It's getting crowded at the top of the kidney-cancer market.

This week Merck & Co. and Pfizer became the latest to join the fold, when the Food and Drug Administration approved the combination of Merck's Keytruda and Pfizer's Inlyta as an initial treatment for patients with advanced renal cell carcinoma (RCC), the most common form of kidney cancer.

And it looks like it's going to get more crowded before a clear winner emerges. The additional choices are great for patients, but the competition makes it difficult for investors looking to cash in on the evolving market.

Doctor talking to a patient in an exam room

Image source: Getty Images.

Two drug classes emerge

For quite a few years Pfizer's Sutent was the standard of care as a first-line treatment for RCC, followed by Novartis' Afinitor, followed by a plethora of additional treatments including Pfizer's Inlyta.

Exelixis was one of the first on the scene to disrupt things, showing that its Cabometyx was better than Novartis' Afinitor in a head-to-head study of second-line patients. Bristol-Myers Squibb followed suit, showing that its Opdivo was better than Afinitor in a separate head-to-head study.

Both companies quickly moved into the first-line setting. Exelixis beat Pfizer's Sutent, while Bristol-Myers Squibb showed that the combination of Opdivo and another drug called Yervoy was also better than Sutent.

Kidney cancer drugs largely fall into two classes: tyrosine kinase inhibitors (TKIs), which inhibit the pathways that cancerous cells use to stimulate tumor growth, and PD-1/PD-L1 antibodies, which block a signal that cancerous cells use to tell the immune system to not attack them. The one standout, Yervoy, also encourages the immune system to attack cancerous cells, but by inhibiting a different protein called CTLA-4.

Drug

Company

Drug class

Sutent

Pfizer (NYSE:PFE)

TKI

Afinitor

Novartis (NYSE:NVS)

TKI

Cabometyx

Exelixis (NASDAQ:EXEL)

TKI

Inlyta

Pfizer

TKI

Opdivo

Bristol-Myers Squibb (NYSE:BMY)

PD-1 antibody

Keytruda

Merck & Co. (NYSE:MRK)

PD-1 antibody

Bavencio

Pfizer and Merck KGaA

PD-L1 antibody

Yervoy

Bristol-Myers Squibb

CTLA-4 antibody

Data source: FDA drug labels.

If you can't beat 'em, join 'em

With both drug classes working on their own, Merck and Pfizer struck first, combining Keytruda and Inlyta in a study called Keynote-426. The drugs reduced the risk of death by 47% compared to Sutent.

That's substantially better than Cabometyx's 20% reduction in the risk of death compared to Sutent, which wasn't statistically significant given the small trial size. With the caveat that there are issues with cross-trial comparisons, the combination of Keytruda and Inlyta also appears better than that of Opdivo and Yervoy, which produced a 37% reduction in the risk of death compared to Sutent.

Don't count Exelixis and Bristol-Myers Squibb out just yet, though. The companies are running a late-stage study called CheckMate 9ER, testing Cabometyx plus Opdivo compared to Sutent; it's scheduled to read out data in the second half of 2019. The companies are also testing the two drugs with Yervoy added, although the phase 3 clinical trial for the triplet is still in the planning stages.

Adding to the competition, Pfizer has its own PD-L1 antibody, Bavencio, which it's developing with the German company Merck KGaA. In the pivotal Javelin Renal 101 study, the combination improved progression-free survival -- the time it takes for a patient to progress while remaining alive -- compared to Sutent, but the study is still ongoing and hasn't reported overall survival results yet.

Pfizer and Merck KGaA have already filed a marketing application with the FDA for Bavencio plus Inlyta. The agency gave the application a priority review, setting up a potential approval in June, if not before.

Picking a winner

Assuming side effects are reasonable, patients and their doctors will ultimately choose the cancer treatment with the best overall survival. Pfizer and Merck & Co. have set the bar with Keytruda plus Inlyta, but they'll only have the top spot until another combination produces a better result.

An FDA approval based on progression-free survival seems likely for Bavencio plus Inlyta, but it may be hard for the combination to compete with Keytruda plus Inlyta until Javelin Renal 101 reads out overall survival data.

We'll have to wait and see the data, but the CheckMate 9ER results could be the best of the bunch, with Cabometyx arguably being the best TKI. Picking a winner between Keytruda and Opdivo is a little harder. Sales of Keytruda, which is approved for 11 different types of cancer, are higher than Opdivo's sales, but that may be more a function of Merck designing better clinical trials, going after the right cancer-patient populations, than a sign that Keytruda actually works better than Opdivo.

Investors should also keep another factor in mind. The highest sales in the kidney-cancer market will go to the drug -- or, at this point, drug combination -- used by the most first-line patients. But that treatment will fail for many patients, offering plenty of opportunity for good drugs to be used as second-line treatments.