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Novartis (NVS) to Buy MorphoSys & Add Late-Stage Oncology Drug
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Novartis (NVS - Free Report) announced that it will acquire Germany-based global biopharmaceutical company MorphoSys AG (MOR - Free Report) to expand its oncology portfolio.
Financial Terms of the Acquisition
Novartis will make a voluntary public takeover offer for all no-par value bearer shares of MorphoSys AG for €68 per share or an aggregate of €2.7 billion. The acquisition is expected to close in the first half of 2024.
The transaction is contingent on customary closing conditions. This includes acceptance of the takeover offer by at least 65% of MorphoSys AG’s outstanding shares and receipt of regulatory approvals.
Strategic Value of the Acquisition
The acquisition will add late-stage candidate pelabresib (CPI-0610) to NVS’ pipeline. It is being evaluated in combination with Incyte’s (INCY - Free Report) Jakafi (ruxolitinib) for patients with myelofibrosis (MF), a rare bone marrow cancer.
Jakafi is a first-in-class JAK1/JAK2 inhibitor approved for polycythemiavera, myelofibrosis and refractory acute graft-versus-host disease. Incyte markets it in the United States and Novartis as Jakavi outside the country.
Results of the phase III MANIFEST-2 study investigating pelabresib in combination with Jakafi in JAK inhibitor-naïve MF patients met its primary endpoint of spleen volume reduction. The combination also demonstrated favorable trends in symptom improvement, as evidenced by key secondary endpoints of absolute and 50% change in total symptom score at week 24 compared with baseline. A regulatory filing with the FDA is planned for the second half of 2024.
Pelabresib is also being evaluated in patients with essential thrombocythemia in a mid-stage study.
Novartis will also add tulmimetostat (CPI-0209) to its deep pipeline. The candidate is an early-stage investigational dual inhibitor of enhancer of zeste homolog 1 and 2 (EZH1 and EZH2) proteins currently being tested in patients with solid tumors or lymphomas.
MorphoSys’ pipeline also includes ianalumab (VAY736), which is being evaluated across multiple immunological diseases and in hematology in partnership with Novartis.
Our Take
Novartis has reportedly been on the lookout for an acquisition after selling its stake in rival pharma company Roche for $20.7 billion in 2021. With the successful spin-off of the Sandoz business in October 2023, Novartis is now a pure-play innovative medicines company with a focus on four core therapeutic areas — cardiovascular, renal and metabolic, immunology, neuroscience and oncology.
Shares of Novartis have gained 0.7% in the past six months compared with the industry’s growth of 14.5%.
Image Source: Zacks Investment Research
The MorphoSys acquisition will bolster Novartis’ broad oncology portfolio, provided pelabresib wins FDA approval for MF. The acquisition seems to be a risky bet, as the failure of the drug will be a drag on NVS.
Shares of MorphoSys surged on the acquisition news. Please note that MorphoSys also has an approved drug, Monjuvi (tafasitamab), in its portfolio. However, the drug failed to contribute significantly to the top line.
MorphoSys and Incyte collaborated on the development and commercialization of tafasitamab. Separately, MorphoSys entered into a purchase agreement to sell and transfer all rights worldwide related to tafasitamab to Incyte Corporation.
Mergers & acquisitions deals have intensified in the pharma/biotech space of late as pharma and biotech bigwigs look to diversify their portfolios in the wake of generic competition for key drugs. In particular, the lucrative oncology space has attracted a lot of attention.
Earlier, pharma giant AbbVie (ABBV - Free Report) announced two back-to-back acquisitions — Cerevel Therapeutics for $8.7 billion and ImmunoGen for $10.1 billion. The acquisition will add ImmunoGen’s flagship cancer therapy, Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, to ABBV’s portfolio.
The Cerevel acquisition will add multiple clinical-stage and preclinical candidates with potential across several diseases, including schizophrenia, Parkinson's disease and mood disorders, to ABBV’s pipeline.
