Innovation- Merck's Answer To The Challenges Ahead




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Video title: Innovation- Merck's Answer To The Challenges Ahead
Released on: May 18, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed in Amsterdam at BioEurope Spring 2012, Fintan Walton talks to Barbara Yanni, Vice President and Chief Licensing Officer of Merck & Co
Barbara Yanni's perspective: Environment for late stage products
Fintan Walton:
Hello and welcome to PharmaTelevision News Review. On this show I have Barbara Yanni, who is Vice President and Chief Licensing Officer at Merck , welcome.
Barbara Yanni:
Thank you very much Fintan, it's great to be here.
Fintan Walton:
Barbara, you are one of my early interviewees, I interviewed you in San Francisco about four years ago at that time we've talked about the externalization of research and development at Merck that ongoing idea of bringing drugs and technologies into Merck , how things developed over the last four-years?
Barbara Yanni:
Right, we still continue to be very active in the licensing area, we do about 50 strategic transactions a year and we knew that's very important to our strategy at Merck that it is a complement to our internal research and we try to compliment our pipeline, we look at projects from very early stage to very late stage and we are very actively looking at all times.
Fintan Walton:
Okay, so just look at the late stage products in clinical development obviously there is not much many around and obviously all the good stuffs is already partnered usually and particularly when you are looking at there in the biotech market for products, so what is the environment from your perspective for late stage products?
Barbara Yanni:
Well it is a difficult environment and there really aren't that many late stage products around, however and I guess you could say that's one of the reasons that we did the merger with Schering-Plough [PharmaDeals ID = 32697], because they had a very strong product line and in areas that Merck wasn't in, for example in respiratory they had very, very strong tradition in respiratory so that's added to our Merck 's product offerings and they've also biologics expertise, so that was very important but here we are a couple of years after that merger and we are continuing to look for both early stage and late stage opportunities.
Fintan Walton:
Okay, so when it comes to the early stage obviously that's you got more degrees of flexibility I suppose and one of the observations that we've made is that deals are becoming a bit more creative particularly at the early stage in order for companies like Merck to access great science you have to be a bit more flexible about your deals so is that what you've done?
Barbara Yanni:
Yes I think that is true, I mean I think the main thing you have to think about when you do deals is it's really not up to us at what stage we want to partner a particular asset that's up to the company that owns that assets, so if they feel they want to take it to a later stage then we will be looking at partnering them, if they are willing to partner at earlier stage say preclinical or they want to partner a program at basic research that's the time that we can step in and sometimes we don't step in then and we know we are at risk for losing that deal, so we have to be very cognizant about what the potential partner wants to do when they are ready to partner and to respond to their wishes for the timing and also the kinds of deals that they want to do.
Origin and mission of California Institute of Biomedical Research
Fintan Walton:
Sure, and of course the that the biotech environment is tough for biotech companies particularly from a funding perspective these days, it also means that companies like yours have to access research at an earlier stage even into universities and not-for-profit organization?
Barbara Yanni:
Yes.
Fintan Walton:
So how is that working for Merck?
Barbara Yanni:
Well we have an exciting new announcement that we made last week about the founding of the California Institute of Biomedical Research which is going to be headed up by Peter Schultz who is a terrific scientist and it's going to be an independent not-for-profit company and the mission of Calibr as they are known is to be to take academic proposals and there will be investigators who work at Calibr and the there will be a team that chooses the projects and then the academics will be able to work with the investigators at Calibr on the chosen projects too and the idea is that they will take their early research activities and working with Calibr will take this to from this academic idea to proof of concept, preclinical proof of concept and then Calibr will partner out that program and the partner may be Merck, Merck gets the first look at the programs, but if Merck doesn't choose to partner Calibr can access another partner and so it's a way of getting early research getting it on the way that being translated into medicines.
Approach and strategy towards personalised medicines
Fintan Walton:
Yes, absolutely interesting and then there is a growing trend in that particular area, also the other area that has changed I suppose increasingly over the last four or five-years is the emergence of personalized medicines and each company has it's own approach, what is the Merck approach to personalized medicine?
Barbara Yanni:
So we realized that personalized medicine is very, very important especially if you look at an area like oncology where it's very, very important to find the right patients for the right medicine, because you know there is a lot of side effects to oncology medications and you don't want to be treating someone who's tumor assay is not going to respond to that medicine. So what we've done is some work on a lot of work in our oncology area of finding the right patients, so we've done a couple of deals one with Roche Molecular [PharmaDeals ID = 35123] where we gonna work with them on their assays to find the right patients for particular medication and another one we've just recently announced a deal with Abbott [PharmaDeals ID = 45762] and they are going to work with us to develop a companion diagnostic for Merck therapeutics that's at clinical stage, so that diagnosticwould be used to identify patients in the clinical trial that we will be doing, so that's the form of personalized medicine.
