MRK Merck and Co Inc

By Peter Loftus, Jonathan D. Rockoff and Anne Steele 

In a surprise finding that raises questions about the potential for a new class of cancer drugs that harness the body's immune system, Bristol-Myers Squibb Co. said its drug Opdivo wasn't significantly better than chemotherapy in a study of patients with newly diagnosed lung cancer.

The outcome is a big blow to Bristol-Myers, which had been counting on a positive study to help widen its lead in the lucrative new market for cancer immunotherapies. Bristol-Myers shares recently declined 16% to $63.41, wiping out about $20 billion of its market capitalization.

It also suggests there could be limitations for an expensive class of drugs that has been seen as capable of improving treatment of a wide range of tumors. For the most part, these drugs have shown impressive results in prior clinical studies in certain tumor types. For instance, studies have shown they have significantly prolonged the lives of many patients with melanoma, a deadly form of skin cancer, compared with older treatments.

Opdivo, which costs about $12,900 a month per patient, was initially approved to treat melanoma in 2014. U.S. regulators have steadily expanded its uses to include patients whose lung cancer worsened after trying chemotherapy, as well as patients with kidney cancer and a type of lymphoma. Most analysts expected Opdivo to show a benefit in patients with newly diagnosed lung cancer -- a larger patient population than Opdivo's other uses.

The Bristol-Myers setback could provide an opening for rival Merck & Co. Its shares jumped more than 6% Friday because, in contrast to Opdivo, Merck's competing immunotherapy Keytruda prolonged survival in a separate study of patients with newly diagnosed lung cancer, versus chemotherapy. Merck hasn't yet released full results of that study.

Keytruda also is currently approved to treat lung-cancer patients who have already tried chemotherapy, as well as skin cancer. Roche Holding AG and AstraZeneca PLC also are studying cancer immunotherapies to treat lung cancer.

"The companies have been locked in a marketing battle in lung cancer," which could be worth $10 billion to $15 billion in annual sales, Bernstein analyst Tim Anderson wrote in a note Friday. To date, Bristol-Myers has dominated the market "by a wide margin. Today's news very much helps level the playing field and is a major boost for" Merck, he said.

Bristol-Myers said it is disappointed with the results, but that the trial was just one in a constellation exploring the best way to use immunotherapies. The company sees potential in using Opdivo in combination with its older immunotherapy, Yervoy, for newly diagnosed lung cancer patients, a use known as first-line treatment. A study of such a combination is ongoing.

"Although this is disappointing in the short term, in the long term it doesn't really change what we think about the role of immunotherapy and the combination of Opdivo and Yervoy," Bristol-Myers Chief Executive Giovanni Caforio said in an interview.

Bristol's study, dubbed "Checkmate -026," enrolled about 535 patients with advanced non-small cell lung cancer, the most common form of lung cancer, who hadn't received prior treatment with any drug. Some patients received Opdivo while others received chemotherapy. The main goal was to demonstrate that Opdivo delayed disease progression or death compared with chemotherapy. Opdivo missed the goal, Bristol-Myers said Friday in a news release. The company hasn't yet published full results from the trial.

Non-small cell lung cancer accounts for about 85% to 90% of all lung-cancer cases. The National Cancer Institute estimates 224,390 Americans will be diagnosed with lung cancer this year, and 158,080 will die from it.

Sales of Opdivo soared to $840 million in the most recent quarter, up $718 million from a year earlier and accounting for much of Bristol's revenue gains in the quarter.

Sales of Keytruda nearly tripled in Merck's latest quarter to $314 million. The company is awaiting a U.S. Food and Drug Administration decision on whether to expand Keytruda's use to include treating head and neck cancer; the FDA's target action date is Aug. 9.

A Merck spokeswoman said the company couldn't comment on the Bristol study because full results haven't been released. She said Merck expects to release results of its first-line lung-cancer study of Keytruda in the near future.

Write to Peter Loftus at peter.loftus@wsj.com, Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

August 05, 2016 12:43 ET (16:43 GMT)

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