Why Opdivo is still best positioned in NSCLC

Print Friendly, PDF & Email

Richard Evans / Scott Hinds / Ryan Baum


203.901.1631 /.1632 / .1627

revans@ / shinds@ / rbaum@ssrllc.com


October 10, 2016

Why Opdivo is still best positioned in NSCLC

  • BMY’s Opdivo failed its first-line NSCLC trial, where MRK’s Keytruda succeeded. BMY’s trial recruited patients with PDL1 expression levels of 5% or greater, as compared to 50% or greater in the MRK trial. Because PDL1 expression and efficacy with this class (PD1 inhibitor) are correlated, we believed BMY’s failure was attributable to having recruited patients whose PDL1 levels were on average too low
  • BMY disclosed further details from its trial at ESMO Sunday, which show that the difference in PDL1 expression levels does not account for the difference in efficacy. In the MRK trial (all patients above PDL1 levels of 50%), the statistically significant overall survival (OS) hazard ratio (HR) of 0.6 favored Keytruda. In the BMY trial, the statistically insignificant HR of 0.9 favored Opdivo in the subset of patients with PDL1≥50%
  • The difference cannot be explained by response rates in the two trials’ active controls, which were similar. The difference can be due to chance; the number of PDL1≥50% patients in the BMY trial (214) is much lower than in the MRK trial (305), and the confidence intervals partially overlap. Nevertheless, the failure of PDL1 levels to account for the BMY result weakens impressions of Opdivo in NSCLC, and correspondingly strengthens impressions of Keytruda
  • Despite the reputational hit, we see Opdivo remaining dominant in second-line NSCLC, at least in PDL1 negative patients, in whom Opdivo is the only approved PD1
  • On balance, MRK and BMY are likely to split the NSCLC PD1 inhibitor market in the immediate term on a roughly 2:1 basis in MRK’s favor. (MRK gets the 25% of NSCLC patients with PDL1≥50% as first-line. Assuming 75% failure rates for the 75% of PDL1<50% patients on first-line platinum, 56% of first-line platinum patients become eligible for second-line PD1 inhibitor therapy. The PDL1+ half go to Keytruda, the PDL1- half go to Opdivo. Total to MRK is 53% of NSCLC patients; total to BMY is 28% of NSCLC patients)
  • Longer-term, early clinical evidence indicates that first-line NSCLC therapy eventually will be a combination of a PD1 inhibitor with either platinum-based chemotherapy, or a CTLA4Ig such as BMY’s Yervoy or AZN’s tremelimumab; and, evidence favors the PD1+CTLA4Ig regimen, particularly in PDL1 positive patients. Only MRK and BMY are studying their PD1’s in combination with both platinum-based chemotherapy and a CTLA4Ig; however, the MRK Keytruda+CTLA4Ig trial is in phase 1 using BMY’s CTLA4Ig Yervoy, as compared to BMY’s evaluation of Opdivo+Yervoy which is in phase 3

Where we’re BULLISH: Biopharma companies with undervalued pipelines (e.g. AMGN, BAYER, BMY, GILD, ROCHE, SHPG, SNY, VRTX); Biopharma companies with pending major product approvals (e.g. ACAD, ADMA, ALIOF, BIIB, CHMA, CLVS, CPRX, CTIC, GILD, ICPT, JAZZ, LLY, LPCN, MRK, NVO, OCUL, PTCT, SRPT, TEVA, ZSPH); SNY on sales potential for Praluent (alirocumab); CNC, MOH and WCG on bullish prospects for Medicaid HMOs; and, DVA and FMS for the likely gross margin effects of generic forms of Epogen

Where we’re BEARISH: PBMs facing loss of generic dispensing margin as the AWP pricing benchmark is replaced (e.g. ESRX); Drug Retail as dispensing margins are pressured by narrowing retail networks and replacement of AWP (e.g. WBA, CVS); ABBV on Humira US pricing risks; ENDP on risks to branded Rx price premia; Research Tools & Services companies as growth expectations and valuations are too high in an environment of falling biopharma R&D spend (e.g. CRL, Q, ICLR); and, suppliers of capital equipment to hospitals on the likelihood hospitals over-invested in capital equipment before the roll-out of the Affordable Care Act (e.g. ISRG, EKTAY, HAE)

When BMY’s Opdivo failed its trial for first-line non-small cell lung cancer (NSCLC, Checkmate-026) after MRK’s Keytruda had succeeded in its first-line NSCLC trial (Keynote-024), we pointed out that because response rates tend to rise with PDL1 expression levels, BMY’s failure was in all likelihood due to BMY having recruited patients with PDL1 expression levels of 5% or greater, as compared to MRK having recruited patients with PDL1 expression levels of 50% or greater

