Novartis is set to pay €95 million ($110 million) upfront for the global rights to Galapagos and MorphoSys’ anti-IL-17C antibody MOR106. The deal positions Novartis to take MOR106 forward in atopic dermatitis and other indications, handing over up to €850 million in milestones as it goes.

Galapagos and MorphoSys discovered MOR106 through a 50-50 joint R&D pact they formed in 2008. The partners focused their efforts on IL-17C in a belief it may act as an amplifier of local inflammation in skin diseases including atopic dermatitis. With phase 1 safety data and preclinical efficacy data in the bag, Galapagos moved the anti-IL-17C antibody into a phase 2 atopic dermatitis trial in May. 

Now, Novartis has stepped in. The Swiss pharma will bankroll the phase 2 study and a planned phase 1 trial of a subcutaneous formulation of the drug. MorphoSys and Galapagos will remain involved in the clinical development of MOR106 but Novartis will have full ownership and bear all the costs.

Novartis is paying €95 million upfront for those rights. Galapagos and MorphoSys will split the fee, and however much of the €850 million in milestone are realized, down the middle. The same applies to the low-teens to low-twenties tiered royalties Novartis will pay on net commercial sales if MOR106 comes to market.

MOR106 will slot into Novartis’ immuno-dermatology pipeline alongside ZPL389, an oral H4 receptor antagonist it acquired in the 2016 takeover of Ziarco. Both drugs are being developed as treatments for atopic dermatitis, although the MOR106 program could expand to cover other indications.

"This collaboration with Novartis will enable us to accelerate and broaden the development of MOR106 beyond our current focus on atopic dermatitis and to exploit the potential of MOR106 to the maximum. Data from preclinical models and expression analyses suggest that the target of MOR106 might be involved in other diseases, which justifies expanding the development program," MorphoSys CEO Simon Moroney, Ph.D., said in a statement. 

For Galapagos and MorphoSys, the deal validates their belief in the potential of combining their technologies and frees up resources to invest in other assets. The 2008 joint venture sought to marry Galapagos’ targets and other disease-related biology to MorphoSys’ antibody technology. MOR106 is the result of this marriage.