Morphic’s stock prices soar by 75%! Eli Lilly invests an additional $3.2 billion in the autoimmune field

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Eli Lilly has welcomed its first acquisition deal of the year.

On July 8, 2024, Eli Lilly announced the acquisition of all outstanding shares of Morphic Therapeutic at a price of $57 per share, with a total transaction value of $3.2 billion. The transaction price is approximately 79% higher than the last trading day before the announcement, which was on July 5, 2024. According to Eli Lilly, the transaction is expected to be completed in the third quarter of this year. Affected by the news, Morphic’s stock price soared by 75% after the market closed, with a market value approaching $2.8 billion.

Only one product in clinical development

According to the official website of Morphic, the company has multiple candidate products, involving indications including autoimmune diseases, pulmonary arterial hypertension, and oncology. However, the only one that has entered the clinical stage is MORF-057, which is also the core value of this $3.2 billion transaction.

This drug is an oral small molecule α4β7 inhibitor, and Morphic is currently conducting two Phase II clinical trials for two indications: ulcerative colitis (UC) and Crohn’s disease (CD).

According to the previously released results of the Phase IIa EMERALD-1 trial for UC, after 12 weeks of treatment with 100mg BID, the primary endpoint RHI score (Robarts Histopathology Index, used to measure the histological disease activity in ulcerative colitis) significantly decreased by 6.4 points from the baseline (p=0.002) in 35 patients with moderate to severe UC.

The secondary endpoint, the mMCS (modified Mayo endoscopic score), also decreased by 2.3 points from the baseline, and the mMCS remission rate and response rate were approximately 26% and 46%, respectively.

In this trial, MORF-057 was well-tolerated, with no serious adverse events (SAEs) and safety signals observed. The most common adverse events were UC exacerbation and anemia.

Such safety may have a larger therapeutic window than JAK1 inhibitors (such as AbbVie’s upadacitinib) and other drugs.

However, it cannot be compared in this way. In the same UC field, the market will often compare it with Takeda’s drug Entyvio with the same target point. (In fact, Morphic often refers to itself as the “oral version of Entyvio”.)

Entyvio is Takeda’s sales pillar, with annual sales of 800.9 billion yen (more than 5 billion US dollars) in 2023, a blockbuster drug. Compared with it, MORF-057, as an oral formulation, must be better than Entyvio, which is a subcutaneous injection/intravenous infusion formulation.

It seems that MORF-057 will have a broader market prospect, but it is not, at least not now.

Uncertainty Surrounding MORF-057

Firstly, the EMERALD-1 trial did not include a control group; how credible is the primary endpoint? Secondly, even if the data is credible, the primary endpoint is still not as good as the Phase III clinical results of Entyvio, which is -7.5. (This is a cross-comparison of efficacy, with different dosages and durations of medication.)

In terms of market competition, established drugs such as Humira, Entyvio, and Upadacitinib are all blockbuster products for UC/CD with high market share in their respective targets.

In terms of research and development, just a month ago (June 27, 2024), a pharmaceutical company called Ensho Therapeutics introduced an oral α4β7 inhibitor, AJM300, from Eisai. Currently, this drug has been approved for the induction treatment of UC in Japan.

Not only that, but in June 2023, Eli Lilly acquired Dice Therapeutics for $2.4 billion, thereby gaining a preclinical oral α4β7 project.

Moreover, Eli Lilly itself has the IL-23 antibody Mirikizumab, which was just approved by the FDA last year for the treatment of adult moderate to severe UC. Mirikizumab is also approved for both intravenous and subcutaneous formulations.

Now, just a year later, Eli Lilly is willing to spend $3.2 billion to invest in the oral α4β7 project again, showing the value it sees in it.

New Favorite of MNCs: The IBD Field

Inflammatory bowel disease (IBD) is a chronic relapsing inflammatory intestinal disease, including UC (Ulcerative Colitis) and CD (Crohn’s Disease). Due to the characteristics of these diseases such as “incurable,” “long-term medication use,” and “prone to relapse,” the market is continuously expanding.

Statistics show that the global IBD market is approximately 18 billion US dollars, and it is expected to grow to about 49 billion US dollars by 2030. At the same time, the IBD market is relatively concentrated, with four therapeutic products, including Humira, accounting for 75% of global revenue.

Therefore, in addition to Eli Lilly, many MNCs (Multinational Corporations) are involved.

In April 2023, Merck spent 10.8 billion US dollars to acquire Prometheus, gaining the TL1A monoclonal antibody MK-7240; in the same year, Roche spent 7.1 billion US dollars to acquire Telavant, thereby obtaining the TL1A monoclonal antibody RVT-3101

Looking back at the domestic perspective, there are not many innovative IBD drugs in clinical development in China. Among them, the oral S1P receptor modulator Etrasimod (Iquimod) jointly developed by Pfizer and Everest Medicines, and the JAK1 inhibitor Olumiant (Upadacitinib) developed by Hengrui Pharma/Arcutis are the fastest in development progress.

In the future, will there be transactions in China domestic IBD market? DrugTimes will continue to pay close attention.

【Editor’s Note】The above content is a quick translation of the Chinese article written by DrugTimes Team. To view the original article, please click here. Many thanks!


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