Scrip: industry news and insights
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Merck & Co., Inc. won’t be the first to deliver an antiviral drug or a vaccine to treat or prevent COVID-19, but the company revealed progress during its third quarter earnings call on an antiviral and two vaccine candidates that it thinks will be an improvement on the efforts other companies have put forth against the novel coronavirus.
Merck & Co.’s Q3 revenue jumped 1% year-over-year to $12.55bn, beating analyst consensus of $12.16bn, as growth from Keytruda (pembrolizumab) and other products offset weakness in the company’s vaccine business, which is beginning to recover from declining sales due to the general drop in routine doctor visits as patients seek to avoid exposure to COVID-19. Gardasil had a slower return to growth than anticipated, but executives reinforced Merck’s confidence in the HPV vaccine.
The company said when it reported first quarter earnings in April that it expected a $2.5bn impact on 2020 revenue, including $1.7bn in pharmaceutical revenue, due to the COVID-19 pandemic. (Also see "Merck Cuts Pharma Revenue Guidance By $1.7bn Due To Pandemic" - Scrip, 28 Apr, 2020.) Merck & Co. revised that estimate to $1.95bn, including a $1.8bn impact on pharma revenue, when it reported second quarter earnings in July. Now the company expects a $2.35bn revenue hit, including $2.3bn in the pharma portfolio and $50m in animal health.
In Q3, Merck & Co. estimated that the COVID-19 impact on pharma product sales was $475m, bringing the year-to-date total to $2.1bn, primarily due to lower back-to-school demand for vaccines, particularly Gardasil for which sales dropped 10% year-over-year to $1.19bn in the third quarter and are down 3% for the year to $2.94bn. Sales of the ProQuad vaccine against measles, mumps, rubella and varicella fell 8% for the quarter to $576m and are down 23% for the year at $1.39bn.
Merck & Co. chief financial officer Robert Davis noted during the 27 October earnings call that “while our vaccines portfolio made a strong recovery from the second quarter, year-over-year comparisons were negatively impacted by continued below-normal levels of wellness visits, particularly in the United States. Gardasil sales declined 10% year-over-year as growth in ex-US markets was more than offset by pandemic-driven impacts in the United States.”
However, sales for the pneumococcal vaccine Pneumovax 23 soared 58% to $375m in Q3. Merck & Co. indicated that patients were eager to reduce their risk of catching pneumonia given the warnings of public health officials that influenza could be especially difficult this fall and winter. The tough flu season is coming at the same time that the rate of growth in COVID-19 cases is increasing, all of which puts older adults and other at-risk populations at greater risk of serious illness.
Merck & Co.’s top-seller by a long shot – the PD-1 inhibitor Keytruda – maintained its dominant position among anti-PD-1/L1 therapies in the treatment of non-small cell lung cancer with half of its US sales coming from the antibody’s use in lung cancer and the other half from its indications in other cancers, including melanoma, endometrial carcinomas, bladder, head and neck, and renal cancers. Both Q3 sales of $3.72bn globally (versus $3.62bn consensus expectations) and Keytruda’s year-to-date total of $10.39bn were up 21% from 2019.
“We expect continued growth from Keytruda with significant growth opportunities internationally, where the drug launched later relative to the US, and in earlier adjuvant lines of therapy (lung cancer in particular, with pivotal data likely in 2021),” Morningstar analyst Damien Conover said in a same-day note.
Also in oncology, alliance revenue from sales of the AstraZeneca PLC-partnered PARP inhibitor Lynparza (olaparib) jumped 59% to $196m in the second quarter. Alliance revenue from the kinase inhibitor Lenvima (lenvatinib), partnered with Eli Lilly and Company, rose 30% to $142m in Q3.
Merck & Co. also saw improvements in its hospital-based medicines business during the quarter as patients began to undergo elective procedures again. Sales of Bridion (sugammadex), the top-seller in this category, increased 13% to $320m in Q3.
“Broadly, we're encouraged by the recovery of our business, which has been largely consistent with our original expectations, with Gardasil being the primary exception,” Davis said. “Gardasil is trending in the right direction, but the phasing of the recovery is slower than we anticipated, largely due to the impact of the pandemic on the back-to-school season, particularly in the United States.”
Based on increasing sales for key products, despite the ongoing impact of COVID-19 on vaccine sales, Merck & Co. adjusted its full-year 2020 revenue guidance to a range of $47.6bn-$48.6bn from its guidance of $47.2bn-$48.7bn in July.
The company is projecting that its expenses will decline by $625m in 2020 based on reduced travel and other line items due to COVID-19 even with increased research and development costs related to molnupiravir (MK-4482), Merck & Co.’s antiviral drug for the treatment of patients infected with the novel coronavirus, and V591 and V590, its two vaccines against SARS-CoV-2.
