MorphoSys AG Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Corporate Update
- Positive Phase 3 MANIFEST-2 study results demonstrate the potential of pelabresib in myelofibrosis treatment.
- Novartis' acquisition agreement with MorphoSys at € 68.00 per share in cash indicates a premium of 94% and 142% on the volume-weighted average price.
- Financially, MorphoSys reported Monjuvi U.S. net product sales of US$ 24.1 million for Q4 2023 and US$ 92.0 million for the full year 2023.
- The company had € 680.5 million in cash and other financial assets as of December 31, 2023, ensuring operational sustainability until early 2026.
- MorphoSys plans to submit a New Drug Application for pelabresib in myelofibrosis treatment to the FDA and EMA in mid-2024.
- The sale of tafasitamab rights to Incyte for US$ 25 million and the completion of a share capital increase generated additional funds for the company.
- Total revenues decreased by 28% in Q4 2023 compared to the same period in 2022.
- Operating loss increased to € 81.4 million in Q4 2023, indicating financial challenges.
- Consolidated net loss for Q4 2023 was € 48.3 million, showcasing a negative financial outcome.
- The revocation of the 2024 financial guidance due to the sale of tafasitamab to Incyte raises uncertainties about future financial performance.
- R&D expenses for the full year 2023 were € 283.6 million, reflecting significant investments in development activities.
Insights
The acquisition of MorphoSys by Novartis at a substantial premium indicates a strategic move by Novartis to bolster its pipeline with MorphoSys' advanced clinical assets, particularly pelabresib. This acquisition price suggests a strong confidence in the future revenue streams and market potential of these assets. The significant premium also reflects the competition and scarcity of advanced biotech assets in the market. Investors should note the liquidity position of MorphoSys, which is robust with €680.5 million in cash and financial assets, providing operational runway until early 2026. However, the reported operating loss and net loss for both the quarter and the full year are areas of concern, indicating a need for further efficiency in operations or a strategic pivot to return to profitability.
The Phase 3 MANIFEST-2 study results for pelabresib are pivotal, as they show potential for a new standard of care in myelofibrosis treatment. The combination therapy with ruxolitinib, a JAK inhibitor, has shown significant improvements in disease hallmarks, which could lead to a strong market position if approved. The safety profile aligning with previous trials adds to the compound's credibility. The planned submission of a New Drug Application to the FDA and a Marketing Authorization Application to the EMA in mid-2024 is a critical next step for MorphoSys and will be a key driver of the company's value proposition post-acquisition.
The decrease in Monjuvi's U.S. net product sales year-over-year, despite the overall stability in annual revenues, may raise questions about the drug's market penetration and competitive landscape. The royalty revenue growth is a positive sign, reflecting the underlying value of MorphoSys' licensing agreements. The sale of tafasitamab rights to Incyte for a modest sum suggests a strategic repositioning, possibly to streamline the company's focus on pelabresib and tulmimetostat. Investors should monitor the market response to pelabresib's potential approval and commercial launch, as it will significantly influence MorphoSys' future financial performance within the Novartis portfolio.
– Entered into Business Combination Agreement to be acquired by Novartis for
– Sold all tafasitamab rights worldwide to Incyte
– Presented comprehensive Phase 3 MANIFEST-2 study results at ASH 2023 Annual Meeting, demonstrating pelabresib improves all four disease hallmarks of myelofibrosis
– Monjuvi®
–
– MorphoSys to host conference call and webcast on Thursday, March 14, 2024, at 1:00 pm CET (12:00 pm GMT; 8:00 am EDT)
PLANEGG/
“In 2023, we demonstrated the potential for pelabresib to shift the myelofibrosis treatment paradigm, as results from our Phase 3 MANIFEST-2 study showed that all four disease hallmarks were improved with the pelabresib and ruxolitinib combination therapy over standard of care,” said Jean-Paul Kress, M.D., Chief Executive Officer of MorphoSys. “Now, in 2024, we are pleased that Novartis is committing to the future of our promising pipeline. With its ample resources, additional scientific expertise and global footprint, Novartis can help accelerate pelabresib's potential worldwide. The acquisition process is progressing steadily, and we expect to close the proposed transaction in the first half of the year.”
