Merck & Co. will pony up $625 million plus royalties on its blockbuster PD-1 cancer drug Keytruda to settle up its patent dispute with Opdivo-maker Bristol-Myers Squibb and its development partner, Ono.
It’s a big upfront number, but analysts shrugged it off, saying that the overall patent settlement was along the lines of what they’d expected. The royalty stream itself will deliver 6.5% of Keytruda sales through 2023 and 2.5% through 2026. Bristol-Myers and Ono will split the proceeds 75/25.
The deal gives Bristol-Myers something of a consolation prize after Opdivo’s recent disappointments in non-small cell lung cancer. After Opdivo’s failure in a test in previously untreated patients last year Keytruda won a quick FDA approval in that first-line setting, and analysts see a further boost for the Merck drug in previously treated patients, too.
This year, the patent settlement could help offset the financial fallout from those disappointments, Leerink Partners analyst Seamus Fernandez said in a Monday note to investors. The firm expects Bristol-Myers “to rescind its recent commentary that Opdivo will grow both in the U.S. and overseas in 2017,” Fernandez wrote, but depending on how BMS chooses to book Merck’s up-front payment, it could boost earnings by 20 cents per share this year, enabling the company to maintain the earnings guidance it laid out during its third-quarter earnings call.
And long term, the patent settlement could be a big consolation prize, analysts said. “Given we currently assume global Keytruda sales of $4.6 billion in 2017, increasing to more than $10 billion in 2022, the royalty stream may turn out to be quite meaningful,” Credit Suisse analyst Vamil Divan wrote in a Sunday investor note.
That’s good for BMS, which has suffered a series of blows for Opdivo in lung cancer, one of them announced just last week. After the drug fell short in the first-line trial unveiled last fall, the company said it would focus on combination approaches toward treating non-small cell lung cancer. But Friday, the company said it wouldn’t pursue an accelerated approval for its Opdivo-plus-Yervoy combo in the same patient population, based on a review of the data it now has in hand. The company didn’t reveal details about that data.
Meanwhile, Bristol-Myers had hoped that digging deeper into that first-line monotherapy data—from a closely watched study dubbed Checkmate-026—would turn up subgroups of patients who’d benefit more substantially than the study’s target group, those with PD-L1 expression of 5% or more. Keytruda’s study, by contrast, aimed at patients with PD-L1 levels of 50% or more.
“We have not seen major differences in the biomarker cutoffs,” Fouad Namouni, Bristol’s head of oncology development, told FiercePharma in an interview at the European Society of Clinical Oncology meeting last fall.
Adding to Opdivo’s bad news, Merck said earlier this month that the FDA had accepted its filing for a Keytruda-plus-chemo combo in first-line NSCLC. Coupled with the Opdivo-plus-Yervoy setback, that filing gives Keytruda a 9- to 16-month lead in the first-line NSCLC combo race,” Leerink Partners analysts said in a Monday note.
Of course, NSCLC isn’t the only cancer type that Opdivo and its fellow PD-1/PD-L1 checkpoint inhibitors are targeting. Both Opdivo and Keytruda won their first FDA approvals in melanoma, and Opdivo now has an Opdivo-plus-Yervoy approval in that disease as well. The two meds are approved to treat certain head-and-neck cancer patients now, and they’re working toward approvals in bladder cancer. The meds are under study in several cancers in multiple permutations of combination therapies, in partnership with a range of biotechs and cancer vaccine companies.
Meanwhile, Roche’s Tecentriq has its own bladder cancer approval, and it’s challenging Keytruda and Opdivo in lung cancer, thanks to an approval in October. AstraZeneca is looking for an approval on its PD-1 competitor durvalumab later this year.
by Tracy Staton |