Merck Serono Secures Future Pipeline




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Video title: Merck Serono Secures Future Pipeline
Released on: August 04, 2009. © PharmaVentures Ltd
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In March 2009 Merck Serono announced that they had set up a strategic Venture Fund to invest in biotech companies with interesting programmes that are in line with Merck Serono’s strategic thinking. At BIO 2009 Dr. Jöern-Peter Halle, VP Early Stage Licensing, joined Fintan Walton to discuss how this fund will give the company enviable access to exciting innovation in their main therapy areas.
Merck Serono early stage licensing and focused therapeutic areas.
Fintan Walton:
Hello and welcome to PharmaVentures business review here at Bio in Atlanta. On this show I have Joern Peter Halle who is Vice President of Early Stage Licensing at Merck Serono. Welcome to the show.
Joern Peter Halle:
Thank you.
Fintan Walton:
Merck Serono is an interesting company. It's based in Switzerland. It's a product of merger between the German E. Merck and Serono [PharmaDeals ID = 25251] a Swiss biotech company very famous, pulled together to create this new entity, your role obviously as I said is to bring in licensing opportunities. Could you describe what that role really is? What do you mean by early stage licensing and the type of products you are trying end license?
Joern Peter Halle:
Right, so early stage means for us everything prior to IND filing, so everything that is not yet in the clinic. However I also have research and evaluation function, so people of my in my team look for opportunities across the board so pre clinical development, discovery stage but also in clinical stage so really have to have a comprehensive view about what's going on in biotech companies and other pharma companies. As I said I do the pre clinical meaning prior to IND negotiations with my team.
Fintan Walton:
And the types of product areas that you are trying to cover at now are just one of those?
Joern Peter Halle:
Yeah, we have clear after the merger clear strategic focus on oncology, neuro degenerative diseases and drugs in autoimmune, inflammatory disease those are the core therapeutic areas. We have also established therapeutic areas such as endocrinology and Fertility. But the main focus especially in the early stage is on the three areas I mentioned.
Fintan Walton:
And when people think about early stage you already mentioned you know pre clinical up to a pre IND also for a lot of pharmaceutical companies like yours you are looking for platform technologies, technologies that can bring a new capability for new for drug discovery. Is that also included in your (indiscernable)?
Joern Peter Halle:
That's also in my area especially when it comes to to the negotiations structuring of these deals. Of course we are very closely interacting with the research organizations especially for the technology platforms and then also linking that to the therapeutic areas because we always want to make sure that the platform really fulfills the need that the therapeutic areas has.
Deal capabilities at every stage, ventures funds and strategy on opportunities.
Fintan Walton:
Right, now company like Merck Serono is has developed a [indiscernable 0.2.51] on focus as you say. But if I was a biotech company and I was looking to out license my technology or my products which are at the early stage as you define them, Why should I go to to your organization say versus another larger pharmaceutical company?
Joern Peter Halle:
First of all we have deals or structures in place for every stage. So we have of course the capability to in license late stage, clinical stage opportunities. We restructure co-development , co-discover deals also in the pre clinical phase and actually recently we initiated our corporate venture fund needed to cover also the very early stage opportunities which are of high strategic interest for us but we feel that the validation step is needed prior to in licensing.
Fintan Walton:
So it's not just the capabilities of Merck Serono itself and its global presence but more importantly also here is this new venture fund which supports biotech company?
Joern Peter Halle:
Right. So we refer that -- yeah as I said some opportunities that came to us where really interesting, really in our focus but where we felt that direct transfer of the technology or the product into our research and development organization doesn't make sense much better to mature the technology or the product of the biotech company. So this was the reason reason why we set up this new structure.
Fintan Walton:
Okay. So when you are out there looking for opportunities, you are looking for opportunities on a product basis, technology basis but from what you are saying you are also looking at from a company " organization perspective as well because obviously for you to make an investment decision it's different than just simply taking a licensing?
Joern Peter Halle:
It it's different "yeah right and really depends on on the situation. So we are very close to our internal R&D organization, we are in one function that is called product development. So we are close to the project leaders, project management and things like that. So we exactly know what we can do internally, where our resources are, where our capabilities are and we of course compare and match this to the capabilities of the biotech companies then we need to structure the best deal to bring the product forward.
Deal making process with Merck Serono and the alliance management team.
Fintan Walton:
So so you've described there some of the structure which is important for somebody outside trying to look into Merck Serono, so you as you said you work very closely with the research and development teams within Merck Serono. So where does all of this fit? Where, how do if I was a biotech company do I go directly to you or can I go straight to research and development if I was interested in setting up the collaboration with with Merck Serono. How does that it actually work? And what sort of expectations can an individual have when they are going through a deal making process with Merck Serono?
