Morphosys shares fall after dermatitis treatment flops

BERLIN/FRANKFURT (Reuters) - German biotech company Morphosys halted development of an experimental atopic dermatitis treatment that analysts had pinned hopes of blockbuster sales potential on, sending its shares down as much as 6.8% on Tuesday.

A mid-stage clinical study for its MOR106 antibody, jointly developed with Switzerland’s Novartis and Belgo-Dutch biotech Galapagos NV, was stopped part-way into the trial as it did not reduce eczema and skin irritation as hoped, Morphosys said late on Monday.

The shares were down 3.1% at 94.10 euros at 0825 GMT.

The German biotech company is using proceeds from a second listing in the United States last year to build a U.S. sales force from scratch in expectation of the launch of its most advanced drug, MOR208 against a type of blood cancer, next year.

MOR106, in turn, was its second-most advanced drug candidate, with analysts seeing future peak annual sales well above $1 billion.

“The decision was based on a lack of efficacy and not on safety concerns,” Morphosys said in a statement.

Galapagos and Morphosys announced their collaboration with Swiss pharma giant Novartis in July 2018, targeting atopic dermatitis and potentially other conditions.

Morphosys said it would explore the future strategy regarding MOR106 with its collaboration partners.

Reporting by Tassilo Hummel and Ludwig Burger, editing by Riham Alkousaa and Thomas Escritt