Why IMU is a multi multi bagger, page-21311

In late 2022 reuters.com reported U.S. drugmaker Merck & Co had plans to patent a new formulation of its $20 billion cancer immunotherapy Keytruda that can be injected under the skin, allowing it to protect its best-selling drug from competition expected as soon as 2028. The key patents on Keytruda will begin to expire in 2028, opening the door to biosimilars. reuters.com noted at the time having spoken with Merck that while they have disclosed that it is developing subcutaneous versions of Keytruda, it has not previously said that it expects the new formulation to become the most widely used version of the drug after it is rolled out and an engine for growth toward the end of this decade.

If successful, Merck could begin marketing the new formulation within a few years, a top Merck executive told Reuters. It expects it to fuel Keytruda's growth as it gains approvals in earlier stage cancers. "We believe that subcutaneous formulation has the potential to be novel, non-obvious and useful, which means we would get a new patent for it," Merck CFO Caroline Litchfield said in an interview, using the terminology for the criteria under U.S. law to determine what technologies merit a patent.

"The clock for that patent would start ticking from the time we would get that patent approved,” Litchfield said.

Reading between the lines Merck is not planning on resigning their key revenue source quite so easily. Despite having to sell the drug at lower prices post 2028 recent data demonstrates the many challenges drug developers will have improving on Keytruda, the world’s biggest-selling drug last year. Recently a number of Phase 3 combination trials with Keytruda have gone awry, two of them in the lung cancer indication. The biggest setback was in a lung cancer trial of a coformulation of Keytruda with a different type of immunotherapy called vibostolimab, an approach that could help Merck fight off biosimilar competition after its main Keytruda patent expires in 2028. Combined with the chemotherapy docetaxel, the Keytruda-vibostolimab combination didn’t significantly delay disease progression when compared with docetaxel alone.(See biopharmadive.com for more)

Just before that Merck released results from another part of the trial, which tested the Keytruda-vibostolimab combination alone against docetaxel. Those results were also negative for the combination. Merck currently is running four Phase 3 trials of the combination in lung cancer along with one in melanoma. Another trial, called KEYLYNK-008, was stopped at an interim analysis when data monitors saw that the Keytruda-Lynparza combination maintenance therapy didn’t help patients live longer or delay progression longer than Keytruda plus chemotherapy maintenance.

Whilst a further Keytruda Trial entitled LEAP-001 sought to demonstrate that the Keytruda-Lenvima would outperform a chemotherapy combination as a first-line treatment, but missed both on overall survival and progression-free survival measures. (See merck.com for more).

Taking $25 billion out of the immunotherapy market when Keytruda runs out of patent life opens the door for drugs such as PD1 Vaxx, Imugenes B cell candidate currently being trialled in lung and gastric cancer. Results for PD1 Vaxx shall have well and truly been obtained by the end of 2025/6 and a direction for the vaccines progression determined by then. But as outlined above it may well be far less than $25 billion USD, if Merck has anything to do with it. As late as February 1, 2024 biopharmadive.com reported Merck research chief Dean Li saying, “The subcutaneous [Keytruda] is an innovation that is going to be demanded, and is being demanded, by the field.” As outlined above such a version could give Merck leverage to compete with any generic versions of IV Keytruda that emerge following patent expiry in 2028. At the time Merck CEO noted Davis that Merck is planning to price any subcutaneous formulation with an eye to generic competitors. “We will price our subcutaneous to drive for volume ... which means we will be looking at prices really more in line with where you would see a generic version at a premium that history has shown is very manageable,” he said.

But I suppose all of the above does not rule out the chance Merck looks to acquire safe B cell vaccines such as PD1 Vaxx, or for that matter Her Vaxx, in search of compounds to take up the slack from Keytruda’s shortfall. We continue to believe we need more and we will continue to prioritize business development,” said Davis. “Our views of deals like Prometheus, like Acceleron — they’re still the size of deals we’re very interested in if we can find great assets.” Acquisitions valued up to $15 billion would be in Merck’s range, he added.

DYOR Seek investment advice as and when required Opinions only