WOLFE RESEARCH HEALTHCARE CONFERENCE 2026 - MORPHOSYS AG

Good morning everybody, my name is Andy Chen, one of the Smith Biotech analysts here at Wolf Research, and today we have Insight, we have Bill and Pablo from Insight joining us. We're very excited, and maybe starting from the big picture, right, so Insight right now is benefiting from a lot of products moving toward the pivotal stage, moving toward the launch mode. Can you maybe talk about basically the overview here, how you're viewing the business right now compared to, let's say, last year? Sure. It's a good question. It was nice to see you, Andy. Good morning, everyone. We laid a framework out at the beginning of the year that I think is still intact and has progressed significantly over the past 12 months. And the framework was we have a core business, X-JACIFY, that serves as a foundation. And that's on track to reach at least $3 to $4 billion by 2030. And we report on that business each and every quarter. In fact, in the third quarter, that business was up north of 30% on a year-over-year basis. It's supported by several launches. That'll be important. We have the XR launch, the povacitinib launch, and then Opsalora in the international markets. And the second part of our framework is our pipeline. And over the past 12 months, we've moved several compounds from phase one development into phase three. And that includes 989 for MPNs, G12D in pancreatic cancer, as well as colorectal cancer, and then TGF-beta by PD-1 for colorextal cancer and then Latar support. You look at those four assets, I would say, especially for 989, 12D and Latar Support, those are high PTRS projects. So on a risk-adjusted basis, they have a great deal of value when we think about the recovery. The pipeline will drive the recovery。 TGF beta by P1 we shared very impressive data at ESMO it was response rate data and if that response rate holds up that is an outlier opportunity inside of inside on a risk adjusted basis it's not quite as valuable as the other three that I just mentioned and so you put those two pieces together a three to four billion dollar core business you layer on a pipeline that an unadjusted basis doesn't require heroic assumptions to believe it could be you know on an unadjusted basis eight to ten billion dollars and we will have sort of created a recovery for insight post 29 where the company can grow at a top quartile rate call it a 10 15 percent kegger and then the last pillar part of the framework is business development and we'll use that like any company does which is to supplement what we're doing internally and we're focused on assets that can be approved in the 29 to 32 window and be accretive during that period of time. Pretty agnostic as it relates to therapeutic area. Hematology, oncology, and immunology are relevant to Insight, and we have the capabilities to operate in all three areas. And then as it relates to stage of development, we can do early stage deals with less upfront capital or later stage deals mit more upfront capital. We have about $4 billion on our balance sheet, and that will grow to six billion dollars if we don't use it. And so we believe we have all the ingredients to transition the company away from Jackify. I think what we're focused on is increasingly execution. The biology risk is not zero, but it's a lot lower than what it was at the beginning of at the year. So you talked about the current business, you talked about the outer years and where it could be in the future. But what about, let's say, in the next one or two or three years? What are you hoping to unlock in 27, 28, 29? I'll break it up between core business and pipeline. In the core business, what you want to watch for and what we're judged on is the launch of Povacit. We expect to get an approval in early 2027. We think that is going to be a very important growth driver for the company. Watch the conversion rate of XR on a quarterly basis, we'll provide an update. We're at about 3% right now. We expect that that's going to land, broadly speaking, between 10% and 30%. If it was 15%, that would be the midpoint. That would be a solid outcome for the company. We suspect some data on povicitinib and PN at the end of the year, which will be another indication for that product in addition to vitiligo. So it would be a three-indication JAK inhibitor. We'll have data on Opsalora and HS and mild to moderate HS also towards the end of the year. And those are catalysts for that core. As it relates to the pipeline, we'll provide updates, and Pablo can go through this, on 989, G12D, and latarsapart, which we'll be advancing into phase three. And we have to convert these phase three programs into FDA approvals and then ultimately revenue earnings and cash flow maybe we can talk about each of these products right so maybe starting from Jack of our XR so 3% share so far but it's only been four or five months can we extract play from that 3% for the next two years because we I think we can get to more than 10% right yeah the way I look at it just mathematically there's 26 months between now and we lose jackify ir if we converted ir to xr 50 basis points a month that's 13 added to three we got we're at the midpoint if we do a little bit better than 50 basis point a month we can get to the