Novartis may have bought MorphoSys, but it really only had eyes for BET inhibitor pelabresib: filing

Novartis may have emerged victorious from a bidding war for MorphoSys, but a peek into the deal negotiations reveals that the Swiss pharma would have been happier if it could have walked away with one specific asset.

Despite handing over 2.7 billion euros ($2.9 billion) cash to buy out the German biotech in February, the star of the show in Novartis’ eyes was always pelabresib, according to deal-related documents published yesterday. MorphoSys had been testing the BET inhibitor in combination with Incyte’s Jakafi in patients with myelofibrosis.

MorphoSys’ relationship with Novartis dates back decades and was strengthened in 2022 when the pharma paid $23 million in cash for the rights to the biotech’s preclinical cancer program. But as far as yesterday’s documents are concerned, the story really begins at the BIO International Convention in June 2023, when execs from both companies met up to discuss “potential strategic opportunities.”

The two companies did discuss pelabresib, although Novartis didn’t put any offer on the table at this stage. Over the following months, the Big Pharma made it increasingly clear it was interested in the drug, with those intentions becoming more concrete after MorphoSys published topline data from a phase 3 trial in November 2023 showing that pelabresib hit one primary endpoint on spleen volume reduction but missed another on significantly beating placebo on reducing symptoms.

By late December, Novartis was eyeing January’s J.P. Morgan Healthcare Conference as the best time to bring the companies’ respective CEOs together to discuss a deal. But when MorphoSys made it clear it already had another offer on the table, Novartis stressed that it would “move quickly” to stay in the game.

Novartis’ initial offer was sent on Jan. 3—to acquire all of MorphoSys’ shares for 55 euros ($58) apiece in cash. With a view to wrapping up the deal in two weeks, negotiations rolled ahead until Jan. 12, when Novartis threw a curveball—rather than buy the biotech outright, could the Big Pharma just pick up the pelabresib program via an acquisition of MorphoSys’ Constellation Pharmaceuticals unit?

To sweeten the proposal, Novartis said it might be willing to pay a higher price for pelabresib alone than if it came entangled with the rest of MorphoSys. But the biotech didn’t bite, and two days later Novartis had submitted an updated offer of 68 euros ($75) per share for the whole company. This would end up being the finalized offer, conditional on MorphoSys selling its sole commercial asset—lymphoma med Monjuvi—to longtime partner Incyte.

Novartis executives made no secret of the fact that pelabresib was the real prize when they went public with the deal in February. “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,” the pharma’s chief medical officer Shreeram Aradhye, M.D., said at the time.