The Deal: Celgene, MorphoSys Strike Deal on Blood Cancer Drug

NEW YORK ( The Deal) - Celgene Corp. ( CELG) has made a move to solidify its future in the multiple myeloma space, inking a licensing deal with Germany's MorphoSys AG for its MOR202 drug that could be worth $818 million to MorphoSys.

Munich-based MorphoSys gets an up-front license fee of 70.8 million Euros ($92 million) and Celgene will purchase $60 million worth of new shares of the company, the parties said Thursday.

Multiple myeloma is a blood cell cancer affecting white blood cells that produce antibodies. It's fairly rare, accounting for only about 1% of cancers, but until recently death occurred between one and four years after diagnosis. With newer drugs, such as those developed by Celgene, survival in many with the disease has been extended several years. Celgene, based in Summit, N.J., is a leader in MM treatments with its U.S.-approved brands Thalomid, Revlimid and Pomalyst. MOR202 would offer an option for revenue replacement in that space as those brands lose exclusivity.

The transaction must be cleared by U.S. antitrust authorities under the Hart-Scott-Rodino Act. The price of shares will be determined following that clearance. It will include a premium of at least 15% of the closing price of the shares prior to the parties signing the agreement.

Total value of the transaction could hit $818 million for MorphoSys, which may be entitled to additional development, regulatory and sales milestones plus tiered double-digit royalties on net sales outside a co-promotion territory.

Celgene secures worldwide rights to MOR202 while sharing the rights with MorphoSys to co-promote the drug candidate in Europe if it is approved there. MorphoSys retains 50-50 profit sharing in its co-promotion territory.

MOR202 is a fully human monoclonal antibody targeting CD38 and is in development to treat MM and leukemias. It is now in a Phase 1/2a trial in patients with relapsed/refractory MM. MorphoSys and Celgene will share in the costs of development of the mAb for MM and other indications, with MorphoSys paying one-third of the costs and Celgene two-thirds.

Patients continue to need new options for treatment of the disease, said Mark Alles, executive vice president and global head of hematology and oncology at Celgene. "Strategic investments in next-generation medical innovation make it possible for physicians to turn incurable cancers like MM into chronic, more manageable diseases."

CD38 is a protein found on the surface of tumor cells in MM and certain leukemias. Once attached to the CD38 site, MOR202 attracts natural killer cells that can more easily identify and eradicate the cancer cells.

MOR202 has shown encouraging results given alone, as a monotherapy, and with other therapies such as Revlimid and a proteasome inhibitor.

Other companies are interested in the CD38 area as well. Johnson & Johnson's ( JNJ) biologics unit Janssen Biotech signed a licensing agreement in August with Genmab A/S worth nearly $1 billion to help develop that company's anti-CD38 biologic. Called daratumumab, the drug candidate recently received breakthrough therapy designation from the U.S. Food and Drug Administration. A Phase 1/2 safety study is ongoing.

Sanofi ( SNY) also has an anti-CD38 drug candidate, SAR650984, in Phase 1 trials.

Written by Pamela Taulbee

More from Mergers and Acquisitions

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Congress May Have Just Set in Motion a Huge Banking Industry Merger Wave

Congress May Have Just Set in Motion a Huge Banking Industry Merger Wave

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Square Shares Shake Off Concerns About PayPal's Deal for iZettle

Square Shares Shake Off Concerns About PayPal's Deal for iZettle