Bryan Garnier & Co Morphosys (Buy) PT € 125
(11th September 2019)
Next Catalyst: 29th October 2019 - Q3 results
The right CEO to make MorphoSys a commercial-stage company
Very positive first impression from meeting with new CEO.
We had the opportunity to meet MorphoSys’ new CEO Jean-Paul Kress in London yesterday, just a few days after he took over the position.
Coming from Syntimmune (sold for USD1.2bn to Alexion in Sept. 2018), JPK has a solid background in commercial operations as well as in immunology. Among his top priorities, he particularly highlighted 1/the launch of MOR208 in the US, 2/ ongoing partnership discussions and
3/ his willingness to create further value from the pipeline. We believe him to be a perfect fit to prepare MorphoSys’ transition to a biopharma company with commercial operations thanks to his extended experience from blue-chip pharma companies (Genzyme, Biogen, Gilead), as well as his expertise to hire and build teams which will be particularly helpful to structure the US subsidiary.
Finally, we think that his dealmaking skills will be highly relevant to strike one or more partnerships.
Several catalysts could drive the stock in coming months
Among them are: the BLA filing for Tafa in the US and in the EU before the end of the
year, leading to a decision before the end of Q2 2020 in the US; B-MIND futility analysis
in Q4 which could be followed by results in Q1 2020 and finally, the announcement of
a partnering deal for Europe. While the filings are quite anticipated now that the
regulatory strategy has been disclosed (see our last report), we believe that B-MIND
results could be a key catalyst for two reasons: 1/further expand Tafa’s potential in
DLBCL and 2/trigger the anticipated partnering deal in Europe (if not signed before).
B-MIND futility analysis could lead to final data in Q1 2020
As a reminder, B-MIND is a phase II/III study evaluating Tafa in combination with
bendamustine vs rituximab + bendamustine. A futility analysis has been set for Q4 and
will result in the study continuing in all comers or biomarker selected patients. While
final data is expected in Q1 2020 if all-comers pass futility, an additional year will be
needed if only subgroups pass futility. Given that a longer-than-expected duration of
response in the overall patient population has been shown, suggesting better efficacy
in the Tafa arm, we believe that the probability of a complete failure of B-MIND is
now really low. If positive, these results could be a significant catalyst by further
broadening combination potential with either Bendamustine or Rituximab.
Could Astrazeneca be the right partner outside of the US?
As reported in our OncoDay 2019 paper, AstraZeneca is seeking to become more
ambitious in haematology following positive data sets obtained with Calquence in CLL.
From a situation where Celgene used to be the partner in the field, AZ is now
candidate to make acquisitions of phase II/early phase III assets to build up its own
franchise around the Calquence backbone. For these reasons, we believe that ex-US
rights of Tafa could be a perfect addition in order to strengthen AZ’s haematology
portfolio given its potential in DLBCL as well as its later stage positioning in CLL.