Keytruda’s Recent Trial Halts Should Not Be A Concern
Merck (NYSE:MRK) stated in a recent press release that it has halted new enrollments in clinical trials Keynote-183 and Keynote-185, which are exploring combination therapies involving Keytruda for multiple myeloma. The company has observed more deaths in the group taking Keytruda combo therapy and plans to investigate the reason behind it. Should this sound an alarm bell for investors? We believe that there is not sufficient/conclusive enough data at this point to make any kind of judgment. Previously, a phase 2 trial showed that Keytruda increases the efficacy of pomalidomide and dexamethasone in patients with relapsed/refractory multiple myeloma. These are the same drugs that Keytruda was being tested in combination with in Keynote-183 and Keynote-185. Additionally, Keytruda hasn’t really faced any serious safety setbacks in a host of studies it has gone through, and is approved for a large number of cancer types, thus mitigating some of the risk. We need to wait and watch as to what the investigation reveals, but for now investors do not need to be alarmed.
However, it is important to note that Merck’s near term performance is likely to be tied to Keytruda. Therefore, any significant shock concerning its safety profile must be taken seriously, especially if it happens in the lung cancer domain. Keytruda has so far been approved for advanced melanoma, advanced non-small cell lung cancer, Hodgkin’s lymphoma, head and neck squamous cell cancer, urothelial carcinoma, and MSI-H cancer . For lung cancer, in particular, the drug is expanding in first-line therapy. Merck mentioned that IMS data suggests that Keytruda is the most prescribed drug in the first-line lung cancer treatment. Additionally, Merck’s second-line lung cancer treatment share has been relatively stable in recent quarters.
Our price estimate of $65 for Merck is roughly in line with the market.
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