When MorphoSys acquired Cambridge, Massachusetts-based Constellation Pharmaceuticals last year, the $1.7 billion deal value represented the entirety of the cancer drug developer’s pipeline. MorphoSys has now decided to focus on Constellation’s most advanced assets, a move that cuts earlier-stage drug programs and the jobs associated with them.
MorphoSys said Thursday that discovery biology and drug discovery work at Constellation have been discontinued. Work related to the clinical-stage cancer drugs will move to MorphoSys’s headquarters in Planegg, Germany.
“Since the early pipeline was part of the goodwill resulting from the acquisition of Constellation, an impairment test was performed based on the latest cash flow projections, which triggered an impairment charge on the goodwill in the amount of € 231 million (about $253.7 million),” the company said in its announcement.
The write down will be added to MorphoSys’s operating expenses, which the company said will be reported next week in the release of fourth quarter and full-year 2021 financial results.
Constellation’s drug research focuses on epigenetics, which involves turning genes on or off without altering the genetic code. The most advanced Constellation drug is pelabresib, a therapeutic candidate in late-stage development for myelofibrosis. Another Constellation drug candidate, CPI-0209, is in mid-stage testing as a potential treatment for advanced solid tumors and blood cancers. Speaking on a conference call last June, when the deal was announced, MorphoSys CEO Jean-Paul Kress said that the Constellation assets are complementary. These drugs bolster MorphoSys’s presence in blood cancer and expand its reach into solid tumors, he said. The acquisition closed last July.
According to Constellation’s 2020 annual report, the biotech’s earlier-stage drugs included CPI-482, which was in preclinical development for blood cancers, and multiple discovery-stage compounds for solid tumors. The decision to cut these research programs is not entirely a surprise. MorphoSys Chief Financial Officer Sung Lee said on the investor call that after the deal’s close, the focus would be on the two clinical-stage compounds from Constellation and two cancer drugs that MorphoSys had advanced to the clinic.
MorphoSys’s stock price closed Thursday at $6.32, down nearly 2.5% from Wednesday’s closing price, and down more than 75% from its 52-week high.
Photo: MarsBars, Getty Images
