MorphoSys AG

Novartis CEO Vas Narasimhan assured investors on Tuesday that it takes a careful, systematic approach to M&A after recording an $800 million impairment to its recent MorphoSys acquisition. During the company’s third-quarter earnings call, Narasimhan said that he sees its overall M&A success rate as “in line with the overall sector.” The MorphoSys impairment , recorded just five months after Novartis closed the deal, was related to clinical data for the company’s myelofibrosis candidate pelabresib. “Whenever you do clinical-stage deals like we did with pelabresib, you will have updated clinical data,” he said in response to an analyst question about investor confidence. “I would expect sophisticated investors not to read too much into one-offs, but rather look at the overall portfolio of how a company does [and] executes M&A.” Novartis is delaying its regulatory submission for the candidate, as it needs more time to follow patients and assess concerns about emergent malignancies. The company’s stock $NVS was down roughly 3% on Tuesday afternoon. Narasimhan said Novartis has “adequate firepower” for dealmaking, share buybacks and other investments. He cited the company’s recent $1 billion deal to acquire radiopharmaceutical startup Mariana Oncology and another deal struck earlier this week for Monte Rosa Therapeutics’ molecular glue candidate. “We can do all M&A bolt-on deals that we come up with,” CFO Harry Kirsch said, adding that “it’s not so easy to come up with good ones given the premiums one has to pay and the high conviction we have to have.” As for Novartis’ appetite for M&A in immunology, Narasimhan said the focus is broadly around reinforcing the company’s efforts in bispecifics or cell therapy, “or to look at novel targets like Monte Rosa that we recently have done.”

Just five months after closing its $2.9 billion deal for MorphoSys, Novartis has recorded an $800 million impairment on the acquisition after a review of “certain clinical trial data,” the company said in its third-quarter earnings report . A company spokesperson confirmed that the review was triggered by pelabresib, an oncology candidate at the center of the MorphoSys buyout. Novartis shared Tuesday that it’s expecting a delayed regulatory submission for pelabresib, as it needs to follow patients longer to assess concerns about emergent malignancies. The company had initially hoped to file for approval in myelofibrosis this year. Emergent malignancies in patients treated with pelabresib were first reported by STAT earlier this year. Novartis will “look at the data over the course of next year,” and assess the potential need for additional studies, CEO Vas Narasimhan said during its Q3 earnings call with the media. Novartis also disclosed three Phase 2 pipeline cuts Tuesday: a BCMA cell therapy called durcabtagene autoleucel or PHE885 in multiple myeloma; XXB750 in hypertension and heart failure; and an IL-17 inhibitor subbed CMK389 in pulmonary sarcoidosis. Overall, Barclays analysts said Novartis had a “strong” quarter. The company raised its end-of-year guidance, with Narasimhan saying its “pure-play” strategy is starting to pay off. While executives previously expected net sales growth in the high single digits to low double digits, Novartis now says the low end of that range will be in the double digits. “The changes we’ve made to become a focused, pure-play company focused on key therapeutic areas, focused on key geographies, is really working,” Narasimhan told reporters. Elsewhere, Narasimhan also fielded a variety of questions about Novartis’ new structure, legal strategy and manufacturing capacity: On the company’s reorganization: It’s been roughly two years since Novartis announced a global restructuring that impacted thousands of positions and involved the spinout of generics unit Sandoz. The company said it completed its transformation in November 2023, though “additional streamlining” this year brought some cuts on the development side. Narasimhan said Novartis is “always going to be fine-tuning at a low level, but we don’t foresee any other large changes at this time.” On radioligand supply: Novartis applied for a label expansion last quarter to bring Pluvicto into the pre-taxane setting for patients with metastatic castration-resistant prostate cancer. But despite recent shortage concerns across the radiopharma space, Narasimhan said Novartis’ manufacturing plans will enable not only the supply of Pluvicto, but also “a very large pipeline of radioligand therapies moving forward.” He added that Novartis’ supply has been “unconstrained for most of this year,” with the ability to produce volumes that support $7 billion to $8 billion-plus in sales. The company has plans to expand its Indianapolis site, and is putting up new sites in California, China and Japan. On the Inflation Reduction Act and a recent court loss: A New Jersey federal court recently rejected Novartis’ legal challenge to the IRA. The company has appealed, though Narasimhan said it’s “difficult to say” whether Novartis’ case or cases brought by other drugmakers will conclude before negotiated prices take effect in 2026. For now, the CEO said Novartis is pushing for legislative changes, including around a provision that calls for negotiations to occur sooner for small molecule drugs than for biologics. “We are operating under the assumption that we need to work under the rules of the law and rather focus on trying to educate policymakers,” he said. On generic entry: Novartis said it expects generic rivals to Tasigna, Promacta and Entresto to hit the US market in mid-2025. “That will certainly be a headwind we’ll face in the second half of 2025,” Narasimhan said. “We still expect good growth next year, both on the top and bottom line.” Editor’s note: This story has been updated to include comment from Novartis on the MorphoSys impairment.