As it turns out, we were wrong; the difference in PDL1 expression levels does not explain the difference in trial outcomes. In Keynote-024, MRK’s Keytruda was superior to platinum-based chemotherapy for overall survival (OS) with a hazard ratio of 0.6 (95% c.i. = 0.41 to 0.89). As anticipated BMY disclosed Opdivo’s efficacy in the subset of patients with PDL1≥ 50%; unanticipated is that in this subset Opdivo was (insignificantly) superior to platinum-based chemotherapy for OS at a hazard ratio of just 0.9

The difference cannot be attributed to different responses in the active control (platinum-based chemotherapy) arms of the two trials. In Keynote-024 progression free survival (PFS) was 50% and 15% at 6 and 12 months in the active control; in Checkmate-026 PFS was approximately[1] 50% and 20% at 6 and 12 months. In Keynote-025 OS in the active control was 72% and 54% at 6 and 12 months, as compared to approximately 70% and 50% at 6 and 12 months in Checkmate-026

There remains the possibility that the difference in response rates for patients with PDL1 expression levels above 50% is due to chance. MRK studied 305 patients (all with PDL1 ≥ 50%), as compared to just 214 patients with PDL1≥50% in the BMY trial; and, the two trials’ 95% c.i.’s for OS partially overlap

Nevertheless, the substantially higher OS in Keynote-024, and the failure of PDL1 expression levels in Checkmate-026 to account for the difference, strengthens impressions in favor of Keytruda for NSCLC, especially 1st-line. This raises the question of how NSCLC therapy will evolve over the immediate and longer terms

In the immediate term Keytruda undoubtedly dominates first-line NSCLC for patients with PDL1>50%, a sub-population that accounts for roughly 25% of NSCLC patients. The remaining 75% of first-line treatment will continue to be platinum-based chemotherapy. Patients failing platinum-based chemotherapy (roughly 75%) become candidates for second-line therapy. Of these patients about one-third will be PDL1 positive, and about two-thirds PDL1 negative. Both Keytruda and Opdivo are labelled for second-line treatment of PDL1+ NSCLC patients who have failed first-line platinum; however, because of Keynote-024 halo effects favoring Keytruda, the majority of these patients will be treated with Keytruda. For the second-line PDL1- patients, only Opdivo has shown efficacy (and is labelled for) this indication, and we believe the great majority of these patients (half of total NSCLC patients and two-thirds of second-line NSCLC patients) will continue to be treated with Opdivo

In the longer term, all evidence indicates that first-line NSCLC treatment will be a combination of a PD1 with either platinum-based chemotherapy, or a CTLA4Ig (such as BMY’s Yervoy, or AZN’s tremelimumab). Currently available evidence implies that the PD1+CTLA4Ig combination is superior to the PD1+platinum combination in PDL1 positive patients (Exhibit 1, three rightmost columns for Opdivo+Yervoy, two middle columns for Opdivo+platinum (i.e. Opdivo+SOC)). MRK, BMY, and Roche are all evaluating their PD1’s in combination with platinum-based chemotherapy; MRK, BMY and AZN are evaluating their PD1’s in combination with a CTLA4Ig. Thus only MRK and BMY are covering both the PD1+platinum and PD1+CTLA4Ig possibilities; however, MRK’s study is in phase 1 and is evaluating Keytruda in combination with BMY’s Yervoy; BMY’s Opdivo+Yervoy for first-line NSCLC is in phase 3. AZN’s durvalumab+tremelimumab (PD1+CTLA4Ig) trial also is in phase 3; however earlier-phase trial results imply lower response rates for this combination as (indirectly, across trials) compared to Opdivo+Yervoy (Exhibit 2)

Of note, BMY disclosed additional phase 2 (Checkmate-012) evidence for the Opdivo+Yervoy combination in first-line NSCLC, confirming the pattern of rising efficacy with rising PDL1 expression levels, the superiority of the PD1+CTLA4Ig combination to PD1 alone (Exhibit 3); and, that tolerability of the combination regimen is on par with the PD1-only regimen


  1. BMY hasn’t disclosed specific values; these are read from graphics provided at ESMO


©2016, SSR, LLC, 225 High Ridge Rd, 2nd Floor, Stamford, CT 06905. All rights reserved. The information contained in this report has been obtained from sources believed to be reliable, and its accuracy and completeness is not guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein. The views and other information provided are subject to change without notice. This report is issued without regard to the specific investment objectives, financial situation or particular needs of any specific recipient and is not construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. In the past 12 months, through a wholly-owned subsidiary SSR Health LLC has provided paid advisory services to Pfizer Inc (PFE) and to Merck (MKGAY) on both securities-related and non-securities-related topics

Print Friendly, PDF & Email