Novartis’ Public Takeover Offer:
On February 5, 2024, MorphoSys announced the company entered into a Business Combination Agreement with Novartis BidCo AG (formerly known as Novartis data42 AG) and Novartis AG (hereinafter collectively referred to as “Novartis”) based on Novartis’ intention to submit a voluntary public takeover offer for all outstanding MorphoSys no-par value bearer shares at an offer price of
The offer will contain customary closing conditions, in particular a minimum acceptance threshold of
Pelabresib Highlights:
On December 10, 2023, comprehensive results from the Phase 3 MANIFEST-2 study at 24 weeks were presented during an oral presentation at the 65th American Society of Hematology (ASH) Annual Meeting and Exposition. In MANIFEST-2, the combination of pelabresib and the JAK inhibitor ruxolitinib improved all four disease hallmarks of myelofibrosis, including a significant reduction in spleen size with a response rate nearly double that of placebo plus ruxolitinib. The combination therapy showed a strong positive trend in reducing symptom burden and improvements in measures of anemia and bone marrow fibrosis, and demonstrated safety results in line with assessments from prior clinical trials.
Monjuvi/Minjuvi® Highlights:
Monjuvi (tafasitamab-cxix)
On February 5, 2024, MorphoSys also announced it entered into a Purchase Agreement to sell and transfer all rights worldwide related to tafasitamab to Incyte Corporation (“Incyte”). Under the terms of MorphoSys’ Purchase Agreement with Incyte, Incyte will obtain exclusive rights worldwide, assume full responsibility and cover all costs going forward for the development and commercialization of tafasitamab for a purchase price of
Corporate Developments:
On December 14, 2023, MorphoSys announced the completion of a share capital increase from
Financial Results for the Fourth Quarter of 2023 (IFRS):
Total revenues for the fourth quarter 2023 were
in € million* |
|
Q4 2023 |
|
Q3 2023 |
|
Q4 2022 |
|
Q-Q Δ |
|
Y-Y Δ |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
59.0 |
|
63.8 |
|
81.6 |
|
(8)% |
|
(28)% |
Monjuvi product sales |
|
22.4 |
|
21.5 |
|
24.7 |
|
|
|
(9)% |
Royalties |
|
34.0 |
|
34.0 |
|
29.1 |
|
|
|
|
Licenses, milestones and other |
|
2.6 |
|
8.3 |
|
27.9 |
|
(69)% |
|
(91)% |
* Differences due to rounding. |
|
|
|
|
|
|
|
|
|
|
Cost of Sales: In the fourth quarter of 2023, cost of sales was
Research and Development (R&D) Expenses: In the fourth quarter 2023, R&D expenses were
Selling, General and Administrative (SG&A) Expenses: Selling expenses in the fourth quarter 2023 were
Operating Loss: Operating loss amounted to
Consolidated Net Loss: For the fourth quarter 2023, consolidated net loss was
Financial Results for the Full Year 2023 (IFRS):
Total Revenues for the full year 2023 were
in € million* |
|
2023 |
|
2022 |
|
Y-Y Δ |
|
|
|
|
|
|
|
Total revenues |
|
238.3 |
|
278.3 |
|
(14)% |
Monjuvi product sales |
|
85.0 |
|
84.9 |
|
|
Royalties |
|
116.4 |
|
99.9 |
|
|
Licenses, milestones and other |
|
36.9 |
|
93.5 |
|
(61)% |
* Differences due to rounding. |
|
|
|
|
|
|
Cost of Sales: For the full year 2023, cost of sales were
R&D Expenses: For the full year 2023, R&D expenses were
SG&A Expenses: Selling expenses for the full year 2023 were
Operating Loss: Operating loss amounted to
Consolidated Net Loss: For the full year 2023, consolidated net loss was
Cash and Other Financial Assets: As of December 31, 2023, the Company had cash and other financial assets of
Under the Business Combination Agreement, Novartis agreed to use all such efforts which are from the perspective of a prudent business person reasonable and appropriate to provide MorphoSys with the financial resources required following completion of the Novartis Takeover Offer to enable MorphoSys to pay any obligations of MorphoSys arising from the implementation of the Novartis Takeover Offer as and when due, for example, but not limited to the obligation from the convertible bonds and the obligations arising from the long-term incentive plans, each to the extent triggered by the completion of the Novartis Takeover Offer.
