MorphoSys AG (MOR) Q2 2021 Earnings Call Transcript

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MorphoSys AG (MOR -0.39%)
Q2 2021 Earnings Call
Jul 30, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, welcome to the MorphoSys Second Quarter 2021 Financial Results Conference Call. [Operator Instructions]

Now I would like to turn the conference over to Dr. Julia Neugebauer. Please go ahead.

Dr. Julia Neugebauer -- Senior Director Investor Relations

Ladies and gentlemen, good afternoon or good morning. My name is Julia Neugebauer, Senior Director, Investor Relations at MorphoSys, and it is my pleasure to welcome you to our second quarter 2021 Financial Results Conference Call. Joining me on the call today are Jean-Paul Kress, Chief Executive Officer; Sung Lee, Chief Financial Officer; Roland Wandeler, Chief Operating Officer; and Malte Peters, Chief Research and Development Officer. Before we begin, I'd like to remind you on Slide two that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for the commercialization of our products and our development plans, the impact of COVID-19 on our business and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners.

These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in MorphoSys' 20-F and annual report, or for the year ended December 31, 2020, and from time to time in other SEC documents at MorphoSys. It is important to keep in mind that our statements on this webcast speak as of today. On Slide three, you will find the agenda for today's call. Jean-Paul will begin with an overview of the second quarter and will give an outlook. Roland will then provide a commercial update, and Malte will provide an update on our development pipeline, before turning the call to Sung for a summary of our second quarter and first half 2021 financial results. Following these prepared remarks, we'll open the call for your questions.

With that, I'll now hand the call over to Jean-Paul.

Dr. Jean-Paul Kress -- Chief Executive Officer

Welcome, everyone, and thank you for joining us today for our second quarter financial results and business update. I am particularly excited about the addition of Constellation Pharmaceuticals to MorphoSys and want to express a very warm welcome to our new team members. Together with Constellation, we have a great opportunity to bring new breakthrough therapies to patients. This is an exciting new chapter for our company as we significantly expand our pipeline and bolster our position in hematology/oncology.

Constellation's [Indecipherable] to late-stage candidates fit well with our proven clinical development, regulatory, and commercial capabilities and allow us to potentially expand into solid tumors. In short, we are uniquely positioned to unlock their value. Over the last several weeks, I've had the opportunity to spend time in Cambridge with the Constellation team and their tremendous excitement among both organizations. Integration is well underway, and we are focused on what we can do together to bring Constellation's mid- and late-stage candidates to market to meet the needs of patients. Key opinion leaders and physicians have also expressed their enthusiasm, as we will enhance our presence in hematology/oncology and increase our efforts to improve the lives of patients living with cancer.

Moving to Monjuvi, we achieved $18 million in sales and grew 16% quarter-over-quarter. With the vaccination rollout well underway in the U.S., we saw the positive impact to Monjuvi sales as we exited the second quarter and are encouraged to see that we gain momentum continuing in July. While we anticipate increased Monjuvi uptake in the second half, we ended the first half with a lower number of patients on therapy than we had anticipated, due to the challenging environment brought on by COVID for the majority of the first half. For that reason, we are narrowing our group revenue runs guidance, which Sung will elaborate further on. Nevertheless, we are encouraged by Monjuvi's leading market share position and remain optimistic about the future trajectory, especially given the recent positive momentum.

We are seeing a shift to more second-line patients, which will naturally lead to a longer duration of treatment. We have a broad development program for tafasitamab underway, and we believe tafacitamab has the potential to be a backbone therapy for non-Hodgkin's lymphomas. Alongside our partner insight, we have initiated two pivotal trials this year in first-line DLBCL and relapsing refractory follicular and marginal zone lymphomas, respectively. And we anticipate beginning a third pivotal trial in CLL later this year. We're also progressing with felzartamab, our anti-CD38 candidate for autoimmune membranous nephropathy, and we will be providing a proof-of-concept update at a scientific conference later this year. And we also are on track to start the trial in IGA nephropathy, another autoimmune disease with high unmet need.

Turning now to our newly acquired clinical-stage assets from Constellation, starting with Pelabresib. Pelabresib is being evaluated in the Phase III trial MANIFEST-2 for myelofibrosis in combination with ruxolitinib. There remains a large unmet need for patients with myelofibrosis, and we believe that Pelabresib has the potential to change the treatment paradigm. Malte will give an update about how we will optimize the MANIFEST-2 trial for maximum success. Constellation's next compound is a second-generation EZH2 inhibitor, which is currently in Phase II clinical trial and has best-in-class potential for treating both hematologic and solid tumors. The second-generation EZH2 inhibitor has shown promising preclinical data, and we are looking forward to advancing it in the clinic. We see lots of promise in Constellation's overall pipeline. Together, we have the great opportunity to bring breakthrough therapies to patients and to write the next chapter in our company's history.

