Merck may not have had the splashiest presentation at the American Society of Clinical Oncology meeting, but the data show why the Big Pharma remains king of oncology, analysts say.
While young, scrappy biotechs like Revolution Medicines and Summit Therapeutics stole the headlines at the American Society of Clinical Oncology meeting over the weekend, analysts point to an old oncology stalwart, Merck, as possibly the biggest winner.
That’s if you pay attention to the slow burn that has been the drugmaker’s plan to replace King Keytruda, the mega blockbuster that spurred the immuno-oncology revolution with its original FDA approval in 2014. The PD-1 inhibitor has since gone on to collect more than 44 indications. But all good things must come to an end, and Merck has been quietly working to rebuild its oncology powerhouse to prepare for Keytruda’s upcoming patent expiry.
“[The] ASCO event highlights the developmental progress Merck has made in oncology with efforts finally starting to payoff,” BMO Capital Markets wrote on Monday.
At ASCO, data from the Phase 3 OptiTROP-Lung05 trial of TROP2-directed antibody-drug conjugate sacituzumab tirumotecan (sac-TMT) were presented, revealing an overall survival rate of 80.4% among Chinese patients with first-line non-small cell lung cancer (NSCLC).
BMO believes these data suggest that the company has made its mark in NSCLC, with potential beyond the indication. Still, Merck’s shares declined as exciting readouts in the PD-1/VEGF space drew interest.
“While we think PD-(L)1/VEGF (specifically BNTX/BMY’s pumitamig) development has shown meaningful mechanistic validation this weekend, we come away feeling as if Merck’s TROP2 and potential for combinations with its own PD-1/VEGF could offer the company the firepower and trial flexibility to not only be a leader in NSCLC but other solid tumors with more readouts imminent,” BMO wrote.
Just two years ago, Merck revealed initial data from a Phase 3 trial that showed “early signs of promise.” But some worried the company was being too aggressive with the development program.
Heading into ASCO weekend this year, Merck faced questions about whether it had missed the PD-1/VEGF race. While the pharma has a candidate called MK-2010 in the mix, it’s much earlier than Summit and Akeso’s ivonescimab and ADCs have seen heavier emphasis.
These up-and-coming PD-1/VEGF assets—which did not unseat “King Keytruda” with their ASCO readouts, according to BMO—are still a “credible mechanism-level threat to Keytruda’s long-term franchise dominance,” Guggenheim wrote.
“While behind, we believe MRK has a history of learning from competitors and moving quickly and aggressively with programs where they see a meaningful opportunity, and they can leverage their combination of assets (MK-2010, sac-TMT, and more) to catch up,” the analysts wrote, adding that they “are eager to see more details on how they plan to compete in this space.”
Still, sac-TMT appears to be living up to what Merck saw early in development that moved the asset to the top of the food chain.
“With sac-TMT demonstrating such robust efficacy (albeit in a Chinese patient population) in NSCLC, we can’t help but feel that these early developmental decisions are starting to pay off proving the value of this planned expansion,” BMO wrote of Merck’s post-Keytruda oncology plans.
Merck is planning a “steady stream” of readouts for sac-TMT in the coming months, providing investors with a chance to get with the program, according to BMO. These include more details on the therapy’s positive readout in endometrial cancer, plus readouts in breast cancer and gastroesophageal adenocarcinoma. In total, Merck will reveal data from 16 Phase 3 trials of sac-TMT over the next three years, Guggenheim said.
These readouts are arriving “just when the company needs it,” BMO said, with Keytruda’s loss of exclusivity arriving in 2029.
Merck brushed off competition from Summit and Akeso’s ivonescimab during an investor meeting at ASCO—although management “is generally impressed” by the data, Guggenheim said. Company executives noted that there are still plenty of questions about the applicability of the HARMONi-6 readout in a more global population. Analysts have come to the same conclusion, questioning the young, China-only, male-dominated population in the study.
“Results from the study may have been positive, but development plans for sac-TMT (potentially in combo with MK-2010) appear to paint Merck as well-positioned to handle competition in NSCLC,” BMO wrote.
Merck’s team is still committed to the PD-1/VEGF space, however, with plans “to take a disciplined and data-driven approach to moving MK-2010 forward across various indications,” Guggenheim said.
Merck’s team also highlighted a plan to drive into hematology after the $6.7 billion acquisition of Terns Pharmaceuticals in March. The deal brought in five assets that should produce Phase 3 readouts beginning in 2027, Guggenheim said.
“Overall,” Guggenheim analysts wrote, “we believe Merck continues to do a commendable job in working to diversify away from Keytruda (both in and outside of oncology), highlighted by ~60 ongoing Phase 3 studies across their late-stage oncology pipeline and registrational readouts expected from 10 different assets in the next four years.”
