3 Questions With Merck’s SVP of BD&L
Although a lawyer by training, Ben Thorner, J.D, hasn’t practiced law nearly as much as he’s been involved in the business development (BD) side of the pharma industry. With early stints in his career at Amgen and Novartis, he learned the nuances and intricacies of deal making, all of which prepared him for his current role as SVP and head of BD and licensing at Merck Research Laboratories.
Like many of us, Thorner is actively preparing for one of the industry’s biggest events — the Annual J.P. Morgan (JPM) Healthcare Conference (Jan. 8 – 11, 2018) in San Francisco. Along with the co-located Biotech Showcase, nearly 40,000 life science professionals will attend what is being referred to as BioWeekSF. Many of those attendees — like Thorner — come with business development, mergers, and acquisitions on their minds.
We sat down with Thorner to pick his brain on what key biopharma BD trends to expect at this year’s show.
Life Science Leader: What Are Some Of The Emerging Transaction Trends In The Biopharma Industry?
Thorner: The market in the deal space always has been a little bit driven by fads, and the current time is no exception. Look at the last three years of the immuno-oncology (IO) space. Venture capital groups starting companies, and larger companies doing deals to partner or buy an IO program were driven by a vision of being able to codose two, three, or four checkpoint inhibitors and expecting extraordinary efficacy. Merck recognized how difficult it is to predict efficacy in the IO space, and so our approach was to partner in clinical development to see what actually works — in people. This is because we had spent a great deal of time doing intricate animal experiments where it seemed like just about everything worked. For example, I remember a research scientist who was extraordinarily excited when we combined our mouse version of Keytruda with another molecule and saw 10 out of 10 complete responses in mice. But such findings did not translate to humans. As such, our approach in terms of buying, licensing, or partnering on assets in the clinical space has been much more broad, and we have tried to make Keytruda available for combinations with just about anything and everything; from checkpoint inhibitors, to targeted therapies, to chemotherapy, to radiation — so long as there is a reasonable mechanistic rationale. Merck currently has more than 525 clinical studies ongoing with Keytruda, with about 300 of those being combination studies. Statistically, many of these early plays are not going to work out, but a few will. The PD-1 (i.e., programmed cell death protein)/IDO (indoleamine-2,3-dioxygenase) combination space is one such area being actively studied, which will be interesting to watch over the coming months as new clinical data becomes available.
Life Science Leader: What Type Of Venture And Emerging Partnership Models Are Currently Paying Dividends?
Thorner: All of the funds that have previously been successful in raising large amounts of money continue to do so, but are doing so on ever-shorter cycles of fund-raising. This has driven much larger venture rounds for startups. I recently saw a number noting U.S. startups raised $22.7 billion across all stages of funding rounds in the second quarter of 2017 alone. I believe that figure was about $20 billion more than all that was raised in the first quarter of 2017. While we could probably debate if such an influx is likely to drive value creation or incineration of large amounts of cash, what can’t be debated is that funding is up — significantly. Similar to what we saw with funds being poured into neuroscience research, it is likely that such large influxes will have an impact, hopefully one that is significant and lasting. But let’s bring this back to Merck, where we tend to approach venture in a couple of different ways. First, we spend a lot of time in business development, building relationships with other venture funds because the companies they form are those we are likely wanting to partner with. So we want to know them well and build lasting relationships, for we view Merck’s relationships with these companies as being very symbiotic. Second, Merck actually has its own two venture funds. One is the Merck Global Health Innovation (GHI) Fund. This $500 million evergreen fund is part of the commercial organization and invests in things that are not drug candidates, such as diagnostics, digital health, and other technologies that can synergize with our therapeutics businesses. The fund has made over 40 digital health investments. We also have built a venture fund inside Merck Research Labs (i.e., MRL Ventures Fund), which is run by Reza Halse, Ph.D. This fund, based in Cambridge, MA, focuses on investing at a very early stage in biotech companies working in a therapeutics space. These could be companies working on developing a novel medicine against a new area of biology or perhaps have a platform that can be used to develop multiple products using new sorts of modalities. With this fund Merck seeks to get involved with such companies at the seed or A round stage and make investments with other blue-chip venture funds. The aim of the MRL Venture Fund is to facilitate growth and development in the ecosystem, while also allowing for Merck to contribute scientific insights, and an end goal of helping these smaller companies gain an understanding as to what Merck is interested in and what Merck thinks “good” looks like.
Life Science Leader: Beyond Oncology, Is There Buzz In Other Therapeutic Areas, Such As Neuroscience?
Thorner: Absolutely. Back in May, Merck announced a deal with Teijin Pharma, a Japanese company, granting Merck exclusive global rights to develop, manufacture, and commercialize its preclinical-stage anti-tau antibody. This will complement Merck’s existing Alzheimer’s disease (AD) portfolio, which includes the late clinical-stage, small molecule candidate verubecestat (MK-8931). This is a partnership, as Teijin retains the option to copromote an approved product in Japan. For a long period of time, prior to the deal, we had been talking and working with Teijin on a more informal basis. If you roll back the calendar about five years, you’d have seen a lot of companies running for the exits in the neuroscience space, as it was very difficult area to understand the pathophysiology of disease. Further, in neuroscience it is very difficult to tell when something is and is not working. But there have been a few changes that have completely changed the industry’s perspective, and as a result, we have seen venture funding in neuroscience increase by 40 percent in the past five years over the prior five years.
Part of this increased interest in neuroscience comes from new learnings in human genetics, which is enabling neurologic conditions to be defined more precisely. Real biomarkers have led to better imaging agents. Merck has developed PET ligands, which are being made available to the biomedical community in a couple of different ways, so researchers are better able to actually visualize what is happening in the brain with disease progression, and whether or not a molecule interdicts its target effectively.
Another driver behind neuroscience investment is the staggering unmet medical need for neurological disorders in OECD member countries, where we are seeing a “greying” of populations. For example, the United States will soon face the 2030 problem, which involves the coming challenge associated with the caring of large numbers of frail and elderly as the Baby Boomer generation ages. This will be compounded by neurological disorders, (e.g., Alzheimer’s) often associated with aging, that place a tremendous cost burden on society. Another driver has been our slow and steady increase in the understanding of the molecular mechanisms of neurologic diseases. This has been driven by previous decades of immense NIH funding. In the 1990s, the NIH funneled about $950 million into neurology research, followed by about $8 billion in the 2000s. In addition, we are seeing neurology starting to borrow themes from oncology, which has been deploying a precision medicine and highly targeted approach toward treatment. An enabling component to successfully executing on a more targeted approach has been the advancements in identifying and measuring disease progression via improved imaging modalities (e.g., MRI, PET, SPECT, and CT) and wearable technologies that allow researchers to better quantify changes in movement disorders in the clinic.
A final catalyst has been the Broad Institute of MIT and Harvard. Well known for its work in oncology, back in 2014 the Broad Institute announced a $650 million commitment to galvanize mental illness research, which will be conducted at The Broad Institute’s Stanley Center. Philanthropy cannot be overlooked, as this significant financial commitment was driven by one person, Ted Stanley, who the Broad Institute’s president, Eric S. Langer, credits with ending a neurological research drought in the private sector, and has already resulted in the identification of more than 100 regions of DNA associated with schizophrenia and discovery of biological mechanisms underlying the disease’s development. All of these developments give us a lot more hope that going forward, working to develop therapeutics for neurological disorders will be less like shooting at a target in the dark.
For more neuroscience R&D insights, stay tuned for my next blog, Will Neuroscience R&D Be The Next Big Thing — Again? 3 Questions With Merck’s VP & Head Of Neuroscience Research