Dr. Claudia Gutjahr-Löser, Head of Corporate Communications & IR, MorphoSys AG

Transcription

1 MorphoSys AG Q Conference Call Text 7 November 2014 The spoken word shall prevail. Dr. Claudia Gutjahr-Löser, Head of Corporate Communications & IR, MorphoSys AG Slide 2: Safe Harbor Good afternoon and good morning and welcome to our Q conference call and webcast. I am Claudia Gutjahr-Löser, Head of Corporate Communications and Investor Relations of MorphoSys. For the participants of the conference call, you will find the slide deck of this presentation on our corporate website. Before we start the presentation, I have to remind you that during this conference call we will present and discuss certain forward-looking statements concerning the development of MorphoSys s core technologies, the progress of its current research programs and the initiation of additional programs. Should actual conditions differ from the Company s assumptions, actual results and actions may differ from those anticipated. You are therefore cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Slide 3: Today on the Call With me today are Simon Moroney, our Chief Executive Officer, Jens Holstein, our Chief Financial Officer, and Arndt Schottelius, our Chief Development Officer. Simon will start by giving you an operational overview of the first nine months, before Arndt will address the ASH abstracts which were released yesterday. Before we open the call for your questions, Jens will review the financial results of the first nine months of Afterwards, Simon, Arndt and Jens will be available to answer your questions on these topics. I would now like to hand over to Simon Moroney. MorphoSys AG - Q Conference Call Manuscript Page 1 of 15

2 Dr. Simon Moroney, CEO, MorphoSys AG Thank you Claudia, and also from me, a warm welcome to the call. Q3 has been another quarter of significant progress for MorphoSys. As usual, I ll start by running through the most important events. Slide 4: Major Topics in Q Starting with our proprietary portfolio, a highlight was the addition of a new program, which came about through our agreement with Emergent BioSolutions on the joint development and commercialization of MOR209/ES414. We talked about this deal on a call held on August 20 th, so I won t go into it again in detail now. I will however remind you that MOR209 is a bi-specific antibody for prostate cancer, which is about to enter Phase 1 clinical development. We expect the trial to start around year-end. Arndt will provide an update on the other clinical development programs in his part of the presentation. Turning now to our discovery activities, in October, MorphoSys announced the acquisition of Lanthio Pharma s lanthipeptide technology. As a reminder, lanthipeptides are small, constrained cyclic peptides which can be produced either chemically or recombinantly. Our decision to exercise an option in the original agreement with Lanthio Pharma was based on a feasibility study which convinced us that we could make and screen libraries of lanthipeptides. This technology brings us a capability which is complementary to our antibody platform. Because of their smaller size, lanthipeptides can be used to target new epitopes. In addition, lanthipeptides are potentially orally available, with an antibody-like ability to inhibit proteinprotein interactions, which is very difficult with small molecules. In this regard, the lanthipeptide platform is absolutely complementary to our antibody capability. This transaction is based on an investment in Lanthio Pharma from our Innovation Capital program and exemplifies how we intend to use strategic investments into promising young biotechnology companies. This quarter, we announced that we had been awarded a research grant of up to 1 million from the German Federal Ministry of Education and Research. The grant will support the discovery and development of therapeutic antibodies against two G protein-coupled receptors. Slide 5: The MorphoSys Proprietary Portfolio Altogether, in our Proprietary Development segment, we now count 10 active programs, of which three MOR103, MOR202 and MOR208 are in clinical development. At this point it s worth mentioning that we have completed the transition of all of our proprietary discovery programs to the new Ylanthia platform. We have conducted a detailed comparison of Ylanthia with our HuCAL Platinum library, and shown that Ylanthia consistently yields a superior output in terms of the diversity of antibodies we generate and the requisite drug-like properties of those antibodies. MorphoSys AG - Q Conference Call Manuscript Page 2 of 15

3 Slide 6: The MorphoSys Pipeline - 21 Clinical Programs, 94 Total Let s look now at our Partnered Discovery segment. During Q3 we received a milestone payment from Novartis in connection with the initiation of a Phase 1 clinical trial in the field of diabetic eye diseases. This new program brings to 9 the number of our antibodies in clinical development at Novartis. Shortly after the end of the third quarter, we received a milestone payment from our partner Janssen Biotech for the start of phase 3 clinical development of guselkumab. Janssen has announced that they will conduct three Phase 3 studies of guselkumab in mild-to-moderate psoriasis patients, in a total of more than 2,000 patients. Completion is scheduled for In total, our partnered and proprietary pipeline currently comprises 94 therapeutic antibody programs, of which 21 are in clinical development. Of the 21 programs in the clinic, three are in Phase 3 clinical development, ten are in Phase 2 and eight are in Phase 1. That completes my overview of the operational highlights of the quarter. Now over to Arndt for the update on our proprietary portfolio. Dr. Arndt Schottelius, CDO, MorphoSys AG Thank you, Simon, and also from me a warm welcome to the call. Slide 7: ASH 2014 Abstracts on MOR208 & MOR202 The abstracts for this year s ASH conference were published yesterday evening. We are looking forward to presenting a clinical and preclinical data package at the conference in December on our MOR208 and MOR202 programs. We have published three abstracts with data, and I would like to quickly summarize the results for you. Slide 8: MOR208 Demonstrates Preliminary Efficacy in DLBCL, FL and inhl The first abstract covers the ongoing phase 2 trial of MOR208 in NHL. The open-label phase 2 study was designed to assess the efficacy and safety of single-agent MOR208 in patients with relapsed or refractory NHL previously treated with rituximab, who were not candidates for high-dose therapy with stem cell support. Please bear in mind that we are looking at four different subtypes of NHL, namely diffuse large B-cell lymphoma, follicular lymphoma, mantle cell lymphoma, and other indolent NHL. The abstracts covers the efficacy results for the 51 patients enrolled in stage 1 and the safety for 85 patients enrolled to date in stages 1 and 2 of this trial. The investigator assessed overall response rate in stage 1 over all NHL subtypes was 24%, with responses observed in the DLBCL, FL, and the other indolent NHL cohorts, as listed on the table on slide 8. To summarize the safety profile, MOR208, is well tolerated without significant infusion toxicity and demonstrates preliminary efficacy in patients with relapsed/refractory DLBCL, FL, and inhl. MorphoSys AG - Q Conference Call Manuscript Page 3 of 15

