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.
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)
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