German biotech group Morphosys seeks European partner for debut drug

* Morphosys hopes to launch leukaemia drug in US next year

* Needs partners in Europe as markets are too fragmented

* Drug may compete with Norvatis immune-cell therapy Kymriah

FRANKFURT, Feb 25 (Reuters) - German biotech firm Morphosys is in talks with potential partners to bring its debut drug, a therapeutic antibody against leukaemia, to Europe.

In a first for a German biotech company, Morphosys is building commercial operations in the United States from scratch in expectation of launching the drug, called MOR208, there next year.

MOR208 could compete with Novartis’s immune-cell therapy Kymriah, if approved.

European markets, however, are too fragmented across national boundaries for the company to take on under its own steam, the group’s chief executive and co-founder Simon Moroney said.

“We have good interest from quite a few companies that have approached us,” Moroney told Reuters.

Morphosys, with a market value of about 3 billion euros ($3.4 billion), is leaving behind its roots in the early discovery of therapeutic antibodies, where it relied on external development partners, to become a full-blown biopharmaceutical company.

MOR208, with FDA breakthrough therapy status, is being tested against a common type of blood cancer abbreviated as DLBCL, for patients that could not be helped by prior treatment.

Morphosys has hired a president for its future U.S. activities to head a 100-strong team, anticipating a MOR208 market launch in the United States around mid-2020, the CEO said.

Shares in Morphosys have fallen 6 percent since the company said here last week that Moroney, 59, would not renew his contract beyond June 2020 and was ready to step down as soon as a successor is found.

Berenberg analyst Patrick Trucchio attributed the decline in the past week “to the appearance of an abrupt change so close to key milestones for lead product candidate MOR208”.

The shares had doubled over the past two years, boosted by drug trial results and licensing deals with pharma majors such as Novartis.

“The company has never been in a better position,” said Moroney, who is of dual German and New Zealand nationality, when asked about his plans to retire at a time of major transition for the group that he has been part of for 27 years.

“It’ll be much more attractive for people to join a company in good shape, a company that has the support of the investment community and a great asset that is moving towards the market.”

Mainly to fund the U.S. venture, the company in April 2018 sold $239 million worth of American Depositary Shares in a U.S. stock listing.

“In some respect it’s a sizable bet, just given that we’re having to establish this completely new part of the company. We can only succeed if the U.S.-based commercial operation does a good job. The product risk I actually feel very comfortable about because the clinical data is strong,” said Moroney.

Intermediate results from an ongoing mid-stage trial showed in December here that a drug combination with MOR208 quelled the disease completely or partially in 58 percent of DLBCL patients that had run out of treatment options.

$1 = 0.8804 euros Reporting by Ludwig Burger and Patricia Weiss Editing by Susan Fenton