MorphoSys Looks Externally to Grow Antibody Pipeline
BioWorld International - Mar. 04, 2009
By Cormac Sheridan
BioWorld International Correspondent
MorphoSys AG aims to broaden its proprietary pipeline of therapeutic antibodies by either in-licensing or acquiring molecules or companies.
In reporting its 2008 results, Simon Moroney, CEO of the Martinsried, Germany-based antibody platform developer, emphasized the company's financial strength and its immunity from the current economic downturn. "We are extremely secure at a time when many companies in our industry face critical questions about their very survival," he told analysts on a conference call.
The company has a guaranteed revenue stream worth more than ?400 million (US$510 million) between now and 2017, arising out of the blockbuster alliance it entered with Basel, Switzerland-based Novartis AG in late 2007. Milestones and royalties could push the total beyond ?1 billion. (See BioWorld International, Dec. 5, 2007.)
Moreover, the company exited 2008 with ?137.9 million in cash, a substantial improvement on the previous year's closing balance of ?106.9 million. MorphoSys is actively seeking deals. "The objective would be to use our balance sheet and potentially issue new shares to secure one or more therapeutic antibodies which would increase the value of our pipeline," Moroney said. "Overall we have significant fire power to be able to carry out a transaction."
Its existing areas of focus, in cancer and immunology, are the preferred indication areas, he said, while molecules in late preclinical development through to those in Phase I trials would constitute the "sweet spot" for the company.
So far, MorphoSys has just one proprietary program in early clinical development. MOR103, which targets the cytokine Granulocyte-macrophage colony-stimulating factor (GM-CSF), is in development for rheumatoid arthritis and has completed a Phase I trial in healthy volunteers. MOR202, an anti-CD38 antibody, is in preclinical development. Its target indication is multiple myeloma.
Joint drug development programs with Novartis, in an undisclosed field, and with Mechelen, Belgium-based Galapagos NV, in the area of bone and joint diseases, are further back.
The company's fee-for-service business based on its HuCal antibody platform is closed to new customers - a side-effect of the Novartis deal - but five existing customers extended their relationships with MorphoSys in 2008. "This is the best possible evidence that they are happy with the technology and the collaboration," Moroney said.
In total, 55 drug development programs are ongoing in that part of the business. Three of these are in the clinic. F. Hoffmann-La Roche Ltd., of Basel, is developing gantenerumab, which targets beta amyloid, for Alzheimer's disease. Single and escalating dose Phase I studies in patients have completed enrollment. BHQ880, which targets Dickkopf-1 (DKK-1), a soluble Wnt pathway antagonist, is in development at Novartis for refractory myeloma patients. A Phase Ib/IIa study in combination with zoledronic acid (Zometa) has just begun.
Because it targets osteoclasts, the antibody also has potential in osteoporosis. Centocor Ortho Biotech Inc., a subsidiary of Johnson & Johnson Co., of New Brunswick, N.J., is developing an undisclosed HuCal antibody in cancer and immunology indications.
Moroney said he expects partners to file up to four more new INDs during the current year.
MorphoSys reported net income of ?13.2 million - or ?0.59 per share - on total revenues of ?71.6 million for 2008. In 2007, it earned ?11.5 million - or ?0.53 per share - on revenues of ?62 million. For 2009, the company is forecasting revenues of ?80 million to ?85 million and an operating profit between ?8 million and ?11 million. It is raising expenditure significantly on proprietary product and technology development, to ?18 million to ?20 million, up from ?7.7 million in 2008.
The performance of its research and diagnostic antibody business was flat, though profitable, during 2008. However, currency effects resulted in a 7 percent sales decline, to ?18.2 million. Moroney said he expects the outlook to improve this year because of the anticipated improvements in the NIH budget, which has been flat for the past three years. "We think the climate for research in the U.S. is more favorable now than it was under the previous administration."
The company's stock (FRANKFURT:MOR), which underwent a three-for-one split in late December, gained 3.4 percent when the results were disclosed last Thursday, ending the day at ?15.20. n
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