Yahoo Finance MorphoSys AG (NASDAQ:MOR) Q3 2023 Earnings Call Transcript
MorphoSys AG (NASDAQ:MOR) Q3 2023 Earnings Call Transcript November 16, 2023
Operator: Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Third Quarter Statement 2023 of MorphoSys. Throughout today's recorded call, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Julia Neugebauer. Please go ahead.
A - Julia Neugebauer: 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 third quarter 2023 financial and results conference call. With me on the call today are Jean-Paul Kress, our Chief Executive Officer; Tim Demuth, our Chief Research and Development Officer; and Lucy Crabtree, our Chief Financial Officer. Before we begin, I'd like to remind you on Slide 2, that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for the commercialization of our products and our development plans and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners.
These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in MorphoSys' 20-F and Annual Report, or for the year ended December 31, 2022, and from time-to-time in other SEC documents of MorphoSys. It is important to keep in mind that our statement in this webcast speak as of today. On Slide 3, you'll find the agenda for today's call. Jean-Paul will begin with an overview and give an outlook. After that, Tim will share an update on our clinical development work. And then, Lucy will provide a summary of our third quarter 2023 financial results. Following our prepared remarks, we will open the call for your questions. With that, I hand the call over to Jean-Paul.
Jean-Paul Kress: Thank you, Julia. Good morning and good afternoon, everyone. Thanks for joining us today. We are very excited that the top-line results from our Phase 3 MANIFEST-2 study of pelabresib in combination with ruxolitinib in first-line myelofibrosis will be available by the end of November. Shortly after, we will present detailed findings from the study at the 2023 ASH Annual Meeting during an oral presentation on Sunday, December 10. Pelabresib, our investigational BET inhibitor has the potential to meaningfully improve upon the current standard of care for myelofibrosis. Right now, we believe we have the best new molecule to treat this disease. Our Phase 2 MANIFEST study showed the strong efficacy and safety profile of pelabresib in myelofibrosis, with deep and durable improvements in spleen volume and symptom reduction at 24, 48, and 60 weeks.
Further to this, in the MANIFEST study, changes in biomarkers correlated with improvements in certain clinical measures of treatment success, suggesting a potential disease-modifying effect of pelabresib. These Phase 2 data underscore the strengths of this combination therapy and we remain very confident in the outcome of the MANIFEST-2 study. Combination treatment is the highly anticipated next step to address the inadequate spleen size reduction, symptom control, and lack of response durability observed with JAK inhibitors in myelofibrosis, the current standard of care. Our market research shows that the majority of U.S. community and academic-based physicians view combination therapy as the way of the future in myelofibrosis. The pelabresib and ruxolitinib combination therapy was ranked among the highest in top product attributes, driving treatment decisions against ruxolitinib, momelotinib, and the navitoclax and ruxolitinib combination.
These physicians commented on pelabresib's impressive efficacy and were pleased that the combination was well tolerated and appeared to have a benefit for anemia. This reaffirms the excitement we continue to hear from physicians around pelabresib, reflecting the dire need for more effective and well-tolerated therapies to treat myelofibrosis. Moving to Monjuvi. Monjuvi, our CD19-targeting immunotherapy, continues to be prescribed to certain adult patients with relapsed or refractory DLBCL. In the third quarter, Monjuvi net sales were $23.4 million. This represents a 5% year-over-year growth and is on track with our 2023 guidance, allowing us to narrow our full year 2023 guidance target. Beyond its currently approved indication, the largest potential upside for Monjuvi is in the first-line DLBCL setting, which we are investigating in our Phase 3 frontMIND study.
Data from that trial which randomized nearly 900 patients, are projected for the second half of 2025. Monjuvi is also being explored in the Phase 3 inMIND study in relapsed refractory follicular lymphoma and marginal zone lymphoma, which is being run by our partner, Incyte. These data will be available in 2024. The strong U.S. commercial infrastructure we have in place for Monjuvi would also enable the smooth launch of pelabresib, as we have encountered a large overlap in treating physicians for DLBCL and myelofibrosis, especially in the community setting. Beyond our pivotal programs, we are pleased with the progress of tulmimetostat, our investigational next-generation dual inhibitor of EZH2 and EZH1. In September 2023, the FDA granted Fast Track designation for tulmimetostat for the treatment of patients with advanced, recurrent, or metastatic ARID1A mutated endometrial cancer, whose disease has progressed following at least one prior line of treatment.
Continued exploration of this promising asset in our Phase 1/2 study across tumor types, now with an additional lower dose cohort, will inform our future development plans. Our key partner programs developed via our legacy antibody technology platform, are also progressing well. Ultragenyx and Mereo BioPharma recently announced interim Phase 2 data demonstrating that setrusumab significantly reduced fracture rates in patients with Osteogenesis Imperfecta. Anthos Therapeutics revealed that its Phase 2 study of abelacimab in patients with Atrial Fibrillation was stopped early due to overwhelming positive results, highly significant reductions in bleeding events versus standard of care. While not central to our business strategy, these programs offer a potential upside and provide us with options for non-dilutive financing.
I would now like to turn the call over to Tim, to provide a development update. Tim, over to you.
