The bottom line is a minus of 514.5 million euros.
(Photo: MorphoSys)
Frankfurt The $1.7 billion takeover of the American biotech company Constellation Pharmaceuticals is becoming a serious burden for Munich-based Morphosys AG – both for investor confidence and for the balance sheet. Morphosys had to concede this when presenting the 2021 annual financial statements on Wednesday evening. The bottom line is that Munich made a loss of 514 million euros, after a profit of 98 million euros in 2020.
In addition to increasing research expenditure, EUR 231 million of this related to an impairment of goodwill from the Constellation takeover. The write-down arose after Morphosys decided to discontinue Constellation’s early-stage research activities in favor of concentrating fully on the more advanced projects.
Morphosys shares were slightly up on Thursday afternoon despite the high deficit, but have already lost more than half their value since the Constellation deal was announced last June. Before the takeover, Morphosys was still worth about 2.2 billion euros on the stock exchange, today it is still 835 million euros.
Compared to the former top valuation of more than four billion euros in 2019, the market value has now even fallen by more than 80 percent. In addition to skepticism about the US takeover, the previously disappointing sales development of the blood cancer drug Monjuvi, developed by Morphosys, also played a role. It received approval in the USA in 2020 and achieved sales of almost 67 million euros last year.
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In the meantime, company boss Jean-Paul Kress defended the strategic realignment associated with the Constellation takeover in the analyst call. “Our clinical research pipeline has never been as robust as it is today,” said Kress. In the course of the Constellation acquisition, Morphosys had sold the rights to license income from previous research partnerships to the pharmaceutical financing company Royalty Pharma, thereby shifting its own risk profile even more towards drug development.
Morphosys aims to catch up in hematological cancers
The aim is to bring a second cancer drug onto the market alongside Monjuvi by 2025: the active ingredient pelabresib, which is directed against bone marrow cancer (myelofibrosis), from Constellation’s research. Morphosys aims to achieve a strong position in the fight against hematological cancers.
In addition, Morphosys is working on two other substances in this area as well as on a potential active ingredient against specific autoimmune diseases of the kidneys. These products are currently in mid-stage clinical testing.
Research expenditures of probably more than 300 million euros are likely to result in a loss in the current year. With cash reserves of around 980 million euros, the biotech company feels solidly secured to continue its own research program until 2025.
Kress continues to see the peak sales potential of Monjuvi at 500 to 750 million euros. “But it is clear that this goal represents a challenge and will probably be postponed in time,” admitted the Morphosys boss. For the current year, the company expects Monjuvi sales of 100 to 123 million euros.
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