Press Release: Novartis to strengthen oncology pipeline with agreement to acquire MorphoSys AG for EUR 68 per share or an aggregate of EUR 2.7bn in cash

-- Transaction to include pelabresib, a late-stage BET inhibitor for

myelofibrosis (MF) and tulmimetostat, an early-stage investigational dual

inhibitor of EZH2 and EZH1 for solid tumors or lymphomas

-- Pelabresib recently met its primary endpoint of spleen volume reduction

and demonstrated favorable trends in symptom improvement with a

well-tolerated safety profile in Phase 3 MANIFEST-2 study, when

administered in combination with ruxolitinib in JAK inhibitor-naive MF

patients1

-- Pelabresib and ruxolitinib combination offers potential for practice

changing, first line of treatment in myelofibrosis with regulatory filing

with the U.S. FDA planned for H2 2024

-- Transaction aligns with Novartis strategic focus on oncology, and

strengthens company's efforts in developing next-generation treatment

options for cancer

-- EUR 68 per share (or EUR 2.7bn aggregate) all-cash transaction

unanimously approved by Novartis and MorphoSys Boards, expected to close

in H1 2024, subject to customary closing conditions, including a minimum

acceptance threshold of 65% of outstanding shares tendered in the

takeover offer and regulatory approvals

Basel, February 05, 2024 -- Novartis today announced that it has entered into an agreement to make a voluntary public takeover offer to acquire MorphoSys AG (FSE: MOR; NASDAQ: MOR), a Germany-based, global biopharmaceutical company developing innovative medicines in oncology. The acquisition, which is subject to customary closing conditions, including a minimum acceptance threshold of 65% of outstanding shares tendered in the takeover offer and regulatory approvals, further expands and complements Novartis pipeline in oncology, one of its priority therapeutic areas, while also enhancing Novartis global footprint in hematology.

Upon completion of the acquisition, Novartis will own pelabresib (CPI-0610), a novel and potentially practice changing treatment option with a well-tolerated safety profile provided in combination with ruxolitinib for patients with myelofibrosis (MF). It will also include tulmimetostat (CPI-0209), an early-stage investigational dual inhibitor of enhancer of zeste homolog 1 and 2 (EZH1 and EZH2) proteins currently being tested in patients with solid tumors or lymphomas.

Pelabresib in combination with ruxolitinib recently met its primary endpoint of spleen volume reduction in the Phase 3 MANIFEST-2 study in JAK inhibitor-naive MF patients(1). The combination also demonstrated favorable trends in symptom improvement as evidenced by key secondary endpoints of absolute and 50% change in total symptom score (TSS) at week 24 compared to baseline. All four clinical hallmarks of disease in myelofibrosis -- splenomegaly, disease-associated symptoms, anemia and bone marrow fibrosis -- were improved with the pelabresib and ruxolitinib combination. In the earlier Phase 2 MANIFEST trial, the third arm of the study with a patient population comparable to MANIFEST-2, showed durable improvements in both spleen volume and total symptom score up to week 60(2). Regulatory filing with the U.S. FDA is planned for the second half of 2024.

"We are excited about the opportunity of bringing pelabresib, a potential next-generation treatment combined with ruxolitinib, to people living with myelofibrosis, a rare and debilitating form of blood cancer, " said Shreeram Aradhye, M.D., President, Development and Chief Medical Officer of Novartis. "With the planned acquisition of MorphoSys, we aim to further strengthen our leading pipeline and portfolio in oncology, adding to our capabilities and expertise. Building on our long-standing development partnership with MorphoSys, we look forward to continuing our work together to realize the full impact and value of their investigational medicines for patients with unmet needs."

Pelabresib is an investigational small molecule designed to promote anti-tumor activity by selectively inhibiting the function of bromodomain and extra-terminal domain (BET) proteins to decrease the expression of abnormally expressed genes in cancer. Pelabresib is also being studied in patients with essential thrombocythemia (ET), which is currently in Phase 2 in second line of treatment. Besides pelabresib, MorphoSys' pipeline includes a broad portfolio of partnered assets of which some are in partnership with Novartis, including ianalumab (VAY736) which is studied across multiple immunological diseases and in hematology.

