Novartis has announced plans to shutter MorphoSys facilities in both the United States and Germany, impacting 330 employees, as part of a strategic reorganization following its recent acquisition. The decision comes as the Swiss pharmaceutical giant reassesses its R&D priorities and grapples with an extended timeline for securing regulatory approval of pelabresib, a promising treatment for bone marrow cancer.
The closure announcement follows Novartis' $2.9 billion acquisition of MorphoSys in February, a deal primarily driven by the potential of pelabresib in treating myelofibrosis. Despite the restructuring, a Novartis spokesperson emphasized the company's ongoing commitment to pelabresib's development, stating that teams continue to work on R&D programs while supporting integration efforts into Novartis.
Clinical Development Challenges
The drug's development journey has faced several hurdles. While pelabresib showed promise in late-stage testing when combined with the approved treatment Jakafi, results were mixed. Recent reports have highlighted new safety concerns, casting some uncertainty over the drug's approval prospects. These challenges have led Novartis to significantly revise its regulatory timeline, with CEO Vas Narasimhan indicating that necessary additional data collection could extend until at least 2027.
Financial Impact and Broader Restructuring
The extended development timeline and emerging challenges have already had financial implications for Novartis, prompting the company to write down the value of the MorphoSys acquisition in its third-quarter earnings. This latest restructuring adds to Novartis' broader organizational changes over recent years, including a major 2022 restructuring affecting thousands of employees and the recent closure of a San Diego gene therapy facility.
Strategic Focus on Development
Despite these setbacks, Novartis maintains its strategic focus on pelabresib's development program. The company's commitment reflects the significant unmet need in myelofibrosis treatment, even as it navigates the complexities of drug development and regulatory requirements. The integration of MorphoSys' operations into Novartis continues, albeit with significant organizational changes aimed at optimizing research and development efficiency.
