The Merck-Viralytics Tango

Nice job Viralytics (ASX : VLA) !

Today’s announcement about a collaboration with Merck around combination CAVATAK-Keytruda (PD-1) is a meaningful announcement and the first real glimmer of evidence that there may be interest from any of the heavy-hitters in immuno-oncology. In the great battle to dominate this space, it’s encouraging to see Merck – or specifically, Merck Research Laboratories – take in an interest in what the company is doing.

While this is an important first step, it also needs to be put into perspective that this collaboration is with the very early-stage, experimental part of the Merck machine. It has also has no financial consideration attached, and given that it is an uncontrolled, open-label study, strongly suggests that this is nothing more than a proof-of-concept study being driven by Viralytics, and not by Merck. Therefore I would say that it is merely good news, not great news.

Keytruda only fairly recently got the nod from the FDA for NSCLC, so to be fair to VLA, in some ways this is still pretty aggressive behaviour from Merck. Frankly, with BMS, Roche and others breathing down their neck, now is not the time to be petty about missing out on an interesting proof-of-concept, particularly with a promising reagent like CVA21.

Perhaps my only negative question is this…. would it have been better to simply just fund this study and get on with it?

What do I mean by this?

Well, Keytruda is approved (i.e. indicated) for use in NSCLC and the press release clearly denotes that the study uses a fixed dose of Merck’s drug, presumably the prescribed dose of Keytruda. Therefore there was really nothing stopping VLA from running the clinical study as a “standard of care” study, plus CAVATAK. There is even a degree of reimbursement support already (or “access”), so VLA probably didn’t even have to go out of pocket for the Merck drug.

Would it have been more powerful to just get the data under its own steam, or do it with Merck? Perhaps an interesting question for shareholders to ponder… when does NOT paying for information reduce the value of information?

Always.

11 thoughts on “The Merck-Viralytics Tango

  1. Foot-in-the-door manoeuvre by VLA?

    Application of a classic Robert Cialdini persuasion technique?

    VLA gets big-hitter Merck to agree to a tiny “collaboration”, Then big-hitter Merck may find themselves unconsciously falling into a much bigger “collaboration” down the track.

    Maybe…

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    • Gregory – this is a collaboration. Not a deal. To be clear, Merck is not spending a dime on this study. It is also not “Merck” it is MRL. It is not the same…
      …but you wouldn’t know that, so I am not going to stuff it up your arse.
      I have done these deals – dozens of times – they are not easy to close but they are also far from a slam-dunk.
      There is nothing “lol” about this (and if you ever use LOL again on this site I will permanently ban you from posting as you are either incredibly lazy or you still wear nappies).

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  2. If VLA engineered this tiny “foot-in-door” alliance deliberately, then hats off to them. It’s clever. Better than having to approach big-hitters at all those “partnering dos” along with all the other hopefuls and begging big-hitting to “please be my money-bags partner”.

    Or worse, just waiting and waiting for the phone to ring.

    Maybe VLA could try Cialdini’s other 5 persuasion techniques too:

    1. Scarcity: “Hey, you other big-hitters, Merck’s got his eye on me. Act fast. I’m going, going…g…”

    2. Authority: Merck is authority.

    3. Likeability: “Practice the well-known secret of success: Be nice and easy to do business with”

    4. Social proof: “Hey other big-hitters out there, if I’m good enough for Merck to hang around with, then maybe I’m good enough for you too!”

    5. Reciprocity: Sorry, can’t think of anything specific here, but this this principle says VLA needs to think: “I will do a favour for this big-hitter. Hopefully they will return the favour big time.”

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  3. Its a great deal for VLA and I would say that with Merck doing the Biomarker Analysis in-house makes me think if trials are positive a take over will occur and that is VLAs business plan.

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    • Gregory. The biomarker analysis is a necessary part of the clinical indication in order to prove PD-1 expression. I.e. it’s the “standard of care” – not an “Extra”

      Long Tail
      PS: This is no “deal”. Merck did not pay anything. They got information rights, basically for free. So if you were Merck, why wouldn’t you do this sort of deal? It’s not a controlled study so there is no risk to Keytruda.

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    • Don’t forget Gregory, that Merck are currently doing Keytruda trials with Amgen’s, T-Vec. I think that Merck are having an “each way” bet and why not?

      Like

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