company update - tradinfo · " broad partnered pipeline maximizes number of resulting...

Company Update

January 2008

Safe Harbour

This presentation includes forward-looking statements.Actual results could differ materially from those included in the forward-looking statements due to various risk factors and uncertainties including changes in business, economic competitive conditions, regulatory reforms, foreign exchange rate fluctuations and the availability of financing. These and other risks and uncertainties are detailed in the Company’s Annual Report.

Company Update | January 2008 © MorphoSys AG

MorphoSys at a Glance

! 50 antibody programs ongoing, thereof 4 in phase 1 trials, 22 in pre-clinic

! Multiple partners and indications

Broad Therapeutic Antibody Pipeline

! A leading, independent, antibody companyCompany

! HQ in Martinsried/Munich ! Therapeutic and research antibody

business units! Headcount ~300

Organization

! Profitable on revenues over $80m (2007E)! ~$150m cash! Over $600m in future revenue assured

Financials

! Frankfurt Stock Exchange (since 1999)! Member of TecDAX index (since 2004)

Listed


Recent Newsflow

Nov Dec Jan

Announcement of development of next generation

HuCAL PLATINUM

Technology package in-licensed from Dyax

Landmark $ 1 billion strategic alliance with

Novartis

CTA filed for European Phase 1 trial of MOR103

2007

Disclosure ofGM-CSF as Target

of MOR103 Program

2008


HuCAL: Leading Antibody Technology

" Antibodies can be…optimized to match therapeutic application utilizing modular design

" Antibodies are…fully human

" Ancillary proprietary technologies include…

!RapMAT – accelerated optimization,!AgX – efficient antigen production,!TRIM – trinucleotide mutagenesis

HCDR3 LCDR3LCDR2LCDR1HCDR2HCDR1

7 x HuCAL VH 7 x HuCAL VL

HuCAL®

(Human Combinatorial Antibody Library)

A vast collection or ”library“ of over 12 billion human antibodies designed to enable systematic optimization of antibody properties

Current version: HuCAL GOLD

In development: HuCAL PLATINUM

Modular gene design & construction


Robust Intellectual Property Protected by Core Patent Families

"HuCAL Library Design and Use (~2016 expiry)! 5 US Patents! 1 EU Patent (several EU states); allowance received for Divisional! 2 AU Patent! Pending applications: CA EU JP US

"TRInucleotide Mutagenesis (JHU excl. license) (~2012 expiry)! 1 US Patent; EP upheld in amended form; pending in JP, CA

"Disulfide Display (CysDisplay) (~2020 expiry)! 1 US Patent! Favorable prosecution for EU application! Pending applications: AU CA EU IL JP NO US

"Technology Development (HuCAL PlatinumTM)! Numerous applications in priority year or international phase (PCT) ! Co-exclusive access to various Dyax biologics patent families


Business Segments

Research AntibodiesTherapeutic Antibodies

" Broad partnered pipeline maximizes number of resulting products, reduces risk profile

" Proprietary, un-partnered programs offer even greater upside

" New Novartis alliance secures partnered pipeline, will finance own product development

" Built by merging:

" Top 20 supplier of research antibodies

" Platform to increase uptake of HuCAL in research community


see p. 1324 Partnered Programs

see p. 13 Various*20 Partnered Programs

Phase 1 Phase 2Pre-clinicDiscovery

Various*

CancerMOR202

Rheumatoid ArthritisMOR103

CancerNovartisn.d.

Cancern.d.n.d.

Alzheimer‘s DiseaseRocheR1450

CancerGPC Biotech1D09C3

Phase 3IndicationPartnerName

Product Pipeline

* Includes cancer, inflammatory, autoimmune, infectious, musculoskeletal & central nervous system diseases


MOR103: A HuCAL Antibody for Rheumatoid Arthritis (RA)

" Medical Need! RA patients adequately treated: Under 25%! Non-responders to anti-TNFs: 30%! Non-responders after 2 years on anti-TNF: 50%! Long-term safety issues with anti-TNFs

" Drug Candidate! HuCAL antibody vs. GM-CSF! Very high affinity and expression: potential CoGS advantage! Potential in asthma, COPD & other inflammatory conditions

" Development! Clinical material produced in PerC6 cells (Crucell/DSM)! Dec ‘07: CTA filed for European phase 1 trial ! Jan ‘08: Exclusive licence on US patent application on target

" Fully independent of Novartis collaboration


MOR202: A HuCAL Antibody for Multiple Myeloma (MM)

" Medical Need! MM accounts for 10-15% of hematological & 1% of all cancers! Few available treatment options, no curative therapies! New agents, Velcade and Revlimid, have efficacy (non-

responders) and safety issues" Drug Candidate

! HuCAL antibodies vs. CD 38, a 45kDa glycoprotein! Over-expressed on MM (95%) and some leukemia cell-lines! Compelling efficacy data in vitro and in vivo (SCID mouse)! Mechanism is ADCC plus effector cell independent

" Development! Currently defining therapeutic window, effective

dose level, stability, tox species" Fully independent of Novartis collaboration


Therapeutic Antibody Partnerships

16 renowned pharma and biotech companies are currently working with HuCAL technology and/or developing specific HuCAL drug candidates

Active Collaborations

HuCAL Program(s) Ongoing

Partner

Development, registration, commercialization

Generates & optimizes antibody

Grants exclusive license “first-come-first-served“

Partner

Provides Target

MorphoSys


Roche

Oncomed

Eli Lilly

Boehringer Ingelheim

Merck & Co.

