Bristol Myers Clobbered as Cancer Drug Disappoints; Rival Merck Unanimous Winner at Medical Conference

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New data are likely to prompt doctors to abandon Bristol-Myers Squibb Co.’s (New York City) immunotherapy Opdivo in favor of Merck & Co.’s (Kenilworth NJ) rival Keytruda in a large segment of the lucrative lung cancer market, analysts said on Monday. The results of a closely watched clinical trial sent Bristol’s shares plunging 10%.

New data are likely to prompt doctors to abandon Opdivo in favor of Keytruda for lung cancer Click To Tweet

The data, presented at a recent medical meeting, showed that lung cancer patients fared worse on Opdivo than those on chemotherapy. Merck shares rose 2% on strong benefits shown by Keytruda in a similar late-stage lung cancer study. Earlier in the day, Merck shares rose more than 3% to a near 15-year high.

Both trials tested the drugs that help the immune system to recognize and fight cancer as an initial treatment for advanced lung cancer, according to Reuters. They are already approved for patients whose disease had progressed following chemotherapy, but approval as a so called first-line therapy could greatly increase the number of patients taking them.

Opdivo had been considered the leader among the new class of medicines. It generated $840 million of sales in the second quarter, more than double those of Keytruda.

The view of the rival drugs began to change in August, with the surprise announcement by Bristol-Myers that Opdivo had failed to best older chemotherapies in the Phase 3 trial. Details of the trial unveiled at the European Society for Medical Oncology (ESMO) meeting in Copenhagen only heightened those concerns. Patients on Opdivo went 4.2 months before their disease worsened versus 5.9 months for those on chemo, although the difference was not deemed statistically significant.

“This data represented a worst-case scenario for Opdivo,” Sanford Bernstein analyst Tim Anderson said in a research note. The Opdivo trial enrolled patients regardless of their tumor’s level of PD-L1 expression, a protein targeted by the drug whose presence may help identify those most likely to benefit from treatment with the new medicines.

Meanwhile, researchers reported that Keytruda halved the risk of disease progression in previously untreated patients, and cut overall deaths by 40% compared to chemotherapy. Patients in the Merck trial were only enrolled if they were shown to have high levels of PD-L1, a narrower segment of the lung cancer population than those in the Bristol-Myers study.

“Merck will completely ‘own’ the segment of first-line lung-cancer patients who have high PD-L1 expression levels, and Bristol Myers will capture nothing really,” Anderson said.

Doctors are allowed to prescribe medicines for not yet approved uses, but analysts said they expect current off-label prescribing of Opdivo in first-line lung cancer to dry up now.

In addition, competition in second-line lung cancer is soon expected to intensify with the anticipated approval of Roche’s immunotherapy Tecentriq, which is now approved to treat bladder cancer. Both Keytruda and Tecentriq are given every three weeks, while Opdivo is administered every two weeks, which is seen as a convenience disadvantage.

“The nearly inexplicable failure of (Opdivo) at every level of PD-L1 expression…puts Merck in the driver’s seat in first-line lung cancer for at least the next 12-18 months,” said Leerink Partners analyst Seamus Fernandez.

Calling the Keytruda data “stunning,” Fernandez said, “We fully expect Merck to retain a significant place at the table long term.”

Opdivo is also approved for advanced melanoma, kidney cancer and a type of Hodgkin lymphoma, while Keytruda is also approved for advanced melanoma, plus head and neck cancer. But lung cancer is considered by far the biggest market for cancer drugs.

Steve’s Take: Well, the gloves are now officially off and a lot of marbles are at stake as drug behemoths Bristol-Myers and Merck clashed over who has the best cancer monotherapy. Merck took this latest round in Copenhagen Sunday, by a virtual knockout.

The two rivals, which are both developing a treatment for the same type of lung cancer, have been playing a game of stock market seesaw, observes MarketWatch. Never was that more true than Monday, when Merck’s positive clinical trial data lifted it a mere 2%, while Bristol’s bad news–made worse in contrast with Merck’s–sent it plummeting 10%. That’s a huge dive for one of the industry’s top leaders.

