Days after Sanofi-Aventis and Regeneron’s big pharma/biotech link-up was expanded, Novartis and MorphoSys have revealed details of their extended collaboration which could be worth over $1 billion to the German company.

The firms say that they are looking to create “one of the pharmaceutical industry's most comprehensive alliances focused on the discovery and development of antibody-based biologic therapies, the most successful and fastest-growing class of biologics”. Under this new 10-year deal, which may be extended by the Swiss firm for an extra two years, Novartis and MorphoSys will jointly discover and optimise antibodies against a significant number of molecular targets in a wide range of diseases”.

Cashwise, over the next ten years, Novartis will pay out some $600 million in technology transfer and annual licensing fees, while potential payments to MorphoSys could exceed $1 billion based on clinical milestones “and market approval of multiple products". It will also be entitled to royalties and/or profit sharing on any future sales.

The two companies have been working together since 2004 and they say that their collaboration to date has resulted in “multiple active therapeutic antibody programs across various diseases and the first Investigational New Drug-filing just three years after initiation”. With this new relationship, MorphoSys has decided not to extend its ongoing collaborations with Bayer-Schering and Centocor, which are due to expire in December 2007, though its current therapeutic antibody development programmes with these two partners will nonetheless continue.

MorphoSys chief executive Simon Moroney described the agreement as “a transforming deal” for the firm as it offers “the perfect construct to increase significantly the value of our proprietary drug development pipeline while simultaneously maximising our financial interest in partnered programmes''. He added that the additional cash-flows within the agreement with Novartis “will become a major value driver for MorphoSys”, which developed HuCAL, a technology for the automated production of specific antibodies that involves more than 12 billion functional and distinct fully human antibodies.

The Basel-headquartered firm says it has been steadily building its position in biologics, and they now represent 25% of its preclinical research portfolio. The new Novartis Biologics Unit, created earlier in 2007, has a “strong biotech culture” which has full access to the firm’s “extensive discovery organisation that generates many targets across multiple therapeutic areas”.

News of the deal has created quite a stir particularly among investors in MorphoSys and its share price at 9.45 this morning had already leapt over 20% to 50.25 euros.