Incyte pays $750M upfront for rights to MorphoSys cancer drug

Incyte is set to pay MorphoSys $750 million upfront for rights to anti-CD19 antibody tafasitamab. The licensing deal, which features a $150 million equity investment and up to $1.1 billion in milestones, gives Incyte a big stake in a near-approval asset that achieved CAR-T-like efficacy in lymphoma patients.

Tafasitamab, also known as MOR208, is the subject of a submission at the FDA in diffuse large B-cell lymphoma (DLBCL) that could see the drug win approval this year. MorphoSys began the filing after linking a combination of tafasitamab and Celgene’s Revlimid to overall and complete response rates of 60% and 43%, respectively.

MorphoSys is still running a study comparing tafasitamab to rituximab to see whether its drug can clear that tougher test and realize a more lucrative commercial opportunity. But Incyte has already seen enough to make a big bet that tafasitamab is the drug to end its wait for a new commercial product. 

Incyte is handing over $750 million and making a $150 million equity investment in MorphoSys at a premium price to get the deal underway. Down the line, Incyte is on the hook for up to $1.1 billion in milestones. 

The outlay has landed Incyte the chance to co-promote tafasitamab with MorphoSys in the U.S. and exclusive rights to the drug outside of its home market. Incyte will pay MorphoSys tiered royalties on net ex-U.S. sales that run from the mid-teens to mid-twenties percentage range.

Through the deal, Incyte will get involved with the development of tafasitamab from both a financial and operational perspective. Incyte will pay 55% of the cost of global and U.S.-specific trials and fully cover the costs of studies targeting other countries. In addition, Incyte will run a trial of tafasitamab in combination with its PI3K-delta inhibitor parsaclisib and take the lead on studies designed to win approval in follicular lymphoma, marginal zone lymphoma and chronic lymphocytic leukemia.

The range of therapeutic and geographic opportunities—Incyte highlighted China and Japan as new markets it wants to target—creates the potential for tafasitamab to be a significant product. For that to happen, tafasitamab needs to back up the promise it has shown to date with impressive data in studies with control arms. 

In the near term, the prospects of tafasitamab are tied to the results of the study comparing the anti-CD19 antibody to rituximab in DLBCL. The trial cleared a futility analysis last year, at which point the independent data monitoring committee recommended increasing the size of the study, and is on track to deliver top-line results early in 2022. 

By then, tafasitamab may already have come to market in the U.S. and Europe, giving Incyte a new product to promote. In the years since winning approval for Jakafi, Incyte has seen epacadostat and itacitinib make it as far as pivotal trials only to stumble at the final hurdle.