Shares of Constellation Pharmaceuticals (CNST) - Get Report jumped on Wednesday after it agreed to be acquired by the Munich biopharma MorphoSys (MOR) - Get Report for $34 a share, or $1.7 billion, cash.
Shares of the Cambridge, Mass., company at last check rose 67% to $33.73. American depositary receipts of MorphoSys -- which focuses on cancer and autoimmune diseases -- were down 12% at $19.48.
Constellation develops molecule therapeutics to treat cancer as well as inflammatory and immunologic disorders.
The deal enables MorphoSys to bolster its position in hematology-oncology, the company's chief executive, Jean-Paul Kress, said in a statement.
Constellation’s two lead product candidates, pelabresib and CPI-0209, "have broad potential," Kress said. The drugs are in are in mid- to late-stage clinical trials for patients with various hematological and solid tumors including myelofibrosis, the companies said.
The management and supervisory boards of MorphoSys and the board of Constellation have approved the terms. The deal is expected to close in the third quarter, subject to conditions including antitrust clearances and a vote of Constellation's holders.
This deal will be funded largely by Royalty Pharma, which will provide $1.43 billion to MorphoSys up front. Those proceeds will support the financing of the Constellation transaction and development of the combined pipeline.
Among other terms, Royalty Pharma will make additional payments of as much as $150 million to MorphoSys as drugs reach certain clinical, regulatory and commercial milestones, the companies said.
For its part Royalty Pharma will have the rights to receive all of MorphoSys's royalties on net sales of Tremfya; 80% of future royalties and all future milestone payments on otilimab; 60% of future royalties on gantenerumab; and 3% on future net sales of Constellation's clinical-stage assets, pelabresib and CPI-0209.
Royalty Pharma, New York, buys biopharma royalties and funds innovation in the industry.