Ladies and gentlemen, welcome to the MorphoSys conference call and webcast. My name is Anna, and I am your call operator. I would like to remind you that all participants will be in listen-only mode. The conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star, then zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Julia Neugebauer. Please go ahead.
Ladies and gentlemen, good afternoon or good morning. My name is Julia Neugebauer, Head of Investor Relations at MorphoSys, and it is my pleasure to welcome you to our conference call today. We will discuss yesterday's announcement of the public takeover offer by Novartis, and the sale and transfer of all tafasitamab rights to Incyte. With me on the call today are Jean-Paul Kress, our Chief Executive Officer, Lucy Crabtree, our Chief Financial Officer, and Charlotte Lohmann, our Chief Legal and Human Resources Officer, will join for the Q&A. Jean-Paul will begin with an overview on the benefits and strategic rationale of the agreements with Novartis and Incyte. After that, Lucy will provide more details on Novartis' proposed public takeover offer and the process. Following our prepared remarks, we will open the call for your questions.
Before we begin, I'd like to remind you on slide three that some of our statements made during the call today are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties. It is important to keep in mind that our statements on this webcast represent our judgment as of today. Additional information regarding the transaction will be filed with the United States Securities and Exchange Commission over the coming weeks, and we encourage investors to review this information when it becomes available. With that, I'll now hand the call over to Jean-Paul.
Thank you, Julia. Good morning, and good afternoon, everyone. I am very pleased to be here with you today to discuss this opportunity for our company. At MorphoSys, we have been diligently working to develop and deliver more effective and well-tolerated cancer medicines that address the dire needs of cancer patients worldwide. We successfully built a strong oncology pipeline that provides several best and first-in-class opportunities with pelabresib, our investigational BET inhibitor, at the forefront. We want our pipeline to advance at a greater speed and scale to help ensure patients worldwide can benefit. As such, after a thorough review of all strategic options, we firmly believe our recently announced agreements with Novartis and Incyte are in the best interest of MorphoSys, our shareholders, and cancer patients. Starting with the proposed acquisition by Novartis. This offer provides attractive, immediate, and certain cash value to our shareholders.
Novartis intends to offer MorphoSys shareholders EUR 68 per share in cash, providing shareholders with an opportunity to realize significant value up front and with certainty. It represents an attractive premium of 89% to the unaffected January 25, 2024, closing share price. Additionally, Novartis seeks to maximize the potential of pelabresib. The recent phase III Manifest-2 findings point to the pelabresib and the ruxolitinib combination as a potential paradigm-shifting, first-line myelofibrosis treatment. Beyond myelofibrosis, early data suggests pelabresib's clinical benefits in additional indications, representing new opportunities with this investigational therapy. Novartis has the necessary financial resources, additional scientific expertise, and global footprint unavailable to MorphoSys as a standalone biotech company to maximize the full scope of pelabresib's potential. Next, let's discuss our new agreement with Incyte.
Incyte will obtain exclusive rights worldwide, assume full responsibility, and cover all the costs for the development and commercialization of tafasitamab for a purchase price of $25 million. We have been collaborating with Incyte on tafasitamab since 2020. Given the proposed acquisition by Novartis and our long-standing partnership with Incyte, we know Incyte is best positioned to drive tafasitamab's future growth opportunities forward successfully and more efficiently on its own at this time. MorphoSys Management Board and Supervisory Board unanimously approved both agreements. I would now like to turn the call over to Lucy to provide more details on Novartis' offer and on the process. Lucy, over to you.
Thank you, Jean-Paul. Good morning, and good afternoon, everyone. We will now take a closer look at Novartis' proposed takeover offer to our shareholders. If you decide to tender your shares, you will receive 68 EUR per share in cash. This offer price corresponds to an attractive premium of 94% and 142% on the volume-weighted average price during the last month and three months as of the unaffected January 25, 2024 close, respectively, the day before first rumors on a potential takeover surfaced. It also represents a premium of 89% to the unaffected January 25, 2024, closing share price. This offer implies a total equity value of EUR 2.7 billion. Further, please keep in mind the following: The offer will contain customary closing conditions, in particular, a minimum acceptance threshold of 65% of MorphoSys' share capital and regulatory clearances.