Merck announced two positive clinical trial results on Sunday, both for its Keytruda treatment for metastatic non-small cell lung cancer, and published the results in respected journals on Monday.

“Our new data suggest that Keytruda treatment can offer meaningful improvement over chemotherapy in a broad array of patients,” said Merck president Dr. Roger Perlmutter. “In this sense, these studies may represent a turning point in worldwide efforts to control lung cancer.”

By contrast, Bristol announced that its Opdivo treatment showed “ongoing responses” in two late-stage studies for advanced non-small cell lung cancer, less-than-impressive results following a high-profile trial failure in early August. Though some support for an Opdivo comeback remained after the drug’s summer trial failure, analysts had harsher words after this round.

The weekend Opdivo results were “even worse than expected,” said Evercore ISI’s Paul Sperber. Though more than half of investors expected a comparison between the two drugs to “come in somewhat even… Instead, we saw virtually no benefit for BMY’s” Opdivo, Sperber said.

But J.P. Morgan’s Chris Schott made a case for a Bristol recovery, saying that while the latest results were “wholly disappointing, we see sentiment bottoming as we move past ESMO and continue to see an attractive long-term thesis” based on the study of Opdivo in combination with cancer drug Yervoy, which he said was Bristol’s “path forward in the lung.”

Though Schott was bullish on Merck’s Keytruda, predicting a very rapid uptake and rollout of the drug, he remained “optimistic” on the Opdivo/Yervoy combination being an “extremely competitive combo frontline” for non-small cell lung cancer.

The FDA plans to consider Keytruda for approval, with a decision expected by Dec. 24, Merck said. While Bristol has said it wants to file early for approval for Opdivo/Yervoy, it:

“provided little in the way of detail regarding timelines and the rationale for such a filing,” said Schott. “We expect the Street to remain skeptical of a potential early Opdivo/Yervoy” absent additional data.

But the ESMO meeting has also raised the prospect of another approach–successfully combining immunotherapy and chemotherapy. A lot of scientists have been skeptical of this idea in the past, and there are still questions over whether patients will have a long-lasting response, but positive data from a mid-stage study at ESMO suggests the concept has real promise, says MarketWatch. Roche and Merck are both enthusiastic.

Steering a path through all these permutations is going to be a challenge and ESMO’s President Fortunato Ciardiello says the cancer community must await more clinical trial results over the next few years.

“I think we live in great times for rendering cancer a curable disease but it will take time because the more we learn, the more we understand that it is hugely complex,” Ciardiello told Reuters.

While nobody yet knows what the “gold standard” treatment regimen is going to be, it is already clear this new generation of drugs is going to be big.

“Every time we come back to the immunotherapy market we are amazed at just how large the opportunity is,” said Leerink analyst Seamus Fernandez.

Fernanderz sees combined annual sales of $30 billion to $40 billion for drugs like Keytruda and Opdivo, as well as rivals from Roche, AstraZeneca and Pfizer.

How the market will ultimately distribute itself among the companies is still unclear. But the reported results underscore a shift in expectations that has been evident since August, when Bristol first revealed that its monotherapy trial had failed. After Sunday, it’s Opdivo is really on the ropes.

Something not mentioned in today’s media coverage was the financial stakes on the line. The expectation among forecasters at investment banks had been that Bristol would gain the lion’s share of sales in the lucrative market for these breakthrough cancer drugs, which are also very expensive (list price: $12,500 a month). Now that’s real money but far less certain in Bristol’s future.

Merck shares have risen 8% over the past three months, compared with a 1.6% increase in the S&P 500. Meanwhile, Bristol shares have tanked 33%.

Steve's Take: This round, if not a knockout, is a unanimous decision for @Merck Click To Tweet

Offhand, I’d say it’s not even close to a split decision. This round, if not a knockout, is a unanimous decision for Merck. But stay tuned. The fight’s not over by a long stretch.