upper end of the range and so the most important step in 2026 was formulary coverage which by the end of this year we will have all the formulary we needed which will be 80 90 so So that's a positive. Now we have to actually convert. And that's done through, obviously, a sales organization. So as you get into early twenty seven, we'll have a much better sense of where we're going to land in that range. And then so after Jackify, you have your non-Jackify Hiemann business, a lot of the smaller products. But is there anything that's easily missable by investors here that you want to emphasize? I think that Timbo, Monjuvi, and Zion is collectively is a very sizable business and an important part of growth. But you see the results that we're posting on those three products each and every quarter, and they're on a good trajectory. Each one is in their third year of launch, and so there'll be some growth moderation, but nothing there that anyone should be surprised by. But with future indication expansions, would Monjuvi be one of the top growers? Yeah, it's a good question. We have two indications right now, relapsing refractory, DLBCL, and follicular lymphoma. We are expecting an FDA action in early 2027 on frontline DLLCL. Obviously, that market has evolved significantly in terms of competition. But there's only two large phase three studies in the frontline DLBL setting. You have Epkinley and Polivi and Monjuvi. And so a relatively modest share of frontline DLDCL could double the size of Monjuvian. So an important part of the growth outlook for Monjuvia will be getting the frontline DLDCl. if we weren't to get it it would still be a incremental contributor to the core business and then with upcoming data that's which is the most important to you will be ash data and color data can you maybe frame for us what what is good what are you looking for and what's gonna easily convince physicians that this is going to be a good first-line product. So we have the update on Cal-R at us is a little bit broader. You're asking about 989, which is obviously the lead program, which is already in pivotal trials in second-line ET and second- line MF. We're also going to provide for the first time a view on 798, our next-generation Cal-Ar antibody, which improved all the properties, All the key properties of 989, there's a potency as well as half-life, and we can talk about it in more detail. To 989 what we will have at ASH for the first time is a large group of patients JAK-FI eligible frontline MF treated with 989. As you know, at EHA we presented a cohort of patients that were JAK ineligible treated with 989. That sort of set the floor where you should expect the SVR35 and TSS50 rates. But this is a different population. These are JAK-eligible patients. These are the patients that are going to be represented in the pivotal trial in frontline MF that we intend to launch in the first part of 2027. So, importantly, the abstract has been already disseminated. I think it's important to be patient and wait for the actual meeting. The data cut at ASH has four more months of follow-up. And we know that 9A9, particularly in MF patients, takes some time to solidify its effect and that the efficacy continues to deepen over time. So I would ask you to wait for that data, and then we can talk about it in detail. We'll have the usual endpoints. As we are 35 TSS50, of course, we'll have effect on hemoglobin, et cetera. And we think that all in, this data confirms our view that there is a path to get 9A1 approved in frontline MF. We just have to execute on a frontline study that will finalize the design next year. So the two elements that we need to finalize to design out the data that I just described, what is the efficacy in eligible frontline MF? And the second part is to finalized conversations on an endpoint with with the FDA. Once we have those two things will finalized the design. Just to be clear, we will do a frontline studying MF. The only question is, is that going to be in type 1 or all comers? Is that going be a two-arm study or a three-arm study? Those are really the two questions that remain, and obviously what's the primary endpoint. We'll put all that together in the early part of 27, and then we'll disclose the design of the study, which will launch in the first half of 2027 towards the middle of the year. And Pablo, you mentioned the second line, Jack, ineligible data that you saw previously. To me, that data looked numerically quite good. So can you talk about whether that's a good forward predictor for what you're going to see in first line? Well, it is. It is. Directionally, it Is. You always hope to do better. Those patients were jacking eligible, and that ineligibility is usual because they don't have—it's usually because of anemia. Yeah. Some of those patients tend to have a lower symptom burden, so it's harder to improve the symptoms in those patients. But overall, yes, directionally, it is. We certainly hope to do better than that. And we'll show the data in just, you know, 30 days. And you have a second gen molecule with some, I think, preclinical data coming up and starting phase one next year. How do we think about the molecule and like what like what we see next with the preclinkal data? Is that going to be useful for how we