With that, I will turn the call over to Roland for a commercial update.

Roland Wandeler -- Chief Operating Officer

Thank you, Jean-Paul, and hello, everyone. We reported second quarter Monjuvi sales of $18 million. This represents a 16% sequential increase over first quarter Monjuvi sales of $15.5 million. Importantly, the results were driven primarily by demand. The quarter also benefited from clinical trial orders of approximately $1 million. We are encouraged with the results, our leading market share, and especially the momentum we saw build throughout the quarter. After anticipated headwinds from COVID in April and May, we exited June with a positive uptick in demand, and we have seen this trend continue into the third quarter. We see incremental momentum in Monjuvi's growth in the community setting, with growth in academic centers holding steady, 70% of Monjuvi sales coming from the community setting.

The relative ease of administration, safety profile, efficacy, and duration of response in second-line treatment for relapsed/refractory DLBCL are key drivers for adoption as we increase awareness and differentiation in this market with a large unmet patient need. Looking at demand in more detail, more than 700 accounts, in aggregate, have ordered Monjuvi since launch. During the second quarter, nearly 500 accounts ordered, with approximately 70% of those accounts representing repeat orders. The proportion of accounts that reordered in Q2 increased, and in June, we saw the highest level of repeat orders since launch. These trends are encouraging as we approach the one year anniversary of Monjuvi's approval. Another important metric we are tracking is the penetration into the second-line setting.

We are observing increased usage in second-line therapy, which we are confident over time will lead to increased duration of response and enable patients to benefit and stay on treatment longer in the relapsed/refractory setting. We are also seeing an overall increase in patient treatments, as restrictions continue to ease. We presented [Indecipherable] three year long-term L-MIND data at ASCO, where we received positive customer feedback. The data not only show a durable response and consistent safety profile. It also suggests that the combination with lenalidomide could potentially lead to durable remission.

We expect to present additional data at SOHO and ASH in the coming months to continue to define the clinical profile of Monjuvi. Building on the momentum we were able to take into July, we remain optimistic for the second half of 2021. While there are still sites of care that are either closed or not fully up and running for industry to engage healthcare professionals due to the global pandemic, we are seeing an increase in physicians' ability to meet in person, and the MorphoSys and inside teams are at the ready, as sites of care continue to become more accessible.

With that, I'll turn the call over to Malte.

Dr. Malte Peters -- Chief Research And Development Officer

Thanks, Roland. We have made tremendous progress across our pipeline throughout the first half of 2021. With the acquisition of Constellation, we now have a robust pipeline of four advanced clinical programs, which we believe could change the way cancer is treated. For Monjuvi or tafacitamab, we dosed the first patients in two pivotal trials, extending the clinical development to frontline diffuse large B-cell lymphoma and relapsed/refractory indolent lymphoma. Later this year or early next year, we plan to start an additional pivotal trial, assessing tafacitamab in combination with Insight's PR three kinase data inhibitor, parsaclisib, for CLL patients.

We will also initiate MINDway, a study that will investigate an optimized treatment schedule with a reduced number of Monjuvi administrations for patients with NHL. Optimizing the treatment schedule is particularly important for patients with follicular lymphoma and relapsed/refractory DLBCL. We are excited about developing parsaclisib in myelofibrosis, and I will share some updates on how we will enhance the MANIFEST-2 trial in a minute. We are evaluating felzartamab for patients with autoimmune membranous nephropathy, or AMN, a disease with a significant unmet medical need in the M-PLACE study. And we are about to start another trial in IgA nephropathy. IgA nephropathy is an autoimmune disease with high unmet need, with about 8,000 new patients per year in the United States and about 11,000 new patients per year in the EU.

These clinical trials, which run in parallel, highlight our confidence and commitment to develop felzartamab broadly in autoimmune diseases. CPI-2029 is a potentially best-in-class EZH2 inhibitor. It is currently in a Phase II clinical trial, investigating its potential in hematological and solid tumors. In addition, we are excited about preclinical data showing that CPI-2029 is synergistic with lenalidomide. These data suggest that this molecule could have the potential to offer long-term treatment for patients with this disease. Now let's take a look at some exciting news for tafasitamab. We received the positive CHMP opinion much earlier than we had hoped for, and it is a pivotal step toward bringing this important treatment to patients in Europe as soon as possible. The three year long-term follow-up data were included in the European submission dossier, and we are now eagerly awaiting the European Commission's decision. We are very encouraged by the confirmation of the orphan drug designation status by the COMP mid-July, confirming that Monjuvi may be of potential significant benefit compared to the existing therapy in this setting, Polivy.