Image: Bigstock
Novartis (NVS) to Buy MorphoSys & Add Late-Stage Oncology Drug
Novartis (NVS - Free Report) announced that it will acquire Germany-based global biopharmaceutical company MorphoSys AG (MOR - Free Report) to expand its oncology portfolio.
Financial Terms of the Acquisition
Novartis will make a voluntary public takeover offer for all no-par value bearer shares of MorphoSys AG for €68 per share or an aggregate of €2.7 billion. The acquisition is expected to close in the first half of 2024.
The transaction is contingent on customary closing conditions. This includes acceptance of the takeover offer by at least 65% of MorphoSys AG’s outstanding shares and receipt of regulatory approvals.
Strategic Value of the Acquisition
The acquisition will add late-stage candidate pelabresib (CPI-0610) to NVS’ pipeline. It is being evaluated in combination with Incyte’s (INCY - Free Report) Jakafi (ruxolitinib) for patients with myelofibrosis (MF), a rare bone marrow cancer.
Jakafi is a first-in-class JAK1/JAK2 inhibitor approved for polycythemiavera, myelofibrosis and refractory acute graft-versus-host disease. Incyte markets it in the United States and Novartis as Jakavi outside the country.
Results of the phase III MANIFEST-2 study investigating pelabresib in combination with Jakafi in JAK inhibitor-naïve MF patients met its primary endpoint of spleen volume reduction. The combination also demonstrated favorable trends in symptom improvement, as evidenced by key secondary endpoints of absolute and 50% change in total symptom score at week 24 compared with baseline. A regulatory filing with the FDA is planned for the second half of 2024.
Pelabresib is also being evaluated in patients with essential thrombocythemia in a mid-stage study.
Novartis will also add tulmimetostat (CPI-0209) to its deep pipeline. The candidate is an early-stage investigational dual inhibitor of enhancer of zeste homolog 1 and 2 (EZH1 and EZH2) proteins currently being tested in patients with solid tumors or lymphomas.
MorphoSys’ pipeline also includes ianalumab (VAY736), which is being evaluated across multiple immunological diseases and in hematology in partnership with Novartis.
Our Take
Novartis has reportedly been on the lookout for an acquisition after selling its stake in rival pharma company Roche for $20.7 billion in 2021. With the successful spin-off of the Sandoz business in October 2023, Novartis is now a pure-play innovative medicines company with a focus on four core therapeutic areas — cardiovascular, renal and metabolic, immunology, neuroscience and oncology.
Shares of Novartis have gained 0.7% in the past six months compared with the industry’s growth of 14.5%.
Image Source: Zacks Investment Research
The MorphoSys acquisition will bolster Novartis’ broad oncology portfolio, provided pelabresib wins FDA approval for MF. The acquisition seems to be a risky bet, as the failure of the drug will be a drag on NVS.
Shares of MorphoSys surged on the acquisition news. Please note that MorphoSys also has an approved drug, Monjuvi (tafasitamab), in its portfolio. However, the drug failed to contribute significantly to the top line.
MorphoSys and Incyte collaborated on the development and commercialization of tafasitamab. Separately, MorphoSys entered into a purchase agreement to sell and transfer all rights worldwide related to tafasitamab to Incyte Corporation.
Mergers & acquisitions deals have intensified in the pharma/biotech space of late as pharma and biotech bigwigs look to diversify their portfolios in the wake of generic competition for key drugs. In particular, the lucrative oncology space has attracted a lot of attention.
Earlier, pharma giant AbbVie (ABBV - Free Report) announced two back-to-back acquisitions — Cerevel Therapeutics for $8.7 billion and ImmunoGen for $10.1 billion. The acquisition will add ImmunoGen’s flagship cancer therapy, Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, to ABBV’s portfolio.
The Cerevel acquisition will add multiple clinical-stage and preclinical candidates with potential across several diseases, including schizophrenia, Parkinson's disease and mood disorders, to ABBV’s pipeline.
NVS carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.