Merck KGaA scouts for deep-pocketed partners to leverage its R&D budget
|Merck KGaA's head of pharma Stefan Oschmann|
After hitting rock bottom with the failure of the multiple sclerosis drug cladribine two years ago, Merck KGaA has been rethinking the entire R&D process as it restructures around a new executive team. Now the head of the pharma division, Stefan Oschmann, tells the Financial Times that the Darmstadt-based drug developer is looking to stretch its $1.5 billion annual research budget with some additional cost-sharing deals that might include private equity groups as well as other industry partners.
Oschmann is in search of outside investors who can afford to pick up half the cost of Phase III trials that could range anywhere from $200 million to $800 million for multiple sclerosis drugs. And the pharma company has come up with a mix of milestones and profit-sharing arrangements to sweeten the deals.
The deal-making offensive follows a recent pact with Quintiles ($Q) to handle much of the company's development efforts, with the CRO angling for performance-based milestones. Oschmann also pointed to Merck's deal with Nordic Biosciences last March, in which the biotech company agreed to provide services around the Phase IIb trial for the osteoarthritis drug sprifermin (recombinant human FGF-18), as an example of the kind of risk-sharing arrangements the company is seeking. And the strategy fits in with Merck's confident assertion that it is orchestrating a pipeline rebirth around oncology, immunology, immunotherapies and neurology.
Merck KGaA execs have been campaigning to create a new image for the company, which has been blighted by a steady diet of bad news on the R&D front. The company closed its big Serono site in Geneva, just finishing the move to Germany in the last few days. But it's effort to change the narrative so far--part of its "Fit for 2018" campaign--has been hampered by clinical setbacks.
Late last year its cancer vaccine Stimuvax flunked a key late-stage study. Merck has brought the program back from the dead, though, renaming the cancer drug--partnered with Oncothyreon ($ONTY)--and aiming at a subpopulation of patients.
Its thin late-stage effort also includes TH-302, in-licensed from Threshold Pharmaceuticals earlier this year in a $525 million licensing pact. The drug hit the primary endpoint on progression-free survival but disturbed investors by missing overall survival. Researchers say the OS results were scrambled by a crossover of patients to the drug once their tumors progressed.
It won't be easy for Merck KGaA to change its image without some clear wins on the development front. And it will take more than a few creative financing deals to convince analysts that the company can effectively choose winners among the drugs it adds to the pipeline.
- here's the article from the Financial Times (sub. req.)
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