MorphoSys Reports Six Months 2006 Results - MorphoSys Raises Financial Guidance for 2006
07/28/2006 - MorphoSys AG (Frankfurt: MOR; Prime Standard Segment, TecDAX) today reported financial results according to IFRS for the first six months ended June 30, 2006. During the first half of 2006, revenues increased by 72% to EUR 26.5 million, resulting in a net profit of EUR 4.5 million, compared to a net profit of EUR 1.8 million in the previous year. Separately, the Company raised its revenue guidance from EUR 50 million to up to EUR 52 million, operating expense guidance was lowered by up to EUR 3 million, which could decrease operating expenses for the full year from EUR 49 million to EUR 46 million. MorphoSys’s cash position amounted to EUR 64.9 million at the end of the second quarter of 2006, compared to EUR 53.6 million at year-end 2005.
First Half Year - 2006:
Revenues increased by 72% in the first six months of 2006 to EUR 26.5 million (June 30, 2005: EUR 15.4 million). Revenue growth was driven by high levels of success-based payments within the therapeutic segment, including clinical as well as research milestones, and the consolidation of Serotec Group revenues into Group accounts in the research segment. Revenues arising from the Therapeutic Antibodies segment amounted to EUR 17.5 million or 66% of total revenues, which included success-based payments in the amount of EUR 5.0 million. The AbD segment, formerly the Research Antibodies segment, comprising the Serotec, Biogenesis and Antibodies by Design brands, contributed EUR 9.0 million or 34% to total revenues.
Total operating expenses for the first six months of 2006 amounted to EUR 21.0 million, compared to EUR 13.3 million in the same period of 2005. The acquisition of the Serotec Group had the effect of increasing operating expenses by EUR 5.6 million. Cost of goods sold (COGS) amounted to EUR 4.0 million (June 30, 2005: EUR 1.1 million), representing cost of sales for goods sold by the AbD segment. Research and development costs increased to EUR 7.9 million from EUR 7.0 million; sales, general & administrative expenses amounted to EUR 9.1 million compared to EUR 5.2 million in the previous year. Stock-based compensation, reported as components within COGS, R&D and S,G&A expenses, remained unchanged at EUR 0.6 million over the previous year. Operating profit for the first six months of 2006 reached EUR 5.6 million (June 30, 2005: EUR 2.0 million). Non-operating expenses in the first six months of 2006 amounted to EUR 1.0 million (June 30, 2005: non-operating expenses of EUR 0.2 million), and include recognition of tax accruals.
In the first half of 2006, MorphoSys achieved a net income of EUR 4.5 million, compared to a net income of EUR 1.8 million in the same period of the previous year. Diluted net income per share for the first six months of 2006 amounted to EUR 0.70 (June 30, 2005: EUR 0.31).
On June 30, 2006, MorphoSys held cash, cash equivalents and available-for-sale financial assets of EUR 64.9 million, compared to EUR 53.6 million on December 31, 2005. Included in this amount were funds of EUR 17.1 million from the capital increase in March 2006 as well as cash inflow from operations in the amount of EUR 14.6 million during the first six months of 2006. The number of shares issued at June 30, 2006 was 6,654,179, compared to 6,025,863 at December 31, 2005, reflecting the Company’s capital increase in conjunction with the acquisition of Serotec, and a private placement successfully concluded in March 2006.
Second Quarter - 2006:
In the second quarter of 2006, the Company generated revenues of EUR 11.7 million, compared to EUR 7.9 million in the same quarter of 2005. Total operating expenses amounted to EUR 10.8 million, compared to EUR 6.5 million in the same quarter of 2005. The resulting profit from operations for the second quarter of 2006 amounted to EUR 0.9 million, compared to EUR 1.4 million in the second quarter of 2005. A net loss of EUR 0.4 million resulted for the second quarter of 2006, compared to a net profit of EUR 1.3 million during the same period of 2005.
