Sanofi, Merck Join Forces On Ketruda, THOR-707 Combo In Cancer

Sanofi (SNYNF) has entered into an agreement with Merck to conduct a Phase 2 clinical trial to evaluate the safety, pharmacokinetics, and preliminary efficacy of THOR-707, a highly differentiated non-alpha IL-2 candidate with a best-in-class profile, combined with or in sequenced administration with Merk’s Keytruda (pembrolizumab) in patients with various cancers.

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Under the agreement, Sanofi will sponsor the clinical trials while Merck (MRK) will provide Keytruda.

“We believe that THOR-707 has the potential to become a foundation of the next generation of immuno-oncology therapies,” said Peter Adamson of Sanofi. “This collaboration will enable us to explore whether THOR-707 can increase and expand the effectiveness of Keytruda and improve the outcomes for patients with cancer.”

THOR-707 is currently being evaluated by Sanofi in an ongoing Phase 1 open-label, multi-center, dose escalation and expansion trial- which should report results before 2021. This study is designed to evaluate the safety and tolerability of THOR-707, and to determine its recommended Phase 2 dose alone and in combination with anti-PD-1 and anti-EGFR antibodies.

Meanwhile Keytruda is an anti-PD-1 therapy that works by increasing the ability of the body’s immune system to help detect and fight tumor cells. It is a humanized monoclonal antibody that blocks the interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which may affect both tumor cells and healthy cells.

Merck shares are currently trading down 16% year-to-date, and analysts have a cautiously optimistic Moderate Buy consensus on the stock. That breaks down into 8 Buy ratings versus 3 Hold ratings. Meanwhile, the average analyst price target of $96 implies 26% upside potential in the coming year.

Mizuho Securities analyst Mara Goldstein recently reiterated a Buy rating on the stock with a $100 price target (reflecting 31% upside potential), saying that oncology is seeing a rebound from Covid-19.

“The growth in Keytruda continues to drive transformation in the P&L and is supportive of our investment thesis,” Goldstein wrote in a note to investors. The analyst expects Keytruda to drive operating margin expansion and offset negative pressure from loss of exclusivity for other products. (See Merck stock analysis on TipRanks)