Finding New Homes for Merck’s Axed Assets

Merck’s R&D head Peter Kim has often discussed the excitement at the company on the day in late 2009 that its acquisition of Schering-Plough closed and the curtain shielding the two organization’s pipelines from one another was drawn. Kim himself spent hours in front of a computer, gleefully filing through the database of compounds now under his watch.

But in today’s rough R&D climate, pharma companies simply can’t afford to do everything and anything. Almost as soon as the pipelines were combined, Merck also had to file through all its compounds and decide which to shed. Though Merck has not specified a number for how many programs it is cutting overall, the pipeline reorganization is said to be substantial. At the BIO annual meeting, held last week in DC, I sat down with Meeta Chatterjee, Merck & Co.’s head of global outlicensing and asset management, to chat about how Merck is going about finding new homes for those compounds.

The first step in the process was charging every therapeutic franchise head with prioritizing their portfolios. While some companies, such as GlaxoSmithKline and Pfizer, have cut entire therapeutic areas, Merck chose to weed out programs from across its entire organization, Chatterjee says.

The end result was a long list of molecules across all phases of development, and even some at the lead optimization stage, suddenly up for grabs. The list included some that, due to clauses in partnering agreements, had to be returned to a biotech company (see here for how biotechs are grappling with those newly returned assets); others that would be sold outright; and some assets that Merck hoped to keep ties to through a partnership that would include an option to buy back the program down the road after some of the development risk had been removed. Last, a handful of compounds were simply shelved because they showed signs of toxicity in early studies.

Chatterjee’s task is daunting. “Merck did some out-licensing in the past, but there was never a dedicated group, and the number of out-licensing deals were nowhere near what we were being asked to do,” Chatterjee says.

And given the sensitive nature of pharma research, finding partners is not as simple as handing out a spreadsheet of what’s available. “It’s almost reverse competitive intelligence,” Chatterjee says, adding that her group has “had to be judicious” in how information is shared.

Almost as soon as Merck said it was reevaluating its pipeline, a slew of companies and venture capital firms came forward to express interest in assets, she says. “We’ve been approached by everyone.” After the team put together full data packages on every program on the chopping block, they filtered through the requests and tried to find the right matches. In fewer cases, her team has sought to identify a partner that might be interested in a program.

Since completing the data packages on the compounds in December, Chatterjee’s group has done a few small deals, and hopes to complete a few more this year.

Author: Lisa Jarvis

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  1. I have heard Dr. Chatterjee is one of the most efficient workers Merck acquired from Schering. I’d hope her bosses make her as happy as possible because they aren’t getting anywhere without her.