The case for Merck/LL. MRK's sp has been on a rol

The case for Merck/LL. MRK's sp has been on a role lately. It's up 35% over the last 12 months, and its market cap, roughly $285B, now exceeds that of archival Pfizer, while vying with ABBV for 3rd highest drug company market cap. But MRK is currently somewhat of a house of cards in the sense that roughly half of its 2022 revenue was generated by cancer drug Keytruda, and Keytruda's patent is due to expire in 2028. Keytruda's impending patent cliff was likely the impetus for MRK offering $40B to acquire the 4 oncology drugs marketed by Seagren. But that deal fell through last fall, and PFE just announced last week that it and Seagren had signed a $43B acquisition agreement based on the assumption that the 4 Seagren drugs plus Seagren's present pipeline will generate $10B by 2030. Moreover, during the last 2 years, Keytruda has failed multiple phase 3 clinical trials to expand its list of approved indications.

So what does any of the above have to do with LL? Well, maybe nothing, but I did find it interesting that in the recently published BioSpace interview with Cyrus (which seemed to have been given mainly to explain the delay in lifting the clinical hold due to a 6th FDA request), Cyrus once again explained CYDY's future cancer plans in terms of seeking to combine LL with a checkpoint inhibitor, but this time he specially mentioned that he expected such a combination to produce better outcomes and that the checkpoint inhibitor being combinedwith LL in humanized mice studies (xenograft models) was Keytruda. This preclinical study was initially announced in a Nader PR on Oct 7,2021. It mentioned LL and a checkpoint inhibitor, but didn't identify Keytruda as the checkpoint inhibitor involved. The trial is being run, not by MD Anderson itself, but by a research professor, Jangsoon Lee, on staff at MD Anderson. Having been initiated almost 18 months ago, and with 6 weeks of mouse time equaling about 6 years of human life, it would not be surprising if Cyrus has a good handle on how the Keytruda/LL arm has performed relative to the Keytruda arm. And if the results were disappointing for the Keytruda/ LL arm, I struggle to understand why Cyrus would have volunteered the mouse trial reference in this Biospace interview. Developing positive combo data would make much more sense to explain this voluntary reference.

So if LL makes Keytuda more efficacious, might MRK management surmise better phase 3 outcomes for the combo drug and new approvals down the road? But, perhaps more importantly, could combining LL with Keytruda support a successful joint patent application that would restart patent protection for Keytruda? The key element in the application process would be the patent examiner's determination whether combining the drugs for improved efficacy would be considered obvious (patent denied) or unexpected (patent granted if other necessary criteria are met,) To support the "unexpected" conclusion, the applicants could likely offer the FDA's letter disparaging LL as exhibit A.

Clearly, I have no idea whether LL is even on MRK management's radar, but if Cyrus' breadcrumbs regarding the results of Professor Lee's trial are reliable, and if MRK management has also been tracking Professor Lee's work, perhaps someone at MRK might connect the dots concerning what LL could bring to Keyruda and MRK's shareholders.

Anyway, just a few idle thoughts on a Saturday night.