MorphoSys to ramp up R&D expenditure to support slate of clinical trials

MorphoSys (ETR:MOR) is set to ratchet up investment in R&D as it seeks to push candidates through late-phase trials and win the approvals that will allow it to evolve into a fully integrated biopharma company. The additional funds will support the startup of 5 new trials over the next 15 months.

MorphoSys Chief Development Officer Dr. Arndt Schottelius

Martinsried, Germany-based MorphoSys has put a pair of trials of MOR208 in diffuse large B-cell lymphoma (DLBCL) at the top of its list of studies. The first of the trials, an 80-person Phase II study in which participants will receive MOR208 in combination with Celgene's ($CELG) Revlimid, is set to get underway later this year. Once that study is up and running, the start of a pivotal Phase III trial of MOR208 in combination with the chemotherapy bendamustine will loom into view. MorphoSys is aiming to start dosing patients in the Phase III trial in 2017.

A trial of MOR208 in combination with Gilead's ($GILD) Zydelig in patients with chronic lymphocytic leukemia is on the roster, too, as are new studies of MOR202 and MOR209. MOR202, the multiple myeloma drug that Celgene walked away from in March, is tipped to enter a Phase III combination trial in 2017. MorphoSys also expects to advance compounds being developed in its collaborations with Galapagos ($GLPG) and Lanthio into the clinic next year. "It's a significant expansion of our clinical development program," MorphoSys R&D chief Arndt Schottelius said on a conference call.

The expansion will necessitate increased investment in R&D. MorphoSys plans to spend up €63 million on R&D this year. The figure, which is almost twice as much as MorphoSys spent in 2013, is set to be surpassed by larger numbers in the coming years. "[R&D spending] will increase in '16 and the years beyond. And will increase certainly by a bigger amount," MorphoSys CFO Jens Holstein said. MorphoSys may disclose exactly how much it plans to pump into R&D in 2016 early next year but for now is limiting itself to talking broadly about its spending trends.

Funding for the trials will come from the €325 million in cash MorphoSys was sat on at the last tally. MorphoSys expects this pool to start being replenished when the more advanced candidates from its broad pipeline of partnered products begin to come to market. "We're closer than ever before to seeing first partnered products being approved and, most importantly for us, starting to generate a royalty stream," MorphoSys CEO Simon Moroney said. "This is an ideal time for us to be investing more in that proprietary portfolio."

Moroney is also looking to deals for assets in the proprietary pipeline as a source of cash. MOR208 is a likely candidate for such an agreement. MorphoSys is willing to take the compound to approval unpartnered but wants the support of an ally for commercialization. "It's unrealistic to expect that we can commercialize MOR208 worldwide on our own. So what that means, of course, is that we would certainly need--and, at the appropriate time, would seek--a partner to assist us in commercializing the compound," Moroney said.

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