The Knowledge Within: An Interview With Merck KGaA’s R&D Chief

Luciano Rossetti, head of global research and development at Merck KGaA, believes the mid-sized pharma is well on its way to becoming a global immuno-oncology specialist. He discusses in-house innovation, the company’s recent IO alliance with GSK and the next wave of success that is beginning to swell across the cancer drug development community.

Merck KGaA’s Luciano Rossetti talks to In Vivo about the German pharma’s next wave of immuno-oncology products that are steadily moving through its pipeline, why GlaxoSmithKline PLC was an ideal IO partner in a very competitive cancer drug development arena and the company’s wider deal-making strategy when it comes to pipeline advancement.

In February 2019, Merck entered a global strategic alliance with GSK to jointly develop and commercialize its pipeline cancer therapy M7824 (bintrafusp alfa*). M7824 is an investigational bifunctional fusion protein immunotherapy that is currently in clinical development, including potential registrational studies, for multiple difficult-to-treat cancers. This includes a Phase II trial to investigate M7824 compared with Merck & Co. Inc.’s Keytruda (pembrolizumab) as a first-line treatment in patients with programmed cell death ligand-1 (PD-L1) expressing advanced non-small cell lung cancer (NSCLC).

Merck received an upfront payment of €300m ($340m) from GSK and is eligible for potential development milestone payments of up to €500m triggered by data from the M7824 lung cancer program. Merck will also be eligible for further payments upon successfully achieving future approval and commercial milestones of up to €2.9bn – resulting in a total potential deal value of up to €3.7bn.

“Among our pipeline assets, perhaps the most innovative with the greatest potential is M7824, a bifunctional fusion protein immunotherapy that acts in a single molecule,” said Rossetti, head of global research and development at Merck. The compound is designed to simultaneously target two immuno-suppressive pathways: transforming growth factor-β (TGF-β) and an anti-PD-L1. Bifunctional antibodies aim to increase efficacy above and beyond that achieved with individual therapies or combinations of individual therapies. In addition to use as a single agent, M7824 is also being considered for use in combination with other assets from the pipelines of both Merck and GSK under their agreement. (Also see "GSK Makes I-O Move With Merck KGaA Deal Worth Up To €3.7bn" - Scrip, 5 Feb, 2019.)

Despite Merck’s commitment to IO development, GSK initially appeared as an odd partner of choice. The UK big pharma is not a key player in the IO space and has spent recent months bulking out its cancer pipeline through acquisitions and deals. During GSK’s fourth quarter earnings call in February 2019, GSK’s CEO Emma Walmsley said its oncology pipeline has doubled in size since July 2018 to include 16 assets in the clinic. As well as its deal with Merck, in December GSK acquired cancer development company Tesaro Inc.for $5.1bn. (Also see "GSK Embraces PARP Promise With Tesaro Buy" - Scrip, 3 Dec, 2018.)

However, Rossetti said, “We wanted someone very committed to oncology that has a complimentary skillset, but also someone that doesn’t have a full commitment to any immuno-oncology lead compounds.”

He added that Merck still held discussions with some of the major IO players, but ultimately the company was concerned “in terms of having this new immunotherapy as an anchor for future combinations, for new therapies in certain fields like non-small cell lung cancer, it was not ideal to go for an established player who had already committed enormous resources to a marketed anti-PD-1 or anti-PD-L1, or something in very late-stage.” Instead, Merck’s main criteria when seeking a partner for M7824 was to have “someone that was truly heavily committed to growth and investment in oncology, but also to be a major player in terms of global reach.”

Rossetti said there was an immediate alignment with the GSK team at the highest level. “There was immediate alignment on the philosophy and the principles on how to develop this exciting novel drug and bring it to the patients with difficult-to-treat cancers.” Investors are intrigued by the opportunity M7824 represents, because of the potential of its dual mechanism it could potentially overcome some of the hurdles that limit the number of patients that respond to PD-1/L1 treatment. The drug represents an enormous commercial opportunity in cancer.

