Research and Development at Merck

Nearly 4,000 employees around the world work for Merck researching innovations to serve long-term health and technology trends in established and emerging markets as well as in developing countries.

Merck spent around € 504 million on research and development in the third quarter of 2014. In addition, we are focusing on a newly defined mix of in-house research and cost-saving collaborations, which enables us to increase the productivity of our research while simultaneously reducing financial outlay.

The organizational set-up of our research and development activities reflects the divisional structure of Merck. Within the Executive Board, Stefan Oschmann is responsible for the Merck Serono and Consumer Health divisions and Bernd Reckmann is responsible for the Performance Materials and Merck Millipore divisions.

Apart from the details reported below with regard to the third quarter of 2014, more information on the company’s research and development activities can be in the Merck Annual Report for 2013.

Merck Serono

As of July 21, 2014 Luciano Rossetti, M.D., was appointed Executive Vice President and Global Head of Research & Development. In his most recent role, Rossetti was Senior Vice President Late Stage Development at Merck Sharp & Dohme (MSD). Before joining MSD in 2006, Rossetti was an internationally recognized academic scientist for 18 years.

Immunology

A small-molecule BTK inhibitor (MSC 2364447) entered Phase I clinical testing in healthy volunteers, and is the newest program to enter the Merck clinical pipeline. This investigational agent is a highly selective inhibitor of the bruton tyrosine kinase (BTK), which is important in the development and functioning of various immune cells including B lymphocytes and macrophages. Preclinical research suggests it may be therapeutically useful in certain autoimmune diseases.

Neurology

Subsequent to the completion of a Phase I clinical study that demonstrated encouraging MRI results following intradermal treatment of patients with relapsing multiple sclerosis (RMS) with ATX- MS-1467, an investigational immune-tolerizing agent, a Phase II study has started in RMS, and the first subjects are expected to receive treatment before the end of 2014. Following a thorough review of all scientific and commercial aspects, Merck decided not to pursue further development of plovamer acetate, an investigational second-generation copolymer for relapsing-remitting multiple sclerosis (MS). As a consequence, the ongoing Phase II study is being terminated early. Merck remains committed to driving innovation in the field of MS and improving the lives of people with the disease.

Oncology

TH-302, which is currently under evaluation in two Phase III trials, underwent a pre-planned interim efficacy and safety analysis of the Phase III metastatic or locally advanced, unresectable soft tissue sarcoma (STS) study. The Independent Data Monitoring Committee conducting the analysis recommended that the study should continue as planned to its natural conclusion. Current projections foresee that the required number of events for final analysis should be reached in the latter half of 2015, with the primary analysis of overall survival (OS) expected to be conducted in 2016. The second Phase III trial with TH-302, which is being performed in advanced pancreatic cancer, reached full enrolment of 660 patients in October.

During the third quarter Merck Serono, and Sutro Biopharma, a private biotechnology company based in San Francisco, announced a collaboration and license agreement to develop next-generation antibody drug conjugates (ADCs) for multiple undisclosed targets in oncology. Merck Serono also announced a co-development and license agreement with The Institute of Cancer Research (ICR), and the Wellcome Trust, both based in London, to identify inhibitors of the enzyme tankyrase, thought to be important in the development of cancer. Both Merck Serono and the group at the ICR are already working on tankyrase inhibitors and it is hoped their cooperation will accelerate progress in this field.

Immuno-Oncology

Concerning tecemotide, an investigational cancer immunotherapy, the results of a Phase I/II trial in Japanese patients with stage III, unresectable, locally advanced non-small cell lung cancer (NSCLC) indicated that no effect had been observed for either the primary endpoint, OS, or for any of the secondary endpoints. Based on these results, Merck decided to discontinue the clinical development program for tecemotide as a monotherapy in stage III NSCLC worldwide in order to refocus efforts on other promising candidates in the development pipeline.

For MSB 0010718C, an investigational fully human IgG1 monoclonal antibody that binds to programmed death-ligand 1 (PD-L1), the Phase I study is advancing rapidly and anti-tumor activity has already been observed in a number of patients, notably in NSCLC and ovarian cancer. Merck Serono has initiated a competitive process to select a partner for the global co-development and co-commercialization of MSB 0010718C, and aims to reach an agreement by year-end.

Endocrinology

Concerning Kuvan® (sapropterin dihydrochloride), detailed 26-week data from the Phase IIIb SPARK study were presented at the Society for the Study of Inborn Errors of Metabolism (SSIEM) Annual Symposium, in Innsbruck in early September. Results from the study showed that the addition of Kuvan® at a dose of 10 or 20 mg/kg/day to a phenylalanine-restricted diet significantly increased phenylalanine tolerance in children with phenylketonuria (PKU) who are below 4 years of age and responsive to Kuvan®, compared with patients on diet alone. The SPARK study was requested by the European Medicines Agency (EMA) as a post-authorization measure. Given the positive outcome of the trial, Merck Serono has submitted an application to the EMA for a label extension.