Fintan Walton:
Okay, so the strategy there is to partner with companies that have got the skill sets, the technology to develop these companion diagnostic?
Barbara Yanni:
Right that's correct we have chosen not to go into the diagnostics business ourselves, we realize how important it is in certain areas to have a diagnostic whether it would be a companion diagnostic with a disused or in treatment, or whether it be a diagnostic that's used to identify patients but we have so far chosen not, as a strategy not to say buy a diagnostic company or go into to the marketing of diagnostic ourselves.
Merck 's research and development progress in anti-infectives area
Fintan Walton:
Okay, now the other area that you are famous for is anti-infectives obviously antivirals and vaccines and so forth, how is that research and development progressing at Merck ?
Barbara Yanni:
Right, well it's an area Merck has been in for a very long time and we think it continues to be very important it's become more difficult as the diseases have developed resistance to drugs, but we're very proud of our most recent launch in that area in Hepatitis C and we've launched VICTRELIS which is boceprevir and it actually came from the Schering-Plough pipeline and it's a wonderful time in the Hepatitis C environment because these direct acting antiviral drugs are without the very bad side effects of the Hepatitis C drugs that were available before that so many of the patients couldn't tolerate those drugs and if anyone could tolerate them very sadly they only worked in about 50% of the people, so this is really terrific time for the pharmaceutical companies to make a real advance in the treatment of Hepatitis C .
Launch of DULERA in respiratory field
Fintan Walton:
Sure and you've talked about Schering-Plough it was a very important acquisition for Merck, it brought in a number of things you've mentioned already it also brought in you into the more into the respiratory field or put you stronger in the respiratory field because you did out some respiratory?
Barbara Yanni:
Right we have SINGULAIR which is an oral drug, what we didn't have was inhaler drugs and that's what Schering-Plough has brought, so we've recently launched DULERA a combination drug and Schering-Plough has a very in the area of inhale drugs it's very important to have a good device that the patients can use and Schering-Plough has the TWISTHALER device which measures the dose and it's very easy for patients to use and therefore gets the medicine where it needs to be.
Focus and interests in Biologics
Fintan Walton:
Sure, and the other area of course is biologics?
Barbara Yanni:
Right.
Fintan Walton:
So tell us a little bit more about what's happening in biologics at Merck?
Barbara Yanni:
We have a very, very strong interest in biologics and we have a we actually treat biologics as almost like we're it's own franchise, so the head of biologics Dr Rich Murray reports directly to Peter Kim, the Head of the Research Labs so you can see there is a very strong focus on biologics and we are interested in both novel biologics and we are also interested in follow-on biologics.
Barbara Yanni's perspective: Strategy and elements of deals
Fintan Walton:
Okay, so just we were talking about licensing deals and obviously the types of deals you do are quite varied from a pure valuation perspective often people ask you know are valuations going up or down, what's your perspective?
Barbara Yanni:
Well I think people will notice the very expensive deals and so I think we have sometimes reaching some new levels of expensive deals in the case of acquisitions and also in the case of licensing and to some extent I think that's true and what we have to do is be able to look at the valuation especially for a late stage deal and to think to ourselves you know what kind of risk are we taking and what is the outcome.
Fintan Walton:
Sure, right. In the end it's the business decision isn't it?
Barbara Yanni:
It's a business decision, but there is a lot of factors and I often say when we look at these especially late stage deals it we have to just take sort of all the elements of the pharmaceutical company and put them together and think about the deal will it cost the manufacture the product? What clinical studies need to be done? What's the chance those are going to succeed? What is the, what are the indications are gonna look like? What's that label gonna look like and how we gonna be able to commercialize that product and so that's.
Fintan Walton:
And also just you know can you live with the worst case scenario?
Barbara Yanni:
That's true too, can we live with the worst case scenario.
Fintan Walton:
Yes.
Barbara Yanni:
Right.
Role in emerging markets(Deals with Simcere and Supera Farma)
Fintan Walton:
Okay and that sort of things. So that's our people always interested in perceptives of values just the other area that obviously is changing in the world of pharmaceuticals is the emerging markets, so how is Merck playing in that particular area?
Barbara Yanni:
We are very interested in working in the emerging markets, we have are growing our presence there and both internally and our licensing plays a role there too. We have joint ventures with local companies in a lot of areas in that, we find it's often the best way to quickly grow our business. So for example in China we did a deal with local company called Simcere [PharmaDeals ID = 42005] and they'll be distributing some Merck products and we just did a deal in Brazil very recently with a local company and we will be marketing branded generics with them and that's a big part of the pharmaceutical business in China, and Brazil and other places where it is the brand name and the trust in the brand name like Merck that distinguishes those products perhaps more than it has the profile of the products itself the branding is very, very important.