“Merck has a special responsibility to apply its expertise, given its long and productive history in antiviral and vaccine research, and we are advancing our vaccines and antiviral programs through focused investment of effort and resources,” Merck & Co. CEO Kenneth Frazier told the call. “We have made significant progress over the last few months across our COVID program and our learnings reinforce our confidence that the approaches we've selected are among the most promising.”
“While we understand the importance of moving expeditiously in light of the pandemic, our experience with the natural history of other pandemic and epidemic bio diseases counsels us to seek enduring solutions that can be deployed globally now and for future generations,” Frazier said.
Merck & Co. is collaborating with Ridgeback Biotherapeutics LP on the development of molnupiravir, an orally available nucleoside analog that disrupts replication of the SARS-CoV-2 viral genome. (Also see "‘Agile’ Approach Aims To Accelerate Ridgeback’s COVID-19 Timeline" - Scrip, 8 Jul, 2020.) The company said the drug showed activity against multiple coronaviruses in preclinical studies, including those responsible for MERS and SARS, which means “molnupiravir could prove to be a useful antiviral agent in a variety of settings,” Merck Research Laboratories president Roger Perlmutter said during the company’s earnings call. Merck & Co. recently announced Perlmutter’s retirement.
And unlike Gilead Sciences, Inc.'s recently approved antiviral remdesivir and antibody therapeutics in development for COVID-19, the drug also has the benefit of oral administration, which could make it an easier option for treatment of moderately ill patients outside of the hospital setting. (Also see "Coronavirus Update: Gilead's Veklury Gets Full FDA Approval, Roche Partners With Atea" - Scrip, 23 Oct, 2020.)
“Phase I studies completed during the first quarter provided evidence that the compound is well tolerated as monotherapy in single doses as high as 1.6g and in multiple doses of 800mg twice per day for five days,” Perlmutter said. “We believe that the concentrations of the active moiety that were achieved should be more than sufficient to terminate virus production.”
He noted that data on molnupiravir’s antiviral effect in COVID-19 will soon be available from “three relatively small Phase II dose escalation studies” started by Ridgeback. These studies, conducted in the US and UK, are focused on virologic endpoints, such as reductions in viral load and virus infectivity, Perlmutter explained.
Merck & Co. recently initiated two pivotal Phase II/III studies to test molnupiravir versus placebo in 1,450 non-hospitalized and 1,300 hospitalized adults with COVID-19. Perlmutter noted that the company has also “secured resources to produce millions of doses of molnupiravir before the end of 2020 with an even greater supply becoming available early in 2021.”
V591 was developed with a measle virus vector platform developed at the Institut Pasteur and licensed exclusively to Themis Bioscience GmbH, which Merck bought earlier this year. (Also see "Wary Of Coronavirus Hype And Haste, Themis Looks To Future As Part Of Merck & Co." - Scrip, 17 Jun, 2020.) Phase I clinical trials enrolling a total of 300 healthy volunteers are under way in the US and Europe and the results will inform dose formulation and dosing regimen decisions for a Phase III trial. Perlmutter said Phase I immunogenicity data should become available before the end of this year.
V590 uses a recombinant vesicular stomatitis virus (rVSV) platform and will enter Phase I development soon. Merck & Co. is collaborating with the International AIDS Vaccine Initiative (IAVI) to develop its SARS-CoV-2 vaccine using the rVSV technology – the same platform that was used to develop Ervebo, the company’s vaccine against the Ebola virus that was approved in the US almost a year ago. (Also see "Merck’s Ervebo Becomes World’s First Approved Ebola Vaccine " - Scrip, 12 Nov, 2019.)
“We are optimistic that the candidate vaccine will elicit durable immune responses to the SARS-CoV-2 spike protein following a single dose and that it will be safe and well tolerated,” Perlmutter said. “For both V590 and V591, we are developing facilities that will enable us to produce many millions of vaccine doses in the near term and hundreds of millions of doses, should those be required in the longer term.”
He explained that Merck & Co. should have Phase I immunogenicity data from both candidates by the end of 2020 and be ready to move the vaccines into Phase II/III pivotal trials.
Perlmutter said that “given the very large impact of the pandemic, my expectation is that it would not be difficult to enroll those studies in a relatively short period of time, just as has happened for the other studies that have been conducted using, for example, the mRNA vaccines or the adenovirus vaccines” from Pfizer Inc. and partner BioNTech SE, Moderna, Inc. and AstraZeneca.
“Our view has been that Merck’s later entry into this area, positioned outside the realm of the pandemic, may provide a more advantageous pricing model, particularly if efficacious as a single dose vaccine,” Mizuho analyst Mara Goldstein said in a 27 October note.
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