Merck's Keytruda Is Ahead, But Bristol-Myers' Squibb's Opdivo Could Catch Up

According to prescription data provided by Symphony Health, Merck's ( MRK ) cancer drug Keytruda is growing fast, and is well ahead of Bristol-Myers Squibb's ( BMY ) Opdivo in terms of sales. Opdivo's sales stood at $3 million in February as compared to $24.8 million for Keytruda. The latter drug's sales have increased five-fold since its launch. However, Opdivo, which was initially launched for Melanoma, received FDA approval for lung cancer in early March and this can significantly expand its target market. Merck expects to file for a similar indication later this year, which suggests that Opdivo has some time to close the gap and take a lead against Merck in immuno-oncology market which is currently dominated by Roche.

The market for immuno-oncology drugs is very large and growing and there is a huge opportunity to profit from successful drugs. We believe that Opdivo could garner as much as $6 billion in peak sales. Last year, Bristol-Myers Squibb collaborated with CytomX Therapeutics to develop immuno-oncology drugs. It has also entered a couple of agreements worth $1.6 billion to bolster its immuno-oncology drugs portfolio. These include its decision to acquire Flexus Biosciences, which is involved in the development of novel oncology drugs, and a research collaboration with Rigel Pharmaceuticals to gain development and marketing rights to Rigel's TGF beta receptor kinase inhibitor pipeline.

Our current price estimate for Bristol-Myers Squibb stands at $50.73 , implying a discount of about 20% to the market.

See our complete analysis for Bristol-Myers Squibb

Cancer drugs have traditionally been much less effective as compared to drugs catering other therapeutic areas. Besides, there are numerous types and sub-types of cancer which warrant development of very specific drugs. These factors suggest that there is a huge untapped market for caner therapies provided R&D efforts result in novel and effective agents. It makes sense for the company to invest in this area. Immuno-oncology, in particular, is where most of the funding is likely to go.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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