Fintan Walton:
Yes, and that was with Supera Farma [PharmaDeals ID = 45387] was in the Brazil?
Barbara Yanni:
That's correct in Brazil, yes.
Barbara Yanni's views: Future challenges for companies and Merck 's business plans
Fintan Walton:
Yes, so on that theme of emerging markets and so forth all that's about the future and Barbara you have watched Merck go through it's changes both internal changes but also the acquisition of Schering-Plough [PharmaDeals ID = 32697] as you just mentioned as well so you have very good perspective of a large pharmaceutical company operating in a new and different environment, so what's your perspective then for the future? What are the challenges that you see for companies both large companies and small companies and how do you think those challenges will be ultimately overcome?
Barbara Yanni:
Right it's a very, very challenging environment today in the pharma business that's not a surprise to anyone and there are various ways to address that challenge and at Merck under our relatively new CEO, Kenneth Frazier we have reaffirmed our commitment to be an innovation company. We have a very large research and development budget and we feel that the best thing to do is discover, develop new medicines or license them in and that we are looking for differentiated products, because that's what's really important in the market today so that those products can be say approved in Europe, they could be reimbursed in Europe, in the US the challenge is to get them on the formulary of the pharmaceutical the PBM's and so that's something that's difficult to do, it's something that a large company has an expertise in and that we find that's important when we talk to say small biotech companies about or regional companies up to about marketing their product about licensing in their product and what is a big company that has been successful what do we bring to the picture.
Fintan Walton:
Right, so in the end you're making different types of decisions around products I suppose when they go through clinical development, the types of decisions you would have made 10-years ago would no longer apply in other words you're rejecting drugs that do not fit certain criteria anymore?
Barbara Yanni:
I think that's right, I think it's harder to find something that we feel will be truly differentiated and therefore truly commercially successful meaning that it is, it's a meaningful advance for patients.
Fintan Walton:
Right and obviously that we've talked about companion diagnostics as another way into that future because then you are more certain that the patient will be treated properly.
Barbara Yanni:
Right, exactly.
Fintan Walton:
So Barbara, I want to thank you very much indeed for coming on the show.
Barbara Yanni:
Thank you Fintan, it's really been a pleasure. Thank you very much.
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).
Barbara Yanni
Vice President and Chief Licensing Officer
At the time of recording this PTV interview Barbara Yanni serves as Vice President and Chief Licensing Officer of Merck & Co Inc. She leads the Corporate Licensing group which is responsible for negotiating agreements to acquire compounds, programs and new technologies to complement Merck 's research programs and pipeline. Barbara works closely with her scientific and marketing colleagues at Merck to ensure that the company has access to discoveries that will enhance Merck's ability to bring medicines to patients. Barbara and her team have played a major role in shaping a licensing strategy focused on building strong relationships with partners and potential partners. Merck's rapid, straightforward and clear deal making process has made the company an industry leader in the licensing arena. The result has been a significant increase in Merck's external relationships in recent years. In the past five years, Merck has executed approximately 250 significant licensing transactions in all stages, from technologies and early research collaborations to Phase III development candidates. Before joining Corporate Licensing, Barbara was Executive Director of Corporate Development at Merck where she negotiated acquisitions, divestitures and other business arrangements. Barbara has also worked in other positions in Merck's Finance area including Financial Evaluation and Analysis, Treasury and Tax. She joined Merck in 1985 as Domestic Tax Counsel after working as a tax lawyer for several years at Bristol-Myers and in private practice. Barbara graduated with an A.B. from Wellesley College and a J.D. from Stanford Law School. She also holds a Masters of Law in Taxation from New York University.
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 & Co Inc
Merck & Co Inc also known as Merck Sharp & Dohme or MSD outside the United States and Canada, is one of the largest pharmaceutical companies in the world. The headquarters of the company is located in Whitehouse Station, New Jersey, an unincorporated area in Readington Township. It was established in 1891 as the United States subsidiary of the German company now known as Merck KGaA. In common with many other German assets in the United States, Merck & Co. was confiscated in 1917 during World War I and set up as an independent company. It is currently one of the seven largest pharmaceutical companies in the world both by market capitalization and revenue. Merck 's products cover a broad range of areas, including heart and respiratory health, infectious diseases , sun care and women's health. And Merck focuses its research on conditions that affect millions of people around the world " diseases like Alzheimer's , diabetes and cancer while building strengths in new areas like biologics.