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Technology
ALLISON GATLIN

Merck Gambled With Keytruda In 2011 — How That Jump Is Still Paying Off Today

A gamble Merck made more than 10 years ago could pay off again for the pharmaceutical giant's stock after its blockbuster drug Keytruda nearly doubled the five-year survival rate for some lung cancer patients.

Merck has revealed it added Keytruda to chemotherapy for two groups of non small-cell lung cancer patients. After five years, 18.4%-19.4% of patients were still alive. By comparison, just 9.7%-11.3% of chemotherapy patients lived that long.

Eric Rubin, Merck's senior vice president of clinical oncology, called the results "quite remarkable." Before his career at Merck, Rubin was an oncologist. At Merck, he was instrumental in developing Keytruda. Today, Keytruda accounts for more than a third of Merck's sales.

"When I was practicing, that diagnosis was pretty much a death sentence," he said in an interview. "Really no one made it out to five years alive."

Merck unveiled the results at the European Society for Medical Oncology in Paris recently.

The Gamble For Merck Stock

Merck tested the combination in patients with squamous and non-squamous lung cancer. For both groups, the regimen was the first treatment and the cancer was metastatic, meaning it had spread. Squamous describes the type of cells in which the cancer originated.

Patients in both groups received up to 35 cycles of Keytruda plus chemo over a period of about two years.

In the non-squamous group, 19.4% of patients were still alive after five years compared to just 11.3% of patients who received chemo alone. Similarly, those rates were 18.4% and 9.7%, respectively, in the squamous group.

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Side effects occurred in both groups. Roughly 73%-75% of patients on the Keytruda combo reported adverse events, compared with about 67%-70% of those given chemo alone.

"This doubles the overall median survival for patients compared to chemo alone," Rubin said. "It's a quite remarkable advancement for people with this horrible disease. This was a step along the way in terms of our efforts to find better treatments for lung cancer."

Merck stock is closely tied to its efforts with Keytruda. Today, the drug is approved for numerous different cancers.

Merck's Early Leap With Keytruda

But that wasn't always the case. Merck took a leap when it began testing Keytruda in lung cancer, and another jump when it began looking at the combination approach, Rubin said.

Keytruda is an immuno-oncology drug. It works by seeking out a protein called PD-1. In cancer, think of PD-1 as camouflage. Tumor cells can cloak themselves behind that protein, hiding from the immune system. Keytruda locks onto PD-1, allowing the immune system to find and destroy the cancer.

When Merck began testing Keytruda in 2011, detractors said an immuno-oncology medicine wouldn't work in lung cancer. Ultimately, "the results were quite dramatic," Rubin said. He recalled presenting the data at the same European Society for Medical Oncology annual meeting where Merck presented this latest lung cancer data.

"It was basically a standing ovation," he said.

Merck first won Food and Drug Administration approval for Keytruda in lung cancer and melanoma. The FDA also approved a diagnostic test to identify patients with high levels of PD-1 in their cancer. Merck stock has steadily climbed since winning the first Keytruda approval in 2014.

A Barrage Of Approvals

Merck later tested Keytruda in a study of 10 different cancer types.

Researchers looked at patients with a high level of mutations in their cancer, a marker known as tumor mutation burden. They also looked at patients whose cancer cells aren't able to correct mistakes in their DNA. This marker is known as microsatellite instability. Regardless the cancer type, patients with these markers had high response rates to Keytruda.

The company later won FDA approval for patients with these markers in 2017 and 2020.

"It didn't matter what type of tumor you had," Rubin said. The approval in patients with microsatellite instability-high "was the first tissue-agnostic approval."

Ultimately, Merck won approval to treat five cancers on the basis of that study. The FDA also awarded approvals for three new diagnostic tests.

What's Next For Merck Stock?

Eventually, Merck graduated to testing Keytruda added to chemotherapy. Today, that combination is a standard for many cancers. But its success was far from guaranteed at the time.

"Many thought that a chemotherapy combination was not the way to go with immunotherapy because of the idea that, perhaps, chemotherapy would be immunosuppressive — it would kill the immune cells," he said. "So, we took a risk in that combination. We found, in fact, it's one of the best combinations."

Now, Merck is looking for what's next, for Keytruda and new drugs. The first patent protecting Keytruda is set to expire in 2028. That will open the drug up to generic competitors, taking a bite out of a sizable chunk of Merck's revenue.

He notes the company is also studying other immuno-oncology drugs and is "quite interested" in the antibody drug conjugate class. Seagen is a notable company in this space. Antibody drug conjugates are like missiles, carrying toxic chemicals directly to tumors.

Rubin remained mum on rumors that Merck could acquire Seagen. The firms are testing combinations of Keytruda with Seagen's drugs. Merck stock has mostly trended sideways as investors await news on the potential takeover.

"We're always looking for the next Keytruda," Rubin said. "There are various ways to try to fight cancer."

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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