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Novartis to Acquire MorphoSys for $2.9B in Bid to Grow Oncology Footprint

Novartis logo with handful of pills

NEW YORK – Novartis on Monday announced after markets closed that it will acquire German biotech MorphoSys in an effort to bring several clinical-stage oncology candidates into its pipeline including tulmimetostat, a dual EZH2 and EZH1 inhibitor that is under development in several biomarker-informed indications. 

Novartis will offer shareholders of Planegg, Germany-headquartered MorphoSys €68 ($73.02) per share, or €2.7 billion ($2.9 billion), in an all-cash deal that's expected to close during the first half of 2024. The per-share price represents an 89 percent premium to the unaffected Jan. 25 closing price of MorphoSys' shares. MorphoSys shareholders have an acceptance period of four weeks to tender their shares.

On a conference call to discuss the proposed acquisition Tuesday morning, MorphoSys CEO Jean-Paul Kress said it would make available to his company Novartis' financial resources and global reach and "create new opportunities" for MorphoSys employees.

"It's not a light decision, but after a thorough review of all strategic options, we firmly believe it's in the best interests of the company, the shareholders, and the cancer patients," Kress said. "Novartis has ample resources that are currently unavailable to MorphoSys as a standalone biotech."

Part of the goal in coming under Novartis, according to Kress, is to clinically develop MorphoSys' therapeutic candidates more quickly. "We want our pipeline to advance at a greater speed and scale to help ensure patients worldwide can benefit," Kress said.

Among the agents that would come under Novartis' aegis in this deal is tulmimetostat, which is under development for a variety of cancer indications, including several that are biomarker defined. This past fall, the US Food and Drug Administration granted fast-track designation to tulmimetostat in previously treated, advanced ARID1A-mutated endometrial cancer as determined by a next-generation sequencing test. The agency granted the designation, which facilitates expedited regulatory reviews for products meant for patients with unmet medical need, after reviewing preclinical data as well as early data from MorphoSys' Phase I/II tulmimetostat clinical trial.

In that 210-patient study, MorphoSys is evaluating the safety, maximum tolerated dose, and overall response rate of tulmimetostat, also known as CPI-0209, across six cohorts. Beyond the ARID1A-mutated endometrial cancer cohort, this trial features a cohort of patients with urothelial cancer or other advanced solid tumors with known ARID1A mutations; ARID1A-mutated ovarian cancer patients; ARID1A-mutated urothelial cancer patients; relapsed or refractory mesothelioma patients with known BAP1 loss as determined via immunohistochemistry or NGS testing; and patients with certain refractory lymphomas or soft-tissue disease.

According to MorphoSys, tulmimetostat is designed to have a leg up over first-generation EZH2 inhibitors due to its increased potency, longer time on target, and longer half-life, all of which, MorphoSys claims, could result in enhanced anti-tumor activity.

During the American Society of Clinical Oncology (ASCO) meeting in June 2023, MorphoSys presented interim data from tulmimetostat's Phase I/II trial. At the time of the data cutoff, 623 patients had received at least one dose of the investigational drug, and 48 of those patients had at least one post-baseline tumor assessment available. Here, while early, they determined that the ovarian cancer, endometrial cancer, and mesothelioma cohorts all had overall response rates of at least one out of 10 patients, making them eligible for stage II expansion. "These preliminary findings in heavily pretreated patients with multiple tumor types, including tumors with ARID1A alterations or BAP1 loss, support ongoing investigation of tulmimetostat," MorphoSys reported at the time. The drug's safety profile was consistent with EZH2 inhibition, according to the firm.

Beyond tulmimetostat, MorphoSys' lead candidate is a JAK/STAT inhibitor under investigation for treating myelofibrosis. The firm is planning to seek regulatory approval for this agent, dubbed pelabresib, later in 2024 based on Phase III data. The firm also has an already approved agent, dubbed Monjuvi (tafasitamab), which it jointly markets with Incyte as a diffuse large B-cell lymphoma treatment. In tandem with the Novartis acquisition announced Monday, MorphoSys said it is selling Monjuvi's full development and commercialization rights to Incyte for $25 million.

Last week, during a call to discuss its fourth quarter and full-year 2023 financials, Novartis CFO Harry Kirsch described the Switzerland-based drugmaker's approach to mergers and acquisitions as "value-creative bolt-ons in our core therapeutic areas," which include oncology.

For Novartis, the MorphoSys acquisition is part of a broader strategy to grow its oncology footprint. "We aim to further strengthen our leading pipeline and portfolio in oncology, adding to our capabilities and expertise," Shreeram Aradhye, Novartis' president of development and chief medical officer, said in a statement. "Building on our longstanding development partnership with MorphoSys, we look forward to continuing our work together to realize the full impact and value of their investigational medicines for patients with unmet needs."