Fertility

The ESPART study, a Phase III, randomized, single-blind trial to demonstrate the superiority of Pergoveris® (r-hLH plus r-FSH) versus Gonal-f® (r-FSH) for multifollicular development as part of an Assisted Reproductive Technology treatment in patients who have shown poor ovarian response in the past, completed enrollment following the inclusion of 946 patients.

Other highlights

At its Analyst & Investor Day on September 18, Merck gave an update on its plans for its Biosimilars activities. In addition to the already disclosed investment plan of € 100 million for this year, the unit plans to invest € 130 million to € 150 million in 2015, depending on the outcome of ongoing Phase I studies. Existing partnerships with Dr. Reddy’s of India and Bionovis of Brazil will be expanded by another, yet undisclosed in-licensing agreement for a late-stage biosimilar, initially for smaller emerging markets. Between 2015 and 2016, Merck plans to initiate between two and five Phase III clinical trials.

Merck Serono announced the launch of Merck Global Grants with a total annual investment of € 20 million, which underscores the company’s commitment to funding scientific innovation and independent medical education around the world. The Grants for Innovation in Research identify and fund what is considered the most promising research in specific fields worldwide from across biopharma, including academia, research centers, smaller start-ups and independent researchers. During the third quarter, Grants for Innovation were awarded in the areas of Multiple Sclerosis, Growth Disorders and Oncology.

Merck Serono and the Institute of Experimental Neurology (INSPE) at San Raffaele University and Research Hospital in Milan, Italy announced the continuation of a strategic alliance to develop pre-clinical and clinical research projects in the field of neurodegenerative diseases. The translational research will focus on developing innovative therapies against serious and disabling neurological diseases affecting young adults in particular, such as multiple sclerosis. Established in 2004, the renewal of the partnership extends the agreement between the parties for two additional years.

Consumer Health

Consumer Health research and development activities focus on constantly improving tried and proven formulations consistent with the needs of consumers. At the same time, the division is further developing its established brand-name products by making them simpler to use, for example through new forms of applications, and by offering accompanying services.

In the third quarter, the division underscored its innovative strength by launching strategic brands in key markets. In addition to the new Bion® Equilibre in France, these include Nasivin® Fresh Menthol in Germany and the market launch of the Bion® brand in Brazil.

Performance Materials

Merck is the undisputed market and technology leader in liquid crystals, which are primarily used in displays of televisions and mobile communication devices. We are also one of the leading suppliers of functional and decorative effect pigments. Our high-tech materials and solutions are used by customers in the consumer electronics, lighting, coatings, printing technology, plastics applications, and cosmetics industries. Merck is also focusing on growth dynamics in emerging markets within Performance Materials. As a new part of Performance Materials, AZ Electronic Materials (AZ) brings additional fields of business to the Merck portfolio. AZ serves two main markets, the sector of IC Materials for integrated circuit manufacture, and materials for display applications (Optronics).

Liquid crystals

In the area of LC displays for mobile devices, Merck has developed a new LC switching mode, UB-FFS technology (Ultra-Brightness Fringe Field Switching). The new LC switching mode has the potential to increase display light transmittance by 20% and the market launch is proceeding faster than expected. The first products based on this new switching mode are already on the market. The new technology offers many advantages: Firstly, it reduces energy consumption and increases the battery life of the mobile devices. Secondly, it improves mobile display quality and supports the trend towards higher resolutions.

The Merck LC 2021 strategic initiative combines the company’s future LC activities, with a special focus on applications beyond displays. For example, liquid crystals can regulate the light and heat transmittance of windows in building facades. Since acquiring the remaining interest in Peer+, a Dutch specialist for smart windows technology, the company has now been fully integrated. This enables Merck to accelerate the development of LC materials for these applications and enter into collaborations with partners in the glass and facade technology sector.

OLEDs

Organic light-emitting diodes (OLEDs) are used in innovative lighting applications and display technologies. They provide brilliant colors and sharp images from any viewing angle; they have a long lifespan and are highly energy-efficient. In addition, OLEDs enable round or flexible displays, making them perfect for use in the latest technical applications. One such example is the smartwatch, a wristwatch that provides additional computer functionality along with Internet access.

