XLV - MorphoSys: Pelabresib Data Expected In Year-End 2023 Upgrading To A Buy

2023-04-13 08:01:47 ET

Summary

• MorphoSys completed enrollment for MANIFEST-2, a Phase 3 study exploring the safety and efficacy of pelabresib in combination with ruxolitinib for JAK inhibitor-naïve patients with myelofibrosis.
• The topline data of the MANIFEST-2 is expected by the end of 2023 (previously expected in 1H 2024).
• We upgrade MorphoSys's rating to a speculative buy based on the favorable risk/reward: near negative EV valuation and a clear pelabresib catalyst expected in YE '23.
• We expect MOR stock to trend higher from here into the readout, as the worst has been priced in.

Update: complete enrollment of MANIFEST-2

On April 4th, MorphoSys AG ( MOR ) announced that the company has successfully completed enrollment for MANIFEST-2, a Phase 3 study that explores the efficacy and safety of pelabresib, an investigational BET inhibitor, in combination with ruxolitinib versus ruxolitinib alone in patients with myelofibrosis who have not previously been treated with a JAK inhibitor. The topline data is expected to be released by the end of 2023 (earlier than previously anticipated), which is a net positive for the stock, as the key investor concern was that there is no clear near-term catalyst. As discussed in detail during our last analysis , we are cautiously positive due to a tough bar, pelabresib, and Jakafi combination needing to show clear superiority over Jakafi monotherapy on both primary and secondary endpoints.

Updated results from the Phase 2 MANIFEST trial of pelabresib in combination with ruxolitinib in patients with myelofibrosis, including those who were JAK inhibitor-naïve, showed prolonged improvement in both spleen size and symptom severity. The findings from Arm 3 of the MANIFEST trial revealed that 68% of patients (57/84) had a reduction in spleen volume (SVR35) of at least 35% after 24 weeks. This is noteworthy since the corresponding rates of SVR35 at 24 weeks in the two Phase 3 trials for myelofibrosis included in the ruxolitinib label are 42% and 29%. We find Pelabresib's substantial and long-lasting duration of effect shown during the MANIFEST trial compelling. Please read our previous article for more detail .

Myelofibrosis is a difficult-to-treat form of blood cancer with limited treatment options, and JAK inhibitors are the current standard of care treatment for myelofibrosis, which focuses on relieving symptoms rather than treating its cause. So far, the clinical data suggest synergistic effects between BET inhibition (Pelabresib) and JAK inhibition (Jakafi) in myelofibrosis, supporting the potential of this combination therapy.

Myelofibrosis landscape, pelabresib is one of the most advanced combination therapy in the development

Combination approach

• Incyte ( INCY ) is evaluating its own BET inhibitor that can be used in combination with Jakafi, which is only going through phase 1 at the moment.
• Incyte also has a phase 3 asset, PI3K inhibitor parsiclisib, that is being studied as a combo therapy with ruxolitinib in patients who are inadequate responders to ruxolitinib. We expect the data to come out in 2023. For this candidate, we believe the classwide safety overhang is a key concern, as we have seen with Incyte withdrawing NDA in Marginal zone lymphoma, Follicular lymphoma, and Mantle cell lymphoma.
• AbbVie ( ABBV ) has also released phase 2 data of navitoclax, Bcl-2 inhibitor, that is being combined with ruxo in JAK naïve myelofibrosis patients. The trial data was fairly robust (63% of patients with SVR >35% at week 24). Interestingly, the drug has demonstrated a reduction in i) symptom burden, ii) bone marrow fibrosis, and iii) benefit in anemia.
• Roche is developing a PRM-151, a recombinant pentraxin-2 molecule, that is currently going through phase 1 and being studied in combination with ruxo.

Mono therapy under development

• Geron Corporation's Imetelstat, a first-in-class Telomerase inhibitor, has shown impressive symptom response and overall survival benefit in the phase 2 Imbark trial in the moderate to a high-risk patient population who have relapsed after JAK inhibitor. Phase 3 ImpactMF trial of this drug is targeting 2L patients who relapsed after JAK and have a BAT arm that excludes JAK inhibitors.
• A phase 2 asset Bomedemstat, LSD1 inhibitor, has shown robust data across symptom volume, bone marrow fibrosis, and anemia in the second-line myelofibrosis patient population.

Source: BTVI CTIC article

Key catalysts (updated)

For further details see: