NorthWest Biotherapeutics Inc (NWBO)

[hyperopia]

Merck & Co Inc at JPMorgan Healthcare Conference JANUARY 14, 2020

https://s21.q4cdn.com/488056881/files/doc_downloads/transcripts/2020/01/MRK-USQ_Transcript_2020-01-13-(2).pdf

Not sure if this has been posted but there’s an interesting discussion at the end . . .

Christopher Thomas Schott - JP Morgan Chase & Co, Research Division - Senior Analyst
Okay. Great. Another kind of core topic has been business development. And I just would be interested in your latest thoughts on the landscape here. It just seems like The Street is generally supportive of Merck building out its pipeline and portfolio. And I was just interested right now what you see the sweet spot is for Merck as we think about commercial versus clinical, as we think about broader platforms versus maybe single product companies.

Kenneth C. Frazier - Merck & Co., Inc. - Chairman, President & CEO
So let me start by saying that we think that business development will remain for us a very big imperative going forward. And the reason we think about that is because we've always been a science-led company. And we always know that there are great opportunities on the outside. So I would say that the way we think about it is what's the next great opportunity in science and how can we get a hold of it in a way that creates value for shareholders.

What we've said is we're not particularly interested in doing a large consolidation-type merger or synergy-driven merger because that doesn't help us over the long term be more effective in innovation. But as we think about bolt-on transactions, we don't really discriminate on the basis of size. We ask ourselves where the next great scientific opportunity is coming from. And we are looking for those, again, in a financially disciplined way, but we're very much focused on them. And last year, we did over 80 transactions. If you include the ArQule transaction, we've spent about $8 billion on those 80-plus transactions. And we're going to continue to be active.

Christopher Thomas Schott - JP Morgan Chase & Co, Research Division - Senior Analyst?It seems like you've also had some success with these partnership type of arrangements? Is there a robust pipeline of opportunities to pursue like
that?

Kenneth C. Frazier - Merck & Co., Inc. - Chairman, President & CEO
So let me start by saying that we think that business development will remain for us a very big imperative going forward. And the reason we think about that is because we've always been a science-led company. And we always know that there are great opportunities on the outside. So I would say that the way we think about it is what's the next great opportunity in science and how can we get a hold of it in a way that creates value for shareholders.

What we've said is we're not particularly interested in doing a large consolidation-type merger or synergy-driven merger because that doesn't help us over the long term be more effective in innovation. But as we think about bolt-on transactions, we don't really discriminate on the basis of size. We ask ourselves where the next great scientific opportunity is coming from. And we are looking for those, again, in a financially disciplined way, but we're very much focused on them. And last year, we did over 80 transactions. If you include the ArQule transaction, we've spent about $8 billion on those 80-plus transactions. And we're going to continue to be active.

Christopher Thomas Schott - JP Morgan Chase & Co, Research Division - Senior Analyst?It seems like you've also had some success with these partnership type of arrangements? Is there a robust pipeline of opportunities to pursue like
that?

Kenneth C. Frazier - Merck & Co., Inc. - Chairman, President & CEO
Well, I have to say that they come along. I think what those opportunities reflect is the flip side of the conversation we have about concentration risk, which is because KEYTRUDA is so foundational, lots of people who are developing lots of other things come to Merck because they're asking the question of whether or not those particular assets are best put in combination with KEYTRUDA. So those are 2 opportunities that came our way, frankly, because people were looking to see whether or not there was a joint development plan with their molecule and our molecule. And we continue to see these opportunities all the time. Roger and his colleagues field lots of requests from people to think about investigating a particular compound or candidate with KEYTRUDA.

Roger M. Perlmutter - Merck Research Laboratories - President
And I would also say that credit to our business development team who are very clever in thinking about, "Gee, how can we expand our impact through these partnership arrangements?" And we're very pleased with what we've been able to do with our colleagues at AstraZeneca and at Eisai. Both Lynparza and Lenvima are doing terrifically well and will do terrifically well in combination with KEYTRUDA.

Christopher Thomas Schott - JP Morgan Chase & Co, Research Division - Senior Analyst?Last question is just I know in the past you've talked about valuation being a challenge for some of the transactions you look at. What latest state
of the land, where are we today with valuation? Is it [everything] at this point? Or is it still balancing?

Kenneth C. Frazier - Merck & Co., Inc. - Chairman, President & CEO
Everything is fully valued out there from everything that we can see. But we have a lot of strength in our balance sheet. We can do transactions as we take the long view. Again, the sweet spot for us has always been the kinds of transactions that are at a stage where we think that we can use our own internal scientific, our development prowess, our commercial prowess, to make those have more value than they do in the hands the people that have them now. And we'll continue to look at them. Even though they're fully valued, that doesn't necessarily scare us away.