Inclusion Criteria:

• Participant has a localized invasive breast ductal adenocarcinoma, confirmed by the local pathologist, that includes either T1c-T2 (tumor size ≥ 2 cm), clinical node stage (cN)1-cN2, or T3-T4, cN0-cN2.
  • Note: Multifocal tumors defined as the presence of 2 or more foci of cancer within the same quadrant are allowed; at least 1 of the tumors needs to be ≥ 2 cm.
• ER+/HER2– status needs to be confirmed for each focus.
  • Note: Inflammatory breast cancer is allowed.
  • Note: Participants with node negative disease will be capped at 20% of the total population.
• Has centrally confirmed ER+/HER2–, Grade 3 breast cancer of ductal histology, according to the most recent American Society of Clinical Oncology/College of American Pathologist guidelines. Refer to Appendix 6 for country-specific requirements.
• Provides a new or recently obtained core needle biopsy, consisting of multiple cores, taken from the primary breast tumor(s) for central determination of HR status (ER and progesterone receptor), HER2, grade, and PD-L1 status.
  • Note: Adequacy of the biopsy specimen for the above analyses must be confirmed by the central laboratory. Submission of another tumor specimen may be required, if adequate tumor tissue was not provided the first time.
  • Note: Sponsor agreement is required for formalin-fixed paraffin-embedded (FFPE) tumor tissue sample or slides that were obtained greater than 60 days prior to the date that the informed consent was signed.
• Is a male or female ≥ 18 years of age on the day of signing informed consent.
• Has an Eastern Cooperative Oncology Group (ECOG) performance status of 0 or 1, as assessed within 10 days prior to initiation of study treatment.
• A male participant must agree to use a contraception during the treatment period and for at least 12 months (for participants who received cyclophosphamide) or 6 months (for participants who did not receive cyclophosphamide) after the last dose of study treatment and refrain from donating sperm during this period.
• A female participant is eligible to participate if she is not pregnant, not breastfeeding, and at least one of the following conditions applies:
  • Not a woman of childbearing potential (WOCBP); OR
• A WOCBP who agrees to follow the contraceptive guidance during the treatment period and for at least 12 months (for participants who received cyclophosphamide) or 6 months (for participants who did not receive cyclophosphamide) after the last dose of study treatment with pembrolizumab or placebo. 
• The participant (or legally acceptable representative if applicable) provides written informed consent for the study. The participant may also provide consent for future biomedical research. However, the participant may participate in the main study without participating in future biomedical research.
• Has adequate organ function; all screening laboratory tests should be performed within 10 days prior to initiation of study treatment:
• Hematological
  • Absolute neutrophil count ≥ 1,500 cells/μL;
  • Platelets* ≥ 100,000 cells/μL;
  • Hemoglobin* ≥ 9 g/dL or ≥ 5.6 mmol/L.
• Renal
  • Creatinine ≤ 1.5 × ULN; OR
  • Measured or calculated** creatinine clearance (GFR can also be used instead of CrCl) ≥ 50 mL/min for participants with creatinine levels ≥ 1.5 × institutional ULN.
• Hepatic
  • Total bilirubin ≤ 1.5 × ULN; OR
  • Direct bilirubin ≤ ULN for participants with total bilirubin levels ≥ 1.5 × ULN;
  • AST (SGOT) and ALT (SGPT) ≤ 2.5 × ULN.
• Coagulation
  • INR or PT ≤ 1.5 × ULN unless participant is receiving anticoagulant therapy as long as PT or aPTT/PTT is within therapeutic range of intended use of anticoagulants;
  • Activated partial thromboplastin time (aPTT) or partial thromboplastin time (PTT).
• Abbreviations: ALT = alanine aminotransferase; AST = aspartate aminotransferase; CrCl = creatinine clearance; GFR = glomerular filtration rate; INR = international normalized ratio; PT = prothrombin time; SGOT = serum glutamic oxaloacetic transaminase; SGPT = serum glutamic pyruvic transaminase; ULN = upper limit of normal.
• *  Platelet and hemoglobin requirements cannot be met by use of recent transfusion or growth factor support (granulocyte colony stimulating factor [G-CSF], granulocyte-macrophage colony stimulating factor [GM-CSF], or erythropoietin) within 2 weeks prior to initiation of study treatment.
• ** Creatinine clearance should be calculated per institutional standard.

Exclusion Criteria: 

• Has a history of non-infectious pneumonitis that required treatment with steroids or has current pneumonitis.
• Has breast cancer with lobular histology.
• Has bilateral invasive breast cancer.
• Has metastatic (Stage IV) breast cancer.
• Has multi-centric breast cancer (presence of more than 1 tumor in different quadrants of the breast).
• Has any of the following clinical lymph node staging per current AJCC staging criteria for breast cancer staging based on radiological and/or clinical assessment:
  • cN3, cN3a, cN3b, or cN3c.
• Has ER–, progesterone receptor positive breast cancer.
• Participants who have undergone excisional biopsy of the primary tumor and/or axillary lymph nodes or have undergone sentinel lymph node biopsy prior to study treatment.
• Has a known additional, invasive, malignancy that is progressing or required active treatment in the last 5 years.
  • Note: Participants with basal cell carcinoma of the skin, squamous cell carcinoma of the skin, breast ductal carcinoma in situ, or cervical carcinoma in situ that has undergone potentially curative therapy are not excluded.
• Has a diagnosis of immunodeficiency or is receiving chronic systemic steroid therapy (dosing exceeding 10 mg daily of prednisone equivalent) or any other form of immunosuppressive therapy within 7 days prior to the first dose of study treatment.
• Has an active autoimmune disease that has required systemic treatment in the past 2 years (i.e., with use of disease modifying agents, corticosteroids, or immunosuppressive drugs).
  • Note: Replacement therapy (e.g., thyroxine, insulin, or physiologic corticosteroid replacement therapy for adrenal or pituitary insufficiency) is not considered a form of systemic treatment.
• Has a known history of active tuberculosis (Bacillus tuberculosis).
• Has an active infection requiring systemic therapy.
• Has a history or current evidence of any condition (e.g., transfusion-dependent anemia or thrombocytopenia), therapy, or laboratory abnormality that is specifically contraindicated per the current locally-approved labeling, that might confound the results of the study, interfere with the participant’s involvement for the full duration of the study, or is not in the best interest of the participant to be involved, in the opinion of the treating investigator.
• Has known psychiatric or substance abuse disorders that would may interfere with cooperation with the requirements of the study.
• Has left ventricular ejection fraction (LVEF) of < 50% or below the institution limit of normal, as assessed by echocardiogram (ECHO) or multigated acquisition (MUGA) scan performed at screening.
• Has other significant cardiac disease, such as:
  • History of myocardial infarction, acute coronary syndrome, or coronary angioplasty/stenting/bypass within the last 6 months;
  • Congestive heart failure (CHF) New York Heart Association (NYHA) Class II-IV or history of CHF NYHA Class III or IV.
• Has a known history of human immunodeficiency virus (HIV) infection.
  • Note: No HIV testing is required unless mandated by local health authority.
• Has a known history of hepatitis B (defined as hepatitis B surface antigen [HbsAg] reactive) or known active hepatitis C virus (defined as HCV RNA [qualitative] is detected) infection.
  • Note: No testing for hepatitis B or hepatitis C is required unless mandated by local health authority.
• A WOCBP who has a positive urine pregnancy test within 72 hours before the first dose of study treatment. If the urine test cannot be confirmed as negative, a serum pregnancy test is required. In such cases, the participant must be excluded from participation if the serum pregnancy result is positive.