Jan 10 (Reuters) - Merck & Co on Tuesday said the FDA agreed to a speedy review of its application to combine its immunotherapy drug Keytruda with chemotherapy as an initial treatment for advanced lung cancer, potentially giving it a major leg up in the competition for the largest cancer market.
Merck said the U.S. Food and Drug Administration would decide by May 10 whether to approve the Keytruda combination therapy, sending the drugmaker's shares more than 3 percent higher.
"This comes as an important surprise because if FDA approves the application, Merck would suddenly be catapulted ahead of all other (immunotherapy) competitors who are also pursuing competing combination regimens of their own," Bernstein analyst Tim Anderson said in a research note, mentioning Roche, Bristol-Myers Squibb and AstraZeneca.
Merck had not previously indicated that it was close to filing for the combination therapy. Industry analysts had been looking for this news toward the end of the year.
Keytruda alone is already approved as an initial, or first-line, treatment for advanced lung cancer in patients whose tumors have a high level of PD-L1 expression, the protein that the drug targets to help the immune system fight cancer.
This first application for Keytruda in combination with another medicine would include patients with metastatic or advanced non-squamous non-small cell lung cancer (NSCLC) regardless of PD-L1 expression level, opening up a much larger market for the medicine.
Patients with high PD-L1 expression account for only about a quarter of all lung cancer patients.
Evercore ISI estimated the market for first-line lung cancer for all patients could be as high as $14 billion.
"While Merck is unlikely to durably penetrate this entire population, especially with multiple competing regimens on the horizon, an approval in May would give them a significant first-mover advantage," Evercore analyst John Scotti wrote.
Keytruda is already also approved to treat advanced melanoma, the deadliest of skin cancers, and head and neck cancers.
Merck shares rose to $62 in extended trading from a New York Stock Exchange close at $59.92.
(Reporting by Bill Berkrot; Editing by James Dalgleish)