Novartis spends €2.7 billion on acquiring MorphoSys

The recent buzz surrounding a potential bidding war for the cancer specialist MorphoSys has dissipated, following Novartis’ swift move to acquire the German biotech company with a cash offer. This development unfolded less than 24 hours after rumors of a merger and acquisition (M&A) showdown surfaced.

Novartis is bolstering its oncology division by committing 2.7 billion euros ($2.9 billion) in cash to secure MorphoSys. The focus of the deal now squarely rests on MorphoSys’ pipeline. Just before Novartis announcement, MorphoSys had disclosed intentions to divest its only commercial asset, Monjuvi, a lymphoma medication, to its long-standing partner Incyte. Incyte itself had been rumored to be vying for MorphoSys before Novartis swooped in.

With Monjuvi no longer in consideration, Novartis has the opportunity to obtain pelabresib, a treatment currently in trials alongside Incyte’s Jakafi (ruxolitinib) for patients with myelofibrosis. Furthermore, Novartis will acquire access to tulmimetostat, a dual inhibitor of the EZH2/EZH1 proteins in its early stages of evaluation for solid tumors and lymphomas.

Despite positive outcomes in certain aspects, such as meeting the primary endpoint of spleen volume reduction in myelofibrosis patients, pelabresib fell short in other areas during the phase 3 MANIFEST-2 study. Notably, while a significant proportion of patients experienced at least a 35% reduction in spleen volume, the drug failed to achieve a key secondary measure related to symptom reduction compared to a placebo group.

Nevertheless, MorphoSys’ CEO Jean-Paul Kress expressed satisfaction with the trial results, despite the mixed outcomes. Novartis anticipates finalizing the acquisition of MorphoSys sometime in the first half of 2024.

Both Novartis and Incyte have existing ties to MorphoSys. Novartis had taken over a MorphoSys preclinical cancer program in 2022, while Incyte had partnered with Monjuvi. Novartis’ Chief Medical Officer, Shreeram Aradhye believes that this move aligns with Novartis’ strategy to fortify its oncology pipeline and portfolio.

Novartis has been a focal point of speculation within the Big Pharma M&A landscape, highlighted by its recent acquisition of autoimmune biotech Calypso for $250 million upfront. The company has also been linked to some reports of failed talks to acquire Cytokinetics.

From Incyte’s perspective, Monjuvi generated $92 million in U.S. sales last year, with MorphoSys projecting sales of $80 million to $95 million in 2024. Analysts at William Blair emphasized the importance of upcoming phase 3 trial results in driving Monjuvi’s long-term success, with trials for various lymphomas expected to yield crucial data in 2024 and 2025.

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