More pharma M&A as Novartis snaps up MorphoSys for $2.9bn

Novartis is continuing a streak of pipeline-building deals with an agreement to buy Germany’s MorphoSys in a transaction that values the cancer-focused biotech at €2.7 billion (around $2.9 billion).

The €68-per-share cash offer has been approved by the boards of both companies, who say they expect it to be completed in the latter half of the year, subject to the usual regulatory approvals and other closing conditions. MorphoSys’ share price shot up more than 14% after the news emerged to €65.58, close to its 52-week high.

Novartis highlighted pelabresib, a BET inhibitor that recently generated mixed results in a phase 3 trial in myelofibrosis (MF), and dual EZH1/EZH2 inhibitor tulmimetostat in phase 1/2 for solid tumours as the programmes driving its interest.

The main focus of the deal is undoubtedly pelabresib, which was combined with Novartis/Incyte’s JAK inhibitor Jakafi (ruxolitinib), a standard first-line therapy for MF, in the phase 3 MANIFEST-2 trial reported in November.

In a statement, Novartis said the combination of the two drugs had the potential to be “practice changing” in MF, a rare type of blood cancer that causes scar tissue to form in the bone marrow and leads to anaemia, fatigue, itching, weight loss, and other symptoms.

The data revealed that pelabresib met its primary endpoint of spleen volume reduction when added to Jakafi, but was unable to achieve a significant improvement on the secondary objective of reducing symptoms of the disease, although there were trends in favour of the combination. Regulatory filings based on the data are due later this year.

Novartis said buying MorphoSys “aligns with [our] strategic focus on oncology, and strengthens the company’s efforts in developing next-generation treatment options for cancer.” Jakafi is one of its top cancer drugs, with sales expected to reach around $2.6 billion this year.

The two companies have been collaborating on other projects as well, including ianalumab (VAY736), a drug targeting B-cell lysis and BAFF-R blockade that is being tested in several autoimmune disorders, including lupus, Sjogren’s disease, and immune thrombocytopenia.

Much of MorphoSys’ portfolio – including marketed diffuse large B-cell lymphoma (DLBCL) therapy Monjuvi (tafasitamab), partnered with Incyte – is licensed to other companies.

The news has emerged after rumours of a deal surfaced yesterday, driving a big leap in MorphoSys’ share price.

It follows Novartis’ $1.2 billion alliance with artificial intelligence in drug discovery specialist Isomorphic Labs, a $425 million takeover of Calypso and its IL-15 inhibitor for autoimmune diseases, and a licensing deal with China’s Shanghai Argo Biopharmaceutical covering two RNAi interference (RNAi) therapies in the cardiovascular and metabolic diseases area – all signed before the start of the year.

The Swiss pharma group is in the throes of a major restructuring exercise since it spun off its Sandoz generics unit last November, which has included job cuts and a narrowing of its R&D focus to cardiovascular, immunology, neuroscience, oncology, and haematology.

It has been targeting bolt-on acquisitions in these areas, valued at up to $5 billion, according to comments made by chief executive Vas Narasimhan at the group’s R&D update last November.