Joern Peter Halle:
Yeah, now they should go through us. We have people involved from the technical, scientific clinic part or expertise in the team that can really do the initial evolutionaries, see if there is a strategic fit with our pipeline and our desire to expand this pipeline obviously. And and they are also the contact when it comes to more federal, due diligence and so they make the link into the research and development organization.
Fintan Walton:
Right, but obviously there the actual due diligence itself is conducted by individuals within the research and development team themselves?
Joern Peter Halle:
Right, right.
Fintan Walton:
So you got other scientists evaluating the science?
Joern Peter Halle:
Exactly and we we think that this is the best way to do not only the evaluation but also to prepare the technology transfer or the collaboration actually to bring the people together. It's not only about the product and the science and the data. It's also between yeah the relationship between the people and this is also one element of a due diligence can we work together with the biotech company and even if you do a straight in-licensing there is some interaction needed and which is important for the success.
Fintan Walton:
Right and for early stage developmentally or discovery even research there is there is a need for collaboration; there is a greater dependency on the relationship. So that leads into the issues of alliance management you've said how important is relationship with the biotech companies and so forth, so how does that work within Merck Serono?
Joern Peter Halle:
Yeah, we have one alliance management team and actually it's not split between early and late stage. We all hope that an early product will be a late product too and then launch and be marketed. And as there is somehow this need for continuous monitoring of the collaboration we have as I said one alliance management team, one dedicated alliance manager that is responsible for early stage collaboration and which somehow follow the collaboration through hopefully to to the product launch.
Role of Merck Serono in 2009 funding
Fintan Walton:
Okay. Now been involved in such early stage technologies and and drug discovery and development. It you are more likely to come across biotech companies which are still in very early stage, clearly we are here in 2009 funding for biotech companies got tougher, does that mean that your job at Merck Serono has got easier or it's tougher?
Joern Peter Halle:
It really depends. I think flexibility is higher on the biotech side and of course there is a need to be more flexibility to be more flexible on the pharma side as well. So I think the flexibility on the biotech side is really a plus because it's really driving the deal to a conclusion. But of course we always have to think ahead especially if we are really in the collaboration where both parties contribute we have to think about financial reach of the biotech company and we have to structure a deal in a way that we secure the survival of the partner through the let's say collaboration phase at least and hopefully beyond that.
Fintan Walton:
Have you found that companies, well more companies looking to do deals with Merck Serono as a result of the drying up of the funds?
Joern Peter Halle:
We were also I think seen as a partner, a good partner after the integration of Merck Serono because we brought very good complimentary skills together. So I don't see more partnering opportunities or people that come to us. I think it's it's the urgency is higher that's that's clear.
Fintan Walton:
Right.
Joern Peter Halle:
So we have to drive the things to a conclusion otherwise the the biotech company has to go with another partner. So it put some pressure on our organization to really come to decisions in a timely fashion.
Fintan Walton :
Right.
Joern Peter Halle:
Just cautious always, our desire.
Venture fund and investment model.
Fintan Walton :
Right, now you also mentioned important development within Merck Serono's which is the development this venture fund. Could you tell us a little bit about that venture funding and how it operates and where it relates to your function?
Joern Peter Halle:
Yeah, so it's part of my function and it's a very important element. So it's not a separate venture fund that is may be even separated by Chinese walls to the rest of the organization. It's an integral part of the business development, licensing organization. So and it's a strategic venture fund so we only invest in opportunities that are really in-lined with our strategy focus. So it's not a risk balance element vehicle somehow, now we really want to focus our risk in our core therapeutic areas. And yeah as I said want to invest in companies that have interesting products that need more maturity before we can make a licensing or maybe even a negotiation decision.
Fintan Walton:
Okay. And do you tend to I know it's only early days but are you likely to co-invest with other invest VC's
Joern Peter Halle:
Actually.
Fintan Walton:
And is that you gonna hunt with other VC's to invest?
Joern Peter Halle:
Right, especially in the beginning and actually this week we announced the first investment and therefore were we a part of a consortium of investors so we joined the syndicate in the second closing of the A round and I think that's as I said especially in the beginning when to get started the the ideal way. But we are also looking into now at the business plans that we got after the announcement and there are some interesting ideas where we think as a lead investor or even the only investor or sole investor in the company you could make a difference. So this might come also maybe later this year or next year.
Venture funds and drug development.
