MorphoSys is axing its early pipeline and U.S. R&D work that came with the $1.7 billion purchase of Constellation Pharmaceuticals, which will mean a more than $250 million impairment charge as the German pharma shifts the focus home.
The company will instead consolidate R&D work in its home country and focus research activities on the more advanced assets in the pipeline, according to a Thursday release. The company reported an impairment charge of 231 million euros ($253.7 million).
MorphoSys did not say which specific products would be cut, and a spokesperson for the company did not respond to a request for comment as of publication. The company did say that all U.S.-based activities relating to discovery biology and drug discovery departments were being discontinued. Two of the company’s monoclonal antibody treatments are in phase 1, including a treatment for a type of kidney disease called nephropathy and a large B-cell lymphoma therapy.
The German pharma is pushing a handful of monoclonal antibodies through the clinic in a bid to rekindle the success seen with Monjuvi, which was approved by the FDA in July 2020 to treat relapsed or refractory diffuse large B-cell lymphoma in combination with Bristol Myers Squibb's Revlimid. the most advanced portion of MorphoSys' pipeline is focused on expanding the use of Monjuvi. Three out of the four phase 3 trials the company has listed as underway involved the approved drug.
MorphoSys’ June 2021 purchase of Cambridge-based Constellation was meant to fortify the top-heavy pipeline with two fresher oncology candidates. The first was a BET inhibitor treatment for myelofibrosis, an uncommon form of bone marrow cancer, currently being tested in phase 2 and 3 trials. The other was a midstage EZH2 inhibitor for patients with hematological and solid tumors.
On the same day that MorphoSys purchased Constellation, the company also partnered with Royalty Pharma to fund the acquisition. Under the terms of the deal, Royalty gave up more than $1.4 billion in upfront cash in exchange for, most notably, 100% of MorphoSys’ future royalties on Tremfya, the FDA-approved treatment for plaque psoriasis licensed to Janssen.
MorphoSys anticipated that 2022 R&D investments could hit 325 million euros ($357 million), excluding charges related to the Constellation transaction, according to its latest financial report.