Merck Research Laboratories: David Nicholson explains Merck`s focus on early stage science space




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Video title: Merck Research Laboratories: David Nicholson explains Merck`s focus on early stage science space
Released on: August 31, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at BIO 2011, Fintan Walton talks to David Nicholson, Senior Vice President and Head Worldwide Licensing and Knowledge Management of Merck Research Laboratories
Merck Research Laboratories' role and responsibilities within Merck
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BIO 2011 in Washington DC. On this show I have David Nicholson, who is Senior Vice President of Licensing and Knowledge Management at Merck , welcome to the show.
David Nicholson:
Good morning, it's great to be here.
Fintan Walton:
Your role is as I've already mentioned Licensing and Knowledge Management, could you just tell us a little bit about where you fit within the Merck organization particularly as part of that process by which people do deals?
David Nicholson:
Yes of course, so at Merck we split licensing and business development up into two groups, I take care of the licensing organization licensing sits firmly and squarely within our R&D organization Merck Research Labs. The business development organization fits within the finance group and the business development group takes care of negotiations and the financial side of the transaction. Licensing takes care of the science side, Merck we all say it all starts with the science so first of all we do a scientific evaluation have a potential collaboration interaction if we see there is a good scientific fit we get our business development colleagues on board and we work as a team to complete the negotiation discussions and doing the deal.
Fintan Walton:
Okay excellent. Just a little bit on the Knowledge Management side what's that specific responsibility?
David Nicholson:
Yes, so in that position I have responsibility for what we use to think of as libraries, but that information science is not about journals and books on shelves anymore it's about using all the possibilities for data management, turning data into information into knowledge and providing that in a digestible way to the scientist and for the people in our organization.
Merck 's focus on early stage science space
Fintan Walton:
Okay very good. So let's just go back to licensing and particularly the licensing environment as you say you are responsible for licensing primarily obviously in-licensing within Merck you've got a very defined research and development goal and objective obviously the externalization of research and development is an important part of Merck 's overall objective, so in this environment that we are in and I am referring particularly to the changed environment that we have within biotechnology lack of funds and so forth, what is it like for Merck ?
David Nicholson:
It's a great environment to work in, I've been in the industry now for 30 years and my enthusiasm and belief that we can bring great medicines to the market remains unchanged. So overall it's a great environment of course pharma is going through difficult times at the moment as these biotech as are the venture community. So what I really believe in is that biotech, academia, pharma, VC's we all need to work together in much more symbiotic relationship if we are really going to try and improve the productivity and chances of bringing great drugs to the market.
Fintan Walton:
Okay, so one of the things that I understand Merck does is trying to get in earlier into the science as a way of supporting that objective so that you end up with a great drug?
David Nicholson:
Yes, so we say our sweet spot is early, now what does early mean that's before proof of concept. Why we interested in that space while we thing there is far more opportunities there, but importantly we think that's an area where we can work with the partners to help mold and shape the project that they are working on, within pharma we firmly believe of course that we are the people who know how to complete drug development, biotech is fantastic into their lean and nimble organizations, evaluating novel mechanisms coming up with interesting leads, but sometimes they take shortcuts that we in pharma view as being too shortcuts and if we work with them early we can further develop their programs to make certain that the ultimate success it's going to be achieved or when necessary we can do quick kills.
Fintan Walton:
Right, so it's importantly getting the alignment between the two organizations is really important?
David Nicholson:
That's a good way of putting it, yes.
Merck 's deal strategy
Fintan Walton:
Right, so what are the more common or increased level of types of licensing deals going on option based deals in other words company like GSK has been doing option based deals which are really getting access to technology pretty early leaving the responsibilities for the biotech company to continue with the program but having optioned then to license it at in later dates often around proof of concept is that the type of deal that Merck is looking at?
David Nicholson:
Yes we have done option deals, we try and work with our potential partner and put together deal structure that is win-win for both sides and sometimes that's an option deal, sometimes it's not like acquisition, we recently acquired SmartCells [PharmaDeals ID = 38367] which has a very interesting technology for glucose sensitive insulin release and so we acquired the company sometimes it's more a straight licensing deal. We recently did a deal with a Korean company [PharmaDeals ID = 41295] on a biosimilar for Enbrel which we announced that was just a licensing deal for that particular potential product.
Merck 's perspective: Reasons to make acquisition of a company
Fintan Walton:
Right. So the decision to make say for an example an acquisition, because a lot of venture capitalist would just love you to do more of those what is the underlying reason to make an acquisition of a company?
David Nicholson:
There are multiple reasons why we might acquire a company, of course VC's these days increasingly look to pharma as the exit option for that continuously public market is still a very difficult one there are relatively few IPO's and so it does look as though VC's and small companies will continue to look to pharma for their exit for their foreseeable future. Why do we acquire a company very often, we actually start looking at a particular project and we put a value on that project and then we work out whether a licensing deal for a project or an acquisition is the more attractive option for ourselves for the owners and investors of the smaller companies.