Transaction Details

Under the agreed transaction, which has been unanimously approved by the Board of Directors of both companies, Novartis will make a voluntary public takeover offer for all no-par value bearer shares of MorphoSys AG for EUR 68 per share (or an aggregate of EUR 2.7bn).

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

About Pelabresib (CPI-0610)

Pelabresib (CPI-0610) is an investigational small molecule designed to promote anti-tumor activity selectively 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. The development of pelabresib was funded in part by The Leukemia and Lymphoma Society(R).

About Myelofibrosis

Myelofibrosis is a blood cancer -- belonging to a group of diseases called myeloproliferative neoplasms -- caused by genetic abnormalities in bone marrow stem cells and characterized by four hallmarks: enlarged spleen, anemia, impaired bone marrow microenvironment causing fibrosis, and debilitating disease-associated symptoms, including severe fatigue, night sweats, itching, increased bleeding and significant pain caused by their enlarged spleen. For many living with myelofibrosis, the combination of symptoms often severely impacts their quality of life. At diagnosis, several factors, such as age, genetics and bloodwork, help determine a patient's long-term prognosis. About 90% of newly diagnosed patients have intermediate- to high-risk disease, which has a worse prognosis and a higher likelihood of disease-associated symptoms. While JAK inhibitors, the current standard of care, address some aspects of the disease, no agent provides broad disease control. There is an urgent need for novel, well-tolerated therapeutic options capable of changing the natural course of myelofibrosis to provide patients with deep and durable responses across its four hallmarks.

About Tulmimetostat (CPI-0209),

Tulmimetostat (CPI-0209) is an investigational compound designed to exert anti-tumor activity by inhibiting the function of enhancer of zeste homolog 1 and 2 (EZH2 and EZH1) proteins to reactivate silenced genes like tumor suppressor genes. Tulmimetostat is being tested as a once-daily oral treatment in a Phase 1/2 trial (NCT04104776) in patients with advanced solid tumors or lymphomas, including ARID1A-mutated ovarian clear cell carcinoma and endometrial carcinoma, diffuse large B-cell lymphoma, peripheral T-cell lymphoma, BAP1-mutated mesothelioma and castration-resistant prostate cancer.

Forward Looking Statements

This press release contains statements of historical fact or "forward looking statements", including with respect to the proposed acquisition of MorphoSys by Novartis. Forward-looking statements can generally be identified by words such as "potential," "can," "will," "plan," "may," "could," "would," "expect," "anticipate," "look forward," "believe," "committed," "investigational," "pipeline," "launch," or similar terms, or by express or implied discussions regarding the ability of Novartis and MorphoSys to complete the transactions contemplated by the business combination agreement (including the parties' ability to satisfy the conditions to the consummation of the offer contemplated thereby and the other conditions set forth in the business combination agreement), the expected timetable for completing the transaction, the benefits sought to be achieved in the proposed transaction, the potential effects of the proposed transaction on Novartis and MorphoSys, the potential marketing approvals, new indications or labeling for the product candidates MorphoSys is developing, including Pelabresib, or regarding expected benefits and success of, or potential future revenues from such products. You should not place undue reliance on these statements. Such forward-looking statements are based on our current beliefs and expectations regarding future events, and are subject to significant known and unknown risks and uncertainties. Such risks and uncertainties include, but are not limited to: the risk that the closing conditions for the proposed transaction will not be satisfied, including the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated; uncertainty as to the percentage of MorphoSys' shareholders that will support the proposed transaction and tender their shares in the offer; the risk of shareholder litigation relating to the proposed transaction, including resulting expense or delay; the possibility that the proposed transaction will not be completed in the expected timeframe or at all, potential adverse effects to the businesses of Novartis or MorphoSys during the pendency of the proposed transaction, such as employee departures or distraction of management from business operations, the potential that the expected benefits and opportunities of the proposed transaction, if completed, may not be realized or may take longer to realize than expected, risks related to the integration of the MorphoSys into Novartis subsequent to the closing of the proposed transaction and the

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