Merck Serono Says Partnering Part Of Its Future, Seeks Anti-PD-L1 Deal

Mid-sized German pharma says partnering will be part of its future, as it progresses three key pipeline assets and initiates talks with big pharma players wanting to partner its anti-PD-L1 compound.

With collaboration part of its strategy going forward, family-controlled Merck KGAA of Germany has started a competitive process to select the best partner for global co-development and co-commercialization of its experimental anti-PD-L1 compound, and is in advanced talks with major oncology players with the aim of an agreement by year-end.

“We realize that checkpoint inhibitors have become a very crowded and competitive class in which we will need to invest if we want to go to market on time and with the right number of indications being explored. Therefore we have already initiated a competitive process that we believe will help us realize the value of this promising asset,” Merck Serono CEO Belen Garijo told analysts in Darmstadt, Germany Sept. 18.

Merck Serono’s key pipeline assets are TH-302, in Phase III for pancreatic cancer and soft tissue sarcoma; atacicept, in Phase IIb for lupus; and the PD-L1 inhibitor oncologic MSB0010718C, which is poised to enter Phase III.

Merck Serono would not identify what firms it was speaking with, but Garijo said there is much interest in the immunotherapy drug despite the sector already being crowded with competing therapies. “What we are looking for [in a partner] is a strong development and regulatory track record, as well as a global commercial footprint and we expect that the potential partner will see and be ready to propose the right potential value [and price of this anti-PD-L1 compound],” she said.

She was speaking at the pharma group’s first investor and capital markets day since May 2012, as Merck KGAA’s senior management showcased the company’s successful transition to a leaner, more focused life sciences player following restructuring of the group’s pharmaceuticals business after its ill-fated acquisition of Serono in 2006 (Also see "Merck KGAA Begins Transformation Effort By Closing Geneva Site" - Pink Sheet, 25 Apr, 2012.).

Advancing Through Pipeline Quickly

Today, Merck Serono has a restructured, networked approach to R&D which was put on display at the capital markets event. The group, which has increasingly relied on business development to fill its depleted pipeline, is focused primarily on oncology, immunology, multiple sclerosis, fertility drugs and general medicine and has a number of quickly advancing assets, namely hypoxia-targeted oncologic TH-302, PD-L1 inhibitor MSB0010718C, and atacicept (formerly TACI-Ig) as a potential treatment of autoimmune diseases.

Threshold Pharmaceuticals Inc.’s TH-302 is in two Phase III trials, one for pancreatic cancer and the other in soft tissue sarcoma (Also see "On The Threshold Of The Tumor Microenvironment" - Pink Sheet, 18 Jun, 2014.). Atacicept development was stopped in 2011 due to poor clinical results, Merck Serono revived the program with the Phase IIb ADDRESS II trial, a 279-patient systemic lupus erythematosus study that began in November 2013 (Also see "Merck KGaA Finds R&D Nuggets: Plans Further Atacicept Studies In Lupus" - Pink Sheet, 15 Nov, 2013.).

“We need to focus relentlessly on our key pipeline assets, namely TH-302, anti-PD-L1, and atacicept – and we are very happy that we’re now moving into developing launch readiness in our organization [for these],” said Stefan Oschmann, newly named deputy CEO and vice chairman of the executive board, adding: “We haven’t had any major launches for quite a while, so this is something that we will put a lot of effort behind.”

Merck Serono CEO Garijo, who is newly appointed to join the executive board in January 2015, said the anti-PD-L1 compound is about to enter Phase III, looks very promising, and presents one of the most exciting prospects of her career.

“This is a good example of how fast we can move a program from pre-clinical to clinical and to patients, and how quickly we can produce results. Our Phase I program and expansion cohorts have already included more than 500 patients across all tumor types in multiple indications, and we have increasing clinical evidence of a very competitive product profile,” she told the conference, adding that Merck Serono aims to bring key assets to markets from 2017 onwards.

Lupin, Sutro Pacts Underscore Partnering Trend

“In parallel to this we have identified very focused growth initiatives around our business. Seeking partnerships will help us expand our portfolio opportunities,” Garijo said.

That strategy was reflected in the Sept. 16 news of a long-term strategic partnership between Merck Serono and Lupin Ltd., aimed at expanding the German group’s general medicine and endocrinology franchise in emerging markets. The duo’s pact covers major markets such as Brazil, Mexico, Indonesia, Philippines as well as many countries in Africa and Central Eastern Europe, focusing on cardiovascular and diabetes diseases.

That was followed the next day with news of a collaboration and license agreement between Merck Serono and Sutro Biopharma Inc. using the U.S.-based group’s technology platforms to develop antibody-drug conjugates for multiple undisclosed targets.

Focused collaborations like these will remain Merck KGAA’s strategy as the company completes its largest acquisition, the $17 billion purchase of the U.S. life sciences company MilliporeSigma The deal, announced Sept. 22, is expected to boost the German company’s biopharma lab business (Also see "Merck KGaA Buys Sigma-Aldrich To Boost Lab Business, Expand Footprint" - Pink Sheet, 22 Sep, 2014.).

Emphasizing Ruthless R&D Rigor

Garijo said Merck Serono would pursue a tight and efficient R&D approach, killing off R&D programs early when necessary. She pointed to the group’s Sept. 12 announcement it is ending development of its investigational MUC1 antigen-specific cancer immunotherapy tecemotide, formerly known as Stimuvax, for use as monotherapy in patients with Stage III non-small-cell lung cancer (NSCLC).

The company had previously announced plans to do another Phase III study in a subgroup that had fared well in the first Phase III trial, though that had failed overall (Also see "Merck Serono Is Hoping It Pays To Plan Ahead With New Phase III Trial For Tecemotide" - Pink Sheet, 27 Sep, 2013.). But news of another failed trial changed the firm’s thinking.

Luciano Rossetti, newly appointed global head of R&D at Merck Serono, said that the decision to terminate the development program for tecemotide was based on an analysis of the EMR 63325-009 Phase I/II trial of Japanese patients with Stage III, inoperable, locally advanced NSCLC who had received concurrent or sequential chemo-radiotherapy including at least two cycles of platinum-based therapy and radiation.

Study results revealed no effect of the therapy on the primary endpoint of overall survival as well as secondary endpoints including progression-free survival, time to progression and time to treatment failure versus placebo. The company noted that no meaningful difference in adverse events was observed between the tecemotide and placebo arms.

No Plan To Divest Other Parts

Merck Serono is part of a larger conglomerate comprised of four divisions: Merck Serono, Consumer Health (over-the-counter pharmaceuticals), Performance Materials (high-tech chemicals) and Merck Millipore (life science tools). While its pharma unit is firmly focused on a leaner and meaner approach, the conglomerate itself says it will not follow Bayer AG’s example and divest its performance materials and crystals operations (Also see "Bayer’s Early R&D And Animal Health To Get Boost After Material Sciences Sell-Off" - Pink Sheet, 18 Sep, 2014.).

That message was conveyed by Merck KGAA’s CEO Karl-Ludwig Kley. He told the analyst event, “if you started a company from scratch today you would not necessarily go into the life sciences and material sciences at the same time, and today we heard from Bayer that they want to go in another direction - but for us the materials business is something we inherited and we are very happy we did; it is very successful and I do not see that changing going forward.”