At ASCO, EHA and ICML, we shared strong three year follow-up data from our L-MIND trial. We are encouraged by the maturing L-MIND data and that it continues to show durable responses and a consistent safety profile. The median overall survival is 33.5 months, and at four years, 42% of patients are still alive, suggesting that this regimen could offer a functional cure for certain patients. We are excited that there is significant benefit for patients with second-line and also third-line DLBCL, which is demonstrated by the Kaplan-Meier curves on Slide 11.

Pelabresib, a potential first-in-class and best-in-class BET inhibitor, may have the potential to become the new standard of care for patients with myelofibrosis, a type of bone marrow cancer with high unmet medical need. It may be the only therapy that impacts all four hallmarks of myelofibrosis -- bone marrow fibrosis, spleen volume, anemia, and constitutional symptoms. In the United States and Europe, there are an estimated 30,000 to 35,000 patients with myelofibrosis that are considered intermediate or high risk. Only about half of these patients are receiving ruxolitinib therapy, a JAK inhibitor, and many patients are experiencing a suboptimal response, so there is a high unmet need.

Pelabresib has shown a strong response rate in combination with ruxolitinib, achieving a spleen volume reduction in 67% of first-line myelofibrosis patients. It has also shown strong data in the second-line or third-line myelofibrosis. This data makes us very confident about the success of the ongoing global Phase III study, MANIFEST TWO. It is a randomized study comparing Pelabresib plus ruxolitinib against ruxolitinib alone in front-line myelofibrosis. During our due diligence process prior to the acquisition, we looked carefully into every aspect of Constellation's clinical development programs, specifically the MANIFEST TWO study.

Based on our detailed assessment, we decided to optimize the trial design to raise its overall probability of success, by increasing the number of trial participants to approximately 400 patients. We will also improve the speed of enrollment and have already launched a mitigation plan, ensuring operational excellence. This includes adding additional CROs, improving interaction with investigators, expanding the number of countries and sites, and other measures. With all activities in place, we expect to report topline data from this study in the first half of 2024. MorphoSys enters the second half of 2021 with a stronger position than ever to achieve its goal to develop transformative medicines and potential cures for people living with cancer.

Throughout the remainder of the year and beyond, we expect to achieve key clinical milestones that will advance this mission. For felzartamab, we expect to share exciting clinical data in AMN at a medical conference later this year. And we are excited to start the study in a second immune indication, namely IgA nephritis. For Pelabresib, we expect to provide data of a new data cutoff of the MANIFEST Phase II study at a medical conference later this year. Next year, will be the year where we will start several combination studies combining tafacitamab with novel agents in CLL and in non-Hodgkin lymphoma. We also expect data from our Phase III study, inMIND, in 2023. In 2024 and 2025, we will see pivotal studies reading out, namely MANIFEST two and frontMIND, offering potentially clinical benefit to first-line patients with myelofibrosis and DLBCL. So, you can see that there is exciting news coming at the horizon, and we are looking forward to sharing this news.

With that, I'll turn the call over to Sung for a review of the financials.

Sung H. Lee -- Chief Financial Officer

Thank you, Malte. We're pleased to share our financial results for the second quarter and first half of 2021. Moving to Slide 16, total revenues for the second quarter of 2021 were EUR38.2 million, compared to EUR18.4 million for the comparable period in 2020. Monjuvi sales in Q2 were EUR14.9 million, reflecting 16% growth quarter-over-quarter. Royalties from net sales of Tremfya in the second quarter were EUR13.7 million, an increase of 18% quarter-over-quarter. Cost of sales were EUR10.1 million in the second quarter, compared to a credit of EUR7.2 million from the second quarter of 2020, due to a reversal of impairment charges. Turning to operating expenses, R&D expenses in the second quarter were EUR40.5 million, compared to EUR30.9 million in the same period of 2020.

