The race among drug makers in the field of immuno-oncology is heating up with Merck & Co. Inc. (MRK) disclosing its plans to accelerate the submission of regulatory applications for its key drugs in the oncology and hepatitis C virus (HCV) programs.
Keytruda Label Expansion to Continue in 2015
Merck continues to work on expanding Keytruda’s label further and is currently planning to seek FDA approval for an advanced non-small cell lung cancer (NSCLC) indication in the middle of this year.
We note that Keytruda was the first anti-PD-1 therapy to gain approval in the U.S. last year for advanced melanoma. The drug is under review in the EU for this indication. Keytruda enjoys Breakthrough Therapy designation in the U.S. for both advanced melanoma and NSCLC.
Currently, Merck is evaluating Keytruda for more than 30 types of cancer alone and in combination with other therapies.
HCV Filing in 1H15
Merck plans to seek FDA approval for its oral, once-daily combination HCV treatment, grazoprevir/elbasvir in the first half of 2015.
Acquisitions to Expand Long-Term Portfolio
Merck has for some time been looking to expand its long-term portfolio through acquisitions without losing its focus on the core areas of expertise. In Aug 2014, Merck acquired HCV- focused company Idenix Pharmaceuticals. Later, in Dec 2014, Merck announced its intention to acquire antibiotic drug maker, Cubist (CBST), and strengthen its hospital acute care portfolio.
The Cubist acquisition is expected to close in the first quarter of 2015. Following the closure, Merck intends to launch the recently approved antibiotic, Zerbaxa.
$2.5 Billion Savings by 2015
Merck remains on track to generate net cost savings of $2.5 billion by the end of 2015. Merck is evaluating strategic alternatives for some of its businesses so that it can streamline operations and focus on certain therapeutic areas. The company sold off its Consumer Care business to Bayer (BAYRY) for $14.2 billion in Oct 2014.
Our Take
We note that the speeding up of the Keytruda application comes close on the heels of Bristol-Myers (BMY) announcing positive results on its anti-PD1 immune checkpoint inhibitor, Opdivo (read more: Bristol-Myers Opdivo Study Stopped on Favorable Data).
However, early filings would allow Merck enter the highly lucrative market for two large and high-revenue-potential indications by late 2015 or early 2016.
Merck currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Cubist carrying a Zacks Rank #2 (Buy).
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