For the unlikely case that the proposed transaction with Novartis is not consummated, and MorphoSys consequently would remain a stand-alone company, management would need to assess different financing options to ensure the going-concern assumption beyond the said timeframe according to regulatory requirements. Management would then consider both anti-dilutive financing options, such as out-licensing of (pre-) clinical assets or the sale of potential future royalties, but also consider accessing the capital markets by way of issuance of new shares or share instruments (ADSs) and/ or issuance or refinancing of convertible debt.
Number of Shares: The number of shares issued totaled 37,655,137 on December 31, 2023.
Financial Guidance 2024:
As a consequence of the sale and transfer of tafasitamab to Incyte on February 5, 2024, MorphoSys' 2024 financial guidance published on January 30, 2024, cannot be maintained and therefore was revoked. For the time being, MorphoSys will no longer make a forecast for revenues from product sales, as no such revenues will be realized.
For 2024, the Group expects R&D expenses of
The overall forecast is subject to a number of uncertainties, including inflation and foreign currency effects.
Operational Outlook:
The following activity is planned for 2024:
-
Submit a New Drug Application for pelabresib in combination with ruxolitinib in myelofibrosis to the
U.S. Food and Drug Administration (FDA) and a Marketing Authorization Application to the European Medicines Agency in the middle of 2024.
MorphoSys Group Key Figures (IFRS, end of financial year: December 31, 2023)
in € million |
|
Q4 2023 |
|
Q4 2022 |
|
Δ |
|
2023 |
|
2022 |
|
Δ |
Revenues |
|
59.0 |
|
81.6 |
|
(28)% |
|
238.3 |
|
278.3 |
|
(14)% |
Product Sales |
|
22.4 |
|
24.7 |
|
(9)% |
|
85.0 |
|
84.9 |
|
|
Royalties |
|
34.0 |
|
29.1 |
|
|
|
116.4 |
|
99.9 |
|
|
Licenses, Milestones and Other |
|
2.6 |
|
27.9 |
|
(91)% |
|
36.9 |
|
93.5 |
|
(61)% |
Cost of Sales |
|
(14.6) |
|
(15.4) |
|
(5)% |
|
(58.4) |
|
(48.6) |
|
|
Gross Profit |
|
44.4 |
|
66.2 |
|
(33)% |
|
179.9 |
|
229.6 |
|
(22)% |
Total Operating Expenses |
|
(125.8) |
|
(134.6) |
|
(7)% |
|
(432.4) |
|
(450.4) |
|
(4)% |
Research and Development |
|
(80.3) |
|
(94.0) |
|
(15)% |
|
(283.6) |
|
(297.8) |
|
(5)% |
Selling |
|
(22.6) |
|
(23.0) |
|
(2)% |
|
(81.4) |
|
(92.4) |
|
(12)% |
General and Administrative |
|
(22.9) |
|
(17.5) |
|
|
|
(65.8) |
|
(60.1) |
|
|
Impairment of Goodwill |
|
(1.6) |
|
— |
|
n/a |
|
(1.6) |
|
— |
|
n/a |
Operating Profit / (Loss) |
|
(81.4) |
|
(68.4) |
|
|
|
(252.5) |
|
(220.7) |
|
|
Other Income |
|
0.1 |
|
(7.8) |
|
>(100)% |
|
5.0 |
|
12.0 |
|
(58)% |
Other Expenses |
|
(3.9) |
|
7.4 |
|
>(100)% |
|
(7.1) |
|
(15.6) |
|
(54)% |
Finance Income |
|
174.3 |
|
325.0 |
|
(46)% |
|
213.4 |
|
412.1 |
|
(48)% |
Finance Expenses |
|
(40.8) |
|
249.5 |
|
>(100)% |
|
(142.0) |
|
(165.9) |
|
(14)% |
Income from Reversals of Impairment Losses / (Impairment Losses) on Financial Assets |
|
(0.1) |
|
0.4 |
|
>(100)% |
|
0.5 |
|
— |
|
n/a |
Share of Loss of Associates accounted for using the Equity Method |
|
(1.6) |
|
(4.0) |
|
(60)% |
|
(8.2) |
|
(4.3) |
|
|
Income Tax Benefit / (Expenses) |
|
1.6 |
|
(172.7) |
|
>(100)% |
|
1.2 |
|
(168.6) |
|
>(100)% |
Consolidated Net Profit / (Loss) |
|
48.3 |
|
329.4 |
|
(85)% |
|
(189.7) |
|
(151.1) |
|
|
Earnings per Share, Basic and Diluted (in €) |
|
— |
|
— |
|
n/a |
|
(5.53) |
|
(4.42) |
|
|
Earnings per Share, Basic (in €) |
|
1.28 |
|
9.64 |
|
(87)% |
|
— |
|
— |
|
n/a |
Earnings per Share, Diluted (in €) |
|
1.22 |
|
8.93 |
|
(86)% |
|
— |
|
— |
|
n/a |
Cash and other financial assets (end of period) |
|
680.5 |
|
907.2 |
|
(25)% |
|
680.5 |
|
907.2 |
|
(25)% |
MorphoSys will hold its conference call and webcast tomorrow, March 14, 2024, at 1:00 pm CET (12:00 pm GMT/8:00 am EDT) to present the results for the fourth quarter and the full year 2023.
