MorphoSys squares up to Genmab in multiple myeloma
The remarkable €71m ($92m) that Celgene has handed over for rights to MorphoSys’s anti-CD38 antibody MOR202 says as much about the US group’s keenness to defend its position in multiple myeloma as it does about CD38 being a red-hot target in the white blood cell cancer.
The licensing deal came less than a year after Johnson & Johnson handed over an only slightly less impressive €55m for Genmab’s daratumumab, a similarly acting project at the same development stage. It is hard to believe, but MOR202 has not yet generated any clinical data; phase I/II daratumumab results in December must have done much to validate the target and set up the Celgene deal.
MOR202 and daratumumab now form an important part of efforts to shore up Celgene and Johnson & Johnson’s respective multiple myeloma franchises. Celgene’s Revlimid dominated this market with $3.3bn of revenue last year, ahead of the $2.4bn generated by Johnson & Johnson/Takeda’s Velcade.
However, the space is changing with the recent launch of Onyx Pharmaceuticals’ Kyprolis and the expected expiry of Revlimid and Velcade patents in 2019 and 2017 respectively. Given initial in vitro data with MOR202 suggesting synergistic activity with both Revlimid and Velcade, a combination strategy for Celgene was a no-brainer, MorphoSys’s chief financial officer, Jens Holstein, told EP Vantage.
In addition to the €71m cash payment Celgene is buying €46m of MorphoSys stock; last year’s Johnson & Johnson/Genmnab deal comprised an €80m equity element. Including the up-front, equity and milestone payments, some of which are sales related, the Celgene tie-up is worth €628m.
MorphoSys stock was trading up 17% at €43.33 this afternoon, valuing the group at €1bn.
The deal is impressive also because MorphoSys retains a 50/50 profit share in Europe – itself unusual given the early stage of the alliance – while funding only a third of the R&D costs. Presumably both aspects reflect Celgene’s view of the risk and reward of each territory.
Mr Holstein said this structure reflected the estimated split of the market size for multiple myeloma in the US and Europe. In the US Celgene will pay MorphoSys a tiered double-digit royalty, and it would be logical for milestone fees to be heavily backend-loaded, although the large up-front element more than makes up for this.
For Celgene to hand over so much cash for a project without clinical data indicates the presence of multiple interested parties in negotiations, and indeed at the time of the daratumumab deal Genmab said it had received 15 formal term sheets.
Spike in CD38 interest
Interest in CD38 spiked at the Ash conference in December, and “after [daratumumab] data came out people were knocking on our door”, said Mr Holstein. CD38 is expressed on tumour cells in around 98% of multiple myeloma patients, but is also present on various haematopoietic cells and in solid tissue, so the possibility of safety issues had clouded this concept.
But daratumumab, which in phase I/II showed a favourable safety profile, must have allayed many of these concerns. There is only one other anti-CD38 antibody in development, Sanofi’s SAR650984.
MOR202 is in an open-label phase I/II study that should generate data from its dose-escalation stage later this year – safety will continue to be closely watched – and some additional trials will start.
Mr Holstein would not comment on what promises his company had made to Celgene as to the R&D budget allocated to MOR202, but cautioned that spending should not disrupt other activities. “We have a lot of other things cooking. We have to be flexible,” he said.
Among these activities is MOR208, an anti-CD19 antibody in two phase II trials that now remains MorphoSys’s only unpartnered clinical project (EP Vantage interview – MorphoSys mulls more R&D work after Glaxo deal, June 7, 2013). Having done two impressive deals in a month, Mr Holstein cautioned against immediately expecting a third one on MOR208.
For Celgene the phase I/II readout will provide the first direct evidence of MOR202’s potential and of the wisdom of placing such a hefty bet. In the meantime, European investors can take some solace that in MorphoSys and Genmab they have two companies that have bucked Europe’s resistance to US biotech mania.
|Anti-CD38 MAbs for multiple myeloma
|78-patient phase I/II study
|50-patient phase I/II, combo with Revlimid and dexamethasone
|82-patient phase I/II, monotherapy and combo with Revlimid or Velcade
|60-patient phase I dose-escalation trial
|39-patient phase I, combo with Revlimid