Bristol-Myers aces a PD-1 lung cancer trial as Merck mounts counterattack at the FDA

Bristol-Myers Squibb's ($BMY) standout immuno-oncology drug nivolumab, approved last month as Opdivo, scored a resounding success in a late-stage lung cancer trial, bolstering sales expectations for the pioneering treatment. But with the stakes in this development game running into the billions, Merck countered hours later, unveiling its plan to file for an approval of its rival PD-1 drug for lung cancer ahead of schedule as it challenges Bristol-Myers for first-mover advantage on the market.

In a 272-patient study pitting Opdivo against the standard cancer-killer docetaxel, Bristol-Myers drug demonstrated such superior overall survival compared with the control arm that it hit its primary endpoint ahead of schedule, leading the trial's data monitoring committee recommend the study be terminated early. Bristol-Myers is now inviting the patients in the docetaxel group to opt into Opdivo through an open-label extension study.

Bristol-Myers' treatment is designed to galvanize an immune system attack on tumors by blocking a pathway called PD-1, which, left unchecked, allows cancer cells to pass undetected by the body's natural defenses. Like Merck's ($MRK) similar Keytruda, Opdivo won FDA approval last year as a treatment for melanoma, but Bristol-Myers' drug stands alone in lung cancer, as its latest clinical success marks the first time a PD-1 inhibitor has charted a survival advantage against the disease, the company said.

Opdivo's particular promise in non-small cell lung cancer has led analysts to pencil it in as the most commercially promising among therapies that block PD-1 and the related PD-L1, putting Bristol-Myers ahead of Merck, Roche ($RHHBY), AstraZeneca ($AZN) and others. Analysts figure Opdivo will bring in peak sales of around $5 billion, and Leerink's Seamus Fernandez believes the treatment's potential in lung cancer will take it as high as $7.3 billion by 2020. The entire class of therapies is expected to bring in about $35 billion a year.

And Merck, recognizing the promise of PD-1 inhibition in lung cancer, is doing all it can to trim Bristol-Myers' lead in the space. The company announced Monday that it has accelerated Keytruda's timeline in lung cancer and now expects to complete an FDA application in the middle of this year. Thanks to its agency-granted breakthrough therapy designation, Keytruda could pick up a lung cancer approval by the end of 2015, Sanford Bernstein analyst Tim Anderson said in a note to investors, meaning Merck could expand the label for its drug a full 12 months ahead of consensus estimates.

For its part, Bristol-Myers has already submitted lung cancer applications in the U.S. and Europe for Opdivo in lung cancer, expecting to widen the drug's use later this year.

Like its competitors, Bristol-Myers has mounted an expansive R&D program for its PD-1 candidate, running more than 35 trials in total that test Opdivo alone or as part of a cocktail in renal cell carcinoma, head and neck cancer, glioblastoma, non-Hodgkin lymphoma and other cancers.

- read the statement