Fintan Walton:
Right. So it's all down to in the end the assessment and ultimate negotiation of a deal?
David Nicholson:
That's correct what's win-win both for Merck and for the partner.
Opportunities with academic and research institutes
Fintan Walton:
Right. Just looking at not biotech companies but academic and research institutes but not for profit organizations as a source of opportunities is that still unchanged or has that changed in recent years?
David Nicholson:
So Merck has become increasingly focused on the external world, there is an ever increasing awareness that the majority of science is out there and we need to interact with academia, with biotech, small companies, large companies. So that's an evaluation that I think will continue. Pharma companies are increasingly focusing their internal efforts on later stages of discovery, lead optimization, lead discovery and development so in the front end of the research engine we will need to work more and more with academia and I think we need to learn how to work better with academia and academia needs to learn how to work better with us, because it has had a the interaction between pharma and academia has happened check at history if we go back over the last few years.
Fintan Walton:
Well often academic research has a different objective to a pharmaceutical company it's often no blue sky it's often they want to publish sooner rather than may be pharmaceutical company may want to do that?
David Nicholson:
And rightly said.
Fintan Walton:
So it's always a difficult alignment to get how would you argue with that?
David Nicholson:
It is but so what we have to look for is where our objectives match and we should why we've had to check at history of interactions in past is because I think we try to force fits those interactions and those areas of alignment and sometimes in industry people have the view that academics take our money and run that they view pharma as a bank and pharma is not a bank, pharma wants to spend this money to discover and develop drugs which can turn into great medicines and some academics want to work with industry and some don't and that's fine.
Fintan Walton:
Sure. I mean in that case then does a company a spin out company from an academic research lab are lot better to deal with than directly with the academic lab, would you prefer to have the intellectual property and associated knowledge and know-how wrapped inside a startup company?
David Nicholson:
I think once we have established the collaboration, I don't think it matters too much whether it's with an academics lab within a university or with the spin out, it is sometimes challenging to interact with some university technology transfer offices and therefore it's sometimes easier to do a deal with the small company. I would say though that the best the university technology transfer offices have significantly up their game from our perspective over the last few years, I hope they think that industry is up the game as well, but I think that we now have a much better understanding between pharma, licensing organizations, and the best university technology transfer offices which is easier to interact with them than it was a few years back.
Fintan Walton:
So it's become a little bit more sophisticated in the art of deal making?
David Nicholson:
I think we got to know each other somewhat better.
Types of deals Merck is looking at?
Fintan Walton:
Exactly, so just one other thing finally David is could you remind us what Merck is looking for, I mean in terms of therapy focus but also the types of sweet deals that you would like to do?
David Nicholson:
Merck puts quite a lot of effort into publicizing our wants and needs and we do publicize it on our website merck.com/licensing so you can always look there, since the merger between Merck and Schering Plough [PharmaDeals ID = 32697] we've done some heavy lifting in terms of prioritizing the disease areas we focus on we now focus on 11 specific disease areas so we are looking for opportunities specifically within those areas that's the main focus of our licensing effort. And our sweet spot is early prior to proof of concept, we look for people working on validated targets, validated either by compounds in the clinics or by human genetic validation and those are the areas we really focus on. The type of deals we are looking for are truly collaborative deals and we have a scouting organization that is global and we're very proud of it and we have there more than a dozen scouts around the globe, and the Boston Consulting Group recently run a survey of how biotech's perceive pharma companies and Merck was very pleased to come out very high in that survey.
Fintan Walton:
Right. David Nicholson, thank you very much for coming on the show.
David Nicholson:
It's a pleasure to be here, thank you for the conversation.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
David Nicholson
Head
David Nicholson currently serves as Senior Vice President Worldwide Licensing and Knowledge Management at Merck Research Laboratories. Dr. David Nicholson graduated in pharmacology, earning his B.S. from the University of Manchester and his Ph.D. from the University of Wales. He has been employed in research and development in the pharmaceutical industry since 1978. David began working for Beecham at its research facility in Germany in 1978. In 1988, he joined Organon BioSciences in Newhouse, Scotland, where he was the pharmacology department head. From 1993-2002, he worked in Organon's Oss, Netherlands, headquarters. During that time, he held the positions of program vice president of CV and CNS R&D (cardiovascular and central nervous system research and development); head of research in the Netherlands; head of global research; and, eventually, head of research and development for the company. Based in New Jersey since 2002, David joined Schering-Plough following its acquisition of Organon in 2007. Prior to his arrival at Merck in 2009, he served as senior vice president of Global Project Management and Drug Safety.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Merck Research Laboratories
Merck Research Laboratories discovers and develops medicines for cancer and neurodegenerative disorders. The company was founded in 2004 and is based in Boston, Massachusetts. Merck Research Laboratories operates as a subsidiary of Merck & Co Inc.