Roger Perlmutter, Merck & Co.
Executive vice president of research & development
2018 pay package: $6.86 million
2017 pay package: $6.54 million
$1.11 million in base salary;
$1.49 million in bonus;
$4.11 million in stock and options;
$147,696 in other compensation
Merck & Co. has been riding high on the stellar performance of its cancer immunotherapy Keytruda for a few years now, but in the last few months investors have started to ask whether it has become a bit too reliant on the drug.
Keytruda (pembrolizumab) along with human papillomavirus (HPV) vaccine Gardasil accounted for around one-fourth of Merck’s sales last year, and increasingly the company and its R&D chief, Roger Perlmutter, M.D., Ph.D., have been asked to explain what is coming through the pipeline to spread the load and alleviate investor nerves.
Keytruda is expected to have plenty of upside with 20 indications already across 15 tumor types, and more than 1,000 trials of the drug in play—mostly in combination with other drugs. Keytruda is expected to replace AbbVie’s Humira as the top-selling medicine with sales of $22 billion by 2023, according to GlobalData, as it moves into earlier-stage use in adjuvant and neoadjuvant settings.
But Merck doesn’t want to become a one-drug company (think AbbVie of a couple of years ago), and boosted by Keytruda revenues it has been hiking its R&D budget as well as signing various bolt-on deals and strategic collaborations to flesh out its pipeline. It also has an eye on the patent expiry for diabetes blockbuster Januvia (sitagliptin), which should see maximum exposure to generics in 2023.
Alliances with AstraZeneca on PARP inhibitor Lynparza (olaparib) and Eisai on Lenvima (lenvatinib) will help Merck secure 50 more approvals in cancer in the next five years, says the company, while also unlocking indications like breast and ovarian cancer that haven’t been easy targets for checkpoint inhibitors given on their own.
Meanwhile, internal R&D is also playing its part. Merck’s long-serving CEO, Kenneth Frazier, insisted at the company’s first investor update for five years—held in June—that the company has the capacity to build a big franchise like Keytruda “not only … once or twice—but importantly for a company like Merck—to do it on a repeated basis.”
He also said that the disease-agnostic approach to R&D under Merck’s current strategy, while uncommon among big pharma companies, is a strength because “an excess of focus is antithetical with being a company that is led by the science.”
Perlmutter told analysts at the Morgan Stanley healthcare conference in September that Merck has 20 new molecules in play for cancer alone, along with projects across vaccines, infectious disease, metabolic disease and neuroscience that look set to deliver “important new medicines over the next half dozen years.”
The vaccines pipeline is headed by pneumococcal conjugate vaccine V114 in phase 3 that—if approved—will offer broader protection than Pfizer’s blockbuster Prevnar shot, as well as late-stage candidates for cytomegalovirus, dengue, Ebola, and respiratory syncytial virus.
The company has also highlighted MK-8591, the first in a new class of long-acting HIV polymerase inhibitors that could be used not only for HIV treatment but also in implant form to provide long-term pre-exposure prophylaxis (PrEP). Use for PrEP is estimated to account for around two-thirds of the $3 billion annual sales of Gilead’s Truvada, until recently the only drug approved for this use in the U.S.
P2X3 antagonist gefapixant is another program exciting Merck’s management thanks to speculation it could have activity across a range of indications, including chronic cough and endometriosis-related pain. The drug is in phase 3 and has a lead over a rival from Bellus, although the latter says its candidate has some advantages, including being less like to cause taste-altering side effects. It was acquired along with Afferent Pharma in 2016, one of a series of bolt-on deals signed by Merck that this year alone have included takeovers of cancer specialists Peloton, Immune Design and Tilos.
With Frazier reportedly delaying his retirement in order to smooth the transition to a new CEO, and Perlmutter also beyond retirement age and said to be thinking about an exit, it may not be too long before Merck’s R&D will be in other hands. Their message is that they will leave Merck with the best pipeline in its history, but questions about the company’s future beyond Keytruda aren’t likely to go away anytime soon.