We have agreed with Novartis that they will take MorphoSys private promptly after the public takeover offer has been settled. Today's announcement is only the first step in the transaction process. As a next step, Novartis will submit the offer document that outlines all the details of the offer to the BaFin, the German Federal Financial Supervisory Authority, for approval. Once approved, the offer document will be published. After that, the acceptance period begins. During this period, shareholders will have the opportunity to tender their shares. We expect the acceptance period to run for approximately four weeks, followed by a two-week additional acceptance period. MorphoSys has the option to extend the acceptance period by two additional weeks. The exact dates will be announced with the publication of the offer document. During the acceptance period, our management board and supervisory board will publish a reasoned statement on the offer.
Subject to a careful review of the offer document, the boards intend to recommend to shareholders the acceptance of the offer. The offer will be successful if the minimum acceptance threshold of 65% is reached. If reached, as mentioned before, there will be an additional acceptance period that will run for two more weeks. The closing is currently expected to take place in the first half of 2024. We will keep you informed throughout the process and provide updates on milestones as they occur. With that, I hand the call back over to Jean-Paul.
Thanks, Lucy. We believe that this is the right next step for MorphoSys and in the best interest of our shareholders, our company, and cancer patients. Our shareholders benefit from an attractive premium, allowing them to realize a significant value upfront and with certainty. Novartis will help accelerate the development opportunities and maximize the commercialization potential of pelabresib at a greater speed and scale, benefiting patients worldwide. Incyte is very well positioned to drive the future growth opportunities of tafasitamab forward successfully and more efficiently on its own at this time. With that, I would like to open the call for questions. Operator, please open the line.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star then two. As a reminder, that's star followed by one to ask a question. First question is from the line of Xian Deng with UBS. Please go ahead.
Hi, thank you for taking my questions. Congratulations on the deal. Two please, if I may. So the first one is that, thank you so much for the introduction laying out the process. So I was just wondering, I mean, on one side, you have this positive data from pelabresib. At the same time, we also have a lot of investor debate on the approvability of the drug. So I was just wondering if you could give us some, you know, extra color or insight about how that conversation, you know, how your conversation was like with Novartis around this topic, please. So that would be great.
And then the second one is, if I may push my luck a little bit, I was just wondering if it is possible for you to confirm whether you have had the pre-NDA meeting for pelabresib. Thank you very much.
Yeah, thanks for your questions. You know, I mean, I'm going to basically repeat what we said several times since our actual reveal of our phase III trial. I mean, we have the best results in myelofibrosis out there, and we have shown that we act very positively on all components for all marks of the disease in myelofibrosis. And this is a very compelling picture, which we believe will allow us to file and approve this drug based on the totality of the data. So this basis was entertained with, obviously, Novartis, and they have made their decision based on that, and it's very reassuring as well. So I think that's the way to think about it. Now, for the second question, we don't comment on the regulatory pathway.
We have said several times that now we are focusing on driving the filing of the drug this year, and you know, we have everything we need to execute on that, and now together with Novartis.
... Thank you so much!
Thank you.
Next question is from the line of Derek Archila with Wells Fargo. Please go ahead.
Hey, good morning, and yeah, let me extend my congratulations to the team on the deal. Well done. Yeah, just one question. In terms of the process, I guess, you know, obviously they named obviously Novartis and Incyte as potential suitors, you know. I guess, you know, just thinking about the deal process in totality, I mean, were there other companies involved? And, you know, was it kind of the other companies also in the myelofibrosis space? Just trying to understand how competitive the deal dynamics were. Thanks.
Hey, Derek. Thank you so much for your question. We can't comment on the process at this time. I think the outcome with Novartis is fantastic. I mean, we have a long-standing relationship with this company. As I mentioned earlier in my comments, in my remarks, they are a fabulous suitor for taking pelabresib to the next steps and to the scale it deserves. So that's what people should be focusing on today. It's really the enabler for the potential of this great drug and this game changer in myelofibrosis and other indications.
Understood. It was worth a shot. Well, congratulations. Thanks for taking the questions. Thank you.
Thanks, Derek.
Next question is from the line of Andrew Berens with Leerink. Please go ahead.
Thanks. Congrats on the deal. I was just wondering, based on your guidance for the deal to close in the first half of this year, were you expecting any regulatory pushback, given the therapeutic overlap in myelofibrosis between Jakafi, Jakavi, and, and Pela? And are there any other regulatory agencies that will weigh on the deal besides BaFin?
Thanks, Andrew. Charlotte will answer the question.
Yes, sure, Paul. Happy to do so. So as you rightly point out, this public takeover offer is subject to regulatory clearances by several authorities, not only the BaFin. But additional information will be available in the offer document once published, and also in the tender offer materials once filed with the SEC. But we can in summary say that we do not expect antitrust difficulties.
Okay. Thank you.