Tim Demuth: Thank you, Jean-Paul. Good morning and good afternoon, everyone. We are eager to release top-line results from the Phase 3 MANIFEST-2 study as soon as they become available. These data will be released by the end of November. We will disclose these results here in an ad-hoc company press release which will include the primary and key secondary endpoints, spleen volume, and symptom reduction at week 24, as well as a general statement on safety findings. Beyond SVR35 and TSS50, MANIFEST-2 is assessing several other important clinical endpoints, including absolute change and percent change in total symptom score, progression-free survival, overall survival, and duration of the splenic and total symptom score responses, among others.
These endpoints reflect the challenges that patients with myelofibrosis encounter daily, helping us to better evaluate the efficacy and tolerability of the pelabresib and ruxolitinib combination. We remain confident that the comprehensive MANIFEST-2 data package will provide impactful insights now and over time into the potential benefits of this first-line therapy for patients with myelofibrosis. We are also very pleased that shortly after we release the MANIFEST-2 top-line results, we will have the opportunity to present the detailed findings from the study during an oral session at the 2023 ASH Annual Meeting on Sunday, December 10. With ASH being the world's largest professional society serving both clinicians and scientists focused on hematologic cancers, this is the perfect stage to present these highly anticipated pivotal trial results.
Seven additional abstracts on pelabresib and tafasitamab were also accepted at ASH 2023. While our primary focus for pelabresib is in first-line myelofibrosis, we see strong additional opportunities for this investigational medicine beyond this indication. At the 2023 ASCO and EHA Annual Meetings, we presented positive results from Arm 4 of the Phase 2 MANIFEST study, which is investigating pelabresib as a monotherapy in patients with high-risk essential thrombocythemia, also known as ET, whose disease is refractory or intolerant to hydroxyurea. These robust proof of concept results support pelabresib's expansion into other myeloid diseases. As such, we will continue our ongoing evaluation of pelabresib in ET in the MANIFEST study. We will also initiate a Phase 2 study in lower-risk Myelodysplastic Syndrome, also known as MDS, in 2024.
Patients with MDS experience progressive anemia that can require regular blood transfusions or subcutaneous injections, often diminishing quality of life. Furthermore, patients have low long-term response rates to currently available treatments, reflecting a need for new therapeutic options. The outcomes of these assessments in ET and MDS will inform our Phase 3 development plan. With that, I will now turn the call over to Lucy.
Lucinda Crabtree: Thank you, Tim, and good morning and good afternoon, to everyone. We are pleased to share our financial results for the third quarter and first nine months of 2023. Monjuvi sales were $23.4 million in the third quarter of 2023, and $67.8 million for the first nine months of 2023, reflecting a year-over-year growth of 5% and 6%, respectively, allowing us to narrow our revenue guidance for the year -- for the full year 2023. We also recorded EUR1.2 million or $1.3 million in royalty revenue from Monjuvi sales outside of the U.S. from our partner Incyte in the third quarter of this year. Recall, that the results of the second quarter of this year included a one-time effect coming from previously deferred revenues related to Incyte's early access program in France.
Total revenues in the third quarter of 2023 were EUR63.8 million compared to EUR95.8 million in the same period a year ago. The year-over-year decrease resulted primarily from lower revenues from licenses compared to the prior year. Recall, that Q3 2022 benefited from the out-licensing agreements with HI-Bio. Total cost of sales was EUR15.1 million in the third quarter of 2023 compared to EUR8.1 million a year ago. Cost of sales specific to Monjuvi U.S. product sales was EUR7.5 million in the third quarter of 2023 compared to EUR4.5 million in the third quarter for 2022. Turning to operating expenses. R&D expenses in the third quarter of 2023 decreased to EUR63.2 million compared to EUR77.8 million for the third quarter of 2023 -- 2022. Also, selling expenses decreased to EUR19.9 million in the third quarter of 2023 compared to EUR23.5 million for the same period in 2022.
The year-over-year decline was driven by streamlining and focusing of selling efforts. G&A expenses in the third quarter of 2023 were EUR15 million compared to EUR15.6 million in the third quarter of 2022. For the third quarter of 2023, we reported a consolidated net loss of EUR119.6 million compared to a net loss of EUR122.9 million in the third quarter of 2022. Turning to our balance sheet. We ended the third quarter of 2023 with cash and investments of EUR642.2 million compared to EUR907.2 million at the end of 2022. This provides us with a cash runway into 2025, which is more than 12 months beyond the pivotal readout for pelabresib. Turning to our guidance for 2023. On October the 25, we provided an updated financial guidance, narrowing the guidance for Monjuvi net product sales and now expecting it to be in the range of $85 million to $95 million.
Following the recognition of one-time write-offs for raw material used in the production of Monjuvi, we now expect gross margin for Monjuvi U.S. net product sales to be approximately 75%. All other aspects of our guidance remain the same. With that, I'll now turn the call back over to Jean-Paul.
Jean-Paul Kress: Before we open up the line for questions, I want to conclude with a few words. 2023 has been marked by exceptional progress at MorphoSys. We have over-delivered on our key priorities and have a very strong cash position, allowing us to continue this great momentum in the final weeks of the year and beyond. Pelabresib represents an opportunity to meaningfully improve the standard of care for patients with myelofibrosis, a community in dire need of more effective and well-tolerated treatment options. We very much look forward to sharing the results of the MANIFEST-2 study with you soon. With that, I'd like to open the call for questions. Operator, please open the line.
Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Derek Archila with Wells Fargo. Please go ahead.
See also 10 Best November Dividend Stocks and 9 Biggest Car Rental Companies in the World.
To continue reading the Q&A session, please click here.
