Frantic Pace In Cancer Immunotherapy: Merck Vs. Bristol-Myers

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In February Merck (NYSE:MRK) has signed three collaboration agreements with Amgen (NASDAQ:AMGN), Incyte (NASDAQ:INCY) and Pfizer (NYSE:PFE), to conduct separate clinical trials combining Merck's anti-PD-1 therapy MK-3475 with anti-cancer compounds made by each of the companies.

Merck has also signed a deal with Belgian biotech Ablynx (OTC:ABLYF) potentially worth up to 1.7 billion euros ($2.3 billion) to jointly develop immunotherapy drugs for cancer.

Merck also filed the first part of a rolling submission to the FDA for its immunotherapy drug MK-3475 for patients in advanced melanoma, (people with skin cancer who no longer respond to Bristol's (NYSE:BMY) Yervoy). The company is planning to complete the application by mid-year.

The revolutionary new class of anti-PD-1 immunotherapies work by releasing a brake on the patient's immune system to help it better recognize and kill tumors. Bristol-Myers Squibb is considered the front runner in the race, but Merck is feverishly working to catch up.


Roger Perlmutter, Merck's research chief, said this about the collaborations:

"Merck clinical scientists intend to explore the potential of our PD-1 inhibitor across a wide range of cancers, both as monotherapy and in combination. These new collaborations with Amgen, Incyte and Pfizer underscore our shared determination to evaluate treatment regimens with the potential to provide meaningful benefits to patients suffering from cancer."

One of the trials will combine MK-3475 with Amgen's oncolytic vaccine T-Vec in a Phase 1&2 trial in untreated patients with advanced melanoma. Perlmutter was head of research at Amgen at the time when T-Vec was acquired.

Perlmutter points out that in T-Vec, there is a more important aspect than the fact that the modified herpes simplex virus destroys tumor cells. It also stimulates the immune response. Combining the two compounds can possibly make the immune response even stronger. But the first job, of course, is to prove that the two drugs can be combined safely.

MK-3475 will also be tested with Incyte's drug, INCB24360, a so-called "IDO inhibitor," in a study of patients with non-small cell lung cancer and other metastatic cancers. IDO inhibitors have generated a lot of buzz lately among investors and doctors as a potential cancer immunotherapy approach that could complement the PD-1 antibody.

Merck also plans to evaluate MK-3475 with two Pfizer drugs, Inlyta and PF-2566, in multiple cancers.

In addition to these collaborations, Merck announced that the safety and efficacy of MK-3475 monotherapy would be evaluated in a Phase 1 "signal finding" study in 20 PD-L1-positive solid tumor types not previously studied.

A collaboration with GlaxoSmithKline on MK-3475 was previously announced.

Bristol has been developing its anti-PD-1 nivolumumab as a monotherapy and is investigating it in combination with other drugs, including Yervoy. Merck is now following the same pattern, studying MK-3475 in various combinations.

The Ablynx deal

Ghent, Belgium-based Ablynx has a unique approach to antibody development.

Ablynx specializes in so-called nanobody medicines which are derived from llama antibodies. Llamas, along with camels and sharks produce a sturdy antibody with a tiny binding site, which is about one-tenth in size of the binding site on a human antibody.

Because the binding site is so small, the antibodies are far easier and less expensive to engineer and their simplicity makes them strong. They also have a longer shelf life, require no refrigeration and remain intact at temperatures up to 200 F.

Ablynx's nanobodies are applied to a range of serious human diseases, including inflammation, hematology, cancer and pulmonary disease. Ablynx has 30 programs in its pipeline and seven nanobodies in clinical development in partnerships with major companies like Boehringer Ingelheim, Merck Serono, Novartis (NYSE:NVS), and AbbVie (NYSE:ABBV).

Merck's payments to Ablynx start small and promise to increase with success. Merck is paying $27 million upfront along with $14.4 million in research support for Ablynx.

The collaboration work is directed toward so called "immune checkpoint modulators," proteins believed to provide potential targets for the development of cancer immunotherapies, a rapidly emerging approach to the treatment of a wide range of cancer types.

Ablynx' technology originates from a discovery by Belgian scientists in 1989 that camelids, such as camels, llamas and alpacas, naturally produce antibodies with just two molecular chains rather than the four in humans and other mammals.


Bristol has already found commercial success with Yervoy, which has extended the lives of some people with advanced melanoma, the deadliest form of skin cancer.

Merck is racing Bristol-Myers Squibb and Roche (OTCQX:RHHBY) for the first approval of its anti-PD-1 candidate to gain share of an estimated multibillion-dollar market.

