Galapagos and MorphoSys Ink Deal with Novartis for $1.111 Billion+

Biotechnology Deal

Galapagos NV, headquartered in Mechelen, Belgium, and MorphoSys, based in Munich, Germany, signed an exclusive development and commercialization deal with Swiss-based Novartis. The agreement is built around MOR106, an IgG1 monoclonal antibody directed against IL-17C that was created in a collaboration between MorphoSys and Galapagos. MOR106 is being developed for the treatment of inflammatory diseases.

Under the terms of the deal, Novartis will handle all future research, development, manufacturing and commercialization costs for the compound. Those costs include the ongoing Phase II IGUANA clinical trial in atopic dermatitis in addition to a planned Phase I trial to determine the safety and efficacy of a subcutaneous formulation of MOR106 in healthy patients and atopic dermatitis patients.

MorphoSys and Galapagos will run additional trials in support of the compound in atopic dermatitis, while Novartis will research the antibody in other indications.

In addition to the funding of the research programs, Novartis will pay the two companies jointly an upfront fee of $111 million. Additional milestone payments of up to $1 billion (U.S.) are on the table, as well as tiered royalties on net commercial sales in the low-teens to low-twenties. Under a 2008 deal, Galapagos and MorphoSys will split the payments equally.

“This collaboration with Novartis will enable us to accelerate and broaden the development of MOR106 beyond our current focus on atopic dermatitis and to exploit the potential of MOR106 to the maximum,” said Simon Moroney, MorphoSys’ chief executive officer, in a statement. “Data from preclinical models and expression analyses suggest that the target of MOR106 might be involved in other diseases, which justifies expanding the development program. We are also very pleased that we can further strengthen our engagement in atopic dermatitis by starting additional trials together with Galapagos, which will be fully reimbursed by Novartis. Securing a strong and committed partner for MOR106 helps the program, and also enables us to allocate more resources elsewhere.”

MOR106 is the only human monoclonal antibody directed against IL-17C that has been publicly recognized.

This appears to be a good example of Novartis’ new focus, under chief executive officer Vas Narasimhan, to work on developing more innovative drugs. Bloomberg writes, “Narasimhan needs new medicines to counter the impact of cheaper copycats on older products. The experimental antibody known as MOR106 targets a severe form of eczema and will join a portfolio for skin ailments that includes Cosentyx for psoriasis, on its way to becoming a blockbuster, and Xolair, an asthma drug also prescribed for chronic hives, bolstering Novartis’s dermatology business.”

Atopic dermatitis is a severe type of eczema, leading to itching, flaking, oozing or bleeding skin. Worldwide, it affects approximately eight percent of adults and 14 percent of children.

“It is very gratifying to announce this collaboration with Novartis, an immunology and dermatology powerhouse, to broadly expand the development and pave the path to potential commercialization of MOR106,” said Onno van de Stolpe, chief executive officer of Galapagos, in a statement. “We look forward to working with Novartis to support further progress with MOR106.”

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