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MorphoSys Provides Update on Pipeline Activities in 2009


MorphoSys to Accelerate the Expansion and Advancement of its Proprietary Pipeline

MorphoSys AG (FSE: MOR; Prime Standard Segment, TecDAX) today outlined its planned proprietary developments for 2009 and provided an update on its partnered antibody pipeline. The Company intends to advance and broaden its proprietary therapeutic antibody pipeline with its most advanced compound MOR103 expected to enter a phase 2 clinical trial in the second half of 2009. MorphoSys is in a robust position to increase its investment in proprietary drug development, with strong and increasing revenues from its partnered discovery business, a cash balance in excess of EUR 130 million at December 31, 2008 and no material bank debt. The Company plans to more than double its investment in proprietary R&D in 2009, and expects to record a healthy profit as in previous years.

“MorphoSys is ideally positioned to advance its pipeline in 2009”, commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. “We have a solid financial foundation, plus a proven technology and promising targets, which together give us the means of building a very strong proprietary drug pipeline. Even in this challenging economic climate, MorphoSys is ideally positioned to build value by advancing its pipeline, while maintaining profitability.”

The Company’s proprietary pipeline activities in 2009 are projected to comprise:
i) The start of a phase 1b/2a clinical trial in rheumatoid arthritis for lead compound MOR103;
ii) Finalizing the evaluation of MOR103 in a second indication and preparation for an additional phase 2 clinical trial;
iii) Formal pre-clinical development and manufacturing of clinical grade material for MOR202;
iv) The addition of up to 5 proprietary de novo programs to its pipeline, one of which was already started recently;
v) One pre-development program with Novartis - the pre-development agreement provides MorphoSys with the option to enter a formal co-development for the respective program;
vi) Validation of three targets together with Galapagos which are intended to become the subject of therapeutic antibody programs in the future.

As a result of the planned activities MorphoSys’s proprietary pipeline at year-end could consist of up to 8 programs in total, including one co-development program with Novartis - up from two fully-owned and one pre-development program in 2008.

“The expansion of our proprietary pipeline is a key value driver for MorphoSys and we expect to achieve significant progress during 2009 in this regard”, commented Dr. Arndt Schottelius, Chief Development Officer of MorphoSys AG. “By the end of 2009, we plan to have a rich proprietary pipeline based on the well-established and widely-proven HuCAL technology while enjoying the tailwind from our partner pipeline programs further advancing into clinical trials.”

The phase 1 clinical trial for MOR103 in healthy volunteers has been completed and is currently in the analysis stage. The final data will be reported in Q2 2009. Additional pre-clinical investigations of MOR103 in animal models for other inflammatory diseases are currently being conducted. MorphoSys intends to out-license MOR103 for the treatment of rheumatoid arthritis after establishing clinical proof-of-concept. With regard to the cancer program MOR202, formal pre-clinical development is ongoing. In 2009, toxicology studies will be conducted to support regulatory filing for a phase 1 clinical trial. Production of clinical material for MOR202 and MOR103 for the phase 1 and 2 trials, respectively, will continue during the course of 2009. Recently, MorphoSys added one de novo HuCAL antibody program to its portfolio against an undisclosed oncology target. In 2009, MorphoSys anticipates antibody generation and in depth in vitro profiling of target-specific antibody candidates. One additional oncology target has already been selected and the respective antibody program will be started in the course of 2009. Further targets in inflammatory and oncology indications will be evaluated in 2009, which may be the basis for further proprietary HuCAL programs.

