MorphoSys this week delivered a widely promised deal over its lead compound, signing rights to the RA antibody MOR103 over to GlaxoSmithKline for €22.5m ($29.7m) up front. Impressive phase II results released last year allowed the company to move quickly into talks, chief executive Simon Moroney says, with the British pharma giant winning the molecule after a competitive process.
After years of generating steady revenue from a string of reliable platform technology partnerships, anticipation of the company’s first rock-and-roll single-product deal has given MorphoSys’s stock a boost – shares have almost doubled since the phase II results emerged last September. A couple of other contenders in the pipeline mean MorphoSys could repeat the trick, although Mr Moroney says the company is considering taking these agents into later-stage trials itself – another first for the German drug developer.
Glaxo bought worldwide rights to MOR103, an antibody that targets GM-CSF. Originally described as a white blood cell growth factor, GM-CSF is now recognised as an important cytokine involved in inflammatory mediation and hence a viable target in inflammatory conditions like RA and MS.
The agent is the most advanced project in its class, and produced impressive results in a phase I/II trial in 96 patients with mild to moderate RA. The middle dose tested generated an ACR20 score of 68% at week 4, and a fast onset of action was seen.
Glaxo now takes over development work in RA, with a larger phase II study the likely next step and ongoing development of a subcutaneous formulation. MorphoSys meanwhile is wrapping up phase I work in MS and will transfer that project to its partner later next year.
“GM-CSF may be implicated in several other indications, others are looking in respiratory,” Mr Moroney tells EP Vantage, adding that the precise role of the cytokine in these diseases is not fully known. “But we are very sure it is one of key players in RA and now there is strong evidence it is a key player in the activation of T-cells in MS.”
RA is a fiercely competitive field, with the entrenched anti-TNFs and the emergence of oral agents. With a novel mechanism of action and promising early data, Glaxo clearly believes MOR103 has the attributes needed to make inroads into the market, and perhaps others. MorphoSys could receive a further €432m in milestones, plus tiered double-digit royalties on sales, if all goes well.
Back in early 2008 when MorphoSys revealed the target of MOR103, it also announced a patent deal with the University of Melbourne, where much of the early work on the role of GM-CSF was conducted. MorphoSys owns exclusive access to the university's US patent covering the use of antibodies against GM-CSF to treat patients with chronic inflammatory diseases – the university will receive an undisclosed royalty on any future sales – and with a couple of these agents moving through the clinic the company might have to start thinking about protecting that IP.
Mr Moroney, however, refused to be drawn on the company’s plans in this area. "We regard the patent as an important commercial asset; how we intend to pursue it is not something we would discuss."
KaloBios has a phase II asset, KB003, in an asthma study, while Takeda is working on a compound inherited from Nycomed, MT203, in phase I for RA. AstraZeneca has a similar antibody that targets the GM-CSF receptor, mavrilimumab, which is in three large phase II studies.
With the MOR103 deal in the bag attention will now swing to the remainder of MorphoSys’s proprietary pipeline; two agents are in the clinic.
MOR202, an anti-CD38 antibody, is in an open-label phase I/II study in multiple myeloma that should generate data later this year, possibly at Ash. And MOR208, an anti-CD19 antibody, is in phase II trials in acute lymphoblastic leukaemia and non-Hodgkin lymphoma. Data could emerge next year in the former study, a bit later in the latter.
Pending a look at the data, MorphoSys might consider taking these agents further along in-house than it managed with MOR103, Mr Moroney says. “That was never an option in RA due to the size of phase III required. At this stage it’s relatively unlikely we would go all the way ourselves. But we will consider going further,” he says.
Still, investors like deals – MorphoSys shares touched €38.61 today in the wake of the Glaxo deal – a record high that values the company at €892m. However, with around €200m in the bank and secure cash flows from various partnerships, Mr Moroney says his priority is to invest in opportunities to keep the company growing.
“In three to four years we expect our first products to get to market and we will start receiving royalties. Adherence to profitability is no longer as important. Making the most of the programmes is, and the key thing is the opportunities. We are not interested in revenues of 40 or 50 or 60 million [euros]. We are creating the conditions to generate 100 million [euros], and that requires investment,” he says.