Constellation Pharmaceuticals (CNST) to be acquired by MorphoSys (MOR) for $34/sh

• Agreed to be acquired by MorphoSys AG (MOR) for $34.00/share in cash, representing a total equity value of $1.7 bln, as MorphoSys seeks to bolster its position in hematology-oncology by unlocking the benefits of co's lead product candidates, pelabresib and CPI-0209. At three-month highs.
  

MorphoSys (MOR) announced its $1.7 billion plan to acquire cancer treatment biotech Constellation Pharmaceuticals (CNST) on Wednesday and CNST stock rocketed to a four-month high.

Constellation's leading drug, called pelabresib, is in testing for myelofibrosis, a type of bone marrow cancer. It's also studying another drug called CPI-0209 for various solid tumors and blood cancers. Further, the company has two drugs not in human testing for blood cancers and solid tumors.

MorphoSys Chief Executive Jean-Paul Kress called the acquisition "transformational."

"Both pelabresib and CPI-0209 have broad potential and we look forward to unlocking their full benefits for cancer patients," he said in a written statement. "Our existing clinical and commercial expertise is ideally suited to accelerate Constellation's programs, enabling us to maximize Constellation's potential and bring these novel therapies to market."

CNST Stock Soars On Takeover

Under the terms of the deal, MorphoSys will pay $34 per share of CNST stock.

The acquisition helps MorphoSys deepen its cancer pipeline which, today, is tied to a partnership with Incyte (INCY).

Constellation stock has been under pressure this year, however. Shares last traded near MorphoSys' takeover price in February. But CNST stock crashed 25% late that month after revealing pelabresib can cause genotoxicity, a side effect in a drug can cause cellular damage leading to cancer.

It's important to note, genotoxicity isn't uncommon among cancer drugs, Baird analyst Michael Ulz said in a report at the time.

Royalty Pharma Funding Deal

In addition to the CNST stock buyout, MorphoSys announced a long-term funding partnership with Royalty Pharma (RPRX). Royalty Pharma will pay MorphoSys an upfront fee of $1.425 billion. The funds will help support MorphoSys' acquisition of Constellation and development of its pipeline.

MorphoSys will also receive $350 million development funding bonds and up to $150 million in milestone payments. The milestones are tied to Constellation's pelabresib and drugs in development with Roche (RHHBY) and GlaxoSmithKline (GSK).