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Constellation (CNST) Surges on Takeover Deal With MorphoSys
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Shares of clinical-stage biopharmaceutical company Constellation Pharmaceuticals, Inc. surged 65.9% on Jun 2 following the news of its acquisition by German biotech company, MorphoSys AG (MOR - Free Report) .
Shares of Constellation have gained 16.6% in the year so far against the industry’s 4.3% decline.
Image Source: Zacks Investment Research
The companies entered a definitive agreement, whereby MorphoSys will acquire Constellation for $34.00 per share in cash, which represents a total equity value of $1.7 billion.
The transaction is expected to close in the third quarter of 2021.
The acquisition will add Constellation’s two lead product candidates — pelabresib (CPI-0610), a BET inhibitor, and CPI-0209, a second-generation EZH2 inhibitor — to MorphoSys’ pipeline.
Both candidates are in mid- to late-stage clinical studies.
Pelabresib is currently in phase III studies for myelofibrosis, a bone marrow cancer that disrupts the body’s normal production of blood cells. CPI-0209 is currently in phase II for treating hematological and solid tumors. Constellation’s pipeline also includes numerous preclinical compounds.
While the acquisition will strengthen MorphoSys’ existing pipeline in hematologic malignancies and expand into potential therapies for solid tumors, it provides the shareholders of Constellation with attractive, immediate and certain cash value for their shares. The offer price of $34.00 per share in cash represents a premium of approximately 70% to Constellation’s volume-weighted average price for the last five trading days.
Concurrently, MorphoSys also announced that it has entered a long-term strategic funding partnership with Royalty Pharma plc (RPRX - Free Report) . Royalty Pharma will make a $1.425-billion upfront payment to MorphoSys, supporting its growth strategy. The proceeds will be used to support the financing of the Constellation acquisition and the development of the combined pipeline. MorphoSys will also be given access to up to $350 million in Development Funding Bonds with the flexibility to draw over a one-year period.
Royalty Pharma will make additional payments of up to $150 million to MorphoSys upon reaching clinical, regulatory and commercial milestones for otilimab, gantenerumab and pelabresib. Royalty Pharma will have the rights to receive 100% of MorphoSys’ royalties on net sales of Tremfya, 80% of future royalties and 100% of future milestone payments on otilimab, 60% of future royalties on gantenerumab, and 3% on future net sales of Constellation’s clinical-stage assets (pelabresib and CPI-0209). Royalty Pharma is expected to invest $100 million in a cash capital increase of MorphoSys under an authorization to exclude subscription rights of existing shareholders.
We remind investors that MorphoSys has a collaboration and license agreement with Incyte (INCY - Free Report) to further develop and commercialize tafasitamab globally. Monjuvi (tafasitamab-cxix) is approved by the FDA in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL).
Constellation currently carries a Zacks Rank #4 (Sell).
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Constellation (CNST) Surges on Takeover Deal With MorphoSys
Shares of clinical-stage biopharmaceutical company Constellation Pharmaceuticals, Inc. surged 65.9% on Jun 2 following the news of its acquisition by German biotech company, MorphoSys AG (MOR - Free Report) .
Shares of Constellation have gained 16.6% in the year so far against the industry’s 4.3% decline.
The companies entered a definitive agreement, whereby MorphoSys will acquire Constellation for $34.00 per share in cash, which represents a total equity value of $1.7 billion.
The transaction is expected to close in the third quarter of 2021.
The acquisition will add Constellation’s two lead product candidates — pelabresib (CPI-0610), a BET inhibitor, and CPI-0209, a second-generation EZH2 inhibitor — to MorphoSys’ pipeline.
Both candidates are in mid- to late-stage clinical studies.
Pelabresib is currently in phase III studies for myelofibrosis, a bone marrow cancer that disrupts the body’s normal production of blood cells. CPI-0209 is currently in phase II for treating hematological and solid tumors. Constellation’s pipeline also includes numerous preclinical compounds.
While the acquisition will strengthen MorphoSys’ existing pipeline in hematologic malignancies and expand into potential therapies for solid tumors, it provides the shareholders of Constellation with attractive, immediate and certain cash value for their shares. The offer price of $34.00 per share in cash represents a premium of approximately 70% to Constellation’s volume-weighted average price for the last five trading days.
Concurrently, MorphoSys also announced that it has entered a long-term strategic funding partnership with Royalty Pharma plc (RPRX - Free Report) . Royalty Pharma will make a $1.425-billion upfront payment to MorphoSys, supporting its growth strategy. The proceeds will be used to support the financing of the Constellation acquisition and the development of the combined pipeline. MorphoSys will also be given access to up to $350 million in Development Funding Bonds with the flexibility to draw over a one-year period.
Royalty Pharma will make additional payments of up to $150 million to MorphoSys upon reaching clinical, regulatory and commercial milestones for otilimab, gantenerumab and pelabresib. Royalty Pharma will have the rights to receive 100% of MorphoSys’ royalties on net sales of Tremfya, 80% of future royalties and 100% of future milestone payments on otilimab, 60% of future royalties on gantenerumab, and 3% on future net sales of Constellation’s clinical-stage assets (pelabresib and CPI-0209). Royalty Pharma is expected to invest $100 million in a cash capital increase of MorphoSys under an authorization to exclude subscription rights of existing shareholders.
We remind investors that MorphoSys has a collaboration and license agreement with Incyte (INCY - Free Report) to further develop and commercialize tafasitamab globally. Monjuvi (tafasitamab-cxix) is approved by the FDA in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL).
Constellation currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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