Incyte Commits $900M to MorphoSys for Rights to Lymphoma Drug

Xconomy National — 

Two weeks after MorphoSys filed for FDA review of its experimental treatment for a form of lymphoma, the company has struck a deal with Incyte to further develop and commercialize the therapy in the US and around the world.

According to financial terms announced Monday, Incyte (NASDAQ: INCY) is paying MorphoySys (NASDAQ: MOR) $750 million up front for the right to co-commercialize the drug tafasitamab in the US, where profits will be split equally. In addition, Wilmington, DE-based Incyte will buy $150 million worth of MorphoSys stock at an unspecified premium.

The deal also gives Incyte the right to commercialize tafasitamab globally, and the company has agreed to pay its German partner up to $1.1 billion more depending on the development and regulatory progress of the drug. If the drug is approved outside of the US, Incyte will pay MorphoSys royalties from sales.

MorphoSys developed tafasitamab to treat diffuse large B cell lymphoma (DLBCL), the most common form of non-Hodgkin lymphoma, according to the Lymphoma Research Foundation. Treatment for the disease is typically rituximab (Rituxan) and chemotherapy. For patients whose disease does not respond to the initial treatment, options include high-dose chemotherapy and a stem cell transplant. But not all patients are eligible for stem cell transplants and those who are can still relapse after the procedure. While CAR-T represents yet another option for some lymphoma patients, the immunotherapy is expensive and can cause dangerous side effects. MorphoSys says it developed tafasitamab to provide a treatment alternative to high-dose chemotherapy and stem cell transplants.

Tafasitamab is an antibody drug designed to target CD19, a protein broadly expressed in various B cell lymphomas. MorphoSys says its drug binds to this protein, which in turn attracts an immune response from natural killer cells and macrophages. Those immune cells attach themselves to the cancer cells and kill them. In Phase 2 testing, MorphoSys reported that its drug, in combination with the cancer drug lenalidomide, led to an objective response—some reduction in the signs of the cancer—in 48 out of 80 patients, or 60 percent. In 34 out of 80 patients, or 43 percent, MorphoSys reported a complete response—a disappearance of all signs of the cancer in response to treatment.

MorphoSys has additional clinical trial data showing that the tafasitamab/lenalidomide combination works better than lenalidomide alone. Another ongoing study is comparing Morphoys’s drug and the chemotherapy bendamustine against rituximab and bendamustine in DLBCL patients. Late last month, MorphoSys submitted an application to the FDA seeking approval of tafasitamab as a treatment for DLBCL in patients who have relapsed or whose disease cannot be managed by other treatments.

Expenses for further clinical development of tafastiamab for the US market will be split, 55 percent to Incyte and 45 percent to MorphoSys. Incyte will cover clinical development of the drug outside of the US. In addition to DLBCL, the companies have agreed to work together to develop the drug for follicular lymphoma, marginal zone lymphoma, and chronic lymphocytic leukemia. Incyte also plans to test its experimental drug parsaclisib in combination with the MorphoSys drug as a potential treatment for B-cell malignancies.

In a research note, SVB Leerink analyst Geoffrey Porges says that Incyte’s limited commercial experience and its limited resources outside of the US raise some concerns because of competition in the hematology-oncology market, particularly from Roche. Porges notes that MorphoSys has been expanding its commercial workforce in the US in anticipation of FDA approval, adding that “the ultimate commercial success of tafasitamab rests on both parties’ collective commercialization efforts in the US and Incyte’s commercial execution outside the US, including in China and Japan, which are largely unproven capabilities.”

Image by the National Cancer Institute