Merck says it has plenty in the pipe beyond Keytruda

Merck & Co’s first investor day for five years had three major takeaway messages: Keytruda will continue to drive growth for the foreseeable future, the pipeline has plenty of breadth to avoid over-reliance on the cash cow, but there’ll be plenty of deals to extend it further.

What lies beyond Keytruda (pembrolizumab) for Merck has been a fixation among analysts for some time, as the checkpoint inhibitor has relentlessly grown every quarter since its launch six years ago, bringing in $2.3bn in the first three months of 2019 – equivalent to a fifth of group sales.

There’s certainly no sign of Keytruda slowing anytime soon, with new indications still rolling in, most recently for first-line head and neck cancer and second-line small cell lung cancer (SCLC), and with momentum only just starting to gather in renal cell carcinoma.

Keytruda is currently in more than 1,000 clinical trials to support continued expansion into new cancer areas, but it is also backed by a supporting cast of targeted therapies including AstraZeneca-partnered Lynparza (olaparib) and Eisai-partnered Lenvima (lenvatinib) that the company is also expecting to show significant growth in the coming years.

Merck’s CEO Ken Frazier said that while Keytruda is an “unprecedented drug”, there is plenty of growth potential in the broader oncology pipeline, as well as in Merck’s vaccines, animal health and the hospital speciality business.

“We have the balance sheet strength we need to do whatever deals we need to in order to augment the pipeline,” he told analysts and investors at the event, suggesting that the company will continue to focus on early-stage deals founded on strong science that give it the best opportunity to make the best of its development and commercial muscle.

That’s a big contrast to its rival Bristol-Myers Squibb, whose checkpoint inhibitor Opdivo (nivolumab) is locked in a market battle with Keytruda that Merck’s drug is currently winning, largely thanks to its dominance in non-small cell lung cancer (NSCLC). BMS’ current M&A drives is a $74bn mega-merger with Celgene, although its also open to bolt-on deals.

Frazier – who will reportedly be stepping down as CEO after eight years once a search for a new helmsman bears fruit – is also adamant that the company should not focus on specific therapeutic categories, considering any asset in any category that has good potential.

The two most recent bolt-on deals – for Tilos and Peloton – show that cancer is still the top target at the moment for Merck, as both were aimed at expanding its options in immuno-oncology.

The investors’ meeting covered the highlights of the company’s pipeline outside cancer as well, including next-generation pneumococcal vaccines and candidates for respiratory syncytial virus (RSV), cytomegalovirus (CMV) and dengue fever, plus a new HIV drug – MK-8591 – that Merck thinks could be a major step forward in pre-exposure prophylaxis (PrEP).

“Our science-led approach to R&D, managed by our outstanding team of scientists globally, continues to deliver a broad set of pipeline opportunities from discovery to clinical development,” said Frazier, adding: that those “give us confidence in our sustainable growth prospects and demonstrate that we are well positioned to continue our success into the future.”