BASEL/PLANEGG (dpa-AFX) - The pharmaceutical group Novartis is reaching for the biotech company Morphosys from Planegg near Munich. The Swiss are particularly interested in the great hope of Pelabresib, as the Bavarian company's cancer drug could potentially become a blockbuster. Novartis is therefore paying 2.7 billion euros for the takeover and is thus offering Morphosys shareholders a substantial premium. The Management Board and Supervisory Board of Morphosys also support the offer. The Morphosys share price approached the offer with a jump on Tuesday morning.

Shortly after the start of trading, the SDax-listed share price rose by almost a fifth to 66.58 euros, the highest price since July 2021.

Novartis is offering 68 euros for one Morphosys share, as both companies announced the previous evening. This corresponds to a premium of 94 percent on the volume-weighted average price of the last month before January 25, 2024, according to the information. The first takeover speculation arose on this date. The first analyst firms have already adjusted their price targets in line with the offer price - including the experts at Citigroup, who also removed their previous sell recommendation on Tuesday.

According to market expert Andreas Lipkow, there is currently "a veritable hunt for promising small and medium-sized companies" in the oncology sector. Following Pfizer's takeover bid to Seagen shareholders at the beginning of last year, the sector has gained additional momentum.

The Novartis bid for the SDax company Morphosys had already been reported by the news agency Reuters on Monday afternoon. Morphosys' previous distribution partner, the US pharmaceutical company Incyte, was also interested in buying the Bavarian antibody and cancer specialist.

Novartis has linked the completion of the offer to a minimum acceptance by 65 percent of Morphosys' share capital, apart from the usual antitrust approvals. The Group expects to close the deal in the first half of the year. Following the completion of the takeover bid, Morphosys is to be delisted from the stock exchange.

The Swiss company spun off its generics subsidiary Sandoz last year and is now focusing on novel drugs. With the takeover of Morphosys, they want to secure the cancer drug pelabresib. The drug is used in the fight against myelofibrosis, a rare blood cancer that originates in the bone marrow and for which there are currently hardly any therapeutic options. Novartis has extensive resources to "fully develop and expand the potential of pelabresib on a global scale," both companies said.

Meanwhile, JPMorgan analyst James Gordon points out that for the current standard therapy for myelofibrosis - Jakafi - Incyte owns the US rights and Novartis those for markets outside the US. A Morphosys takeover would therefore only be in the logical interest of the larger companies. According to the expert, the potential of a company with the possibility of global commercialization can now be "maximized".

Morphosys is unlikely to be able to do this alone, according to industry experts. The company acquired the rights to Pelabresib itself through an expensive takeover: To this end, the Bavarians bought the cancer specialist Constellation Pharmaceuticals for 1.7 billion dollars in 2021 with financial support from the US group Royalty Pharma. However, the expensive research into the drug drove Morphosy into the red and forced the company's management to terminate several other research projects and cut jobs at its headquarters in Planegg near Munich.

Morphosy believes that Pelabresib could generate billions in sales. The application for approval is expected to be submitted to the authorities in the USA and Europe in the middle of the year. Last November, however, doubts initially arose on the market about the drug's eligibility for approval, as although it achieved the most important objectives of the study, it did not show any statistically significant benefit in some areas.

As a result, Morphosys' share price halved within just eight trading days. In December, detailed pelabresib study data at the annual conference of US hematologists provided a new boost. Since then, investors have again been betting that the drug will receive US approval for the treatment of blood cancer and continue to be a blockbuster.

According to the announcement from the previous evening, Morphosys will divest its blood cancer drug tafasitamab as part of the deal. The drug with the trade name Monjuvi is currently the company's only proprietary drug with marketing authorization. Morphosys will now transfer all worldwide rights to tafasitamab to its US partner Incyte. The two companies are currently still working together on the development and marketing of tafasitamab. In the USA, the Bavarians and Incyte have so far shared the revenues from the drug, which is currently in advanced studies for other indications./tav/stk/mne/stk