The growth primarily reflects the increased investment to support the advancement of our proprietary programs. Selling expenses were slightly down, at EUR28.5 million in the second quarter, compared to EUR29.3 million in the second quarter of last year. G&A expenses in the second quarter were EUR30.5 million, compared to EUR13.8 million for the second quarter of 2020. This increase was driven by EUR18.8 million in transaction costs related to our recent acquisition of Constellation and partnership with Royalty Pharma. For the second quarter, we reported a consolidated net profit of EUR20.9 million, compared to a consolidated net loss of EUR53.1 million in the second quarter of 2020.

In the second quarter, finance income of EUR102.4 million was recognized, mainly due to a decline of the financial liability from collaborations. Overall, the financial liabilities from collaborations declined by EUR101.7 million quarter-over-quarter and finished at EUR445.9 million. Recall that the balance in financial liabilities from collaborations reflects an accounting view of expected profits from the net product sales of Monjuvi in the U.S. in the relapsed/refractory DLBCL setting, owed to our partner Incyte. The recognition of finance income and reduction of liability, both related to the inside collaboration, do not have any impact on cash.

Moving to Slide 17 for the results for the first half of 2021, total revenues for the first half of 2021 were EUR85.4 million, compared to EUR269.7 million for the comparable period in 2020. The year-over-year decline was entirely driven by the recognition of EUR236.1 million as part of the upfront consideration from our partner, Insight, in the first half of 2020. Cost of sales were EUR15.2 million in the first half of 2021, compared to a credit of EUR four million in the first half of 2020, due to a reversal of impairment charges. Turning to operating expenses, R&D expenses in the first half were EUR73.8 million, compared to EUR52.4 million for the same period of 2020. Selling expenses were EUR56.6 million in the first half, compared to EUR42.1 million in the first half of last year. Recall that the second quarter of 2020 was the first full quarter impacted by expenses for services provided by our partner, Insight, in connection with Monjuvi. G&A expenses in the first half were EUR40.8 million, compared to EUR23.9 million for the first half of 2020.

As previously mentioned, the second quarter of 2021 was impacted by transaction costs related to Constellation and Royalty Pharma. For the first half of 2021, we reported a consolidated net loss of EUR20.7 million, compared to a consolidated net profit of EUR179.8 million in the first half of 2020. As mentioned earlier, 2020 benefited from the recognition of EUR236.1 million as part of the upfront consideration from our partner, Insight. Turning to the balance sheet, we ended the second quarter with cash and investments of EUR1.13 billion, compared to EUR1.24 billion as of the end of 2020. Pro forma cash and investments following the completion of the Constellation acquisition and the recent equity purchased by Royalty Pharma was EUR1.17 billion. As we have closed our transactions with Constellation and Royalty Pharma, I'd like to walk you through some key elements of these agreements. Recall that Royalty Pharma made an upfront payment of $1.425 billion.

In return, MorphoSys will pass on 100% of Tremfya royalties to Royalty Pharma, starting with royalties earned for the second quarter of 2021 and thereafter. MorphoSys will also pass on 80% of future royalties, then 100% of future milestone payments on otilimab, 60% of future royalties on gantenerumab, and 3% on future net sales of Constellation's clinical assets, Pelabresib and CPI-0209. All of these royalty payments will be recorded in the MorphoSys income statement. As such, we will record a financial liability in the third quarter for the future royalty payments that Royalty Pharma is entitled to.

The measurement of the financial liability is initially at fair value and subsequently based on the effective interest method. Following the close of the Constellation acquisition, Royalty Pharma purchased MorphoSys shares in the aggregated amount of $100 million as part of the funding agreement. They acquired 1,337,552 new ordinary shares at a price of EUR63.35 per share, the volume weighted average price of MorphoSys shares five trading days prior to the acquisition of Constellation. Pro forma shares outstanding on a diluted basis is 34,128,053 following the purchase.

Turning to our guidance for 2021 on Slide 19, starting with group revenues, we are updating the previously provided range of EUR150 million to EUR200 million to a range of EUR155 million to EUR180 million. The narrowing of the guidance range reflects updated Monjuvi product sales expectations. As mentioned previously, we will continue to record Tremfya revenues, and this is reflected in the guidance range. Moving to operating expenses, which is comprised of R&D and SG&A expenses, we expect 2021 operating expenses to be in the range of EUR435 million to EUR465 million, which include expenses for Constellation as of July 15, 2021. The range also includes onetime transaction-related costs of EUR36 million. We anticipate R&D expenses to comprise between 52% to 57% of operating expenses, excluding the onetime transaction-related costs.

With that, we would like to open the call for questions. Operator?

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We've received the first question. It is from James Quigley, Morgan Stanley. Your line is open. Please go ahead.

