Jean-Paul Kress must have envisioned things differently. From the results of the Phase 3 study for the cancer drug Pelabresib, the CEO of Morphosys, like the company's 540 employees, hoped for a positive market reaction. However, instead of experiencing even a small surge in the stock price, it took a 30% dive in the Frankfurt Xetra trading on Tuesday a fortnight ago. By the end of the day, it was a 21% decline.

Since then, the stock has recovered strongly, gaining about 50%. However, the gain since the beginning of the year has melted to just over 80%, after doubling in value up until early November.

Despite a noticeable flaw, the 58-year-old Kress bravely commented on the study results with optimism. "We are very, very pleased with the results," he said in a conference call. These are the most impressive improvements observed in clinical studies on patients with myelofibrosis to date.

Kress remains confident that Pelabresib will receive market approval for the treatment of myelofibrosis, a form of bone marrow cancer. He reiterated the intention to submit applications in the United States and Europe by the middle of next year.

However, some stock analysts doubt this. Some expect only limited approval for Pelabresib. Although the study results for reducing patients' spleen volume were quite convincing, the second key result for reducing symptoms such as bone pain, fever, and severe fatigue is less clear.

In the high-risk patient group, the reduction in symptoms was even worse than in the comparative segment. In this segment, patients were also treated with the drug Ruxolitinib, already on the market, but not in combination with Pelabresib, rather with a placebo. "This is an anomaly," commented Chief Research Officer Tim Demuth on the result. "We need to understand this better and will investigate it."

Pelabresib is the crucial milestone for the future of Morphosys. Kress expects the drug to generate sales of over $1 billion annually. The success or failure of Pelabresib is also the benchmark to assess the performance of the French CEO. Kress has been the head of the biotechnology company in Planegg, southwest of Munich, since September 2019.

The Ph.D. in medicine, who also studied biochemistry and pharmacology, came from Syntimmune in the USA. Kress is the direct successor to Simon Moroney, who shaped the history and fortunes of Morphosys for a long time. The New Zealander is one of the founders of the company and was at the helm from 1992 to 2019.

Over two years ago, Kress caused a stir in the industry: Morphosys acquired Constellation Pharmaceuticals in the USA for $1.7 billion. Pelabresib comes from Constellation's pipeline. With the mega-acquisition, Kress significantly changed the business model, even though then CFO Sung Lee only spoke of an acceleration of Moroney's strategy. However, the decline in the stock price also accelerated.

Previously, Morphosys had mainly licensed developments to pharmaceutical companies such as GSK, Roche, and Johnson & Johnson, receiving milestone payments and revenue sharing. With Constellation, Kress elevated the company to a higher risk level. Now it independently develops and intends to market drugs.

Derived from Moroney's time is the advanced drug Tafasitamab against blood cancer, marketed in the USA since 2020 under the name Monjuvi by Morphosys and partner Incyte. Morphosys expects Monjuvi to generate net sales of $85 million to $95 million this year.

Kress has much higher expectations for Pelabresib. If his calculation is correct, and the drug is approved and becomes a blockbuster, Morphosys would have two drugs on the market in hematological oncology. This is how the company aims to break even in 2026. However, for Kress, it's still a long way until then. The CEO has not yet delivered proof that his strategy is successful.