Merck_PE - Reprint 9985050 - (Page 5) We’ve been chosen on more than one occasion despite the fact that we weren’t the highest bidder. It probably wasn’t a Grand Canyon-sized gulf—let’s face it. But in the end, the biotech firm has to feel comfortable that they have a good partner pany’s area of expertise really is basic research. But to be exible, you have to go with the expertise of the parties from both companies, and let them do what they do best. You can’t make the pitch, “We’re from Big Pharma, we know it all, just hand it over to us.” To be successful, we have to meet as equals in the clinical space. Just look at Ariad: Harvey Berger, the founder, has been with the company for years— it’s his baby. He was looking for a real partnership. How can companies conduct M&A and licensing more efficiently? Big Pharma has the reputation of being slow and taking forever to make a decision. We’ve tried hard to ensure that’s not true at Merck. We can make decisions very fast—we’ve even shocked our biotech partners on several occasions by being ready before they were. For example, we did a basic research deal with Ambrx that took just six weeks from when we rst met them. It was a new mechanism in diabetes that doesn’t have any clinical proof of concept. But Nancy Thornberry, who heads basic research in diabetes, had her eye on this mechanism. It wasn’t something that we ourselves were ready to invest in. But when we got to know Ambrx, and we saw that they’d made progress and had good ideas about how to pursue this mechanism, it was a perfect opportunity to do this deal. And then there’s the other side of deals, which is that some take a very long time. But in the end, that’s not really a re ection on the deal. How were you able to move so fast on the Ambrx deal? It goes back to the fact that we have tried to make our process easier for the partners and for ourselves. We have a due diligence checklist. We know the questions and the data we want to see. And we have access to senior management on both the research and on the nance side, straight up to Dick Clark and Dr. Kim. All that’s happening in the background, so the company we’re working with doesn’t have to worry about it or wait around for us. What could biotechs and other companies do to make the deal-making process more efficient? One of the latest things is that some companies want us to make a bid before we’ve seen any data. We’re not fond of that development. To me, that’s a big waste of time because we’d just be making a wild guess. There’s not a lot we can do about discouraging this, other than to point out that it’s not the best way to do things. They may have four or ve bids, but you don’t know what they’re worth because people don’t know what they’re bidding on. Nektar found out about the termination of their partnership with Pfizer by reading about it in the morning news. Did that alter the way companies think about doing deals? It is an example of what not to do. But you didn’t need an example to say it’s a bad thing to surprise your partner. Everybody knows that’s not the way you want it to go down. We have an alliance management group, and it’s their job to make sure those surprises don’t happen. We hope that we would never make a mistake like that. These days, is the relationship more important than cash? We’ve been told on more than one occasion that we were chosen despite the fact that we weren’t the highest bidder. My guess is that it wasn’t a Grand Canyon-sized gulf—let’s face it. But I think people do make decisions based on relationships. In the end, the biotech rm has to feel comfortable that they have a good partner who has that same vision for the product, and that they respect the clinical and marketing people. Big Pharma partners often redo clinical trials after licensing a compound—they find they have to repeat a Phase II trial, for example. Have you seen that problem? You do or redo a trial so that you can see a clearer path forward. Nobody wants to redo a trial for the sake of doing it. But sometimes it’s unavoidable. Sometimes, biotechs have to cut corners when they’re doing their trials because they don’t have as much money [as Big Pharmas]. They’re constantly being pushed to go faster, faster, faster. If they had more money, maybe they would have designed something a bit more elaborate. Every deal has a “work plan” associated with it that says, “Here’s what we’re going to do.” You have to build that understanding as you’re working out a deal, so it shouldn’t be a surprise if a company plans to do a second Phase II trial. After 22 years in the biz, do you think there is a science to business development? It’s the same skill as picking what’s going into the pipeline. People ask me, “What’s the probability of success?” And I say, “What’s your success rate in the lab?” It’s very hard to know—I think it’s a combination of art and science. Printed in U.S.A. © Reprinted from Pharmaceutical Executive, May 2008
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