Novartis is increase its pipeline of most cancers therapies with the acquisition of MorphoSys, an organization whose lead drug is on observe for an FDA submission for the remedy of myelofibrosis. However the €2.7 billion deal might increase scrutiny from antitrust regulators as a result of Novartis already has a stake in one other drug commercialized on this blood most cancers.
After the markets closed on Monday, Novartis introduced it’s buying MorphoSys for €68 per share. Whereas that value is a modest premium to the corporate’s closing inventory value Monday in Germany, shares had risen sharply resulting from hypothesis about an acquisition. Along with regulatory approvals, the acquisition wants the acceptance of at the very least 65% of MorphoSys’s excellent shares. The businesses count on to shut the deal within the first half of this yr.
The important thing piece of the acquisition settlement is MorphoSys drug candidate pelabresib. Myelofibrosis, a most cancers affecting the bone marrow’s capability to usually produce purple blood cells, has a number of accredited therapies from a category of medicine that block cancer-driving JAK proteins. Pelabresib stands other than these JAK inhibitors as a small molecule designed to inhibit bromodomain and extra-terminal area (BET) proteins, which may help cancers develop.
In Section 3 outcomes introduced in December through the annual assembly of the American Society of Hematology, the MorphoSys drug, together with accredited Incyte JAK inhibitor Jakafi, met its major purpose of lowering spleen quantity in comparison with remedy with Jakafi alone. However on a key secondary purpose assessing symptom decision, the pelabresib and Jakafi arm confirmed solely a numerical enchancment in comparison with Jakafi alone. Nonetheless, MorphoSys pointed to its drug’s capability to enhance on the 4 hallmarks of myelofibrosis: enlarged spleen, anemia, bone marrow fibrosis, and disease-associated signs. The corporate mentioned it meant to file for U.S. and European regulatory overview of the drug. Novartis reiterated that plan, saying filings are deliberate for the second half of this yr.
In a be aware despatched to buyers Tuesday, Leerink Companions analyst Andrew Berens wrote that the deal might spark rigorous regulatory scrutiny within the U.S. and Europe. Novartis holds outside-of-the-U.S. rights to Incyte’s Jakafi (Jakavi in the remainder of the world). Pelabresib’s therapeutic overlap with Jakavi outdoors of the U.S. might increase issues with the European Fee, Berens mentioned. Additionally, since Novartis receives royalties from Incyte’s U.S. gross sales of Jakafi, U.S. antitrust regulators may weigh in on the deal. Berens famous {that a} comparable difficulty arose in Pfizer’s $43 billion Seagen acquisition. To shut that acquisition, Pfizer needed to divest royalties for bladder most cancers drug Bavencio to keep away from overlap with Seagen’s Padcev, which is accredited in the identical indication.
Apart from the royalties owed to Novartis from Incyte’s U.S. gross sales of Jakafi, Berens mentioned the Federal Commerce Fee might have issues that Novartis’s pursuits within the drug outdoors of the U.S. might have an effect on pelabresib R&D in myelofibrosis. These pursuits might impede improvement of pelabresib, or pela, in myelofibrosis as a part of mixture with different JAK inhibitors, akin to Swedish Orphan Biovitrum’s Vonjo and GSK’s Ojjaara.
“This might be perceived as giving Jakafi an unfair aggressive benefit,” Berens mentioned. “Nonetheless, regardless of these issues, we expect that the businesses might be able to discover cures which will embrace divestiture of the U.S. Jakafi royalty stream by Novartis, in addition to growing pela at the side of different JAK brokers.”
The opposite MorphoSys drug on the way in which to Novartis is tulmimetostat, which is in Section 1/2 testing for superior stable tumors or lymphomas. This small molecule blocks two proteins, EZH2 and EZH1. Each tulmimetostat and pelabresib got here from MorphoSys’s $1.7 billion acquisition of Constellation Prescription drugs in 2021. That deal marked a method shift for MorphoSys, which for a lot of its historical past was a developer of antibody medicine, lots of which had been out-licensed to companions.
MorphoSys’s new path as a small molecule most cancers drug developer hasn’t been totally easy. In 2022, MorphoSys minimize the drug discovery work that got here with the Constellation deal. Practically a yr in the past, MorphoSys stopped all of its preclinical analysis to concentrate on its two clinical-stage most cancers drug candidates.
In the meantime, MorphoSys on Monday struck a separate deal to promote to Incyte its remaining rights to tafasitamab, an antibody drug for diffuse giant B-cell lymphoma that’s marketed within the U.S. below the identify Monjuvi (Minjuvi in the remainder of the world). Below a previous settlement, the 2 firms collaborated on the scientific improvement and commercialization of the drug within the U.S. whereas Incyte had rights to the drug outdoors of the U.S. Below the brand new agrement, Incyte paid $25 million for the drug’s U.S. rights and can not owe milestone funds or royalties. MorphoSys will not proceed to share within the drug’s income. This settlement is efficient instantly.
Picture: Sebastien Bozon/AFP, by way of Getty Photographs
