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Who's going to win pharma's immunotherapy gold rush?

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As Roche ($RHHBY), Bristol-Myers Squibb ($BMY) and Merck ($MRK) race to the market with promising immunotherapies for advanced melanoma, analysts' sky-high sales estimates for the new drug class may soon have to reckon with revenue-slashing competition and fast-growing pricing pressures.

As The Wall Street Journal reports, all three companies are moving toward regulatory filings for their respective treatments, which target the lock-and-key proteins PD-1 and PD-L1 to expose cancer cells to an immune system attack. Bristol-Myers has garnered the most attention with its nivolumab, which posted impressive Phase II survival rates in inoperable melanoma, while Merck's similar MK-3475 has quickly become the slow-footed drug developer's top R&D priority, and Roche's RG7446 has racked up impressive results of its own.

All three could win FDA approval before the end of 2015, and, thanks to stellar results and the potential for combination treatments, analysts expect the drugs to peak at about $12.5 billion a year, WSJ notes, with Bristol-Myers claiming the lion's share. None of the companies is ready to talk about pricing, but Citi told the newspaper that PD-1 treatments could cost as much as $240,000 once they make it to market, far outstripping the costs of current vanguard therapies like Bristol-Myers' Yervoy.

And that's where market forces could intrude and put a damper on all the business-side excitement over the new drugs.

For one, with all three PD-1/PD-L1 blockers expected to hit the market at around the same time, competition and discounting may undercut some of the rosiest projections of peak sales. More importantly, though, the mounting public fervor over the cost of medications could alter expectations for all three companies. Some of the most impressive immunotherapy data have come from studies combining newfangled therapies with other pricey cancer meds, meaning the highest odds of patient success will likely come from doubling up six-figure treatment regimens. To date, payers have been willing to shell out for efficacious cancer drugs, but the expected leap in costs for PD-1 drugs could create a "completely unsustainable" pricing situation, Institute of Cancer Research Deputy CEO Paul Workman told the WSJ.

As Gilead Sciences ($GILD) has been made well aware, public concern about drug pricing is peaking at the moment, and, by the time Bristol-Myers, Merck and Roche get started on commercialization, they may be looking at a different landscape.

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