The biotech company Morphosys buys US cancer specialists

The biotech company Morphosys is reaching for the US cancer specialist Constellation Pharmaceuticals and wants to focus even more on developing its own drugs in the future. The purchase can cost up to $ 1.7 billion. "This acquisition represents a real transformation for Morphosys and strengthens our position in hematology-oncology," said CEO Jean-Paul Kress. Morphosys is offering $ 34 per Constellation share in cash - a premium of almost 68 percent over the previous day's closing price. With the acquisition, Morphosys has secured two new cancer drugs that are currently in the middle to late phase of clinical development. To finance the deal, the company agreed an extensive partnership with the US pharmaceutical finance company Royalty Pharma. For Morphosys, which was founded in 1992, it is the largest acquisition to date. For the purchase of the German biotech company Sloning, Morphosys put around 19 million euros on the table in 2010, and around 20 million euros for Lanthio Pharma in 2015. Royalty Pharma is now financing the Constellation takeover, for which Morphosys has to cede license income to the financial company. Kress sees this as positive: "Our new partner is providing us with more than two billion dollars so that we can advance the development and marketing of our own drugs." With Royalty, Morphosys has found a strong partner that enables the company to finance its growth. The deal was badly received by Morphosys investors: The shares fell by up to 17 percent to a four-year low of EUR 60.30. This is the biggest drop in prices in five years. Constellation rose by a good 67 percent to $ 33.85. "The premium for the Constellation share is very high," said one trader. He is also critical of the assignment of license income to Royalty. "The deal appears to be better for Royalty than it is for Morphosys." Upon completion of the transaction, which is expected in the third quarter, Morphosys will receive an upfront payment of nearly $ 1.43 billion from Royalty. In addition, Morphosys can draw up to $ 350 million in development finance bonds over a period of one year. The German biotech company can also expect milestone payments of up to $ 150 million in royalty to achieve certain goals in the development, approval and commercialization of three drugs, one of which is one of Constellation's cancer drugs. The US financial company is also investing in Morphosys through a capital increase expected to be worth $ 100 million. At the current price, this corresponds to a share of around four percent in Morphosys.