think about the future next generation product? I think it will be. So there will be a poster outlining in detail all the properties of 798, our next generation color antibody. It's very important for us to be the best, first of all, the first approved color antibody, and we think 989 is on track to do that. We have an ongoing second line study in ET and second line in MF. so we're on track to be the first antibody approved and we also believe it's important for us to be The Best in Class color antibody and we think when we look at the properties of 798 that's the case again based on preclinical data at this point. So what we've done here is we continue to improve on the profiles of 989 on three key aspects. One is affinity but it's not critical. More important than affinity is potency. And you'll see a 74 more potent antibody against non-type 1 mutations with broad coverage of non-canonical mutations. And you'll all that detailed in the poster. And the second part is longer half-life for convenience for patients, obviously. And they predict the half-Life at this point in humans is 50 days. Obviously, that's based in non-human primate data. So if that plays out, you're talking about at least once a month, maybe even less frequent than once a month. But, you know, that remains to be seen. But clearly, it will be a much less frequent infusion than 989. 798 will enter the clinic as a pre-filled syringe sub-Q, which is again more convenient for patients. And we're already in conversations to develop an auto-injector, a pen. So we expect that if everything goes well, 989 will be approved, 798 will come after, and quite honestly, will make 999 obsolete once it's approved, assuming everything goes well over the next few years. Our plan, just to complete, and it is to start, if everything goes Well, if we can start at the dose that we want, is to start pivotal trials for 798 at some point in 2028. And switching gears and talk, maybe we can talk about G12D, because that's another hotly discussed topic. So you've announced the partnerships, and we've also seen some competition data in the past few months. Can you maybe talk about what you see as the competitive landscape in PDAC and why these partnerships and potential future partnerships would be the best way forward for Insight? So, you know, there's a saying in the Talmud, the gift of prophecy has been given to the fools, right? If you think you can predict the future, you're probably a fool. So I don't know what the manager of pancreatic cancer is going to be in five-plus years. What I do know is that we want 734 to be a key part of that. And the way to do that is to develop multiple combinations and give physicians and patients multiple options how to treat pancreatal cancer. Our lead indication is frontline in combination with chemotherapy. We can combine with both types of chemotherapy, And by doing that, we think we can cover a big part of what the market's going to be at the time. But we recognize emerging data in combination with PRMT5 inhibitors is very exciting, so we put a collaboration in place with BMS to do that. Preclinical data published earlier this year showed that the combination with PARP inhibitors could be really interesting in this setting, so we've put a combination in place which is innovation for the selected PARP1 inhibitor. We also think, and we have data in colorectal cancer already, and as you know, in colarectal cancer, EGFR is an important driver in KRAS mutated tumors. So we put a collaboration in place with a next-generation EGF-R inhibitor. That, as you pointed out, is just the beginning. Our goal is to give physicians and patients a few years from now as many options as possible how to treat their pancreatic cancer. Those choices will be made on the basis of molecular profiling, personal choice, and efficacy data, to be honest with you. And we want to make sure we play in all those areas. So that's PDAC, right? What about CRC, which the landscape could be a bit different there? Well, in CRC we have already data in combination with Arbitrax. We presented that at ESMO. We had a PFS about 7.2 months, which we think is very competitive in a space that is dominated by things like Lonesurf Bev, frequentinib and regorafenib. We are launching a pivotal trial in second and third line colorectal. It will be predominantly third line, to be honest with you, because we're mandated prior BEV exposure. So it will be a third line study. And in that setting, when we look at the landscape, we think that the data that we have gives us a pretty good probability of success in a pivotal trail. So that study, we're in the process of launching it because we want to be fast to market. In parallel, we have treated cohorts of patients with frontline chemotherapy in combination with EGFR inhibitor and R12D. We'll have that data next year. Those cohorts are fully enrolled. And that is one bucket of the colorectal story. The other is a combination with pitocentumab. We think there's probably going to be a very important role for next-generation EGF-R inhibitors in colorextal cancer based on the data that our colleagues at GenMAP showed at ESMO. So, next year, we'll make the decision whether our frontline colorectal study is in combination with cetuximab or ripetacentamab. We