'Our legacy matters': Merck maps out Keytruda kingdom while spotlighting advances in vaccines, hospital care
“You can for the moment stop taking notes. You can put down your pens and your pad. I have no slides. I have no substantive data. I have no pitch.”
So began Roger Perlmutter’s brief appearance onstage at Merck’s first investor day in five years, where he dived into the company’s history dating back to 1933. The first employees at Merck Research Laboratories, handpicked by founder George W. Merck, were critical to Merck’s ability to achieve clinical and commercial success.
“Underneath these programs, underneath these products […] underneath what Ken and Rob told you about the future of the company, there is this enormously stable platform and what you will hear this morning is first of all our ability to execute clinically and commercially to bring these products to life,” he said of the Merck legacy before turning to Roy Baynes and Mike Nally for a more detailed look on R&D.
Perlmutter’s comments echo CEO Ken Frazier’s insistence that the team here can build a franchise like Keytruda not just once or twice but repeatedly, and come as the board is reportedly scouting their successors.
Frazier addressed the inevitable transition question during Q&A by saying this:
Everything we need to drive the growth we talked about […] is already in our hands and so for us it’s really focusing on executing in the marketplace and focusing in the development space to make sure we maintain that leadership. As it relates to succession, the board is very much focused on that issue. What I can say is I’m extremely pleased by the breadth of the leadership talent in the company.
The take-home message: Merck, now at a 52-week high market cap of $221 billion, is going to do just fine.
On the BD front, the company is sticking to bolt-on M&A deals and strategic collaborations, though CFO Rob Davis emphasizes that “we have the capability to pretty much do what we want.” He also promised a top-down, company-wide effort to create a leaner structure, with an eye to begin cutting R&D expenses as a percentage of sales — a standard metric in pharma — beginning in 2021.
As much as execs hyped up the growth potential across the entire pipeline, Keytruda remains the foundational program as an unprecedented, extremely large product that’s “only going to get bigger” according to Frazier.
“I really believe we’re still in the early stages of the opportunity we have with Keytruda,” added Frank Clyburn, chief commercial officer. And if you take Lynparza and Lenvima into account, “we believe over the next five years I want you to think about the opportunity for more than 50 additional indications.”
The massive network of trials centered around Keytruda has pushed over the 1,000 mark, Baynes, the head of clinical development, said, with more than 100 in earlier lines of therapy (before or right after surgery), upwards of 600 combinations, and 75 registrational studies underway.
Breast and prostate cancers loom large among them. As monotherapy approaches have proven weak, Merck is looking at new combos and earlier lines for potential first-to-market opportunities. The PARP inhibitor Lynparza might also play a big role in tackling those two markets, while Merck and partner AstraZeneca explore 19 other indications for the drug.
As for the rest of the pipeline outside oncology — vaccines and hospital care being the main pillars — the company is looking to both grow existing products while steadily pushing a “rich pipeline.”
Chief marketing officer Mike Nally highlighted two drugs in particular: MK-8591, which “has a true potential to be a game changer for patients with HIV”; and gefapixant, a P2X3 and P2X2/3 receptor antagonist first positioned for chronic cough.
A global vision will be crucial to achieving all of this. In his presentation, CFO Davis described Merck has the fastest-growing multinational pharma in China, swelling 43% over the last 18 months when the average was 11% — thanks in part to product approvals from Keytruda to the HPV vaccine Gardasil.