AstraZeneca (NYSE:AZN) is also in the running, with practically every other pharma company of significance trying to catch-up.

Cancer immunotherapy

The PD-1 antibody is a game-changer in cancer therapy.

Just a few years ago, about 10 percent of cancer patients saw their tumors shrink with immunotherapy treatment; today the response rate has improved to 30 to 50 percent. That compares to the chemotherapy treatment, which has a 10 percent response rate and can be a short-lived solution.

Immunotherapy is not a sure thing even now, but a positive response is becoming a lot more likely with the antibody for PD-1. Additional agents developed may hopefully bring up the response rate over 50 percent in the coming years.

For decades, scientists assumed that cancer was beyond the reach of the body's natural defenses. But after decades of skepticism that the immune system could be trained to root out and eliminate cancer cells, a new generation of drugs is proving otherwise.

The treatment consists of infusing antibodies that enhance the immune system to recognize cancer cells and attack it. Since the immune system has a long-term memory, it continues to go after cancer cells for years to come, so the response is longer lasting and more complete.

However, as of now, this treatment doesn't work for everybody, and researchers don't yet understand why. But when it does work, the results have been particularly impressive.

One of the most promising approaches is the modulation of immune checkpoints. The concept "immune checkpoint" refers to the numerous pathways hardwired into the immune system that are crucial for modulating the duration and extent of the immune responses.

In normal circumstances these checkpoints restrain the immune response to prevent undue damage to the body. But it is becoming clear that tumors found a way to circumvent the mechanism and subvert the body's immune response.

Since many of the immune checkpoints are initiated by ligand-receptor interactions, these are primary targets for biological drugs, especially for multi-targeting agents such as nanobodies.

The newly developed antibodies inhibit these blockade receptors, allowing a more active and vigilant operation of the immune system. Doctors have seen outstanding responses in patients with metastatic melanoma and lung cancer, both of which are almost always fatal with conventional treatments, but good results were also observed in cancers of the bladder, prostate, kidney and bone marrow.

The hope is that by helping the immune system attack cancer, more targeted treatments can be developed as an alternative to current methods, such as chemotherapy, which scientists liken to "carpet bombing" the body.

Lawrence Fong, MD, associate professor of medicine at UCSF, commented:

"For the longest time, people did not believe this was possible. Now we can treat cancer by treating the patient instead of the disease. That's the biggest change. We can treat cancer without delivering chemotherapy or radiation to kill the cancer or performing surgery to get rid of the tumor."

Roger Perlmutter

Roger Perlmutter, Merck's research head is the creative force behind Merck's turnaround effort. He came from a similar position at Amgen in 2012.

Merck's huge (and largely ineffectual) research expenditures in the fourth quarter were cut by $440 million versus the prior year. At the same time, the number of regulatory filings increased, and the company introduced significant new molecules into early clinical development.

Investors' summary

For 2013's full-year revenue, Merck brought in $44 billion, a 7 percent decrease over 2012's full-year revenue.

Net income for the year was $10.4 billion, resulting in earnings of $3.49 per share. These figures, too, were lower than results reported in 2012. Merck attributed the loss to a negative impact from patent expirations and foreign exchange fluctuations.

Products showing strong growth were Gardasil, Remicade, Simponi, Isentress, Zostavax and the diabetes franchise.

Merck chairman and CEO Kenneth Frazier said in a statement that 2013 was a year devoted to reducing the company's cost structure and advance research and development. In 2013, the company has returned $11 billion to shareholders via dividends and share repurchases.

Looking ahead to 2014, Merck expects revenue between $42.4 billion and $43.2 billion, with earnings somewhere between $3.35 and $3.53 per share, on a non-GAAP basis.

Despite the earnings and revenue declines, shares of Merck were trending upward since December, supported by positive results in the cancer immunotherapy trials and the outlook of the planned collaborations with Amgen, Incyte and Pfizer.

Frazier reminded his audience at the recent earnings conference call of the progress the company has made since its merger with Schering Plough in 2009. Merger synergies, said Frazier, resulted in $3.5 billion of net savings as of 2012. In addition to the synergies, the company expects another $2.5 billion in cost savings by the end of 2015 compared to the 2012 baseline.

Then he said this:

"Finally, I would like to remind you that we continue to evaluate all aspects of our business. Through this process, we are exploring strategic options for both our animal health and consumer care businesses. We could reach different conclusions about the two businesses, and anticipate that we'll complete the process and take action, if any, in 2014."

But to achieve a successful turnaround for a company like Merck, it needs to have, most of all, successful new drugs, plenty of them, and the presence of Roger Perlmutter at the helm of research, is the best guarantee that this will happen.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.