Celgene Corp has signed a multiple myeloma and leukaemia pact with MorphoSys that could be worth up to 628 million euros to the German biotech.

The drug at the centre of the agreement is MOR202, a fully human monoclonal antibody targeting the protein CD38. It is currently in a Phase I/IIa trial in patients with relapsed/refractory myeloma.

Under the terms of the deal, MorphoSys will receive an upfront fee of 70.8 million euros, while Celgene is also investing 46.2 million euros to buy new shares in the latter at a premium of 15% of the closing price of the MorphoSys stock prior to the signature of the agreement. MorphoSys will also be entitled to receive additional development, regulatory and sales milestones, plus tiered double-digit royalties, taking the value of the transaction to the aforementioned 658 million euros.

The companies will collaborate on the development of MOR202 in multiple myeloma and other indications and share costs on a 1/3:2/3 basis. MorphoSys has retained co-promotion rights in Europe.

Mark Alles, head of haematology and oncology at Celgene, said that "strategic investments in next-generation medical innovation make it possible for physicians to turn incurable cancers like MM into chronic, more manageable diseases". He added that the collaboration with MorphoSys "enables us to rapidly advance a promising therapeutic antibody in a disease where significant progress is being made, but where patients continue to need new treatment options".

Simon Moroney, MorphoSys chief executive, said the alliance takes his firm "to the next stage of our corporate development". He added that "we have the opportunity to develop a commercial organisation that expands on our significant research, development and technology expertise of today".

Dr Moroney went on to say that targeting CD38 "has matured to be a highly innovative and very promising approach in multiple myeloma and we are committed to retain a larger share of the potential upside".

 MOR202 will be in competition with Johnson & Johnson and Genmab's human CD38 monoclonal antibody daratumumab. The treatment was recently granted breakthrough therapy designation by the US Food and Drug Administration for relapsed and refractory MM and caused much excitement at the recent European Hematology Association meeting in Stockholm.

Dr Moroney concluded by saying that Celgene, "one of the leading innovators in MM, is the ideal partner to develop the compound efficiently and deliver to patients". The firm's biggest-earner is Revlimid (lenalidomide) and Celgene recently received US approval for another MM drug, Pomalyst (pomalidomide).

The deal has gone down well with MorphoSys investors and at 10.20am (UK time) this morning, the stock was up over 13% to more than 42 euros.