Financial Guidance 2006:
MorphoSys increased its guidance for the financial year 2006. On the basis of new collaborations and the expansion of the collaboration with Novartis, an outperformance of revenues versus guidance was identified for the current year in the amount of up to EUR 2 million, which could increase 2006 revenues from EUR 50 million to up to EUR 52 million. Scope for reduction on expense guidance for the full year was also given, with a decrease in expenses of up to EUR 3 million, which could decrease expenses for the full year 2006 from EUR 49 million to EUR 46 million. The impact of these changes could result in Earnings before interest and taxes (EBIT) of up to EUR 6 million.
Events of the Second Quarter 2006 Included:
# Expansion of existing therapeutic antibody collaboration with Novartis until May 2011. Within the framework of the extended agreement, Novartis committed to an increase in the number of new therapeutic antibody projects, in addition to higher annual licensing fees and more funded research at MorphoSys.
# Goal for the number of partnered therapeutic antibody projects at year-end now increased to 38 (previously: 36 programs); currently 35 programs ongoing.
# Formation of an initial two year license agreement with Schering-Plough Corporation with the option to develop HuCAL®-derived therapeutic antibodies against up to 10 disease-related targets.
# MorphoSys and US-based biopharmaceutical company OncoMed Pharmaceuticals signed a license agreement on the use of MorphoSys’s HuCAL technology in the research and development of human therapeutic antibodies for the treatment of various cancers.
# Successful completion of ImmunoGen collaboration as scheduled in June 2006.
# At the Company’s annual shareholder meeting on May 17, 2006, the shareholders confirmed the reappointment of Prof. Dr. Jürgen Drews and Prof. Dr. Andreas Plückthun to the Supervisory Board of MorphoSys AG. All other management proposals were passed with large majorities.
“As planned and communicated, increasing levels of investment are reflected in the profit level witnessed in the second quarter ”, commented Dave Lemus, Chief Financial Officer of MorphoSys AG. “Nonetheless, the business continues to outperform our expectations, and on this basis we have revised our financial guidance upwards for the full year.”
MorphoSys will hold a public conference call today at 10:00 CEST to present the financial results of the first six months of 2006.
Dial-in number for the Conference Call (listen-only): +49 (0)89 2030 3244
Please dial in 10 minutes before the beginning of the conference. A replay of the conference call will be available on http://www.morphosys.com.
MorphoSys develops and applies innovative technologies for the production of synthetic antibodies, which accelerate drug discovery and target characterization. Founded in 1992, the Company’s proprietary Human Combinatorial Antibody Library (HuCALâ) technology is used by researchers worldwide for human antibody generation. The Company currently has licensing agreements and/or research collaborations with Bayer (USA), Boehringer Ingelheim (Germany), Bristol-Myers Squibb (USA), Centocor Inc. (USA), Daiichi Sankyo & Co., Ltd. (Japan), GPC Biotech AG (Germany), Hoffmann-La Roche AG (Switzerland), ImmunoGen Inc. (USA), Merck & Co., Inc. (USA), Novartis AG (Switzerland), Novoplant GmbH (Germany), OncoMed Pharmaceuticals Inc. (USA), Pfizer Inc. (USA), ProChon Biotech Ltd. (Israel), Schering AG (Germany), Schering-Plough (USA), Shionogi & Co., Ltd. (Japan), Xoma Ltd. (USA) and others. Additionally, MorphoSys is active in the antibody research market through its Antibodies by Design business unit. Antibodies by Design was founded in 2003 for the purpose of exploiting the MorphoSys non-therapeutic antibody markets. MorphoSys’ activities in the research antibody segment were significantly strengthened through the acquisition of the U.K. and U.S.-based Biogenesis Group in January 2005 and Serotec Group in 2006. From 2006 onwards, the segment will be named AbD Serotec. For further information please visit the corporate website at: http://www.morphosys.com/.
Statements included in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbour provided by Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words including “anticipates”, “believes”, “intends”, “estimates”, “expects” and similar expressions. The company cautions readers that forward-looking statements, including without limitation those relating to the company’s future operations and business prospects, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors that may affect future operations and business prospects include, but are not limited to, clinical and scientific results and developments concerning corporate collaborations and the company’s proprietary rights and other factors described in the prospectus relating to the company’s recent public offering.
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- Dr. Claudia Gutjahr-Löser
- Director Corporate Communications
- MorphoSys AG
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