James Quigley -- Morgan Stanley -- Analyst

Thanks for taking my question. So a couple -- first one on Monjuvi. Can you give us a bit more details on how the key launch metrics you're tracking are going since you've had a bit more of a reopening in the U.S. in terms of number of accounts that you've managed to have face-to-face interactions with, as well as some physician feedback in the last quarter? And then also, we're speaking to some KOLs, there seems to be, I suppose, some reticence to maybe using Monjuvi, given the lack of efficacy or perceived lack of efficacy in double-hit patients or in primary refractory patients. So, what are the key sort of pushbacks or reasons to not prescribe Monjuvi that you're hearing from out in the field? That's question number one. And question number two, for Pelabresib and the MANIFEST two trial, so clinicaltrials.gov had a September 2022 readout for the primary completion with the trial starting in November 2020, so just under two years from start of the trial to primary readout, adding 90 more patients and 18 more months in terms of potential readout. So, is the original enrollment slower than anticipated, or are you looking for a longer follow up? And what was the key decision to increase number of patients? Was it for more power for the primary endpoint on spend volume reduction? Or was it to power the secondary endpoints, particularly total symptom score? And do you need to show a benefit on [Indecipherable] benefit on total symptom score for either approval or uptake?

Dr. Jean-Paul Kress -- Chief Executive Officer

Thanks, James, for the question. Roland will answer the Monjuvi commercial questions. Malte will go for the Monjuvi KOL question, and obviously, the Pelabresib question.

Roland Wandeler -- Chief Operating Officer

Thank you, Jean-Paul, and hi, James. Regarding your questions on Monjuvi metrics, we of course track a range of metrics, some of which we outlined on Slide eight that you have in the presentation that we provided. Where you see, just as one example, the number of accounts that are adopting Monjuvi -- and there, we are since launch now at a number of 700 accounts, 70% of which are in community with increasing traction there. And we also just shared that we had close to 500 accounts ordering just in Q2, which we find very exciting. Your question to our ability to engage physicians in person, we had a tough first half of the year due to the pandemic, as everyone.

But we saw increasing possibilities for us to engage physicians in person as we exit Q2, and in fact, are now at about 70% of our own engagements with physicians being in person. And importantly, we see that whenever we are able to engage with healthcare professionals in person, that we see our three year data and our message truly resonate and translate into adoption. When it comes to physician feedback, we are especially encouraged with what we hear with the three year long-term data that we shared at ASCO and especially the duration of therapy there, and as Malte explained, the potential that this could mean for patients to actually have durable remissions. In terms of what we hear from KOLs, it is actually that excitement around the three year data and what this could mean for patients, also knowing that the study is still going on and patients are still continuing. And we hear that, as we look across subgroups, that KOLs actually appreciate that Monjuvi offers an option for many patients, but Malte, you can just expand on that on some of the details.

Dr. Malte Peters -- Chief Research And Development Officer

Yes. And I think you had some questions on the double-hit and triple-hit patients. We published the L-MIND data several times, and we are aware that we had only a few patients with double-and triple-hits considerations in the study. But the ones that we had enrolled did extremely well. So we had one partial response, one complete response to a fairly long degree, so I think the few data points that we have actually point to a fairly high activity of the regimen in this setting. So maybe with that, I move to your second complex of Pelabresib. You wanted to have some information on the trial execution. Let me just say when we performed our due diligence with the Constellation company, we did a really very thorough analysis of the situation, so we knew what the situation was with the trial.

Yes, the study was planned to be opened in November, and we knew it took until April until actually the first patient became enrolled. So we were, from day one, certain that we could pay more attention on optimizing the clinical execution. And as I said in my prepared remarks, we have already a full fleshed-out plan in place to do exactly that. With respect to the increase of the number of trial participants, we have increased -- we will increase the number because we feel that we need to be -- we want to give the trial the highest probability of success. We want to be successful on both endpoints, on the primary endpoints, spleen volume reduction 35, and also on the key secondary endpoint, TSS 50. To accomplish that, and also to understand -- and also understanding a bit the current healthcare -- health authority feedback, we decided that it's the best decision to increase the sample size.

James Quigley -- Morgan Stanley -- Analyst

Thank you very much.

Dr. Malte Peters -- Chief Research And Development Officer

Thank you.

Operator

The next question is from Zhiqiang Shu of Berenberg.

