How Merck's historic discoveries in Palo Alto shape its future in South San Francisco

Merck’s discoveries in Palo Alto rewrote textbooks. Now, the company hopes to recreate that success at its new South San Francisco site

Palo Alto was a mecca for young talent in Silicon Valley long before the tech boom – especially in the biotechnology industry. As Merck bids farewell to its Palo Alto site, founded in 1981 as DNAX Research Institute, to head to the new, cutting-edge facility in South San Francisco, longtime employees revisit the scientific discoveries made there and look ahead to new beginnings and further breakthroughs in the new location up the San Francisco Peninsula.

Dan Gorman, principal scientist, biologics development, who started working at the Palo Alto site in 1984, says the environment was unparalleled in opportunities to grow and learn.

“I was in awe of the scientists and Nobel Laureates who would visit, and I was just a recent graduate in microbiology who didn’t know anything about immunology, so it was fantastic.”

The Palo Alto site has been instrumental in building the company’s legacy and leadership in immunology and biologics. It was acquired by Schering-Plough in 1982 and became the company’s discovery arm. Since its founding, the site has been known for attracting post-doctorate scientists eager to pursue research that would make an impact on the lives of patients.

Dan Cua, senior principal scientist, discovery immunology, joined the Palo Alto site in 1997, and says it has always pulsed with youthful energy, noting that more than a third of the approximately 140 scientists on site were post-doctoral fellows at the time.

“We were basically doing discovery research with the mind of making a difference in the clinic and making a difference for the patients. That’s what attracted me here. The potential clinical utility of our research – that makes a big difference.”

Important discoveries cemented the site’s place as a popular destination for postdoctoral scientists from nearby universities like Stanford and Berkeley.

Terri McClanahan, executive director, profiling and expression, translational medicine, says that legacy lives on at Merck and will continue in South San Francisco.

“You can argue we’re really not here to publish papers – we’re here to develop drugs. But there’s a nice balance if you have basic research that’s publishable and you’re attracting postdocs – they bring in vitality and different perspectives and experiences and that fosters a richer environment that fuels discovery.”

A hotbed of immunology breakthrough

In 1986, scientists at Palo Alto made the groundbreaking discovery that helper T cells consisted of two subgroups:

TH1 cells
which generate immune responses
against bacteria and viruses

TH2 cells
which fight against worm and
parasite infections

This fundamental paradigm also led to the discovery of the cytokine interleukin 10 (IL-10).

These breakthroughs fueled further research that led to the discovery of the novel cytokine interleukin 23 (IL-23) and its important role in immune regulation. Since then, scientists at the Palo Alto site have continued to conduct and publish work advancing our understanding of the immune system.


“Our work has resulted in the rewriting of immunology and medical textbooks, including in the areas of joint inflammation, rheumatoid arthritis, ankylosing spondylitis and psoriasis. These were diseases redefined by the discovery of IL-23 and IL-23-Th17 immune pathways.”

-Dan Cua


Soon after the acquisition of Schering-Plough, Merck chose to step up its efforts in oncology R&D. The biologics development and immunology expertise allowed company researchers to explore new ways to help the immune system recognize cancer cells and strengthen its response to destroy them. Dan Cua says that his site’s expertise in immunology, cancer immunity and molecular biology created “fertile ground” for immuno-oncology, which continues to be a major focus.

At the new South San Francisco site, there is renewed concentration on the role of inflammation and immunity in cardiovascular, renal and metabolic diseases.

“We’re going to leverage what we’re learning about immunology from our work in immuno-oncology to focus on the role of immune pathways in other diseases.”
- Terri McClanahan

“We are excited to be moving into the new facility. We have chemists on the same floor as the biologists and the gene profilers, and I think that’s going to be really exciting – it’ll be much easier to brainstorm.”
- Dan Cua

He adds that Merck’s historic discoveries will help enrich its future, saying, “That knowledge can be brought to the new site to drive a new wave of innovation.”

It’s been quite a journey and we’re going to a new phase – it’s like metamorphosis.”