Participants for the call may pre-register and will receive dedicated dial-in details to easily and quickly access the call:
Please dial in 10 minutes before the beginning of the conference.
The live webcast (audio and presentation) can be directly accessed via https://www.webcast-eqs.com/morphosys-2023-ye or via the Investors section under "Events & Conferences" on the MorphoSys website, www.morphosys.com; after the call, a slide-synchronized audio replay of the conference call will be available at the same location.
Consolidated Financial Statements 2023 (IFRS) are available for download at: https://www.morphosys.com/en/investors/financial-information
About MorphoSys
At MorphoSys, we are driven by our mission: More life for people with cancer. As a global commercial-stage biopharmaceutical company, we develop and deliver innovative medicines, aspiring to redefine how cancer is treated. MorphoSys is headquartered in Planegg,
About Pelabresib
Pelabresib (CPI-0610) is an investigational selective small molecule designed to promote anti-tumor activity by inhibiting the function of bromodomain and extra-terminal domain (BET) proteins to decrease the expression of abnormally expressed genes in cancer. Pelabresib is being investigated as a treatment for myelofibrosis and has not yet been approved by any regulatory authorities. Its safety and efficacy have also not been established in a pivotal trial.
The development of pelabresib was funded in part by The Leukemia and Lymphoma Society®.
About MANIFEST-2
MANIFEST-2 (NCT04603495) is a global, double-blind, Phase 3 clinical trial that randomized 430 JAK inhibitor-naïve adult patients with myelofibrosis 1:1 to receive pelabresib in combination with ruxolitinib or placebo plus ruxolitinib. The primary endpoint of the study is a
The new key secondary endpoint, absolute change in TSS, was added to directly measure change in the average TSS from baseline to week 24 of treatment and is listed as the first key secondary endpoint in the MANIFEST-2 hierarchical testing scheme. The decision to update the MANIFEST-2 clinical trial protocol was made following a Type C meeting with the
Additional secondary endpoints include progression-free survival, overall survival, duration of the splenic and total symptom score response, hemoglobin response rate and improvement in bone marrow fibrosis, among others.
Constellation Pharmaceuticals, Inc., a MorphoSys company, is the MANIFEST-2 trial sponsor.
About Tafasitamab
Tafasitamab is a humanized Fc-modified CD19 targeting immunotherapy. In 2010, MorphoSys licensed exclusive worldwide rights to develop and commercialize tafasitamab from Xencor, Inc. Tafasitamab incorporates an XmAb® engineered Fc domain, which mediates B-cell lysis through apoptosis and immune effector mechanism including Antibody-Dependent Cell-Mediated Cytotoxicity (ADCC) and Antibody-Dependent Cellular Phagocytosis (ADCP).
In
In
Tafasitamab is being clinically investigated as a therapeutic option in B-cell malignancies in several ongoing combination trials. Its safety and efficacy for these investigational uses have not been established in pivotal trials.
Monjuvi® and Minjuvi® are registered trademarks of Incyte. Tafasitamab is marketed under the brand name Monjuvi® in the
XmAb® is a registered trademark of Xencor, Inc.