Zhiqiang Shu -- Berenberg -- Analyst

Hi, Thanks for taking my question. So the first question is around Monjuvi. Particularly, I want to understand your decision to run a trial to modify -- to optimize the dosing, the regimen schedule. I wonder, is that something based on the feedback you received from physicians, or something else? And the second question related to Monjuvi is around the peak sales guidance. I recall you mentioned about 500 to 750 million peak sales in the U.S. Are you confirming this guidance? The third question is related to felzartamab. In the Q4 data release, what should we expect to see in this initial data release? And what's your plan in terms going forward for this drug? Thank you very much.

Dr. Jean-Paul Kress -- Chief Executive Officer

Okay. Thank you for the question. I'll start by your second question on the peak sales. Yes, we still think it's possible to achieve this range of peak sales, and it's our goal to achieve it in the U.S. [Indecipherable] setting. Given the start we had, it may take us longer to get there. But as we just mentioned, we are very encouraged with the Q2 exit trends that are continuing so far in Q3. So again, for instance, we have a leading share in second line.

So what I'd like also to emphasize here is that keep in mind, it's just the beginning of the tafasitamab opportunity. The tafasitamab opportunity is bigger than r/r DLBCL. We just detailed the number of trials Phase III is included to broaden the development plan and improve our label with new indications, with multiple studies underway to move, for instance, in first-line DLBCL and other indications.

So that also goes back to the backbone strategies we are pursuing. So yes, we still think it's achievable, but I would put that in the context of the much larger opportunity we have, for instance, with first line. You probably saw some numbers that some other company have thrown out there recently on the first-line opportunity. It's significant. There is a high unmet need, and we have high confidence in our clinical development and our trial to compete very effectively in this space. On that, I'd like to [Indecipherable] the other questions for Malte.

Dr. Malte Peters -- Chief Research And Development Officer

I think the first question was on the IV optimization study. This study is called MINDway. It is aiming at reducing the number of intravenous administrations of Monjuvi by 50%, which will increase significantly the comfort for the patients, particularly those undergoing longer treatment durations. And we had already very successful feedback from health authorities on the study design, so you can expect, once you see the details in clinicaltrials.gov, which will appear shortly that, this trial design has already been vetted and agreed upon with the health authorities. Felzart, remind me, what was the question again?

Dr. Jean-Paul Kress -- Chief Executive Officer

The question was why -- I mean, we said we would publish some results and when [Indecipherable] study.

Dr. Malte Peters -- Chief Research And Development Officer

Okay. Yes, sorry for forgetting it. So we have already submitted an abstract to a conference which will happen in November this year. And we will be excited to share some data from the ongoing study in autoimmune membranous nephropathy at that conference, including data with respect to the autoantibody changes, but also proteinuria changes.

Zhiqiang Shu -- Berenberg -- Analyst

Great. And just for Felzart, what's the plan in terms of going to other autoimmune indications?

Dr. Jean-Paul Kress -- Chief Executive Officer

Yes. Remember, we just spoke about the second indication that we are going to start probably any week now. The second indication is IgA nephritis, which is an autoimmune kidney disease with a significant unmatched need. So we are basically developing two indications in parallel. And based on these results, we will take further decisions regarding future development plans.

Zhiqiang Shu -- Berenberg -- Analyst

Thanks very much.

Dr. Jean-Paul Kress -- Chief Executive Officer

You're welcome.

Operator

The next question is from Jason Butler of JMP Securities. Your line is open.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Hi, Thanks for taking my question. It's Roy for Jason. I guess the first one, with the imminent approval in Europe for Monjuvi, how do you guys see the competitive landscape there as being different from the U.S.? And how does the peak opportunity compare to that $500 million to $750 million you've mentioned for the U.S.

Dr. Jean-Paul Kress -- Chief Executive Officer

Yes. Right. Thanks for the question. It's -- we'd like to be able to elaborate on this question. But as you know well, Insight is handling the ex-U.S. operations and commercial market access, so we defer to them to comment on the uptake, the plans for market access, and obviously, the forecast question. Malte, do you want to -- approval.

Dr. Malte Peters -- Chief Research And Development Officer

Yes, I was just going to say, first of all, maybe just two quick remarks. First of all, the approval came really much earlier than we anticipated and showed us a high interest at the level of the MA. The second important remark is that we succeeded to maintain the orphan status for Monjuvi. And in the orphan designation, there is a statement by the authorities that Monjuvi, in combination with lenalidomide, provides significant additional benefits over existing therapies, which is, in this case, Polivy. So I think these are two remarks that will help you maybe to put our product into perspective.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Okay, great. And then, just on the upfront from royalty, where are you guys recognizing that presumably all in the third quarter? And also, that EUR36 million onetime expense for the Constellation acquisition, where is that going to be recognized?

