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Beleaguered Merck looks to future

Drug maker to open Boston research lab following Vioxx woes

A week after saying it was withdrawing its $2.5 billion arthritis drug Vioxx from the market and losing a quarter of its stock market value as a result, Merck & Co. will try to dodge the storm clouds and turn its attention tomorrow to a brighter subject with the official opening of its Boston research lab.

A total of 300 or more scientists will be working on treatments for cancer, Alzheimer's disease, and obesity within the 11-story, glass-and-stainless-steel tower that looks like a futuristic cruise ship docked on the edge of the Longwood medical complex.

Its upper floors offer views of labs run by Harvard Medical School, Children's Hospital, and Dana-Farber Cancer Institute, as well as a clear view of the Citgo sign and Fenway Park.

The location offers the same proximity to world-class academic research that has attracted an impressive roster of large pharmaceutical research facilities to the Boston area in recent years, including AstraZeneca Pharmaceuticals LP and Novartis AG, the Swiss company that chose Cambridge as its new world research headquarters.

With much bigger budgets, the pharmaceutical companies are opening gleaming laboratories that are the envy of many of their underfinanced cousins in the region's biotech industry.

Yesterday, as workers washed windows and erected a tent for Mayor Thomas M. Menino and other officials scheduled to attend tomorrow's opening, the Merck vice president in charge of the Boston site, Lex H.T. Van der Ploeg, said Merck's chemists and biologists will be focused on basic research to solve tough medical problems, working through licensing deals with the best that Cambridge and Boston institutions have to offer.

''We have a geographic benefit here," he said. ''It's just a stone's throw away."

The facility is the newest among 11 Merck research labs around the world that are trying to help the company shed its reputation as an old-line pharmaceutical company that has neglected to fill its discovery pipeline with experimental new treatments.

The mission has become all the more urgent for Merck after the Vioxx withdrawal last week removed about a tenth of its annual revenues. An analyst said yesterday that Merck's Boston research facility, which has been under construction since April 2001, is in keeping with the company's efforts to reinvigorate its research and development pipeline under the leadership of Peter S. Kim, president of Merck research and a former scientist at the Massachusetts Institute of Technology.

''Peter Kim has made a major commitment to embrace academia and the rest of the drug discovery and development community much more aggressively than Merck has done in the past," said Robert Hazlett, a pharmaceutical analyst with SunTrust Robinson Humphry in New York. ''It's a broad-scale effort to bolster its capabilities."

Hazlett said he does not believe the Vioxx withdrawal will cut into Merck research budgets. Most of the financial pain, he said, has already been absorbed by investors.

That does not mean that Merck's scientists in Boston are not closely watching the Vioxx situation. In an interview in his office yesterday, Van der Ploeg said Vioxx's demise raised the stakes for the company's researchers, making it imperative that they produce new drugs. ''This is indeed a very serious knock on the door for the organization," he said.

Almost as soon as it was approved by the Food and Drug Administration in 2000, published papers and studies warned the antiinflammatory painkiller caused an increased risk of cardiovascular complications in patients. But Merck, which drove heavy sales with a massive ad campaign, said at the time that information was inconclusive.

Then Merck received data last month from an 18-month colon cancer study that proved a link between Vioxx and higher risk of strokes and heart attacks. The firm contacted the FDA and said it had decided to withdraw the drug, which was the company's third-biggest seller in 2003.

Van der Ploeg said Merck's researchers believe Merck was right to quickly remove Vioxx from the market once definitive clinical trial data wereavailable.

''Whether we like the financial impact of what has happened is an entirely separate story," he said. As for morale in the fledgling Boston labs, he said, ''people have oddly walked away galvanized with the notion that we have to work harder to make sure this works."

The first laboratory scientists began working at Merck's Boston operation on Aug. 2, and they had cobbled together their first experimental molecule within 30 days. The initial work at the labs will be on oncology drugs, led by Dr. Giulio Draetta, a former Cambridge biotech executive and more recently a division director at the European Institute of Oncology. He will be supervising a staff that includes some employees of the former Aton Pharma Inc., a cancer-drug company based in Tarrytown, N.Y., that Merck bought for $125 million in February.

Merck plans to begin hiring Alzheimer's specialists for Boston by the end of this year; it will take on obesity researchers beginning in late 2005, Van der Ploeg said. In addition to 300 scientists once it reaches capacity, the facility will hire 150 support staff, said Merck officials.

Christopher Rowland can be reached at crowland@globe.com.

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