Complementing its portfolio of fully owned programs, MorphoSys has secured several co-development options in its partnerships with Novartis and Galapagos and will continue to evaluate additional opportunities. Within these programs, development costs are shared equally or, in the case of MorphoSys’s partnership with Novartis, early-stage costs are fully covered by the partner. In 2008, MorphoSys exercised its first option to participate in the development of a therapeutic antibody program within its collaboration with Novartis. The agreement provides MorphoSys with the option to enter formal co-development of the program, sharing costs and profits up to 50%. As a result of the alliance signed with Galapagos in November 2008, an initial set of three targets has been selected for validation through disease-specific in vitro and in vivo testing with antibodies provided by MorphoSys. If these studies are successful, the alliance will select antibody programs for pre-clinical and clinical development. Under the terms of the agreement, Galapagos and MorphoSys will share the research and development costs, as well as all future revenues, equally. In 2009, Galapagos will conduct the production of these three proteins for the alliance and MorphoSys will generate antibodies directed against the targets. Additionally, Galapagos will apply its target discovery platform during 2009 and the parties may select additional targets for subsequent joint target validation studies.

Summarizing all planned activities, MorphoSys today provided a snapshot of the status of its proprietary pipeline envisioned for the end of 2009: The Company anticipates having three targets in validation studies jointly with Galapagos, up to six proprietary compounds in the discovery stage including one co-development program with Novartis, one program in formal pre-clinical development, and one antibody in a phase 2 study. Of the total 2009 R&D budget, approximately half, or EUR 18 million - EUR 20 million, will be invested in proprietary drug and technology development. The majority of this investment is earmarked for the further development of MOR103 and MOR202.

Additionally, the Company will continue to evaluate opportunities to acquire or in-license drug candidates from third parties, potentially exploiting its strong balance sheet to secure attractive opportunities. These activities could significantly increase the value of MorphoSys beyond the plans outlined today.

“We expect our revenues to continue to grow, enabling us to channel significant funds into our proprietary R&D”, commented Dave Lemus, Chief Financial Officer of MorphoSys AG. “We are in a sound financial position to create new value for our shareholders by investing in selected pipeline programs. We anticipate making investments in 2009 of approximately EUR 18 million to EUR 20 million in proprietary R&D. Even with this substantial increase in R&D investment, we expect to maintain a healthy level of profit.”

Meanwhile, the Company’s partnered pipeline continues to progress. The partnered pipeline is distinguished from proprietary activities by the fact that the former is fully funded by the Company’s partners. As of the beginning of 2009, MorphoSys’s partnered pipeline consists of 55 partnered programs, including one program in phase 2 clinical trials. The partnered pipeline is the source of ongoing milestone payments and will provide lucrative royalty streams in the years to come.

As part of the expansion of its proprietary and partnered development efforts, MorphoSys intends to further build its R&D team. As a result, the Company is expecting to hire more than 40 new employees in R&D in 2009, mainly at the Group’s headquarters in Munich, Germany.

MorphoSys will provide further details around its pipeline activities and give financial guidance for the full year at its year-end 2008 Results Press Conference and Analyst Meeting in Frankfurt, Germany on February 26, 2009.

MorphoSys is a publicly traded biotechnology company focused on the generation of fully human antibodies as a means to discover and develop innovative antibody-based drugs against life-threatening diseases. MorphoSys’s goal is to establish HuCAL as the technology of choice for antibody generation in research, diagnostics and therapeutic applications. The Company currently has therapeutic and research alliances with the majority of the world’s largest pharmaceutical companies including Boehringer Ingelheim, Centocor/Johnson & Johnson, Novartis, Pfizer and Roche. Within these partnerships, more than 50 therapeutic antibody programs are ongoing in which MorphoSys participates through exclusive license and milestones payments as well as royalties on any end products. Additionally, MorphoSys is active in the antibody research market through its AbD Serotec business unit. The business unit has operations in Germany (Munich), the U.S. (Raleigh, NC) and U.K. (Oxford). For further information please visit

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM® and RapMAT® are registered trademarks of MorphoSys AG

This communication contains certain forward-looking statements concerning the MorphoSys group of companies. The forward-looking statements contained herein represent the judgment of MorphoSys as of the date of this release and involve risks and uncertainties. Should actual conditions differ from the Company’s assumptions, actual results and actions may differ from those anticipated. MorphoSys does not intend to update any of these forward-looking statements as far as the wording of the relevant press release is concerned.


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