Immune-Oncology Drug Trials Are Getting Crowded

(Bloomberg Gadfly) -- When a new class of drugs can halt metastatic cancers in some patients, gets FDA-approved to treat seven types of cancer in less than three years and racks up more than $6 billion in sales in its first two full years on the market, a little hype is understandable.  

PD-1/L1 inhibitors are so-called immune-oncology (IO) drugs that help unleash the body's immune system on cancers. And now five drugmakers -- Merck & Co. Inc., Bristol-Myers Squibb Co., Roche Holding AG, AstraZeneca PLC, and Pfizer Inc. -- have one on the market. These companies are running hundreds of clinical trials for new uses and combinations of these medicines, and many of these trial results will be revealed at this weekend's American Society of Clinical Oncology (ASCO) annual meeting in Chicago. 

But the market has yet to reckon with how much this crowding might impact its sky-high expectations for these medicines. Wall Street analysts forecast annual sales of the five big drugs alone to more than double by 2020 from $8.4 billion this year:

As of this writing, there were 1,315 clinical trials ongoing for the big five PD-1/L1 medicines, according to clinicaltrials.gov, the U.S. government's repository. And 1,102 of them were open, meaning they may be actively recruiting patients and are thus relatively new -- an indicator of how rapidly the number of trials is expanding. A slide from Merck's annual report suggests the number of trials has roughly doubled over the past year. Merck's lead IO drug Keytruda is being tested across 30 tumor types. 

It's important to note these numbers count only U.S. trials -- there are many others going on elsewhere in the world. And many more companies beyond the big five are working on similar medicines.

A huge number of these trials overlap. Four different companies are running trials combining their drug and Incyte Corp.'s epacadostat, for example. There's also significant overlap for the drugs already on the market, with three or more IO drugs approved to treat lung and bladder cancers.

All this crowding will be bad for drugmakers -- though a potential boon for patients and insurance companies covering their prescriptions. An increasingly fragmented market will drive prices down and leave companies with ever-shorter periods of market exclusivity. 

This may ultimately come as a shock to investors in some of these firms, given that not all of Wall Street's sales forecasts reflect this crowding. Estimates for market-leading drugs Keytruda and Bristol's Opdivo certainly don't.

Don't expect to hear many such warnings over the din of trial results being hyped at this weekend's ASCO. But companies and investors inspired to follow the IO stampede should bear the potential consequences in mind.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

To contact the author of this story: Max Nisen in New York at mnisen@bloomberg.net.

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net.