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Moffitt, Merck join forces

One of the world's largest drugmakers forms a research venture with the Tampa institute to adapt cancer treatments to individuals.

By BILL VARIAN and KRIS HUNDLEY
Published December 19, 2006

TAMPA - The H. Lee Moffitt Cancer Center & Research Institute is joining hands with the world's second-largest drugmaker in a Tampa venture aimed at cutting-edge research to tailor cancer treatments to individual patients.

Under terms of the deal, Moffitt and Merck & Co. Inc. will form M2GEN, a for-profit Moffitt subsidiary at a still-to-be-determined location near the University of South Florida campus, Gov. Jeb Bush announced Monday.

The state, Hillsborough County and the city of Tampa will provide more than $35-million in financial incentives to build a 50,000-square-foot headquarters for M2GEN. The deal is expected to be finalized in the coming weeks.

In return, Moffitt and Merck pledge to create 165 new jobs in the next three to five years to run the startup, conduct research and apply it to patients. Jobs will average $80,000, and most will be in Hillsborough County.

Merck will make a "substantial" financial investment in the project, according to Moffitt officials, but they did not disclose the amount.

With two weeks left in Bush's term, the deal places a final punctuation mark on an eight-year tenure in which the governor has emphasized diversifying the state's economy in part by luring bioscience companies to Florida. "We're known as a place to visit," said Bush, addressing employees and others at Moffitt on Monday. "But we're also known as an exciting place where the intersection of entrepreneurship and discovery is taking place."

It also marks one of the first major scores for Hillsborough County commissioners, who have watched other regions of Florida land prominent bioscience companies. The county has the biggest financial stake in the project, pledging $20-million in cash, as well as land for the new business.

Commission Vice Chairman Ken Hagan said the county is entering an "exciting new realm" of economic development. Hillsborough competed with Pasco County for the project.

In addition to the county, the state is pledging $15-million. Tampa has pledged $500,000.

Several aspects of the deal must still win approval from various government agencies, though Monday's announcement appears to signal that is a formality. The deal comes in Moffitt's 20th anniversary year. "We have so much to be proud and so much to be thankful for," said H. Lee Moffitt, the former state House speaker who pushed for creation of the cancer center, introducing Monday's news conference.

Peter Shaw, a senior director in clinical oncology for Whitehouse Station, N.J.-based Merck Research Laboratories, said his company chose Moffitt because of shared ideas about advancing cancer treatment. "The first thing is this common, shared vision to develop targeted therapies and personalized medicine," Shaw said.

Dr. William Dalton, Moffitt's CEO, said the project has been four years in the works. It stems from significant advances over the past decade in mapping the chemical building blocks of human beings and the cancers that afflict them.

M2GEN will work with other medical facilities around the state to build a database of up to 30,000 tissue samples and patient medical histories to determine which types of people and cancers respond best to different types of treatment, and which ones don't. Ultimately, they hope to be able to tailor treatment to patients based on their genetic makeup and what it says about how they may respond to different drugs.

"We will be able to determine which types of patients respond to therapy and which ones don't," Dalton said. "Rather than just blind treatment, each individual will get their own unique therapy based on their unique profile."

In return for its contribution to M2GEN, Merck will have exclusive access to the tissue bank database Moffitt is assembling. "They will not have access to the patients' identities; that will be safeguarded," said Moffitt spokeswoman Michelle Foley. "But they will have access to the data."

The bet, Foley said, is that Merck, with many more researchers than Moffitt, will be able to move promising discoveries along the path to marketable drugs faster. And M2GEN will share in any profits.

Though this is the first time Moffitt has spun off a for-profit venture affiliated with a drug company, its cancer researchers have long worked with major pharmaceutical companies on clinical drug trials and research. "And this arrangement keeps us open to partnering with other drug companies going forward," Foley said.

Merck's agreement to put an unspecified number of dollars into Moffitt's research in return for exclusive access to M2GEN's tissue bank database reflects an industry trend. New drug compounds are increasingly being discovered at small biotech companies or research institutions, then being shepherded through the costly and time-consuming approval process by the big pharmaceutical companies. On its Web site, Merck said it has "hundreds of academic collaborators and significant partnerships with biotech and pharmaceutical companies."

"With the advent of the biotechnology era," the Web site says, "We understand that 99 percent of the world's biotechnology research takes place outside of Merck Research Laboratories."

Merck is not alone. Earlier this month, pharmaceutical giant Pfizer of Groton, Conn., announced a five-year, $100-million collaboration with Scripps Research Institute. The deal will give Pfizer first rights to license nearly half the drug discoveries that will come out of Scripps' labs in both Jupiter and La Jolla, Calif. The Pfizer deal replaces a 10-year relationship that Scripps had with the Swiss-based pharmaceutical company Novartis.

Michael Krensavage, an analyst with Raymond James & Associates who covers the drug industry, said Merck's affiliation with Moffitt makes sense.

"All drug companies are looking for new medicines. They've had difficult times replacing the ones that have gone by the wayside," he said. "And Merck, in my opinion, is making a more concerted effort in cancer."

Who's paying for it?

Where the money will come from:

From the state: $15-million from the Quick Action Closing fund.

From Hillsborough County: $20-million from reserves, plus land.

From Tampa: $500,000.

Also from the state and county: $825,000 in tax credits through a business incentive program.

What's next

Various entities, including a legislative committee and a state agency, must approve the state incentives. The City Council and County Commission must approve their contributions, and the state Board of Governors must approve the creation of a for-profit entity at Moffitt. No timetable has been set, but all could come within a few weeks.

About Moffitt

H. Lee Moffitt Cancer Center & Research Institute, 12902 Magnolia Drive, Tampa.

Opened: October 1986

Current size: 1.3-million square feet

Research funding: $54-million per year

Patients treated: More than 210,000 a year

About Merck & Co. Inc.

Headquarters: Whitehouse Station, N.J.

Started: 1891

Employees: 61,500

2005 revenues: $22-billion

2005 net income: $4.6-billion

Top-selling drugs: Zocor, Fosamax, Cozaar, Singulair

[Last modified December 19, 2006, 00:23:27]