Computational biology startup joins Merck KGaA's incubator

After suffering a string of late-phase failures in recent years, Merck KGaA is in the middle of restructuring its business and rebuilding its pipeline. This week, the company began working with two potential sources of new drugs when computational biology and antibody discovery startups joined its Israeli bio incubator. 

Merck opened the incubator in 2011 with $13.5 million in funding and a 7-year plan to grow Israeli biotechs. The second batch of companies to join the incubator includes Metabomed, a newly formed computational biology and cancer metabolism business. Unnamed researchers at Tel Aviv University and the Technion Israel Institute of Technology co-founded the firm, which joins Compugen-Merck Serono collaboration Neviah Genomics and multiple sclerosis-focused antibody startup ChanBio at the incubator.

A reliance on biotech IT tools links the three startups. Neviah Genomics is working with computational discovery platforms from Compugen ($CGEN) to develop toxicogenomic diagnostic tests. Similarly, Merck's brief description of Metabomed highlights its focus on computational biology. Both the academic institutions at which Metabomed's founders work have a strong presence in the field, with their research labs applying computational biology to protein-RNA recognition, prediction of protein function and other tasks.

For Merck, working with startups that apply this data-driven approach to drug discovery could lead to its pipeline becoming populated with candidates that have a better chance of succeeding in late-phase trials. After its terrible run in the clinic, the company needs to up its hit rate. As Stefan Oschmann, head of Merck's pharmaceutical business, told Reuters: "If you want to be successful in the U.S. market, you have to introduce products, and that's what we are working on."

- here's the press release
- read Reuters' take