PLANEGG (dpa-AFX) - Morphosys' study data on the great hope of pelabresib against the rare blood cancer myeolofibrosis have not turned out quite as rosy as previous signals from the management had promised. There is therefore great uncertainty on the stock market. On the company's situation, what the analysts are saying and what the share is doing.

WHAT'S GOING ON AT MORPHOSYS:

The Bavarian antibody specialist has long been a drug researcher on behalf of large pharmaceutical companies. The cancer drug Monjuvi, the first proprietary drug on the market, did not turn out to be the hoped-for driving force a few years ago due to increasing competition. In 2021, Morphosys then took a new direction under the new management of Jean-Paul Kress.

In a spectacular deal for the industry, the Bavarians acquired the US cancer researcher Constellation Pharmaceuticals. Even then, the 1.7 billion dollar deal was not without controversy among analysts. This was because the takeover only came about with the help of a comprehensive financing deal with Royalty Pharma. Since then, Royalty Pharma has collected all Morphosys royalties from the lucrative sale of the psoriasis drug Tremfya. At the time, experts complained that Morphosys was selling off its silverware.

Company boss Kress, on the other hand, made a good deal from his point of view. With the Constellation purchase, he received the active ingredient pelabresib. The drug had already performed promisingly in tests in the fight against the blood cancer myelofibrosis. It therefore appeared to be a promising "game changer" for Morphosys with a sales potential of more than one billion euros per year.

Over the past two years, Kress has been working on the future of the company with pelabresib and has driven forward the costly research into the active substance. Since then, Morphosys has been back in the red and has cut numerous jobs. Success with Pelabresib therefore seems indispensable.

However, contrary to the hopes of the company's management, the newly published data do not speak a clear language. In some of the test subjects, the pivotal study showed no statistical significance with regard to the improvement of certain disease symptoms.

For some analysts and investors, the worst is no longer unthinkable: a rejection of the marketing authorization. In view of the slump in the share price, Kress now faces the challenge of further convincing the market of the potential of this beacon of hope. This is also necessary with regard to the future financing of the company, as the first voices are already worrying about Morphosys' cash flow.

The management vehemently countered all concerns at a recent event with industry experts: The Morphosys CEO assured that he firmly believes in an approval and his CFO Lucinda Crabtree also expressed optimism regarding possible financing options. However, the confidence in the stock market that was only restored this year appears to have been shaken again.

THAT MAKES THE SHARE:

The stock market reacted to the data package by plummeting. Within one trading day, the Morphosys share, which is listed on the SDax, lost up to a third of its value. This followed a similarly significant drop over eight trading days. Many investors are likely to have preferred to play it safe and take profits in the run-up to the data, especially as there were corresponding advance warnings from analysts following the company's nine-month results. In the meantime, the shares have returned to their April level. The year-to-date gain has melted away to just over a fifth; it had still amounted to almost 150 percent in mid-September, when the shares reached their high for the year to date at 32.49 euros.

The rise in the share price so far this year was a sign of renewed confidence in Morphosys on the stock market, which had previously suffered massively: many investors had already turned away before the Constellation deal, after which the price slide accelerated. At the beginning of 2020, one share still cost a good 146 euros. Due to the recent fall in the share price, investors currently only have to shell out 16 euros.

WHAT THE ANALYSTS SAY:

In their initial reaction to the study data, the analyst community was also largely skeptical about the data. However, after a second look at the results, the experts - with a few exceptions - have so far held back with new assessments. Investors will probably have to wait until December, when Morphosys will present its research results with pelabresib in more detail at the American Society of Hematology (ASH) conference.

As a result, the overall ratings and price targets currently show a fairly wide range - and are subject to reservations anyway. According to an overview compiled by Bloomberg, the price targets range from 10 to 40 euros; only the Swiss UBS is currently more optimistic at 47 euros. Of the twelve experts, six still recommend buying, while three of the others recommend selling or holding the shares. As a result of the share's recent setback, almost all targets are now above the current price.

Kempen expert Suzanne van Voorthuizen is so far the only one below. Following the publication of the data, she promptly halved her target price to ten euros and once again recommended that the stock be removed from the portfolio. Despite the mixed results, she believes that approval for Pelabresib is still possible, but the uncertainty surrounding this should continue to weigh on the share price. Another negative factor is Morphosys' tight cash position for the next two years, the expert believes, with a convertible bond maturing in 2025.

UBS expert Xian Deng, on the other hand, is much more positive. She emphasized that the actual statistically weak results of the study only affected a small proportion of the test subjects and therefore firmly expects approval. Deng believes that the drug could generate annual sales of up to 1.1 billion dollars./tav/ag/tih