MorphoSys AG (MOR) to Acquire Constellation Pharmaceuticals (CNST) for $34 Per Share, or ~70% Premium

MorphoSys AG (NASDAQ: MOR) announces today that it has entered into a definitive agreement with Constellation Pharmaceuticals, Inc. (NASDAQ: CNST) whereby MorphoSys will acquire Constellation for $34.00 per share in cash, which represents a total equity value of $1.7 billion. The transaction has been unanimously approved by the Management Board (Vorstand) and the Supervisory Board (Aufsichtsrat) of MorphoSys, as well as the Board of Directors of Constellation and is expected to close in the third quarter of 2021.

MorphoSys also announced that it has entered into a long-term strategic funding partnership with Royalty Pharma plc (NASDAQ: RPRX). The terms of the agreement between MorphoSys and Royalty Pharma provide for the following, under certain conditions and upon closing of the transaction with Constellation:

- $1.425 Billion Upfront Payment: Royalty Pharma will make a $1.425 billion
upfront payment to MorphoSys, supporting its growth strategy. The proceeds
will be used to support the financing of the Constellation transaction and
development of the combined pipeline.

- $350 Million Development Funding Bonds: Royalty Pharma will provide
MorphoSys with access to up to $350 million in Development Funding Bonds with
the flexibility to draw over a one-year period.

- Milestone Payments: Royalty Pharma will make additional payments of up to
$150 million to MorphoSys upon reaching clinical, regulatory and commercial
milestones for otilimab, gantenerumab and pelabresib.

- Royalties: Royalty Pharma will have the rights to receive 100% of MorphoSys'
royalties on net sales of Tremfya^(R), 80% of future royalties and 100% of
future milestone payments on otilimab, 60% of future royalties on
gantenerumab, and 3% on future net sales of Constellation's clinical stage
assets (pelabresib and CPI-0209).

- Equity Investment: After completion of the transaction and subject to the
required approvals of the Management Board (Vorstand) and the Supervisory
Board (Aufsichtsrat) of MorphoSys, Royalty Pharma is expected to invest $100
million in a cash capital increase of MorphoSys under an authorization to
exclude subscription rights of existing shareholders. The new MorphoSys shares
will be listed on the Frankfurt Stock Exchange.

Constellation is a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics that address serious unmet medical needs in patients with various forms of cancer. Constellation's two lead product candidates, pelabresib, a BET inhibitor, and CPI-0209, a second-generation EZH2 inhibitor, are in mid- to late-stage clinical trials and have broad therapeutic potential to offer meaningful benefits to patients with various hematological and solid tumors. Pelabresib has the potential to be a first- and best-in-class BET inhibitor and is
currently in a Phase 3 clinical trial for myelofibrosis, a bone marrow cancer that disrupts the body's normal production of blood cells. The EZH2 inhibitor CPI-0209 is currently in Phase 2 with best-in-class potential for treating hematological and solid tumors. Constellation's pipeline also includes numerous preclinical compounds.

The acquisition accelerates MorphoSys' strategy to grow through proprietary drug development and commercialization. Constellation's lead product candidates, pelabresib and CPI-0209, have broad potential, with expected approvals across a range of oncology indications in the coming years. Constellation's lead compounds fit well with MorphoSys' proven clinical development, regulatory and commercial capabilities, and MorphoSys is well positioned to rapidly advance and unlock the potential of the Constellation portfolio. Royalty Pharma's strategic partnership will fuel the expansion of
the combined company's capabilities to help accelerate the development, approval and commercial reach of breakthrough cancer treatments. This long-term commitment will help deliver significant value to all stakeholders.

Transaction Details

Under the terms of the merger agreement, an indirect wholly-owned subsidiary of MorphoSys will promptly commence a tender offer to acquire all of the outstanding shares of Constellation's common stock at a price of $34.00 per share in cash. Following successful completion of the tender offer, MorphoSys will acquire all remaining shares not tendered in the offer through a second step merger at the same price as in the tender offer.

MorphoSys plans to pay all-cash consideration for the transaction. The tender offer is not subject to a financing condition.

The purchase price of $34.00 per share in cash represents a premium of approximately 70% to Constellation's volume-weighted average price for the last five trading days.

Consummation of the tender offer is subject to various conditions including a minimum tender of at least a majority of outstanding Constellation shares, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and the receipt of any approvals or clearances required to be obtained under the applicable antitrust laws, and other customary conditions. The transaction is expected to close in the third quarter of 2021.

Following close, MorphoSys will remain headquartered in Munich, Germany, and will maintain a significant commercial and R&D presence in Boston, Massachusetts.

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