recognize our competitors are going all out with cetoximab. We think it's worth, in this case, taking a deep breath, looking at the data, and maybe waiting a little bit longer, but launching that study with an external agent EGFR inhibitor. We'll make that decision next year. And then potential future collaborations in PDAC? How long are we, to what degree do we have to wait until we see the next one? Well, I can't put a time out, but there's two sides to these conversations. I think it's important to continue to look for options. One obvious one that has come up in conversations is a pan-RAS, pan-K-Ras inhibitor. We are having multiple conversations in parallel. We'll make the decision in the relatively near term. Right. And then another molecule that's less talked about, but we like it a lot, it's the TGF bispecific. We've seen very good response data, but the PFS data is still a bit early. Can you maybe talk about your confidence behind this molecule? And when are we going to see PFS separation? uh look we are this you know bill always says this is potentially the molecule with the biggest upside in our pipeline yeah but it hasn't been fully due risk yet the response for as you pointed out and he is very strong i think the 71 percent in all comers 83 percent in patients with liver meds the subset of pdl-1 positive patients which are the vast majority is also you know over 80 You know, I haven't seen a response rate with an 8 in front in MSS colorectal cancer patients with liver meds. If it exists, I hasn't seen it. So we really like that. But this is about durability. It's about PFS and survival in the long run. So we need to wait a little bit longer to be fully at risk. We thought the data that we had was strong enough to launch a large phase 3 study for online MSS color rectal. That study is enrolling ahead of schedule. There's always been a lot of support for this program, and I think the reason for that, by KOLs and physicians in general, I think the reason für that is we saw a 15% response rate as a single agent in a population where PD-1 inhibitors basically give you zero responses. I think that has generated enthusiasm, in particular in patients with liver mets, which are even harder to treat. So the study going very well we'll have the PFS data for you next year I'm not gonna set a timeline yet these are event driven analysis so when it's mature enough and we're confident in it we'll show it you know we're cautiously optimistic everything's going to be okay this is a program that needs to be fully de-risked and I think that's going to happen in the first half of next year at some point and then PulverCitinib you're launching that product soon and I don't think we have seen Renvoke data that yet but presumably that's also going to be on the market but you have a one-year lead probably a one year lead over renvoke right so how are you gonna how are going to launch the product and how are you going to take advantage of the lead that you have well we expect the approval in early 2027 yeah what will be important is that first we have a label in both the pre and post biologic setting and 70 almost 70 percent of the patients in our phase three study were in the pre-biologic setting That's relevant because it allows you to source utilization from two distinct clinical situations, patients who are on antibiotics and steroids, which is the large majority of HS patients who need to graduate to an advanced therapy. It also positions povercitinib for patients who aren't IL-17s, may have active disease, not consistent pain relief, or have some injection fatigue. We're having conversations with the FDA right now about the label. if we're able to get the broad label the next step is formulary coverage and typically plans will do a pa to a label so that'll be very very relevant i think there's a price point that we'll be able to charge for povacitinib that makes sense for pbms and plans and also rewards insight for all the work that we did to bring it to market and then of course we have to then launch the drug through a sales organization benefit we have is we are an incumbent in a sense that we have over 300 people who are promoting Opsalora and who will be promoting HS. We have excellent relationships with all the prescribers around the United States. We'll cover about 10,000 physicians and fully fund and resource the launch. It is a really important launch to us as we think about what we're solving for in 29 and beyond. And this will end up coming down to execution like any new product launch comes down to. Right now, all the ingredients are in place for a successful outcome here. And Bill, are you implying that depending on the label, whether you get a broad label, that's going to dictate how you're going to set the price for the product? There's a relationship, obviously, between price and volume, and obviously, that'll come into play. But to be fair, there's a fairly narrow corridor for pricing in the HS market. We know what the 17s Prices are, we know what RENVOC is, and that range will be somewhere probably in the middle of it. And then I also get this question from investors a lot, which is that, so let's assume that you get the pre-biologic label as well. But does that market commercially, is that a big market, given