes should not be raised.

Use in MSI-H tumours

Keytruda secured a regulatory first in May, when the FDA approved it for the treatment of any metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) solid tumour, marking the first time the agency cleared a cancer drug based on the presence of a specific biomarker as opposed to its location in the body.

Asked how utilisation of Keytruda in this setting is evolving, Merck said it is working hard to increase awareness, which is higher in certain cancers where MSI-H is an established biomarker, but is it too early to see this translate into sales.

KOL Views: Leading oncologist outlines road forward and potential pitfalls ahead in new era of genetically defined cancer drugs

Other combos

Although management would not comment on the MYSTIC result, Merck retains an interest in CTLA-4 inhibition and has its own asset in development. It continues to work on identifying which patients (in terms of PD-L1 status) would be best suited to receiving a Keytruda plus CTLA-4 combination and has to pull the trigger on Phase III studies assessing Keytruda plus Yervoy in first-line NSCLC.  Regarding the collaboration with Incyte on the Keytruda plus epacadostat pairing, Perlmutter said the design of Phase III trials outside of melanoma (ongoing since 2016) have been signed off and these studies will begin very soon – ViewPoints: Bristol-Myers Squibb finds itself caught in Merck & Co.'s pincer movement

The PARP deal with AstraZeneca

Full data from MYSTIC, not expected until the first half of next year, may prove to be the missing evidence that prevents comprehensive analysis of this deal from AstraZeneca's perspective. CEO Pascal Soriot argued the agreement will maximise the value of an asset – in its PARP inhibitor Lynparza – that analysts may be under-modelling. The sceptics' view is that AstraZeneca may have already conceded defeat in the PD-(L)1 arena and views Keytruda as the dominant force in the years ahead.

The reality most probably lies somewhere in between, and from Merck's perspective the collaboration with AstraZeneca is "the type of deal we want to do," said CEO Kenneth Frazier. Although the majority of payments (worth potentially $6.1 billion) are contingency based – two-thirds are tied to sales-based milestones and one-third to regulatory milestones – the deal allows Merck to access the PARP inhibitor field in a de-risked way, said management, given Lynparza's first-in-class status and data accumulation. Potential efficacy across multiple tumour types (Lynparza is the first PARP to demonstrate Phase III success outside of ovarian cancer; in breast cancer) is a clear opportunity and preclinical data suggests that PARP inhibition can sensitise tumours to immunotherapy, said Perlmutter. Identifying Lynparza as the best candidate to partner with does carry some irony on Merck's part, given its decision to divest the PARP inhibitor niraparib (now marketed as Zejula) to Tesaro in 2012 – Spotlight On: Optimism for PD-1/PARP combinations remains intact as Tesaro prompts speculation it can play with the big boys

Opportunities outside of oncology

Countering the momentum of Keytruda-led growth opportunities, are declining sales from the Januvia diabetes franchise, which at $1.5 billion for the quarter fell below consensus expectations (of $1.6 billion). Merck highlighted volume growth of about 3 percent year-on-year, but confirmed this continues to slow on an annual basis while price pressure continues to intensify each year, particularly in the US. Nevertheless, the company hopes that using Januvia as an anchor for combination therapy could give its SGLT-2 inhibitor ertugliflozin (co-developed with Pfizer, awaiting approval from FDA by year-end) a competitive advantage.

To read more IAV Other articles, click here.