Sung H. Lee -- Chief Financial Officer

Yes. So on your last part, we did recognize part of the transaction-related costs already, about EUR18.8 million in Q2. There will be subsequent amounts in Q3, as well as Q4, all totaling EUR36 million for this year. In terms of revenue recognition in Q3, the transaction closed in Q3 with Royalty Pharma, so we would expect, for IFRS purposes, that would be recognized in Q3.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Ok, Great. Thank you.

Operator

The next question is from Etzer Darout of Guggenheim Securities. Your line is open. Please go ahead.

Etzer Darout -- Guggenheim Securities -- Analyst

Great. Thanks for taking my question First one, just wanted to if you had any updates on the design of the IgA nephropathy study. You've mentioned multiple dose schedules, a placebo-controlled study. I guess any additional color based on any read-throughs from the M-PLACE POC study that you'll be announcing data on in the fourth quarter? And then I have a second question.

Dr. Jean-Paul Kress -- Chief Executive Officer

Yes. So for the design of the IgA nephritis study, we have not disclosed the design, and I would like to ask you for a little bit of patience until that information is publicly available. With respect to the preliminary data that we will show at the conference later this year, I can only say that we took a very informed decision to submit an abstract with exciting data, both on the autoantibody level and on proteinuria. And we are hoping that the field and medical community will agree with us that this data is clinically meaningful.

Etzer Darout -- Guggenheim Securities -- Analyst

Got it. And I guess, given sort of the news around the Alzheimer's case, just wondered if you had any recent communication with Roche on gantenerumab, given sort of all the news around Alzheimer's?

Dr. Jean-Paul Kress -- Chief Executive Officer

We typically don't have contacts with the -- our royalty partners. And we've not heard much versus what you've seen publicly. We remain obviously very interested by progress that Roche is making as we retain 40% of the royalties on gantenerumab.

Etzer Darout -- Guggenheim Securities -- Analyst

Ok, Thank you.

Operator

The next question is from Graig Suvannavejh of Goldman Sachs. Your line is open. Please go ahead.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Good afternoon or Good morning. I've got several. My first is just on Pelabresib. Thanks for sharing the update on the clinical trial timelines there. Could you just maybe remind us of your current powering assumptions on the Phase III trial relative to the data that you saw in Phase II? And a follow-up on Pelabresib is, I believe that when you first announced the acquisition of Constellation, you had guided to a significant revenue contribution from Constellation assets, beginning in the period of about 2026. So, given today's update on the clinical trial time lines, is there a revision to that prior statement that you made? And then I've got another question separately just on current cash, and I'm wondering if you could comment on your anticipated cash runway. In other words, given current cash, how long does that take you out to? And then secondly, given that, and given that you just announced the Constellation -- or completed the Constellation deal, does your current cash give you the optionality of considering additional business development transactions?

Dr. Jean-Paul Kress -- Chief Executive Officer

Thanks, Graig, for your questions. Let's start by the financial questions, and I might stop by the BD strategic question, and Sung will comment on the cash runway. I mean, we have our hands very full now with lots of programs going on -- the two mid- to late-stage assets from Constellation, in addition to our very comprehensive development plan with tafasitamab and felzartamab, so we have to focus the organization on execution. We grow excited, day after day on Pelabresib, with our discussions with the KOLs, and Malte will elaborate on that in his answers to your power assumption question. But I'd like to say that, you know, never say never, our cash position will allow us [Indecipherable] initiative to trigger more financing will allow us to make potential moves, if it makes sense. But it's not the same focus than it was a couple of months ago, when we had our discussions pre-Constellation. Sung?

Sung H. Lee -- Chief Financial Officer

Great. And Graig, you had a few questions on -- well, I'll start with the significant revenue in 2026. So that factored in the timeline and design plans we have for MANIFEST two. As Malte said, this was well known to us during our due diligence process. And when we made that comment about significant revenue contribution in 2026 at the time of the deal announcement, that would not be the first year of revenues potentially for Pelabresib. That would be the first full year of revenues in 2026, and you would expect a partial revenue contribution from Pelabresib in 2025. Okay. In terms of cash runway, obviously, we're sitting on a very comfortable balance here, but recognizing our operating expense run rate has increased with the acquisition of Constellation. But as I mentioned, on a pro forma basis, we have EUR1.17 billion. We believe this would take us for multiple years into the future, the ability to invest not only in tafasitamab pivotal studies, but MANIFEST as well. We're going to go through a portfolio review this fall, and pending the outcome of that, this would impact the cash runway. But from the current vantage point, it would be multiple years. And I know your follow-up question may be, how do you define multiple years? The way I look at it right here, it's at least 2.5 years, potentially longer. And we have some options in terms of credit facilities, etc. So I'll leave it at that.