Additional Information and Where to Find it
The takeover offer described in this communication (the “Takeover Offer”) has not yet commenced. This communication is neither an offer to purchase nor a solicitation of an offer to sell shares of MorphoSys AG (the “Company”). The final terms and further provisions regarding the Takeover Offer will be in the offer document once the publication of the offer document by Novartis BidCo AG (formerly known as Novartis data42 AG) (the “Bidder”) has been approved by the German Federal Financial Supervisory Authority (the “BaFin”), after which the offer document will be filed with the
In addition to the Offer to Purchase, including the means to tender and certain other Takeover Offer Documents, as well as the Solicitation/Recommendation Statement, the Company files other information with the SEC. The Company’s filings with the SEC are also available for free to the public from commercial document-retrieval services and at the website maintained by the SEC at www.sec.gov and are also available free of charge under the “SEC Filings” section of the Company’s website at www.morphosys.com/en/investors.
In order to reconcile certain areas where German law and
Acceptance of the Takeover Offer by stockholders residing outside
Forward Looking Statements
This communication contains certain forward-looking statements concerning the Company, the Bidder and the Takeover Offer that involve substantial risks and uncertainties. Forward-looking statements include any statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “goal,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions. In this communication, the Company’s forward-looking statements include statements about the parties’ ability to satisfy the conditions to the consummation of the Takeover Offer; statements about the expected timetable for the consummation of the Takeover Offer; the Company’s plans, objectives, expectations and intentions; and the financial condition, results of operations and business of the Company and Novartis AG.
The forward-looking statements contained in this communication represent the judgment of the Company as of the date of this communication and involve known and unknown risks and uncertainties, which might cause the actual results, financial condition and liquidity, performance or achievements of the Company, or industry results, to be materially different from any historic or future results, financial conditions and liquidity, performance or achievements expressed or implied by such forward-looking statements. In addition, even if the Company's results, performance, financial condition and liquidity, and the development of the industry in which it operates are consistent with such forward-looking statements, they may not be predictive of results or developments in future periods. Those risks and uncertainties that could cause the actual results to differ from expectations contemplated by forward-looking statements include, among other things: uncertainties as to the timing of the Takeover Offer; uncertainties as to how many of the Company’s stockholders will tender their stock in the Takeover Offer; the possibility that competing offers will be made; the possibility that various conditions for the Takeover Offer may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the Takeover Offer; the effects of the Takeover Offer on relationships with employees, other business partners or governmental entities; that the Bidder and Novartis AG may not realize the potential benefits of the Takeover Offer; transaction costs associated with the Takeover Offer; that the Company’s expectations may be incorrect; the inherent uncertainties associated with competitive developments, clinical trial and product development activities and regulatory approval requirements; the Company's reliance on collaborations with third parties; estimating the commercial potential of the Company’s development programs; and other risks indicated in the risk factors included in the Company’s filings with the SEC, including the Company’s Annual Report on Form 20-F, as well as the Solicitation/Recommendation Statement on Schedule 14D-9 to be filed by the Company and the Tender Offer Statement on Schedule TO and related Takeover Offer Documents to be filed by the Bidder and Novartis AG. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this communication. The Company and the Bidder expressly disclaim any obligation to update any such forward-looking statements in this communication to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements, unless specifically required by law or regulation.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240313374964/en/
Media Contacts:
Thomas Biegi
Senior Vice President, Corporate Affairs
Tel.: +49 (0)89 / 899 27 26079
thomas.biegi@morphosys.com
Eamonn Nolan
Senior Director, Corporate Communications & Investor Relations
Tel: +1 617-548-9271
eamonn.nolan@morphosys.com
Investor Contacts:
Dr. Julia Neugebauer
Vice President, Global Investor Relations
Tel: +49 (0)89 / 899 27 179
julia.neugebauer@morphosys.com
Source: MorphoSys AG
FAQ
What was the offer price per share in cash in the Business Combination Agreement with Novartis?
What were the Monjuvi U.S. net product sales for the fourth quarter of 2023?
How much cash and other financial assets did MorphoSys have as of December 31, 2023?
What significant event related to tafasitamab occurred on February 5, 2024?
What financial guidance for 2024 was revoked by MorphoSys?
