Morphosys to exit fee-for-service upon Novartis deal

By Kirsty Barnes

- Last updated on GMT

Related tags: Money

Morphosys has landed in the money after scoring a lucrative 10 year
antibody development deal with Novartis and as a result, will now
place all its eggs in one basket and cut ties with its
fee-for-service customers.

"The size of the Novartis deal dwarfs what we lose from existing partnerships",​ said MorphoSys' chief financial officer, David Lemus said during an investor conference call. The German biotech firm has indicated that the new deal could be worth over $1bn - based on a guaranteed payment of $600m in technology access fees and research funding from Novartis, in addition to any revenues in milestones and royalties from any drugs to come out of the partnership that eventually make it to market. Under the deal, Morphosys will attempt to create antibodies against Novartis targets in undisclosed disease areas. The total number of projects entered into will be in the triple digit range, MorphoSys' CEO Simon Moroney indicated during the conference call. At this stage, Novartis will pay for all the research and development expenses, although Morphosys does have the option to co-develop some of the projects, in which case it would also be entitled to a proportionate share in any eventual sales profits. Discussing the move away from its current business model, Moroney said that the firm's "interests are better served with a single partnership",​ and the goal had therefore been to secure itself one large deal in a bid to move away from having to work with a number of smaller customers. Having fulfilled this goal, the company will now phase out its existing relationships, continuing to honour its current commitments until each individual contract expires. Two are up for renewal at the end of this month - with Bayer and Centocour - but will not be extended, Lemus indicated. Novartis and Morphosys have been collaborating on antibody development since 2004 and the fruits of their labour have recently become apparent, with the first drug candidate entering the clinic this year. The signs are therefore positive that the firm's extended relationship with the Swiss drug giant will continue along the same vein, although, a cautionary glance at the position that Nektar, for example, has been left in after its over-reliance on Pfizer, may be wise.

Related topics: Preclinical Research, Novartis, Preclinical

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