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Merck (MRK) - Get Merck & Co., Inc. Report won U.S. approval Wednesday for the use of its immunotherapy Keytruda in combination with chemotherapy to treat patients newly diagnosed with non-small cell lung cancer.

FDA approvals of immunotherapies used alone to treat various cancers have become almost routine, but the agency's latest affirmative nod to Merck marks the first time that an immunotherapy has been combined with another drug to kill cancer cells more effectively.

Keytruda is now the only PD-1 or PD-L1 checkpoint inhibitor approved to treat first-line lung cancer either as monotherapy or as part of a combination therapy. Rival pharma companies, including AstraZeneca (AZN) - Get Astrazeneca PLC Sponsored ADR Report , Roche (RHHBY) and Bristol-Myers Squibb (BMY) - Get Bristol-Myers Squibb Company Report , are trying to catch up.

Ahead of the approval, Merck shares closed up 1% to $63.94. The stock is up 19% over the past year, largely due to the company's cancer immunotherapy success. In the same time period, Bristol shares have fallen by 23%.

Lung cancer is the biggest commercial market for immunotherapy -- total peak sales for newly diagnosed patients could top $8 billion -- so Merck's lead is meaningful.

The Keytruda sales forecast for 2017 is $3.6 billion compared to $4.4 billion for Bristol's Opdivo, according to analyst estimates compiled by FactSet. But that flips starting in 2018, with Keytruda sales expected to reach $5.4 billion versus just $4.9 billion for Opdivo. This is where Merck's lung cancer advantage over Bristol kicks in.

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FDA approved the Keytruda-chemo combination based on a study of 123 patients with newly diagnosed non-squamous, non-small cell lung cancer. The response rate for the Keytruda-chemo arm was 55% compared to 29% for chemo alone. Keytruda plus chemo also improved median progression-free survival to 13 months compared to 8.9 months for chemo alone.

To date, there is no survival advantage for Keytruda-chemo versus chemo alone. Merck is expected to present an update from this clinical trial in June at the American Society of Clinical Oncology (ASCO) annual meeting.

Technically, FDA granted accelerated approval to the Keytruda-chemo combination, meaning Merck must confirm the benefit in newly diagnosed lung cancer patients with additional data. If not, FDA could revoke the approval. Data readout from a separate confirmatory study of the Keytruda-chemo combination is expected in the fourth quarter

Earlier Wednesday, Roche announced negative results in a confirmatory study in which its PD-L1 checkpoint inhibitor Tecentriq failed to help bladder cancer patients live longer than chemo. As a result, FDA could revoke Tecentriq's accelerated approval in second-line bladder cancer.

Looking ahead, AstraZeneca and Roche are expected to reveal top-line results from pivotal studies involving combination treatments involving their respective immunotherapies in first-line lung cancer later this year. A similar study from Bristol is expected to read out results next year.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.