Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Merck & Co.'s 2017 just got a whole lot brighter.

The company announced Wednesday evening that its immune-boosting cancer drug Keytruda can now be prescribed in combination with chemotherapy, vaulting it ahead of its rivals in the space. It's huge news. But exactly how huge it is going forward is largely out of Merck's control. 

Merck's lung cancer success has come at Bristol-Myers Squibb's expense

In October, Keytruda became the first drug in this class -- there are five total on the U.S. market now -- to be approved for newly diagnosed lung-cancer patients. Lung cancer is the largest market available thus far to these medicines, known as immune-oncology (IO) drugs.

But Merck's initial approval was limited to a subset of patients whose tumors had a high level of a biomarker that predict's Keytruda's success; the chemo combo widens its approval to more than 90 percent of newly diagnosed non-small-cell lung-cancer patients, according to a research note from Morgan Stanley analyst David Risinger. The initial approval was in about 20 percent of patients. That, along with better patient results for the chemo combo, should help boost the drug's lung-cancer sales rapidly. 

The question is how long and how much Merck will enjoy this lead.

The most immediate threat is from a different combination approach; AstraZeneca PLC and Bristol-Myers Squibb Co. are trying to treat lung cancer with combos of two different IO drugs instead of just one with an older chemotherapy. There's a strong scientific rationale for believing these drugs will be more effective in combination, according to a recent Bloomberg Intelligence report.

But this approach also comes with substantial safety issues relative to Merck's combination. That will put a lot of pressure on data from pivotal trials for both firms, expected mid-year for AstraZeneca and later this year or in early 2018 for Bristol-Myers.

Right now, analysts don't expect too much of these rival combinations. Tremelimumab, which AstraZeneca is combining with its lead IO drug Imfinzi, is expected to generate $500 million in annual sales by 2020. Bristol's Yervoy, already approved in combination with its flagship Opdivo in skin cancer, is also expected to add about $500 million in annual sales over the same period. That's not chump change, but it pales in comparison to the nearly $7 billion expected from Keytruda that year. 

Better Together?
AstraZeneca and Bristol-Myers Squibb are trying to combine their lead IO drugs (Opdivo and Imfinzi) with a second one in order to boost effectiveness, but analysts are skeptical about the potential of the approach
Source: Bloomberg

The other potential hurdle is Roche Holding AG, which is testing its lead IO drug Tecentriq in lung cancer alongside chemotherapy and its established cancer blockbuster Avastin. If that trial data matches or exceeds Merck's when released in the third quarter -- which is not certain, considering that Tecentriq flopped in a bladder-cancer study on Wednesday -- then direct competition for Keytruda may arrive in relatively short order.

This creates a wide range of possible outcomes. While Merck will likely dominate the lung-cancer market for the rest of 2017, it may face as many as three competitors with potentially more compelling trial results as soon as the first half of 2018.

On the other hand, it's also possible Merck could have the market to itself for a much longer stretch than that. Or its combo may prove to be safer or more effective than its rivals.

Merck is now firmly leading the lung-cancer market, and arguably the IO market in general. But it knows how quickly fortunes can change. Bristol-Myers was seen as leading the pack comfortably until Opdivo failed an aggressive trial in newly diagnosed lung-cancer patients, where Keytruda is succeeding. Merck can't get too comfortable in its perch.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at

To contact the editor responsible for this story:
Mark Gongloff at