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spk05: Ladies and gentlemen, good afternoon and good morning. Expectations for compounds in our pipeline, as well as the development plans of our collaboration partners, and statements about the proposed acquisition of morphoses by Novartis. 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 Morphosis Form 20F and Annual Report, all for the year ended December 31st, 2023, and from time to time in other SEC documents of morphosis. It is important to keep in mind that our statements in this webcast speak as of today. This is the agenda for today's call. Jean-Paul will begin with an overview of 2023 and an outlook for 2024. Tim will then share an update on our clinical development work with a focus on PayLab Recip and Lucy will follow this with a summary of our financial results. After our prepared remarks, we will open the call for your questions. I now hand the call over to Jean-Paul.
spk02: Good morning and good afternoon, everyone. Thanks for joining us today. 2023 was a critical and exciting year for Morphosis. We over-delivered on our key priorities, advanced our potential best and first-in-class oncology pipeline, and further strengthened our financial position, resulting in the company entering into a business combination agreement on February 5, 2024, to be acquired by Novartis. Pelabrasib, our investigational beta inhibitor, is at the forefront of our promising pipeline. In 2023, we demonstrated the potential for Pelabrasib to shift the myelofibrosis treatment paradigm as results from our Phase III, Manifest II study showed that all four disease hallmarks were improved with Pelabrasib and ruxolitinib combination therapy over standard of care at 24 weeks. Patients with myelofibrosis urgently need new options to treat this disease, and pursuing approval of Pelabrasib in first-line myelofibrosis remains our top priority. We also see great opportunity to expand Pelabrasib into other myeloid disease indications beyond myelofibrosis. We are very pleased with the progress of Tulmimetostat, our investigational next-generation dual inhibitor of EZH2 and EZH1, which has shown deep responses in heavily pretreated patients across a broad array of advanced solid tumors and lymphomas in a phase two study. We are continuing investigations of this promising agent and look forward to further elucidating its therapeutic potential. Because of this exceptional progress, we recently announced Novartis offer to acquire Morphosis. After a thorough review of all strategic options, we firmly believe that this decision is in the best interest of Morphosis, our shareholders, and cancer patients. Novartis offer provides attractive, immediate, and certain cash value to Morphosis shareholders. Novartis intends to offer Morphosis shareholders 68 euros per share in cash for a total equity value of 2.7 billion euros. The offer price corresponds to a premium of 94% and 142% on the volume weighted average price during the last two and three months as of the unaffected January 25, 2024 close, respectively. Additionally, Novartis' ample resources, additional scientific expertise, and global footprint can help accelerate Pellab Recipes' potential worldwide. Until the proposed transaction closes, Morphosis and Novartis are acting as two separate companies. As such, Morphosis has very clear priorities for the first half of this year. First, we are focused on closing the Novartis acquisition, which we expect will occur in the first half of 2024. The closing process is progressing steadily and we do not expect any issues. We received antitrust clearances in Germany and Austria and have also made antitrust filings in the U.S. under the HSR Act. The next step in the takeover process is for Novartis to publish their offer document, which is expected next month. Both companies are fully committed to making the acquisition a reality. Next, we are continuing to prepare regulatory filings for the Pelabrasib and Ruxolitinib combination in first-line myelofibrosis with the intention of submitting applications to the US FDA and the European Medicines Agency in the middle of 2024. We are also working to complete transfer of Tafacitamab to Insight, our longstanding collaborator, following the announcement of its sale on February 5th, 2024. Lastly, we are diligently managing our cash runway and maintaining business continuity during this exciting infection point for our company. I would now like to turn the call over to Tim, who will provide a development update. Tim, please.
