Riding the wave

By Marie Shields, Editor

The global pharmaceutical industry is facing some tough challenges at the moment: patent expiries, a lack of new blockbusters, and now the ongoing crisis in the financial markets. But Merck Serono’s Bernhard Kirschbaum isn’t too worried, as he tells NGP.

“The combination of what the consumers want, what the health agencies want and the discussion around pricing will lead to more stratified approaches to medicine”
-Bernhard Kirschbaum

Much has been written about the difficult situation in which the US pharmaceutical industry finds itself, with several of the bigger companies merging and cutting jobs, but what’s happening here in Europe? For Merck Serono at least, the outlook is not all bad. When asked if the financial downturn will force the company to downsize its R&D staff, Bernhard Kirschbaum, Executive Vice President of Research and Development for Merck Serono, says, “No, I don’t see that we will have to cut jobs. We are in a more comfortable situation than many of our bigger competitors who face big challenges with patent expiries. We don’t have significant patent expiries in the near future, giving us time to bring new drugs to market, and creating a completely different dynamic than the one that exists in companies who are under pressure.”

“We see a significant opportunity to build and create the right momentum and so there is no talk of job cuts. On the contrary, we are further building our R&D capabilities, particularly in the new core areas that we have announced.”

Staying in focus
The core areas that Kirschbaum is referring to are oncology, autoimmune and inflammatory diseases and neurodegenerative diseases. “These are our focus areas,” he says.“At the same time we want to maintain our leadership around the growth hormone and fertility business. But in terms of research efforts, we’re doing less research for the two latter areas. Until we find cures or better protection for cancer, there will be a medical need because there are still many people dying, and many cancers are not very treatable and we are far away from cures.”

“We have a strong commitment to and a very nice portfolio in oncology, where we are approaching the indications from different angles, attacking tumor cells themselves, the tumor environment and the immune system.”

“Then we have neurodegenerative diseases like Parkinson’s and Alzheimer’s, where there’s currently only symptomatic treatment. These are devastating diseases and an increasing burden for an aging population. The whole industry, including ourselves, is looking for disease-modifying agents that are able to at least postpone the onset or the progression of these diseases. That would have a huge impact on the individual patient and also on society, if you think about the explosion of the cost and the burden associated with the aging population.”

“And of course one of our big areas is multiple sclerosis, where despite the fact that there are great drugs, there’s still a need for higher efficacy and for more convenience, which would then allow better compliance, more continuity, less frequent injections and less painful or oral alternatives that are efficacious and safe. With cladribine tablets and their favourable results from the phase III CLARITY study, we have the opportunity to serve patients with a new oral alternative.”

Kirschbaum points out that with rheumatology and autoimmune diseases in general, and even in rheumatoid arthritis, there are still researchers looking desperately for effective, new, safe alternatives. He says it’s a tough task to become curative, and this is even more true for other autoimmune diseases such as inflammatory bowel disease.

Merck Serono has a very exciting compound in the context of rheumatology: “We are engaged in osteoarthritis and we think with one of our compounds, FGF18, we indeed have a compound that may become the first disease-modifying agent. Here again we have a disease that affects regeneration of the joints and hits many people, 10 times more than RA in terms of prevalence. You have the surgery, the knee and hip replacement and otherwise you’d give painkillers but that’s often more counterproductive than beneficial.”

“It’s ambitious because many companies have tried. We have a very attractive mechanism with the fibroblast growth factor 18 that targets the articular cartilage and stimulates it to grow. It would be wonderful for the patients to find something that would be disease-modifying.”

Family values
The ability to continue with these important areas of research depends to some extent on a stable working environment. One factor that helps Merck Serono provide this stability is the fact that it is a family-owned company.

“This gives us a lot of confidence for the future,” says Kirschbaum. “It means we don’t have to look every day, every minute at the stock price; instead we can think in somewhat longer periods. I did live through this during my time at Aventis, when you always had to look at the stock market and to sometimes make short-term decisions that were not absolutely in line with regard to long-term requirements.”

“This does not mean we are not ambitious, and it doesn’t mean we don’t have a lot of pressure and want to bring things forward and not lose any time. But in our setting, there is no need to do something that helps in the short term but which in the long term would be a mistake.”

