While Merck’s Keytruda has racked up nearly 20 approvals from the U.S. Food and Drug Administration, there is some investor concern that the company is too dependent on the product for its future.
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With two new approvals for its vaunted checkpoint inhibitor Keytruda and a rapidly expanding oncology pipeline following M&A deals, Merck & Co. plans to share outlines for the future of its cancer treatment at the first investor day held in five years.
While Merck’s Keytruda has racked up nearly 20 approvals from the U.S. Food and Drug Administration, there is some investor concern that the company is too dependent on the product for its future, The Wall Street Journal reported this morning. Keytruda, which has been approved as both a monotherapy and in combination with other drugs, has significantly contributed to explosive growth in Merck’s market capitalization to a record $217 billion, the Journal noted. Last year, Keytruda generated $7 billion in sales for Merck and is projected to become the world’s top-selling drug in 2024, the Journal said.
Success is bringing concern to Merck investors who don’t want to see the company become too dependent on Keytruda for growth, much like AbbVie and its top-selling drug Humira. Credit Suisse AG analyst Vamil Divan told the Journal that there is an emerging view among investors that Merck is too tied to Keytruda, particularly as projections indicate that cancer treatments will account for 40% of the company’s returns by 2024.
Merck, like many other companies, sees oncology as a promising growth market, and has invested in its own R&D efforts, as well as snapped up several companies with promising pipelines. Over the past 30 days, Merck has acquired two oncology-focused companies, Peloton Therapeutics and Tilos Therapeutics. The pipelines of both of these companies are expected to provide new revenue sources for the company. Merck has also partnered with a number of companies in oncology and some of those are paying off, particularly its partnership with AstraZeneca on the PARP inhibitor Lynparza. Following strong Phase III results in pancreatic cancer, the first time a PARP inhibitor demonstrated activity in germline BRCA-mutated metastatic pancreatic cancer, the two companies plan to seek regulatory approval.
During the investor day, the Journal noted that Merck will also focus its attention on other portions of its pipeline, including its vaccine and HIV programs. Earlier this month Merck won a new approval for Zerbaxa for hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by certain bacteria. Analysts predict the drug could hit blockbuster status, the Journal said.
HIV is also an area of growth for Merck. Last year, the company won approval for two new HIV treatments, Delstrigo, a once-per-day triple combination treatment, and Pifeltro, a new non-nucleoside reverse transcriptase inhibitor. Mike Robertson, an executive director at Merck and an infectious disease specialist, told BioSpace in an exclusive interview last week that the company also has other HIV treatments in development, including MK8591. If the anti-retroviral hits its clinical endpoints, Robertson predicted the drug will become a cornerstone of Merck’s HIV franchise. He said it has a unique mechanism of action and the company believes it could be a novel class of drug. Because it has a long half-life, Robertson said it remains in the body for some time and continues to work. That means that the drug would not need to be taken as often and provide some pill relief to HIV patients who take multiple pills daily.
“When you think about it, people will take these therapies for years and decades. Anything that reduces the pill burden they have to take… we think could make it more preferable for many patients,” he told BioSpace.
Merck will highlight these drugs, as well as many others, at the investor day Thursday, the Journal said.
