Merck Drops After Withdrawing European App for Wonder Drug Keytruda


Late on Friday, Merck announced that it had pulled its application for Keytruda (pembrolizumab) in combination with pemetrexed and carboplatin as a first-line treatment for metastatic nonsquamous non-small cell lung cancer (NSCLC) from the European Medicines Agency (EMA). Although the company’s press release doesn’t go into much detail, it apparently was because the EMA was pushing back on the application and the data from the KEYNOTE-021G trial it was based on.

In a note to investors, Umer Raffat, an analyst with Evercore ISI, wrote that the European agency was reluctant to approve drugs based on Phase II data, even though the U.S. Food and Drug Administration (FDA) regularly does so in oncology.

John Carroll, with Endpoints News, writes, “Ironically, the EMA has been fine with keeping PTC’s Duchenne MD drug ataluren on the market following an accelerated approval, even though it’s failed a series of studies and was just slapped down for the third time by the FDA, which wants to see some real evidence of efficacy before handing out a greenlight on marketing.”

Merck stated it “is confident in the clinical data from this rigorously conducted trial, which demonstrated significant improvement in overall response rate (ORR) and progression-free survival (PFS) for the Keytruda combination regimen compared to chemotherapy alone. Additionally, the company’s broad clinical development program includes a number of studies evaluating Keytruda in combination with chemotherapy in the first-line NSCLC setting. Merck looks forward to sharing data from these studies with regulatory authorities and the medical community as they become available.”

Company stock dropped at the news. Shares traded for $61.91 Thursday, Oct. 26, and closed out at $58.24 at the end of trading day Oct. 27. Pre-market trading has shares at $56.54 currently.

The company’s shares had generally been on an upswing recently, driven in part by Keytruda sales. It had already been approved for NSCLC, melanoma, head & neck cancer, classical Hodgin’s lymphoma and bladder cancer. It is also being evaluated in the clinic in about 30 other tumor types in addition to hundreds of combination therapies.

Seeking Alpha writes, “The pick-up in sales of Keytruda has been impressive this year. Revenues came in at $584 million in the first quarter and increased to $881 million in the second quarter, a 180 percent year-on-year growth number from the $314 million revenue number in Q2 of 2016. The $300 million pick-up in sales on a sequential basis is outright impressive, driven by product approvals, wider adoptions and expanded territory. Sales were still lagging to Bristol-Myers Squibb’s Opdivo which posted second-quarter sales of $1.2 billion, but were growing less quickly.”

Although investors were likely responding to the news about the EMA, it’s not at all a death sentence for the drug, it merely slows growth a bit while Keytruda continues to increase in market share and sales.

Another factor is the NotPetya cyber attack. The company noted on Friday that it lost $135 million in sales and another $175 million in related costs at the same time it was forced to borrow $240 million of Gardasil from federal stockpiles. As John Carroll writes, “That extra $310 million in costs will be repeated in Q4, Merck noted in their quarterly call, as overall damages roll up to the $1 billion mark.”

Back to news