Fintan Walton:
Right, and and obviously there is always a when you get a venture fund the outcome for a venture fund normally is a return to investors based on the on the return for obviously for the funding that's investing in biotech companies. So how can you reconcile or is there a need of reconciliation between the ends of the venture fund versus the needs for Merck Serono to develop drugs through drug development?
Joern Peter Halle:
The the aim of the corporate venture fund is really to secure access to innovation in the long run for Merck Serono and to get drugs into the portfolio in the long run. So if we make a nice financial return but we are not successful in bringing products into the pipeline I think the whole think would be seen as " not very successful and vice versa. So really the aim is to bring in innovation products into the pipeline, financial return is of course also of interest, we are company in the end but it's not the prime focus of the initiative.
Fintan Walton:
Okay. And for the venture funds which are coming in alongside you, have you seen a change from their perspective or they more or likely now to invest in biotech companies, if a company like Merck Serono says like we are interested in co-invest with you?
Joern Peter Halle:
Right, well we really see there a difference and our initial fear was with this strategic focus and the idea to do in the end a licensing deal. VC would be some of concern that we kept the upside and things like that. But we see just the opposite, they are really more likely to invest because they they see that the pharma companies interested in the biotech company and I think they also speculate that long lasting partners somehow they can follow the companies the best acquire in the end.
Fintan Walton:
Right.
Joern Peter Halle:
So and which could give them a nice exit.
Fintan Walton:
So it provides one form of due dilligence foundation of the opportunity.
Joern Peter Halle:
Yeah.
Fintan Walton:
But also hopefully at some future date an exit for them as well?
Joern Peter Halle:
Right, and yes IPO is not a choice these days. Yeah having some pharma companies on board that are able to acquire the company in the end if the thing is successful, I think it's a big task.
Venture fund and Merck Serono's licensing deals in the future.
Fintan Walton:
Are the licensing deals likely to be different as a result of your investment?
Joern Peter Halle:
When say so, so the we don't look for preferred rights especially not in the syndicate with other investors, I think that's mutual exclusive somehow. So the only right that we get is to observe the company to follow the technology or the product development and then to make the right decision at the right time.
Fintan Walton:
Okay.
Joern Peter Halle:
So I don't think that the in the end the licensing deal would be different to something else. But as you mentioned we have been conducted two three years maybe of due diligence and so we can be much more confident in the decision compared to other companies.
Fintan Walton:
Could we speculate that Merck Serono is gonna do more deals now as a result of having venture fund?
Joern Peter Halle:
More more deals on the early stage, yes. Just doing an investment for sure. Overall, I think we already have a portfolio of products from partners and from internal research and I think we would like to " to keep this, this balance. So yeah, we were quite successful on partnerships in the past and hopefully also in the future.
Fintan Walton:
Okay. Well Peter Halle, thank you very much indeed for coming on the show. Thank you very much indeed.
Joern Peter Halle:
Thank you.
Joern Peter Halle
VP Early Stage Licensing
Joern Peter Halle is heading the Early Stage Licensing function at Merck Serono, which includes a Search & Evaluation function for all therapeutic areas and development stages and the negotiation of enabling technology and pre-clinical candidate deals. Previously Senior Licensing Manager for Merck KGaA he led several successful in-licensing projects and made significant contributions to acquisitions. Prior to joining Merck in 2005, he co-founded the biotech company Switch Biotech in 1997 where he held management positions with increasing responsibilities including the position of Chief Business Officer. He has a PhD in molecular biology from the University of Konstanz, Germany, did his post-doc in biochemistry at the Gene Center in Munich, and worked as a freelance bioinformatics consultant.
Merck Serono
Merck SeronoEMD Serono in the United States and Canada is a pharmaceutical company headquartered in Geneva, Switzerland. The company combines its complementary expertise in new chemical entities (NCEs) and new biological entities (NBEs) to offer innovative prescription drugs of either origin. With comprehensive skills in all areas from research and development to manufacturing, marketing and sales, the division offers its world-class products in over 150 countries worldwide. Their strategically positioned workforce of 8,000 sales and marketing employees ensures commercial coverage in the U.S and Canada, Latin America, Europe, Asia-Pacific and Japan. Merck Serono focuses on finding ways of responding to significant unmet medical needs. They do this by bringing treatments and services to patients in the therapy areas they know best: oncology, neurodegenerative diseases, fertility, endocrinology, cardiometabolic care and other specialist areas such as dermatology. They have six innovative biotechnology products on the market, which together generate more than half of their sales worldwide: Erbitux, Saizen, Rebif, Serostim, GONAL-f.