Merck Shares Drop After Keytruda Treatment Fails Late-Stage Liver Cancer Trial

Merck shares slipped lower in pre-market trading Wednesday after the drugmaker said one of its key liver cancer treatments failed a late-stage trial only months after getting accelerated approval from the U.S. Food & Drug Administration.

Merck & Co. (MRK) - Get Merck & Co., Inc. (MRK) Report shares slipped lower in pre-market trading Wednesday after the drugmaker said one of its key liver cancer treatments failed a late-stage trial only months after getting accelerated approval from the U.S. Food & Drug Administration.

Merck said late Tuesday that its Keytruda treatment for patients with advanced liver cancer who were previously treated with systemic therapy did not meet the endpoints for overall survival when compared with placebo plus best supportive care. The failure will increase pressure on Merck to solve the treatment's shortcomings as it competes with Bristol Myers Squibb's (BMY) - Get Bristol-Myers Squibb Company Report Opdivo. 

"While we are disappointed KEYNOTE-240 did not meet its co-primary endpoints, the results for overall survival, progression-free survival and objective response rate are generally consistent with findings from the Phase 2 study, which led to the accelerated approval of KEYTRUDA for the treatment of patients with hepatocellular carcinoma who have been previously treated with sorafenib," said chief medical officer Dr. Roy Baynes. "We sincerely thank the patients and investigators for their participation in this study and are committed to helping patients diagnosed with this common and difficult-to-treat type of liver cancer."

Merck shares were marked 2.18% lower in pre-market trading Wednesday, indicating an opening bell price of $77.51 each. Bristol Myers shares closed at $51.36 each last night and were unchanged in pre-market trading.

Keytruda sales were a big component of Merck's stronger-than-expected fourth quarter fourth quarter earnings, as well as its robust profit guidance for 2019, which the company posted earlier this month.

Merck said non-GAAP earnings for the three months ending in December came in at $1.04 per share, up 6.1% from the same period last year and one penny ahead of the consensus Street forecast. Group sales, Merck said, rose 5% to $11 billion, just ahead of the $10.97 billion estimate, while Keytruda revenues rose 64% from last year to $2.15 billion, again beating the consensus forecast of $2.12 billion.

Looking into 2019, Merck said it sees non-GAAP earnings of between $4.57 and $4.72 per share on worldwide sales of between $43.2 billion and $44.7 billion, both topping estimates compiled by Refinitiv.

Bristol-Myers said last month that it pulled an application to the U.S. Food & Drug Administration for its key 'Opdivo plus Yervoy' cancer therapy combination after getting an extension from the FDA from the treatment until May 2019.

EU regulators asked for more information on the therapy, which is being tested as part of a trial the group calls 'CheckMate -227', including an overall survival (OS) analysis for certain types of patients. Bristol-Myers said an OS analysis for the same patient sub-group was also submitted to the FDA.

Opdivo, which Bristol-Myers classifies as a "prioritized brand" that harnesses the body's own immune system to fight cancer, saw sales rise 33% to $443 million over the fourth quarter, while Yervoy revenues grew 43% to $115 million.