Pharmaceuticals sector:Results at US companies through 6May,Opdivo retains superiority over Keytruda

Merck mentions Keytruda strengths in 16/12 Q1 results

    Merck announced 16/12 Q1 results on 5 May local time. Global sales of Keytruda came in at only $249mn, versus Bristol-Myers Squibb’s global sales of Opdivo, another PD-1 antibody co-developed with Ono Pharmaceutical [4528], of $704mn in the quarter. During the earnings call held the same day, Merck emphasized the following points about Keytruda. First, it said that results of the trial on treatment-na?ve (first-line) non-small cell lung cancer patients are due for release in mid-2016. Second, it was Merck that noted the importance of PD-L1 testing to physicians, and it had taken a lead in supplying physicians that carry out PD-L1 tests. In the US, 30% of lung cancer patients already undergo PD-L1 testing, and 70% of these are first-line patients. Third, it noted that PD-L1 testing was also required to use Opdivo as a first-line treatment. Management commented that on that basis, Keytruda was more patient-friendly, requiring only one administration every three weeks, than Opdivo, which needs to be given every two weeks.

    Current and future differences between Opdivo and Keytruda

    We see the following two main reasons for the disparity between Opdivo and Keytruda sales. First, Opdivo has gained approval for the indications of melanoma and advanced/recurrent non-small cell lung cancer, ahead of Keytruda. Second, non-small cell lung cancer patients have to undertake PD-L1 testing to use Keytruda. PD-L1 testing is an invasive procedure requiring bronchoscopy or lung biopsy. No PD-L1 tests are required for treatment with Opdivo. With no need for cumbersome and invasive tests, we think Opdivo has the upper hand over Keytruda globally. That said, first-line lung cancer patients need PD-L1 testing for both Opdivo and Keytruda.

    No change to our view of Opdivo superiority, but REGN2810 warrants attention

    We have not altered our view of Opdivo’s superiority over Keytruda. First, Bristol-Myers Squibb is due to announce Phase 3 trial data for Opdivo on first-line lung cancer patients in Jul-Sep. We think the announcement will come around the same time as trial data for Keytruda, which Merck has said will be mid-2016, and we assume a similar timing for approval and launch for the two treatments. Second, the first-line Keytruda study has been on patients with a PD-L1 expression tumor proportion score (TPS) of 50% or more. The Bristol-Myers Squibb first-line lung cancer trial is on patients with TPS of less than 50%, and thus giving a larger patient pool to Opdivo. Third, we see no major difference in Japan between two-week and three-week gaps between doses as there are lots of hospitals and visiting hospitals is not difficult. One risk on the horizon is the new REGN2810 PD-1 antibody, although approval is still some way off.

    Regeneron Pharmaceuticals’ REGN2810 warrants attention

    Regeneron Pharmaceuticals also announced 16/12 Q1 results on 5 May local time. At its earnings call held the same day, management announced that its Phase 2 trial of PD-1 antibody REGN2810 for the indication of cutaneous squamous cell carcinoma would be a registrational study. According to the US National Institutes of Health (NIH) clinicaltrials.gov website, the timeframe for the primary outcome measure is 12 treatment cycles (96 weeks). While details of the administration schedule have not been disclosed, we think the company has developed a PD-1 antibody drug that can be given once every eight weeks. A drug that needs to be given only once every eight weeks is much friendlier to patients than the every-other-week schedule for Opdivo. While it will take time for this treatment to gain approval, we think it warrants attention as a potential PD-1 antibody rival.