The Merck product line for these types of applications is called livilux®. Merck has developed a strong portfolio of worldwide patents, based on more than ten years of experience. Development partnerships with customers are a way of testing new technologies and making them market-ready. For instance, with printer manufacturer Seiko Epson the Performance Materials division has co-developed a technology that can be used to print OLED displays. While Merck contributed its expertise in OLED material and ink development to the collaboration, Seiko Epson contributed its expertise in print heads featuring micro piezo inkjet technology as well as process expertise. The jointly developed technology offers the advantage of lower costs and higher material efficiency. In contrast to evaporated OLED displays, the materials are applied at room temperature and under normal pressure in the case of printed OLED displays. In addition, this technique only deposits material in the areas where diodes are actually located.

High-quality pigments and functional materials

Besides high-quality decorative effect pigments, Merck also offers functional materials used, for example, in laser marking of plastics, in conductive coatings, and in heat reflection for greenhouses. The Meoxal® brand is the latest development in effect pigments. These pigments captivate with their excellent color saturation and exceptional performance. This is the result of their innovative layer technology and the use of aluminum flakes as the substrate. They are highly suitable for a multitude of high-performance applications, especially for automotive and plastic coatings.

The new generation of Xirallic® pigments under the name Xirallic® NXT was successfully launched with the product Xirallic® NXT Panthera Silver in the second quarter of 2014. In the course of extending this range of products, the launch of Xirallic® NXT Leonis Gold, an innovative gold pigment whose visual properties are very similar to shiny metallic gold, was prepared in the third quarter. A version of our pigment Lava Red was launched onto the automotive market under the label Colorstream® Lava Red SW for our automotive customers. It will soon be presented to a wide audience as part of the “Red Emotions Automobile Campaign”. In the area of pigments for cosmetic applications, the product Ronastar® Diamond Black IQ, which meets the growing regulatory requirements of the cosmetics industry, was recently introduced.

AZ Electronic Materials

In its IC Materials business, which supplies products for integrated circuit manufacture, AZ has developed a range of products for Extreme UV Lithography (EUV) applications which has already been qualified by several customers for their processes.

The increased complexity of lithography processes for the most advanced generations of chips is opening up opportunities for new process materials that the IC Materials business is either innovating or developing further. AZ’s “shrink” technology, which was mentioned in the report on the second quarter, again enjoyed a high degree of customer interest, especially for negative tone resist processes. Further customers have started the material qualification process. In the meantime, so-called rinse materials are being used in order to prevent the collapse of fine resist structures caused by capillary forces during resist development. With increasing miniaturization of structures, the application of these materials is becoming necessary for a growing number of processes and AZ is developing this product range specifically for this purpose. Increased requirements placed on etching processes can be met with new metallic hard masks, which are replacing older silicon-based processes. AZ develops the corresponding products, e.g. based on zirconium or wolfram, in close cooperation with customers.

In the Optotronics business, the new siloxane materials mentioned in the report on the second quarter of 2014 are now at the pilot production stage as a thin-film barrier for OLED lighting.

Merck Millipore

With nearly 800 employees focused on R&D, Merck Millipore is working with customers to develop innovative solutions for the research, development and production of pharmaceutical and biotech processes worldwide.

In September, Merck Millipore announced it had received two R&D Magazine 100 Awards for innovative products released to market in 2013. The 52^nd annual R&D Awards recognize the 100 most technologically significant products introduced onto the marketplace over the past year. The Merck Millipore products that were recognized are:

The SmartFlare™ detection reagent is a novel probe capable of detecting specific mRNAs and miRNAs in live, intact cells. This technology allows for carrier-free cellular endocytosis of the reagent, followed by detection and relative quantitative analysis of RNA levels. Because the reagent leaves the cell after the detection event, the same sample can be used for any downstream analysis, which makes it possible to assess multiple biomarkers or downstream functionalities in the same cells.

Clarisolve® depth filters are specifically tuned to the particle size distribution of various pretreatment methodologies, enabling the fastest and most efficient way to clarify high-density streams and easily transfer processes from upstream to downstream without the use of centrifugation. Clarisolve depth filters were designed for high cell density/titer mammalian cell culture feed streams for monoclonal antibody production. There has also been early success in microbial and vaccine applications.

In the third quarter of 2014, Merck Millipore also announced the opening of a new Biomanufacturing Sciences Training Center (BSTC) facility in Tokyo, Japan. The state-of-the-art facility is designed to help biopharmaceutical companies develop manufacturing processes and find solutions to processing challenges in collaboration with engineers from Merck Millipore. The goal for this facility, now the ninth of its kind for Merck Millipore, is to enhance the customer experience by delivering innovation, quality products, and comprehensive technological support – all major components of our product and service portfolio offering.