“The Merck family has invested a lot in this company, not just money. It’s not like with some other families who might invest here and there and when the one business suffers they pull their money out and put it into something else. That’s not the case with us, which brings additional stability. We also have both the chemicals and the pharmaceuticals business sectors and this helps us to balance things out. There are times when the pharma business profits from the chemistry business and there are times, such as right now, where the chemistry business profits from the pharma business.”

Another benefit that Kirschbaum finds in working at Merck Serono is the opportunity to work in networks rather than silos. This is part of the reason he chose the company as the next step in his career. “I chose an organization with an open and active mindset, which you particularly need in the early phase of drug development, because you can’t do it all on your own. The world has changed so dramatically that you could be as big as you wish as a company, and you will still need help. You still need the networks and the access to experts externally.”

Kirschbaum has worked in New York, Paris and Germany. He believes it’s important, both for him personally and also as a leader in a global company, to be exposed to different cultures and nationalities. “I’ve always enjoyed that interaction,” he says. “I found each of those places extremely enjoyable, whether it was the Lake Constance region with many opportunities for outdoor activities, or somewhere like New York, where you can combine a tough academic environment and a high workload with the best quality entertainment options. And then there was Paris, which was perfect both with regard to my work at the Pasteur Institute and my private life, with a home in the Quartier Latin.

“The toughest part of all those changes was the step into industry, because for industry I exchanged the espresso at noon in a nice Parisian café with the canteen next to the chemical plant. But what I learned in all these different situations was that I had to approach each with the attitude that, independently of how it turned it, it would be an important experience for me that I would profit from in one way or another. This attitude has made me quite relaxed in approaching challenges.”

In terms of the differences between the academic world and the world of big pharma, Kirschbaum says that as a young scientist, it’s extremely rewarding if you are associated with a compound that makes it through development. “There was one compound that I accompanied to the market at the beginning of my career and that was just a great experience and a huge learning curve. This was one of the reasons why I have stayed in the industry, because the experience is so manifold and so broad.”

Changing times
Rheumatic and autoimmune disease research has been through many changes since Kirschbaum started working in the area in the mid-1990s. “Then, methotrexate was the generic standard therapy. There were some other drugs that showed efficacy – they had serious side effects but they were cheap, and you needed to beat this type of efficacy. During this period several oral compounds were profiled at the same time as injectibles such as the anti-TNF treatments, which completely changed the environment.

“The development during the past decade has been dramatic. It was interesting to see such a field where people were on the one hand anxious to treat the pain and on the other hand there were cheap generic compounds available and you had to decide if it was worth the effort of embarking on further work. There were already treatment options but there was – and still is – medical need in this area. For example, there are people who are not able to stay on a certain therapy because at some point they can’t simply stand it any longer, and they need other options.”

Merck Serono’s current pipeline includes Erbitux, which according to Kirschbaum is becoming an important standard in oncology. “It’s certainly an important pillar for us to build our oncology portfolio around. We are continuing to look into alternative indications where Erbitux may be beneficial.”

“In oncology, it’s very important to have combinations of drugs that work together to bring an improvement. This was a significant breakthrough in colorectal cancer. If this cancer gets reduced to a level where the metastasis can be completely resected, this provides the chance for a cure. The combination of Erbitux treatment with subsequent surgery can be beneficial. If you have a patient for whom surgery is not an option because it is not resectable and you can bring it down to a level where it becomes resectable, then this is a significant additional benefit.”

In addition to Erbitux, Merck Serono has several promising compounds in later stage development for various cancers. These include cilengitide, a peptide-like integrin inhibitor which acts as an antiangiogenic agent, and Stimuvax, for non-small cell lung cancer, which Kirschbaum says could be extremely exciting in the development of a vaccine for cancer. “It would be the first successful vaccine for cancer. Of course the verdict is still out as to whether it will work in a larger patient population,” Kirschbaum explains. “That’s to be tested now in phase III.”

Biomarkers remain an important element in the company’s cancer research. “Each of our trials has an association with a biomarker,” Kirschbaum says. “With many of our products, we either associate them with certain markers or we associate them with single nucleotide polymorphisms. As a midsized company, we are in a better position to tackle this than the big pharma companies, who may worry about losing market share.