spk01: Thank you, Jean-Paul. Good morning and good afternoon, everyone. Since our phase three, manifest two results were presented at the ASH annual meeting in December 2023. The myelofibrosis physician community has consistently stated that the Pelabrasib and Ruxolitinib combination has the potential to shift the treatment paradigm of this debilitating and deadly disease. Notably, in the MANIFEST-2 study, Pelabrasib and Ruxolitinib nearly doubled the proportion of patients achieving at least a 35% reduction in spleen volume over placebo plus Ruxolitinib at 24 weeks, meeting the primary endpoint of the study. This was a meaningful result given the known association between spleen volume reduction and patient survival. Additionally, compared with placebo plus Raxolitinib, the combination of Pelabrasib and Raxolitinib showed a strong positive trend in reducing symptom burden and improvements across measures of anemia and bone marrow fibrosis at 24 weeks. Very importantly, the Pelabrasib and Raxolitinib combination demonstrated safety results in line with assessments from prior clinical trials. Further, Pelabrasib and Raxolitinib was associated with fewer grade three or higher adverse events compared with placebo plus Raxolitinib. These findings point to the potential for Pelabrasib and Raxolitinib to become the new standard of care for patients with myelofibrosis. With these strong results in hand, our key objective is to bring Pelabrasib to patients as quickly as possible. This is why our number one priority is preparing and filing our regulatory submissions in the US and Europe by the middle of 2024. We are on track for this process and are confident that our comprehensive, collaborative data package will provide impactful evidence to the respective regulatory agencies. We are also continuing to prioritize scientific communications and medical education work for collaborative across the US and Europe to our experienced medical affairs team. We continue to collect safety and efficacy data, including duration of treatment data from the Manifest 2 Phase 3 study. Durability of response is key for physicians treating myelofibrosis, especially as the benefits of currently approved therapies tend to fade over time. We have seen deep and durable responses in patients with myelofibrosis, the dipalabrasib and raxolitinib combination, at and beyond 60 weeks in the Phase II Manifest Study. We plan to share new data for Manifest II at a scientific congress in the first half of this year. I would now like to turn the call over to Lucy for an update on our financials.
spk04: Thank you, Tim. Good morning and good afternoon, everyone. Despite an increasingly competitive environment, net U.S. sales for Monjuvi grew to $92 million for the full year of 2023, reaching the higher end of our 2023 financial guidance. Total revenues in 2023 were 238.3 million euros, compared with 278.3 million euros in 2022. Recall that in 2022, we benefited from the execution of outlicensing agreements. Total cost of sales in 2023 were 58.4 million euros compared with 48.6 million euros in 2022. This increase is largely due to one-off effects from write-downs on inventories recognised in 2023. Next, we will turn to operating expenses. R&D expenses in 2023 were 283.6 million euros compared with 297.8 million euros in 2022. The decrease in R&D expenses reflects our current clinical study progress and the prioritisation of activities across our pipeline. Selling expenses also decreased to €81.4 million in 2023, compared with €92.4 million in 2022. The year-over-year decline is mainly due to active measures to streamline and focus our previous Monjuvi sales efforts. G&A expenses amounted to 65.8 million euros for 2023, compared with 60.1 million euros in 2022. This increase was driven by a rise in share-based payment expenses. This is due to the increase in Morphosis's share price, which is the valuation basis for our share-based payment programs. For the four-year 2023, consolidated net loss was 189.7 million euros, compared to a net loss of €151.1 million in 2022. Because of the sale and transfer of Tafsitimab to Insight on February 5th, 2024, Mofosi's 2024 financial guidance, published on January 30th, 2024, cannot be maintained and therefore was revoked. In 2024, we now expect R&D expenses of €170 million to €185 million, reflecting our investments in the development of Pellabrasiv and Tomimetastat. SG&A expenses are expected to be between 90 million and 105 million euros. Following the announcement of the tafacitimab sale, we started the transition process immediately and subsequently ceased all field sales activity as tafacitimab was our only commercial product. As our agreement with Insight did not include the transfer of Morphosis employees, we made the extremely difficult decision to terminate employment of all customer-facing field sales colleagues. The significant reduction of our forecasted 2024 R&D and SG&A expenses compared with 2023 can be attributed to both the sale of tafacitimab and the previously announced implementation of broad measures to diligently manage all our available cash. Please note, any effects from the implementation of the Novartis takeover offer are not included in this forecast. We ended 2023 with cash and investments of 680.5 million euros, which includes the proceeds from our successful raise of 102.7 million euros in gross funding. Our cash runway now extends until early 2026, inclusive of our convertible debt repayment. I'll now turn the call back over to Jean-Paul.
