German Merck Unveils Its Secret Weapon

| About: Merck KGaA (MKGAF)

Many immuno-oncology players with a partnered PD-L1-targeting asset already in late development might be tempted to rest on their laurels, but Merck KGaA (OTCPK:MKGAF) (OTCPK:MKGAY) has moved swiftly to a new project from its own labs that it says could be even better than avelumab.

The bispecific fusion protein, known only under the lab code M7824, is “the most exciting clinical asset in our pipeline right now”, Luciano Rossetti, the German group’s head of R&D, tells EP Vantage. He reckons that this can beat even the efficacy of avelumab by blocking innate as well as adaptive immunity.

“It’s a completely novel, first-in-class, bispecific fusion protein of an avelumab-like antibody ... linked to two molecules of TGF-beta trap,” says Mr. Rossetti, adding that having yielded “spectacular” early data M7824 is now on an even faster development pace than avelumab.

Last month, Merck reported one complete and several partial remissions in what was just a dose-escalation trial. The group is now quickly recruiting patients into a study in over 10 tumor types.

Adding efficacy

TGF-beta has been likened to a master switch in tumor immunity, and it is postulated to be involved in mediating innate immunity in the tumor microenvironment. Merck now needs to prove that incorporating a TGF-beta block adds major efficacy to PD-L1 checkpoint blockade.

Mr. Rossetti accepts that previous efforts to block this pathway alone, with what he calls “dirty TGF-beta kinase inhibitors,” have been unspectacular. “But it’s one of the most attractive hypotheses of how you can block both innate and adaptive immunity. Adding that into a single molecule, driven into the same place – the tumor microenvironment – is intrinsically extremely attractive.”

The obvious hint is that a single bispecific – assuming correct stoichiometric properties in blocking both targets completely – could give a better effect than two separate molecules targeting the same targets given together.

Unlike avelumab M7824 is a wholly owned Merck asset. In collaboration with Pfizer (NYSE:PFE), avelumab awaits regulatory action on its filing for Merkel cell carcinoma, though Mr. Rossetti says this first approval is important purely to establish avelumab along with its safety and manufacturing as a “registered entity.”

Once this piece is in place, the really important future approvals like lung cancer should be more straightforward, he suggests. However, he says Merck has had “to revisit the strategy for lung cancer” after last year’s first-line failure of Bristol-Myers Squibb’s (NYSE:BMY) Opdivo (Bristol's Opdivo fall-out brings others into play, August 9, 2016).

The design of avelumab’s first-line NSCLC trial, Javelin Lung 100, is being modified, Mr. Rossetti reveals, to increase chances of success in light of Bristol’s failure. At present, this is a monotherapy study testing progression-free survival in PD-L1-positive patients.

Mr. Rossetti will not reveal what the changes are until regulatory clearance, but admits that they will delay readout beyond the originally expected timeline of late this year. He also says avelumab is at the head of the pack in ovarian and gastric cancers, and in renal cell carcinoma, a combination with Inlyta is an important phase III trial.

Plugging the gaps

Mr. Rossetti admits that it has not been plain sailing since 2014, when he joined Merck, a group notorious for clinical failures. Though basic science and discovery were always strong “there were some major gaps – I was very honest and explicit about it – particularly in clinical development, and in translation from discovery into the clinic.”

He cites a lack of focus on areas where the company clearly needed to be strong, necessitating the cull of some 13 clinical programs, including some in Phase III, followed by strict prioritization. He also accepts that Merck’s CAR-T tie-up with Ziopharm and Intrexon has proceeded at a cautious pace.

“We have always seen this as an ‘optionality’,” he states. “Rather than moving forward very rapidly with a me-too strategy we had to refocus on really novel approaches, with different targeting strategies beyond CD19. It’s a very long shot, but a very high reward if it works.”

He picks two other approaches for special mention in Merck’s newly expanded portfolio. The first is M2951, a BTK inhibitor that is highly differentiated from AbbVie’s (NYSE:ABBV) Imbruvica in terms of being “exceptionally selective.” This is important in autoimmune disease where there is less tolerance for off-target side effects, and the asset is in two Phase II trials in lupus and rheumatoid arthritis.

The second, the DNA-PK inhibitor M3814, is one of the most exciting projects in DNA damage and repair, which “we have selected, within oncology, as a real area of emphasis,” says Mr. Rossetti. He adds that combination therapy, especially with immuno-oncology agents, will be critical to its success.

Indeed, for Merck, 2017 will be “the year of the combo,” Mr. Rossetti predicts.

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