The Merck KEYFORM-007 study recently brought disappointing news, as Merck & Co. (NYSE:MRK) announced that the phase III trial of its anti-LAG-3 antibody favezelimab, combined with the blockbuster anti-PD-1 therapy Keytruda, did not meet its primary endpoint in treating microsatellite stable (MSS) metastatic colorectal cancer (mCRC). Despite the setback, the company continues to explore the potential of Keytruda across various cancer types.

Insights from the KEYFORM-007 Study

The phase III KEYFORM-007 trial was designed to evaluate a fixed-dose combination of favezelimab and Keytruda versus standard-of-care treatment regorafenib. The study focused on patients with PD-L1 positive MSS mCRC who had been previously treated with standard therapies.

The study did not demonstrate a statistically significant improvement in overall survival (OS) for patients treated with favezelimab and Keytruda compared to those receiving regorafenib. Importantly, the safety profile of the combination was consistent with that of prior studies, without any unexpected side effects. A full analysis of the trial data is underway, and Merck plans to share detailed findings with the scientific community soon.

Keytruda is already approved for treating certain colorectal cancers with microsatellite instability-high (MSI-H) or mismatch repair-deficient tumors in the United States. However, it has yet to receive approval for MSS mCRC, highlighting the challenges in expanding its efficacy to a broader range of colorectal cancer patients.

Expanding Indications for Keytruda Beyond Colorectal Cancer

While the Merck KEYFORM-007 study did not achieve its intended results, Merck is exploring the combination of favezelimab and Keytruda in other cancers. The phase III KEYFORM-008 study is evaluating the fixed-dose combination for relapsed or refractory classical Hodgkin lymphoma after anti-PD-1 therapy. These trials indicate Merck’s ongoing commitment to broadening Keytruda’s use in multiple cancers.

Keytruda Secures New Approvals in Japan

In more promising news, the Japanese Ministry of Health, Labor, and Welfare (MHLW) recently approved Keytruda for three new indications in lung and urothelial cancers. Keytruda received the green light for use alongside chemotherapy as a neoadjuvant treatment, transitioning to monotherapy as an adjuvant treatment for non-small cell lung carcinoma (NSCLC).

Additionally, Keytruda was approved as a standalone therapy for radically unresectable urothelial carcinoma in patients ineligible for platinum-based chemotherapy. Moreover, the MHLW approved Keytruda in combination with Pfizer’s (NYSE:PFE) antibody-drug conjugate, Padcev (enfortumab vedotin-ejfv), for first-line treatment of radically unresectable urothelial carcinoma.

Pfizer has seen increasing demand for Padcev, particularly after its acquisition of Seagen in December 2023, which added four antibody-drug conjugates (ADCs) to Pfizer’s portfolio: Adcetris, Padcev, Tukysa, and Tivdak.

Merck’s Stock and Financial Performance

Year-to-date, Merck shares have risen by 5.2%, falling short of the industry’s 22.8% growth. This modest performance reflects some of the challenges the company faces in expanding the use of its cancer therapies.

The failure of the Merck KEYFORM-007 study may limit the immediate expansion of Keytruda into the MSS mCRC treatment space. However, the drug continues to generate significant revenue from its approved indications, and Merck remains focused on exploring new combinations and therapies.

Better-Ranked Biotech Stocks to Watch

There are other biotech stocks with better outlooks:

ANI Pharmaceuticals (NASDAQ:ANIP): ANI Pharmaceuticals has seen estimates for 2024 earnings per share (EPS) rise from $4.53 to $4.81 over the past 60 days. Its shares have increased 3.9% year to date, with an average earnings surprise of 31.32% across the last four quarters.

Fulcrum Therapeutics (NASDAQ:FULC): Fulcrum has seen its 2024 loss per share estimates narrow from $1.33 to $0.28 over the past 60 days. Despite its shares dropping 48.6% year to date, Fulcrum has delivered an average earnings surprise of 393.18% over the last four quarters.

These companies represent promising opportunities within the biotech sector, offering alternatives for investors looking beyond Merck’s current challenges.

What’s Next for Merck and Keytruda?

The Merck KEYFORM-007 study setback does not signal the end of Keytruda’s potential in new cancer therapies. The drug remains a cornerstone in Merck’s oncology portfolio, with approvals in various indications and more clinical trials underway to explore its broader use. While the financial implications of the failed MSS mCRC study may be limited, the company must continue to innovate and identify new cancer types where Keytruda can be effective.

Merck’s strategy for oncology, particularly with Keytruda, focuses on enhancing its position as a leader in cancer treatments. With ongoing developments in other trials and expanded indications in regions like Japan, Keytruda remains a key growth driver for the company, despite the current challenges.

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