Other Pipeline Developments

Merck’s R&D chief also noted that the company has at least six clinical-stage compounds in development that are reaching critical steps in terms of registrational or late-stage trials. “Our clinical-stage pipeline over the last few years has developed very rapidly and with great success,” he noted, adding that this busy pipeline is what pushed Merck to seek a strategic partnership for M7824 “to maximize the value of this asset and to better balance the risk management of our extremely rich pipeline.”

Outside of oncology, Rossetti highlighted evobrutinib as being at a critical development stage for Merck. The compound is expected to move into Phase III trials in the third quarter of this year for the treatment of multiple sclerosis (MS). The company is also awaiting Phase IIb data for evobrutinib in rheumatoid arthritis and lupus. Merck has also submitted a new drug application (NDA) for its oral drug Mavenclad (cladribine tablets) as a potential treatment for relapsing forms of MS, with a decision from the US Food and Drug Administration (FDA) expected in the second quarter.

Also, in its IO portfolio, Merck’s PD-L1 inhibitor, Bavencio (avelumab), which is partnered with Pfizer Inc., recently reported further trial results in renal cell carcinoma (RCC). And on February 11, the US Food and Drug Administration (FDA) accepted for priority review the supplemental biologics license application (sBLA) for Bavencio in combination with Pfizer’s Inlyta (axitinib) for patients with advanced RCC. Inlyta, an oral therapy designed to inhibit tyrosine kinases, including vascular endothelial growth factor (VEGF) receptors 1, 2 and 3, is already approved in the US and Europe to treat RCC.

“It makes sense for us to find strategic partners to fully maximize some assets, particularly ones like M7824; which, if it hits and confirms some of the initial signals, will require a very rapid escalation of our planning soon,” Rossetti said.

IO Deal-Making

Rossetti sees only more IO partnerships across the industry in the near-term. “There are some big players in oncology that have relatively dry internal pipelines and they are heavily investing and looking for partnerships or for licensing deals,” he said. Merck, however is in the situation where it has an organic road ahead coming largely from products developed in-house, but it needs partners to maximize the potential of certain compounds, he noted.

Rossetti expects a heavy level of activity in the field of oncology in terms of the degree of collaborations, partnerships and acquisitions. “That’s what seems to be happening and it makes sense.”

“We’re just at the beginning of a new era in which we are basically able to reawaken the immune system and  activate it to attack tumor cells,” Rossetti said, when considering the next moves for the IO drug development community. “We’re just scratching the surface,” he said. “Only a small minority of patients are dramatically benefitting from these great new therapies, while the potential exists to expand the number of patients as well as the durability of these responses. Looking back at the last couple of years, a lot of promise has been made in terms of immunotherapies, but there has also been a lot of disappointments relative to the enormous number of clinical trials that have been initiated all over the world to investigate these innovative therapies.”

Merck is familiar with setbacks in cancer drug development. In November 2018, Merck and Pfizer lost an opportunity to crack the ovarian cancer market early when Bavencio failed as a monotherapy and in combination with chemotherapy in the Phase III JAVELIN Ovarian 200 study of tough-to-treat platinum-resistant or refractory disease. The companies announced in a November 19, 2018, top-line release that the drug missed progression-free survival (PFS) and overall (OS) endpoints when tested alone or with pegylated liposomal doxorubicin (PLD) chemotherapy against PLD alone in the three-arm study of 556 women with cancer resistant or refractory to platinum chemotherapy. Bavencio is one of the more advanced checkpoint inhibitors in development for ovarian cancer and the companies were hoping to be the first in the PD-1/L1 class approved for this indication. (Also see "Merck KGAA/Pfizer's Anti-PD-L1 Bavencio Loses An Opportunity In Ovarian Cancer" - Scrip, 19 Nov, 2018.)

The Next Wave

Rossetti believes the industry is now ready for more data-driven decisions on what to take forward in pipelines. This earlier and better-informed decision making will spark another “wave of innovation around immunotherapy,” he said. He expects M7824 to play a role in this next movement in cancer treatment.

“It’s an early product, with about 700 patients treated to date. In general, these are small cohorts but we have impressive signals that need to be fully confirmed during the next stages,” he highlighted. If the early signals are confirmed, M7824 could lead to transformational effects in non-small cell lung cancer, biliary tract cancer, HPV-associated tumors, and other areas, Rossetti said.