“The combination of what the consumers want, what the health agencies want and the discussion around pricing will inevitably lead us to more stratified approaches to medicine. Those companies who embark on this early on will have set a standard and also will have the chance to create more credibility in the community because you can say, ‘I won’t give it to people who have no chance to benefit from it, but I can stratify the population.’ Of course we can never be 100 percent sure but we can stratify it in a way that those people who take the compound have a better chance of benefiting. This is a very ethical thing to do, which we have an obligation to engage in.

“We also have compounds for various autoimmune diseases in the pipeline. A compound called atacicept is being investigated in several different areas such as RA, lupus and MS. This is a compound that neutralizes B-cell growth factors and therefore controls B-cell response. There is FGF18 for osteoarthritis, which is in early clinical development. We still have a long way to go but we are really excited about this compound. It could even have company-transforming potential if it is successful.

“In addition to such diseases, we are tackling rare diseases such as inherited phenylketonuria. Our compound Kuvan, which provides the first therapy for this rare disease, has recently been approved in the European Union. It may not be the ultimate blockbuster, but if you have the chance to bring this type of treatment to the patient, you should do it.”

Ramping up
Merck Serono recently announced a $50 million expansion of its facility in Billerica, near Boston, Massachusetts. As a primarily European-based company, Merck Serono is looking to build up significant presence in the US.

“Historically we had two sites in the US – one from Merck and one from Serono – and we said that we need to bring those people together and we are willing to invest in a nice campus there. We brought the discovery research campus together with our technical operations facilities at a site where there is the potential for further expansion eventually if we decide to invest more.

“We want to create these hubs, not only to ensure a fully integrated group of people that covers the value chain, but also in terms of having good local interactions with excellent partners in academia and biotech. Boston is a very good place to do this. We have a significant group there that works on oncology, and again it’s important that they are embedded in the local networks. And we have our endocrinology, our growth hormone and our fertility approaches located there.

“There’s a lot of excitement over in Boston. We have just been ranked in the top 10 of biotech employers by Science magazine, and we have an all-time low attrition rate in research in the Boston area. It has always been double digit before and now we are well in the single digits, and that’s a great achievement, especially if you remember that we just formed Merck Serono two years ago. There’s a remarkable stability and loyalty there, which you usually don’t see in these US regions with heavy pharma presence.”

The emphasis on networks rather than silos also helps to create an R&D continuum. Kirschbaum says that whenever you make a surgical cut between research and development, you end up with silos where people don’t interact very effectively. “We have created a structure where people are interacting much more. They are encouraged both by the structure and by management to interact, and we are seeing good progress in this. As one of the most recent activities in this area, we have merged the research and development departments into one function, headed by myself. It is a big advantage to have everybody around one table.

“We are also developing relationships with university clinics and other external partners that could be involved in early clinical development. We have interesting models in Boston, the Rhine-Main-Neckar area in Germany and also in Geneva – for example, with the University of Lausanne. It’s time to try new models, and the different partners involved are much more open to this. The stratified medicine approach also calls for these types of interactions. You need to build these things in very early in your approach, because otherwise you lose a lot of time and you risk not bringing your compound to the patient.”

In the end it comes down to commitment and a willingness to excel during times of change, both of which Kirschbaum and his company seem to have in spades. “There is a very strong commitment to innovation. We are currently spending €1 billion on R&D every year, which is more than 20 percent of Merck Serono’s total revenues. This also shows if you look at the recent investments we have made in new technologies that could bring new drug-like molecules to the market.”

It certainly sounds as if Merck Serono is well placed to ride out the financial downturn, and emerge successful on the other side.

Bernhard Kirschbaum is Executive Vice President of Research and Development for Merck Serono, and a member of its Executive Management Board. Kirschbaum joined Merck KGaA in 2005 and was previously Vice President in Pre-clinical R&D and Head of Global Technologies. Prior to joining Merck, Kirschbaum was Vice President Discovery Research for sanofi-aventis. He has also worked for Aventis and Hoechst Marion Roussel in various senior positions, and headed the Centre of Applied Genomics in Martinsried.