spk02: Before we open the line for questions, I'd like to conclude with a few words. 2023 has been marked by exceptional progress at Morphosis, resulting in our proposed acquisition by Novartis. We are confident that Novartis' global footprint and leadership in oncology innovation will accelerate the speed and scale at which the significant needs of cancer patients are addressed, with Pelabrasib at the forefront. We and Novartis are fully committed to making this proposed transaction a reality. With that, I would like to open the call for questions. Operator, please open the line.
spk00: Thank you very much. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star and one. If you wish to remove yourself from the question queue, you may press star And two, anyone who has a question may press star and one at this time. Our first question today is from Derek Ashila from Wells Fargo. Please go ahead with your question.
spk03: Hey, good morning. Thanks for taking the questions. Uh, just to, I guess, you know, how long after Novartis publishes the offer doc next month, should we expect the deal to close? I don't know if there's any analogs you could point to with similar situations. And then I just wanted to confirm whether it would be you at Morphosis or Novartis that would actually submit the NDA for Pelabrasiv. Thank you.
spk02: Thanks, Derek. Lucy will take the first part of the question.
spk04: Yes, Derek, consistent with our guidance, we expect the deal to close in H1 2024. Tim, second part of the question, please.
spk01: Sure. Hey, Derek, this is Tim. On the question who will submit the NDA, we said in the business combination agreements that we are operating as independent companies until the deal is closed. And so with that, the guidance will be we will submit the NDA unless the deal is closed before, and then we'll have to see.
spk03: Got it. Understood. Thank you so much. Thanks.
spk00: Our next question comes from Xiang Deng from UBS. Please go ahead.
spk06: Thank you so much. Thank you for taking my questions. Two, please. The first one is you mentioned you've got antitrust clearings already from Germany and Austria, and you've also made antitrust filing in the U.S. I was just wondering if there are any other major ones that you're still waiting to clear and any updates that you could share on that, please. And the second one should be quite straightforward, just so to try my luck. Just wondering if there's anything you could actually disclose on where are you in terms of pre-NDA meeting, please? Thank you.
spk02: Hi, Xiang. This is Jean-Paul. I'll take the first part, and Tim will comment on the FDA question. Yes, you're correct. We got the antitrust clearance from Germany and Austria. We filed for the U.S. No other jurisdictions are expected to be needed here. And good progress has been made and have been making. Tim, on the FDA question?
spk01: Sure. Hey, Zhang. This is Tim. So we said in the prepared remarks, as well as myself, that we are intending to file mid-year this year to U.S. FDA as well as EMA. In terms of pre-NDA meeting, we have the practice here at Morphosis that we do not publicly discuss details of our interactions with regulatory agencies. We previously said, and we stick with that, that having a pre-NDA meeting is a formality that many companies typically do following positive phase three data. And I can just reiterate that we remain confident that the comprehensive data package will provide impactful evidence to the respective regulatory agencies. So everything's on track.
spk06: Thank you very much.
spk00: Ladies and gentlemen, I repeat, if you would like to ask a question, please press star and one. There are no further questions at this time, and I will hand back to Yulia Neugebauer for closing comments.
spk05: Ladies and gentlemen, this concludes today's conference call. MUFOSA's Investor Relations team is available to answer any follow-up questions for the remainder of the day. Once again, thank you for joining. Have a great day and goodbye.
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