that we have the 17s, which work pretty well, and then we have their Humira biosimilars? So is there a real market in that pre-biologic setting? I think there is. And I think it's not an either or. There'll be three formulary situations that we will encounter. And we'll encounter all three of them. There is open access after a steroid or antibiotic. There will be a PA to label, which is you can, you know, if we're approved in both the pre and post biologic setting, we may not have to step through biosimilarity mirror. And then there'll be a step through Biosimilarian error. We'll see all three. And we don't need to have a complete win as it relates to formulary coverage, but we do believe there'll be plenty of situations where there'll be access to Povacitinib before biosimilar Ymir. And if it turns out that we're garnering more utilization in the post-biologic setting, there's still a path to building a sizable product approaching an HS of half a billion dollars. and then i i think bill you alluded to the fact that you are you're an incumbent um you're selling right now um does it resonate with physicians that you like in your portfolio you have a topical you have a oral does that matter to physicians that basically treating the same disease does that matter i think that a a franchise that includes a topicle to oral sequencing strategy is relevant It becomes really relevant if we have a positive study in mild to moderate HS, not moderate, but mild to moderate with Opsalora. We know the phase two data were good. We had a 75% high score 50. Obviously, the vehicle in these studies also achieves a very high response rate. But anytime you have a franchise, it'll be true in MPNs. And it's certainly true here where we can market both Opsalora and Povacitinib alongside each other in a sort of sequencing way will create an advantage for us. And then, so in terms of competition, another company failed in HS yesterday, and then two months ago, I think, another country failed in Prorigo. You're going to read out Prurigo soon, and I think you're going to have asthma data soon as well. Is the market expanding? Just based on whatever's happening elsewhere, is the market expanding? The opportunity. Yeah, the opportunity. Is that expanding? The benefit we have, and you said it at the beginning, is we'll have the first multi-cytokine inhibitor approved by the FDA that's oral. That doesn't exist in HS, which is one of the more difficult conditions. In PN, it's an itch disease, and we know JAK inhibitors work well on itch, and the other thing they do is they work very fast. And so I think the setup right now for povacitinib in HS and in PN, and then we have a third indication, vitiligo, is about as constructive as it can be. And maybe as a wrap-up toward the end, how are you thinking about messaging after ASH, right, after you present MCLR data? What story is Insight going to tell in 2027? Well, I think the most important point for 2027 is we expect to be starting a frontline study in MF with 989. And Pablo described the two different pieces of information we're going to need to finalize the design, the size, the study endpoints. And then the next focus will be on 798, our next generation antibody. we should have data on 7098 towards the end of 2027 and so we'll have as Pablo said first and what we believe could be the best antibody in the area of insight that's the central identity of the company which is MPNs and these and you sound a lot more excited about these than the Povosidnik launch I don't think it's an either or I think we're excited about both they're just very very different. Yeah, because it's one of the bigger launches at Insight. You can certainly with HS, PN, and Vitiligo, and I've said this a few times without a lot of heroic mathematical assumptions, estimate a product that approach or exceed a billion dollars in sales. First step is get the HS approval, the next step is to get the PN and vitiligo approvals which will be in early 2020 call it early 2028 and then successfully execute those launches you know one of the things about povo is it's first in HS it'll be first in PN and then we'll be in a mini oligopoly in in vitiliga but three indications novel agent first in two of them I think it creates a good opportunity and you're not worried about future competition from other JAK inhibitors or other orals, right? There's always competition. I say if you're one of one in a market, you should ask yourself why you're the only one there. There'll always be people in our rearview mirror. I think we just have to focus on executing. I don't think this will become about a market share battle. These are not mutually exclusive situations, and competition is just part of being in a large lucrative, attractive market. Got it, got it. And then Bill, Pablo, any closing remarks? I think we should be judged on everything we talked about today and you know Pablo and I were talking about this earlier we run the company at a very detailed level and we have made a lot of progress in the last 12 months we're not done but I believe that all the ingredients are in place where insight you know post 29 could be one of the top quartile growth companies in the industry very exciting thank you Bill thank you Pablo Thank you, Andy. Good to be here.