The detailed study results confirmed interim findings, showing stable kidney function and sustained treatment effect more than 18 months after the last dose of felzartamab Felzartamab, an investigational anti-CD38 monoclonal antibody, is a potential first-in-class therapeutic candidate for a range of rare immune-mediated indications with planning underway for Phase 3 development IgA Nephropathy (IgAN) is a leading cause of chronic kidney disease with up to 40% of IgAN patients progressing to end stage kidney disease about 20 years after diagnosis Oct. 26, 2024 -- Biogen Inc. (Nasdaq: BIIB) – today presented complete results from the Phase 2 IGNAZ study evaluating felzartamab, an investigational anti-CD38 monoclonal antibody, in people living with IgA nephropathy (IgAN). The results showed substantial reductions in proteinuria, stabilization of kidney function, and sustained treatment effect more than 18 months after the last dose of felzartamab. The complete results were shared during an oral presentation at Kidney Week 2024, the American Society of Nephrology’s annual meeting, in San Diego, California. "The complete results of the IGNAZ Study reaffirm our interim findings, showing a reduction in proteinuria, stabilization of kidney function, and sustained treatment effect more than 18 months after the last dose of felzartamab,” said Jonathan Barratt, MD, PhD, FRCP, Mayer Professor of Renal Medicine at the University of Leicester. “This is promising news for patients and supports the potential of felzartamab to be a meaningful treatment option for people living with IgA nephropathy, a leading cause of chronic kidney disease.” The Phase 2 IGNAZ study (n=54) explored the efficacy and safety of felzartamab in patients with IgAN and high risk of progressive kidney dysfunction. With respect to efficacy, patients receiving a nine-dose regimen of felzartamab over a six-month treatment period experienced substantial reductions in proteinuria levels as assessed by the urinary protein:creatinine ratio (UPCR) and stabilization of kidney function, as measured by the estimated glomerular filtration rate (eGFR), through 24 months. Notably, patients maintained a mean reduction of approximately 50% in the UPCR through month 24, which was more than 18 months after the last dose was administered. These results suggest that felzartamab may have the potential to preserve kidney function and be administered on treatment cycles instead of continuous dosing. Further analysis revealed that felzartamab administration resulted in selective and durable reductions in IgA antibody levels, while IgG and IgM levels recovered to baseline 3 months off-treatment. This selective reduction may offer maintenance of significant immune functions essential for infection protection. Overall, administration of felzartamab was generally well tolerated with a safety profile consistent with prior studies. “We are encouraged by the overall results of the IGNAZ study, especially given the significant unmet medical need for additional treatments to address high-risk IgA nephropathy,” said Uptal Patel, M.D., Head of Development, HI-Bio at Biogen. “We are grateful to all the participants, investigators and study staff who contributed to this study, whose findings will help us continue to evaluate felzartamab’s role in preserving kidney function as we plan for Phase 3.” Felzartamab is an investigational therapeutic human monoclonal antibody directed against CD38, a protein expressed on mature plasma cells. Felzartamab is a potential first-in-class therapeutic candidate with promise as a pipeline-in-a-product across a range of immune-mediated diseases. Felzartamab has been shown in clinical studies to selectively deplete CD38+ plasma cells, which may allow applications that ultimately improve clinical outcomes in a broad range of diseases driven by pathogenic antibodies. Felzartamab was originally developed by MorphoSys AG for multiple myeloma. Human Immunology Biosciences (HI-Bio) exclusively licensed the rights to develop and commercialize felzartamab across all indications in all countries and territories excluding China (including Macau and Hong Kong and Taiwan). Biogen acquired HI-Bio in July 2024. Felzartamab is an investigational therapeutic candidate that has not yet been approved by any regulatory authority and its safety and effectiveness have not been established. Immunoglobulin A nephropathy (IgAN) is the most common primary glomerulonephritis worldwide. It is a leading cause of chronic kidney disease with up to 40% of IgAN patients progressing to end stage kidney disease about 20 years after diagnosis. IgAN accounts for about 40% of all native-kidney biopsies in Japan, 25% in Europe, 12% in the United States, but less than 5% in central Africa.1 Founded in 1978, Biogen is a leading biotechnology company that pioneers innovative science to deliver new medicines to transform patients’ lives and to create value for shareholders and our communities. We apply deep understanding of human biology and leverage different modalities to advance first-in-class treatments or therapies that deliver superior outcomes. Our approach is to take bold risks, balanced with return on investment to deliver long-term growth. References: Rajasekaran et al. (2021) IgA nephropathy: An interesting autoimmune kidney disease. Available at https://www-ncbi-nlm-nih-gov.libproxy1.nus.edu.sg/pmc/articles/PMC5198292/. Hastings et al (2018) Clinical Research, Life Expectancy for Patients From the Southeastern United States With IgA Nephropathy. 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