2.7. ‘MetaMorphosys’ or how a big pivot paid off (kind of)

Novartis’s recent €2.7 billion ($2.9 billion) offer for Morphosys is the very stuff of biotechnology. The medium-sized deal adds two clinical-stage cancer drug candidates to its pipeline. 

Both operate through epigenetic mechanisms – they aim to alter dysfunctional gene expression programs and thereby interfere with the signals that maintain cancer growth. Pelabresib, a potential first-in-class inhibitor of bromodomain and extra-terminal motif (BET) proteins, has completed a phase 3 trial in myelofibrosis, a rare bone marrow cancer which disrupts red blood cell production. Tulmimetostat (formerly CPI-0209), an inhibitor of enhancer of zeste homolog 2 (EZH2), is in phase 1/2 trials in solid and haematological cancers. 

Behind the headlines, of course, lies over 30 years of European biotechnology history. Morphosys was the flagship firm in Munich’s biotech cluster and for long a leader in antibody discovery and development. It entered a string of large-scale deals with the likes of Novartis (again), Roche, GSK, Celgene (now Bristol Myers Squibb), and Johnson & Johnson.

Although its HuCal platform did deliver at least one blockbuster, in the form of J&J’s interleukin-23 inhibitor Tremfya (guselkumab), Morphosys failed ultimately to capture sufficient value to secure its future as a standalone antibody developer – unlike its more successful European rivals Genmab and Argenx. CEO Jean-Paul Kress and his team executed a bold pivot in 2021 by buying Constellation Pharmaceuticals for $1.7 billion and jettisoning Morphosys’s antibody heritage. That, essentially, is what Novartis is now buying. 

Companies mentioned in this episode: 
Abbvie, Abbott Laboratories, Abcellera, Ablynx, Argenx, Celgene, Cambridge Antibody Technology, Constellation Pharmaceuticals, Chiron, Dyax, Genmab, GSK, Incyte, Johnson & Johnson, Morphosys, Novartis, Roche, Royalty Pharma, Xencor

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