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Merck & Co.'s over 900 clinical trials balance out cancer drug's rare setbacks

A rare clinical bump in the road for Merck & Co. Inc.'s immuno-oncology blockbuster Keytruda in early 2019 was the kind of late-stage setback that could derail a smaller research and development program. But with over 900 Keytruda trials ongoing worldwide, the failure appears to be a proverbial drop in the bucket.

So far in 2019, the drug's clinical failure in liver cancer is the only notable loss among a bevy of wins. Because of the R&D volume Merck has put behind Keytruda and the sheer size of the program, failures present the company with less risk, executives and analysts say.

In March, the company notched a regulatory win as the European Commission approved Keytruda to treat squamous non-small cell lung cancer, an indication for which it was approved in the U.S. at the end of 2018.

And in February, Merck announced three Keytruda successes in genitourinary cancers: prostate, bladder and kidney.

The Keynote-426 trial in kidney cancer was a particular boon, according to Merck and analysts.

Umer Raffat, an Evercore analyst, said at the time that Keytruda plus Pfizer Inc.'s Inlyta will likely be considered the standard of care for the initial treatment of advanced renal cell carcinoma, and Keynote-426 "sets a high bar for future trials in the indication."

"This combination has a magnitude of benefits that hasn't been seen in modern kidney cancer trials," Merck Research Laboratories Vice President of Clinical Research Scot Ebbinghaus told S&P Global Market Intelligence.

Merck's overall goal is to expand the indications as widely as possible to stake more of a claim in the cancer space, and a program of that size comes with its own challenges and rewards, Ebbinghaus said. Overall, Keytruda has been approved in the U.S. for 10 tumor types.

Those approvals helped Keytruda surpass Roche Holding AG's Herceptin and Bristol-Myers Squibb Co.'s Opdivo as the top-selling cancer medicine in 2018, with $7.17 billion in revenue.

Strategy and innovation

Ebbinghaus called the process of expanding Keytruda's influence in cancer and the research-heavy strategy behind it "a unique drug development experience."

"Many times [in cancer research] you're not sure if things are working and a lot of your strategy is around mitigating risk — here, it's more about exploring the breadth of opportunities and trying to get things out as fast as you can to people," Ebbinghaus said.

Because of the breadth of indications Merck is striving to treat, the company has had to design clinical trials with more efficiency.

"We've done a number of innovative things in terms of clinical trials," Ebbinghaus said. "The one I would immediately highlight in terms of innovation is our tumor-agnostic strategy."

Tumor agnosticism describes a medicine that can treat cancer in any organ or tissue as long as the cells have a specific alteration targeted by the drug, Ebbinghaus explained. For Keytruda, that is the PD-1 checkpoint protein preventing the cells in the immune system from attacking cancer cells.

"Since a drug like Keytruda works in such a broad breadth of tumors, should we take an approach that's based on tissue diagnosis, which is the typical one?" Ebbinghaus said. "Or based on a biomarker that may select for sensitivity to a drug like this? We've taken both approaches."

Because Keytruda has such wide access to cancer treatment, there are more indications on the horizon, one of which is to treat the disease at earlier stages.

"We have neo-adjuvant approaches across quite a number of other diseases — lung cancer, bladder cancer, breast cancer," Ebbinghaus said. "And we look forward to seeing the benefit of giving an anti-PD-1 drug like Keytruda in an earlier disease state that hopefully prevents the cancer from ever developing metastatic disease."

There is one space, however, that Ebbinghaus said may be off limits.

"We haven't gotten into cancer prevention," Ebbinghaus said. "I don't see that as something we're probably going to do at least on our near-term horizon."

'The key to the Merck story'

Keytruda plays a major part in Merck's future growth, President of Merck Research Laboratories Roger Perlmutter said on the company's most recent earnings call Feb. 1. Just four years out from its first approved use, he said, Merck is "still at an early point in the development of Keytruda."

Credit Suisse analyst Vamil Divan said at the time that the release of positive data and commercial uptake of Keytruda is "the key to the Merck story."

Keytruda competitor Opdivo from Bristol-Myers has a comparable number of patients in clinical trials, but the drug has fallen behind in lung cancer particularly due to a critical November 2018 failure.

According to data from Evercore analyst Umer Raffat, Bristol-Myers had enrolled or was actively recruiting 109,385 patients for Opdivo trials as of February, while patients in trials with Keytruda number 95,022.

During Merck's February earnings call, CFO Robert Davis said that spending on research will begin to slow down after continued growth in 2019. The reason is to allow sales to catch up to R&D spending.

"We're not feeling it in the oncology therapeutic area, but all good things may come to an end at some point," Ebbinghaus said. "I want to make sure that Merck oncology is more than a Keytruda company."

He said that collaborations with AstraZeneca PLC and Eisai Co. Ltd. — developing cancer drugs Lynparza and Lenvima, respectively — could fill that gap.