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Novartis continues shopping spree with Morphosys takeover

Updated at 06 Feb 2024 6:11 am

Even after the numerous takeovers in 2023, the pharmaceutical group Novartis' appetite for additional acquisitions is not yet satiated. The Basel-based company is acquiring the German biotech company Morphosys for 2.7 billion euros.

This does not come as a complete surprise. The first media had already speculated about this on Monday evening before the actual Novartis communiqué. According to the reports, the Basel-based company was able to prevail against the US drug manufacturer Incyte.

Under the terms of the agreed transaction, which has been unanimously approved by the Boards of Directors of both companies, Novartis will launch a voluntary public tender offer for all no-par value bearer shares of Morphosys AG at a price of EUR 68 per share.

The offer that has now been made also puts an end to the takeover speculation about the German biotech, which was founded in 1992 in Martinsried near Munich.

Pipeline is strengthened

The acquisition strengthens Novartis' oncology pipeline, the Group announced late Monday evening. The transaction gives Novartis access to pelabresib, a drug for the treatment of myelofibrosis (MF), a life-threatening, chronic disease of the bone marrow.

As Novartis itself writes, the cause of MF is currently still unknown. It is assumed that MF is caused by a change in the stem cells in the bone marrow.

In addition to pelabresib, the acquisition gives Novartis access to tulmimetostat, an early-stage compound currently being tested in patients with solid tumors or lymphoma. In addition, Morphosys' pipeline includes a broad portfolio of drugs, some of which are being developed in partnership with Novartis, including Ianalumab (VAY736), which is being studied in various immunological diseases and in hematology.

Most importantly, however, is pelabresib. The active ingredient recently led to a reduction in spleen volume in a combination study and thus achieved the targets set. In the USA, the application for approval from the US Food and Drug Administration (FDA) should be submitted in the second half of 2024 if possible.

Strategically sensible acquisition

Novartis itself remains true to its M&A strategy with these plans. Just a week ago, CEO Vas Narasimhan confirmed in an interview with AWP Video that the Group would continue to focus primarily on bolt-on acquisitions with a volume of up to USD 3 billion.

Analysts, on the other hand, consider the plans to make strategic sense, as can be seen from the first early comments. The experts at JPMorgan, for example, write that the current standard of care for myelofibrosis is Jakafi, for which Novartis owns the rights outside the US. "Therefore, the acquisition of global rights for pelabresib makes strong strategic sense as it builds on Novartis' existing hematology presence," the report states.

The transaction is subject to customary closing conditions, including acceptance of the tender offer by at least 65% of the outstanding shares of Morphosys AG and receipt of regulatory approvals. The transaction is expected to close in the first half of 2024. Until completion of the transaction, the company will continue to operate as a separate, independent company.


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