In the coming years, there will be “more and more demand to find the right patients for the right therapies or the right therapies for the right patients,” Rossetti said. “Immuno-oncology is particularly challenging. We do believe in PD-L1 as a good driver but cancer is tremendously complex and a number of patients do not respond to these therapies, or acquire resistance to them, leaving them with limited treatment options.”

“The next challenge is going to be fully understanding the drivers for specific tumors, whether it be targeted oncology or immuno-oncology,” Rossetti said. “We need to be able to identify these drivers earlier and treat them with very specific biologics or small molecules. That’s where big investment is required to realize the full potential of precision medicine and that’s where we as a company are focusing most for our future.”

When it comes to precision medicine, Merck wants to use more evidence and analysis derived from digital databases. “We’re putting some effort in digital pathology but also in gene sequencing and expression analysis, which is the most important genetic factor underpinning tumors, before we even start designing our first-in-human studies. Investments are prompt in some of those novel types of analyses in the clinic.”

In-House Versus Acquired

Rossetti regularly promotes Merck’s in-house discoveries and developments. “For many years, we have been very strong in drug discovery with laboratories producing extremely good ideas and promising approaches. But in many ways, we were not fully materializing our clinical pipeline,” he said.

However, the company is focused now on investing in translational medicine across its development program, in alignment with marketing colleagues. As such, there was a unifying intent to develop internal programs, he said. “We feel, in the last few years, that we have enhanced our productivity within the organization and in advancing innovative therapies. By having a very focused discovery strategy as well as a complete end-to-end organization, we can successfully develop our products all the way through registration to launch.”

Rossetti added that to have a strategy based on how may acquisitions and licensing agreements can be done, a company must have substantial resources. “In the rare cases in which clinical-stage, well-validated or highly promising assets are available, it takes a huge amount of resource to step in.” He said Merck has “more and more trust in the ability of our own internal lab to produce truly breakthrough innovation, and M7824 is an example of this.” Whereas externally feeding the pipeline would be “incredibly costly and highly competitive.” This was why Merck chose to focus on maximizing the output of its discovery units, Rossetti noted.

“I think we’re being clear that there’s still the possibility for us to do smaller deals for something to complement our pipeline, but the general philosophy is to stick with the internal and organic growth of the pipeline,” he said. To balance that pipeline and manage where its R&D dollars go, Merck, in 2013-2014, narrowed its R&D focus to very specific core areas. “We focus on multiple sclerosis and leveraging immunology,” Rossetti highlighted, adding that one example of where Merck has pulled back its R&D efforts is in neuroscience. “We made the decision that in terms of true innovation in the lab, we were less competitive in neuroscience, where there are specific scientific areas within oncology and immunology where we believe we can be very competitive. In terms of disease areas we are prioritizing specific tumor types and are also very committed to multiple sclerosis.” He also noted that in autoimmune diseases, Merck has a particular focus on systemic lupus erythematosus. “These are really narrow areas and a major focus of our scientific efforts.” 

To be competitive in these areas, Merck is getting even more niche. “In terms of our scientific focus, even within immuno-oncology, we are creating a center of excellence in bispecific and bifunctional proteins to really leverage the ability of having a single molecule with more than one mechanism.” He added, “We also want to do more to direct these mechanisms to the antibody component of bispecific and bifunctional compounds as well as to specific areas within the tumor environment. This is one area that we have invested a lot in.”

Merck is also advancing its activities within DNA damage repair (DDR) research and development. “As we think long-term, there will be some synergies between inhibiting the mechanism for DDR that we believe can amplify the efficacy of current therapies, in particular the autoimmune checkpoints,” Rossetti said.

“We have ambitious view about the pipeline,” Rossetti noted, adding that over the last 12 to 18 months the company’s confidence in its R&D offering has grown. He cited M7824 and evobrutinib as prime examples that have made the company feel as though “we are on the right path.” What Rossetti seeks now is “to see big success in our launches and even more regulatory success to confirm this progress.”

*Bintrafusp alfa is the proposed International Nonproprietary Name (INN) for the bifunctional immunotherapy M7824.