After Incyte's commercial buy, Novartis shells out €2.7B for cancer specialist MorphoSys

Rumblings of a potential bidding war over cancer specialist MorphoSys have subsided as quickly as they arose after Novartis descended on the German biotech Monday with billions of dollars in cash. The move comes less than 24 hours after rumors of the M&A imbroglio surfaced in Reuters.

Novartis is beefing up its oncology arm by laying out 2.7 billion euros ($2.9 billion) in cash to acquire MorphoSys, the companies announced after market close Monday.

The deal is now wholly centered on MorphoSys’ pipeline. Mere hours before Novartis telegraphed its buyout, MorphoSys revealed plans to sell its sole commercial asset—lymphoma med Monjuvi—to longtime partner Incyte, which was also rumored to be jockeying for MorphoSys before Novartis swooped in.

With MorphoSys’ marketed med out of the equation, Novartis is poised to pick up pelabresib, a therapy being tested in combination with Incyte’s Jakafi (ruxolitinib) in patients with myelofibrosis. The Swiss pharma giant is also set to receive tulmimetostat, an early-stage dual inhibitor of the EZH2/EZH1 proteins currently being pitted against solid tumors and lymphomas in the clinic.

Pelabresib plus Jakafi recently met the primary endpoint of spleen volume reduction in the phase 3 MANIFEST-2 study in myelofibrosis patients who’ve never tried a JAK inhibitor, Novartis and MorphoSys pointed out in their M&A announcement.

Still, the data, which uncloaked in late November, were far from perfect.

After the study’s 24-week mark, MorphoSys saw a significant improvement in the proportion of patients achieving at least a 35% reduction in spleen volume, causing the trial to hit its primary endpoint. But the drug failed on its second key measure: The study found 52% of patients taking pelabresib and Jakafi had at least a 50% reduction in total symptom score compared to 46% of patients who took placebo with the JAK inhibitor.

Despite missing on some of the trial’s goals, MorphoSys’ CEO Jean-Paul Kress was quick to say he was “very pleased with this positive outcome” when reflecting on the trial results last fall.

Novartis expects the MorphoSys deal to close sometime during the first half of 2024.

The revelation of buyout rumors and the confirmation of a deal happened at breakneck speed Monday, following an early morning report from Reuters that Novartis was in advanced talks to acquire the German company. At the time, it was rumored that Incyte was also in the bidding war for MorphoSys.

Both companies have preexisting ties to the oncology specialist, with Novartis taking over a MorphoSys preclinical cancer program in 2022 and Incyte partnering on MorphoSys' sole commercial product, the lymphoma med Monjuvi.

“We are excited about the opportunity of bringing pelabresib, a potential next-generation treatment combined with ruxolitinib, to people living with myelofibrosis, a rare and debilitating form of blood cancer,” Novartis Chief Medical Officer Shreeram Aradhye, M.D., said in the release. “With the planned acquisition of MorphoSys, we aim to further strengthen our leading pipeline and portfolio in oncology, adding to our capabilities and expertise.” 

Novartis has been at the forefront of Big Pharma M&A speculation this year, snapping up autoimmune biotech Calypso for $250 million upfront in the first days of January and being linked to unconfirmed reports of unsuccessful negotiations to acquire Cytokinetics.

From Incyte's perspective, Monjuvi garnered $92 million in U.S. sales last year, and MorphoSys expects 2024 sales of between $80 million and $95 million. Analysts at William Blair suggested the drug's longer-term success will be tied to some upcoming readouts.

“Positive results from the ongoing phase 3 trials are clearly needed to drive growth for Monjuvi, with the follicular lymphoma and marginal zone lymphoma trial expected to read out in 2024, and the first-line diffuse large B-cell lymphoma trial reading out in 2025,” the analysts wrote in a Feb. 6 note.

With the latest news, MorphoSys shares skyrocketed by 56% to close at $17.27 on Monday.