Next question is from the line of Charlie Mabbutt with Morgan Stanley. Please go ahead.
Hi, thanks for taking my question. Charlie Mabbutt from Morgan Stanley. Just one from me. I was just wondering if we should expect any incremental pelabresib data over the first half of this year in terms of longer follow-up. And if not, when might we see that? Thanks very much.
Yeah, thanks for the question. You know, for the time being, we continue to act as an independent company. We continue to execute on what we said we would. Our goals are very clear this year to drive pelabresib to the next step, and mainly the filing in myelofibrosis. Right now, our focus is mostly on the filing. More data are being generated, you know. Our trial, Manifest-2 trial is continuing and generating longer data.
But we are not communicating yet on where we would publish our, or communicate on this data. But I want to come back on a very important point. I mean, our filing, we have what we need for our filing. We have the data we need. We have the wealth of data that we have communicated on at length over the last weeks, especially at ASH, to ensure a successful filing.
Great. Thanks very much.
Thanks.
As a reminder, that's star followed by one, if you'd like to ask a question. Next question is from the line of Manos Mastorakis with Deutsche Bank. Please go ahead.
Yes, hi. Thank you for taking the question. Wanted to ask if you have any further explanation on why the high-risk subgroup missed on TSS 50? And just to confirm that you are not able to say anything about updated analysis we could expect on at ASCO, please. Thank you.
Well, you know, as we said, several times, I mean, this is a statistical anomaly in this small, high-risk population. It's less than 10% of the trial and in the real life. And, if you look at the totality of the data, this is, this is again, to be put in context, and we don't expect that to be an issue. Now, for our new data, again, I mean, we're not communicating yet on where and when we will have incremental data published for pelabresib.
Thank you.
Next question is from the line of Rajan Sharma with Goldman Sachs. Please go ahead.
Hi. Thanks for taking my question. I'd just be curious to get your perspectives on timing of the transaction. Why now, as opposed to potentially when you have a pelabresib approval in hand? And then secondly, if I could just follow up. I know that you said that you're not expecting any kind of antitrust issues, but if that were to be the case, is there a break fee in that scenario? Thank you.
So why, why did we agree to be acquired now? Well, look, it's not a light decision, but after a thorough review of all the strategic options. We firmly believe it's the best interest of the company, its shareholders, and obviously the cancer patients, for the reasons I mentioned. But, you know, for the shareholders, it provides attractive and certain cash value now. They're risking their investments ahead of future milestones. For the patients, Novartis has ample resources, which are actually currently unavailable to MorphoSys as a standalone biotech for accelerating and maximizing the laboratory's potential on global scale. And for the employees of MorphoSys, it creates new opportunities. So we really, we really believe that all stakeholders are in a great position for this. And actually, I missed your second question. Can you repeat it?
Yeah, just if there are any antitrust issues, is there a potential break fee that would be due to MorphoSys?
Okay. Charlotte will answer the question.
Yeah, sure. So as I mentioned beforehand, we don't expect any antitrust difficulties, but we cannot comment on-
Next question is from the line of Vineet Agrawal with Citi. Please go ahead.
Hi there. Thanks for taking my question. I just have two. One, will Novartis be allowed to attend the pre-NDA submission meeting with GSK? And, the second, is the transfer of tafasitamab rights to Incyte independent of Novartis acquisition?
Vineet, I couldn't hear well. You broke up a little bit on the second part of the question. Would you repeat, please?
Oh, hi. Sorry. No, I was just asking, is the transfer of tafasitamab rights to Incyte independent of Novartis acquisition, or that's done deal?
Yeah. So Vineet, I'll start by the second part. Yes, it's independent, but it's also to be taken in the grand scheme of the transaction. I mean, the compelling Novartis transaction for all the reasons we mentioned, including financially, obviously has put some light on the decision to do the transaction with Incyte. We believe that, you know, it's time for tafasitamab now to find a home with less complication than a joint venture. And as I mentioned, Incyte is well positioned. It's they have been working with us on the drug. They know it very well, and they know the market very well. And now it's time for them to take over this asset. And... Sorry, I was trying to find the question-
Yeah.
The pre-NDA meeting, Vineet. Yeah. Thank you. No, we are not commenting on that now.
All right. Thank you.
Thank you.
That was the last question. I would like to turn the conference over back to Julia Neugebauer for any closing remarks.
Ladies and gentlemen, this concludes today's conference call. If any of you would like to follow up, MorphoSys' investor relations team is available for the remainder of the day. Once again, thank you for joining. Have a great day, and goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you very much for joining, and have a pleasant day. Goodbye.