Dr. Jean-Paul Kress -- Chief Executive Officer

Malte?

Dr. Malte Peters -- Chief Research And Development Officer

Yes. And maybe just a couple of comments on how we see Pelabresib. And so, we have a very good report with leading KOLs. I had two calls with some of the leaders in the field yesterday. I think we are hearing that the medical community is really excited about Pelabresib. They may see it as the most exciting compound, compared to other investigational agents. And we have not changed a bit our assessment regarding probability or success of the product. I think in the past, we have done a very good job in finding the right middle ground between being aggressive and achieving a high probability of success. And we want to do the same thing with Pelabresib again. So that was the reason why we adapted the trial design to make -- to give it the highest probability of success. But our assessment of Pelabresib as a future drug in myelofibrosis remains completely unchanged and is super bullish.

Dr. Jean-Paul Kress -- Chief Executive Officer

And the 2026 revenue assumption. No. Okay. Thank you. Sorry. All right, next question. [Speech Overlap]

Operator

Okay. Thank you. [Operator Instructions] Our next question is from James Gordon, JPMorgan. Your line is open. Please go ahead

James Gordon -- JPMorgan -- Analyst

Hello, James Gordon, JPMorgan, and apologies if I'm repeating the questions. Unfortunately, I missed the very beginning because of too many overlapping calls. I just wanted to confirm two points. So, on the Pela Phase III data, is it definitive that we couldn't see anything before 2024? Or is there any possibility that you could do some sort of interim analysis? So that would be the first question, please. And the second one was just confirming there was previously the $500 million to $750 million peak potential for Monjuvi in the U.S. in relapsed refractory DLBCL, so has that come down by 20% in the same way that the Insight liability has come down? And if not, why is it not moved by the same amount? Thank you,

Dr. Jean-Paul Kress -- Chief Executive Officer

James, thanks for the questions. Let me start by the second one. It's a bit echoing the previous question on the peak sales range being still achievable. So we see it as a long-term opportunity that we still very much believe in and are very much focusing on. We see all the endeavors in the studies that -- and capital we're allocating to the development of the product. So I think I would encourage everyone to keep in mind the large, long-term opportunity beyond r/r DLBCL. I think the space is also starting to recognize that there are other indications, like first-line, which are very much into play here. And that's why the short-term, I would say, adjustments we're making now are not really a reflection of the long term, I would say. I'll turn the question on the Pela study.

Dr. Malte Peters -- Chief Research And Development Officer

On the pillar study, yes, I think, of course, there are always opportunities to accelerate. I think with the plans I alluded to earlier, we are really confident that we can execute on the trial as quickly and as aggressively as we can. I think I would prefer to have maybe six or nine months of time and see how our measures are taking off, and then we can give maybe a bit of more updates on how we think we end up in our time lines. With respect to interim analysis, I really prefer not to touch on this because we want to keep the integrity of the trial design intact, and commenting on interim analysis is possibly introducing a bias, so I would like to leave it at that.

James Gordon -- JPMorgan -- Analyst

Thank you.

Operator

We have no further questions coming through, so I would like to hand back to Dr. Julia Neugebauer to wrap up today's call.

Dr. Julia Neugebauer -- Senior Director Investor Relations

Ladies and gentlemen, this concludes today's conference call. If any of you would like to follow up with the Investor Relations team [Indecipherable] is available for the remainder of the day. Once again, thank you for joining our call. Have a good day, and goodbye.

Operator

[Operator Closing Remarks]

Duration: 54 minutes

Call participants:

Dr. Julia Neugebauer -- Senior Director Investor Relations

Dr. Jean-Paul Kress -- Chief Executive Officer

Roland Wandeler -- Chief Operating Officer

Dr. Malte Peters -- Chief Research And Development Officer

Sung H. Lee -- Chief Financial Officer

James Quigley -- Morgan Stanley -- Analyst

Zhiqiang Shu -- Berenberg -- Analyst

Douglas Royal Buchanan -- JMP Securities -- Analyst

Etzer Darout -- Guggenheim Securities -- Analyst

Graig Suvannavejh -- Goldman Sachs -- Analyst

James Gordon -- JPMorgan -- Analyst

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