Daiichi Sankyo

Schering-Plough

Pfizer

Astellas

Novartis

201220112010200920082007

Active Collaborations: Timelines


Partnerships: Typical Terms per Program

1 2 3 4 5 6 7 10 Years8 9

Success fee

Phase 1 milestone

Phase 3 milestone

Approvalmilestone

Royalties(mid single digits)

Exclusive licence fee + FTE support

9-12

MorphoSys costs

4

20

24

EUR millions

Number ofpartnered programs

currently at each stage


Landmark Strategic Alliance With Novartis

- MOR has options to co-develop a limited number of programs

Clinical Development

- MOR has options to co-detail those programs it co-develops in certain marketsMarketing

- Preclinical development of selected programs at MOR, funded by NOV

Preclinical Development

- Exclusive target model, first-come-first-served- Large number of program starts on NOV targets- MOR primarily responsible for lead generation &

optimization

Lead Generation/ Optimization

- GOLD + PLATINUM HuCAL libraries & related new technologiesTechnology

Primary responsibility Secondary responsibility New opportunity for MorphoSys


Financial Details

" Approx. $600m over 10 years! Approx. half ($300m) in technology license fees plus internalization fee for

HuCAL, comprising contingent double digit success payment! Approx. half ($300m) in research funding for team at MorphoSys

Committed Funding

" $1 billion, comprising! $600m committed funding (see below)! $400m in milestones (probability-weighted assessment)! Does not include royalties

Revenue to MorphoSys

" Shared costs & profits (sliding scale) on co-developed programsCo-development

" On all programsMilestones & Royalties

" 10 years, with Novartis having options to:! Extend to 12 years! Terminate after 7 years if certain technology goals are not met

Term


Partnered Programs in the Clinic

" HuCAL antibody vs. MHCII (HLA-DR) for relapsed and refractory lymphoma

" European phase 1 study at 3 sites, patient recruitment completed

" Antibody seems safe and well-tolerated

GPC Biotech: 1D09C3

" HuCAL antibody vs. amyloid-β for Alzheimer‘s Disease

" Europ. phase 1 study ongoing at 4 sites: randomized, double-blinded, in patients

" Results expected 2008 (MOR estimate)

Hoffmann-La Roche: R1450

" HuCAL antibody vs. undisclosed cancer target

" 3 years from start of project to IND

Novartis

" HuCAL antibody vs. undisclosed cancer target

" IND filing in June 2007

Undisclosed Partner


Business Segments

Research AntibodiesTherapeutic Antibodies

" Broad partnered pipeline maximizes number of resulting products, reduces risk profile

" Proprietary, un-partnered programs offer even greater upside

" New Novartis alliance secures partnered pipeline, will finance own product development

" Built by merging:

" Top 20 supplier of research antibodies

" Platform to increase uptake of HuCAL in research community


AbD Serotec: The Business

Research Antibody Market: US$ 1bn

Catalogue antibody business10,000 antibodies

Custom service businessUSP: MAbs in 8 weeks

Catalog:80% of market

Custom:20% of market

Research applications with novel targets seed new

HuCAL Rx and/or Dxopportunities


AbD Serotec: Gaining Scale

Launch Custom Service Antibodies by Design

200620042003 20072005

Acquisition of Biogenesis

Acquisition of Serotec

€0.8m

€4.3m

€18.3m

2004 2005 2006

Ranked No. 11 worldwide for customer recognition in BioCompare Survey


0.930.68Earnings per Share (diluted) in EUR

6.1*4.9Net Profit

1.22.9Income Tax Expense

7.4*7.8Profit Before Taxes

(0.3)0.9Non-Operating Income/(Expenses)

7.86.9Profit from Operations

31.237.2Total Operating Expenses

14.0

11.7

5.5

39.0

9-Months 2006

15.5S,G&A Expenses

15.7R&D Expenses

9-Months 2007In EUR millions

44.1Revenues

6.0Cost of Goods Sold

Profit & Loss Statement (Group)9-Months 2007

* Differences due to rounding


Condensed Balance Sheets (Group) 9-Months 2007

127.8*168.6*Total Liabilities100.1138.8Total Shareholders’ Equity

9.511.3Total Non-Current Liabilities18.3

127.851.710.1

66.0

12/31/2006

Liabilities18.4Total Current Liabilities

48.1Total Non-Current Assets168.6Total Assets

15.5Other Current Assets

09/30/2007In EUR millions

Assets

105.0Cash, Cash Equivalents & MarketableSecurities

* Differences due to rounding


Shareholder Structure

Novartis

AstraZeneca

Free Float

~ 7 %" Novartis

~ 5 %" AstraZeneca

~ 88 %" Free float

7,376,890Number of Shares Issued at September 30, 2007Frankfurt Stock Exchange

ISIN: DE0006632003

SE Code: MOR

Bloomberg: MOR GR


Forthcoming Events

" Update on proprietary development! MOR103 –CTA approval

! Upcoming phase 1 study for MOR103

! Update on MOR202 development plans

" Progress in partnered antibody pipeline! Maturing pipeline

! New INDs

! Clinical data from ongoing phase 1 programs

" Progress in proprietary technology development" Feb 28: 2007 results and guidance for 2008


New Deal is Transforming for MorphoSys

Value

Establish & patentcore technology

Commercialize viafee-for-servicepartnerships

Novartis alliance will:

" Drive further pipeline expansion

" Finance MOR‘sproprietary activities

Late 1990s Mid 2000s Present & Future

Thank You.

www.morphosys.com

Dr. Simon MoroneyChief Executive Officer

Phone +49 (0)89 / 899 27-311Fax +49 (0)89 / 899 27-5311Email [email protected]

Dr. Claudia Gutjahr-LöserHead of Corp. Comm. & IR

Phone +49 (0)89 / 899 27-122Fax +49 (0)89 / 899 27-5122Email [email protected]

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

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