4 The data we have generated so far in NHL provide strong support for the MOR208 program. The signal searching approach we applied to this study has identified in particular diffuse large B-cell lymphoma and follicular lymphoma as valuable development options for this compound. We will present updated data on this trial at the ASH meeting. We expect to complete recruitment for the phase 2 study of MOR208 in NHL shortly. At the moment, we are actively planning additional phase 2 studies for MOR208 in combination therapies, focusing on DLBCL and indolent lymphoma including follicular lymphoma. As announced this morning, MOR208 received fast track designation from the FDA for the treatment of DLBCL. The more frequent interactions with the FDA that this enables will help us to expedite the development of MOR208 in this particular subset of non-hodgkin s lymphoma patients. Slide 9: MOR208 Final Results for Phase 1/2a Trial in CLL/SLL The second abstract on MOR208 summarizes the final results of the completed phase 1b/2a trial of MOR208 in CLL. In total, 27 patients were enrolled, with a median age of 66 years. The patients were generally high risk, and heavily pretreated with a median number of 4 prior therapies. Toxicity of MOR208 was modest with no maximum tolerated dose identified. The efficacy of MOR208 in this trial was encouraging, with 67% of patients achieving a partial response by clinical criteria and 30% using IWCLL 2008 criteria. These response rates are impressive, especially for a single agent antibody and compare favorably with results for rituximab given on a weekly schedule as well as ofatumumab and obinutuzumab in the relapsed CLL setting. Responses to MOR208 were fairly durable as well, especially given the limited duration of exposure to the drug in most patients. Response duration was prolonged in those receiving maintenance therapy which suggests that a longer duration of antibody administration is reasonable in future trials. Slide 10: MOR202 Preclinical Results Demonstrate Synergies with Pomalidomide The third abstract covers additional pre-clinical studies of MOR202 in combination with the immunomodulator pomalidomide. The cytotoxic activity of MOR202 on multiple myeloma cells was enhanced and synergized when combined with pomalidomide via multiple mechanisms, namely direct cytotoxicity, CD38 up-regulation and activation of effector cells. These results provide a mechanistic rationale for combining MOR202 and pomalidomide. As previously communicated, we have added two additional cohorts to the ongoing MOR202 trial, where we will test MOR202 in combination with pomalidomide and with lenalidomide. These studies will start in Q1 of Slide 11: MOR103 MS Data Presented at ACTRIMS Before I hand over to Jens, I wanted to mention MOR103 briefly. Clinical data for the MOR103 program from the phase 1b study in multiple sclerosis were presented in September at the ACTRIMS-ECTRIMS meeting. The data showed that MOR103 is well tolerated in MS patients, MorphoSys AG - Q Conference Call Manuscript Page 4 of 15

5 and some hints of activity were observed. Presentation of these results marked the last of our direct responsibilities for the MOR103 program, which is now fully transferred to GSK. That completes my overview. I will now hand over to Jens for the financial review. Jens Holstein, CFO, MorphoSys AG Thank you, Arndt. Ladies and Gentlemen, also from my end, a warm welcome to our Q conference call and many thanks for your interest in MorphoSys. As you are used to, I will start my report with a summary of the most important financial figures of the first nine months of 2014 before coming to our recently updated guidance for the full year of Slide 13: Consolidated Income Statement (IFRS) Total Group revenues from continuing operations amounted to 46.9 million for the first nine months of 2014, compared to 63.6 million in the same period of the previous year. You might recall that we have been able to sign a number of very important agreements in the first nine months of At the beginning of 2013, we sold our subsidiary AbD Serotec to BioRad and signed a license agreement in connection with this deal for the use of HuCAL for research and diagnostic purposes. In June, we then signed contracts with GlaxoSmithKline for MOR103 and with Celgene for MOR202. Specifically the agreement with GSK contributed more than 20 million to our topline in 2013 explaining the decrease we see in comparison to this year s revenues. Moving towards our expenses, total operating expenses from continuing operations remained essentially at the level of the previous year, amounting to 51.1 million. Our expenses for research and development increased to 40.8 million, with personnel expenses and costs for external laboratory services being the biggest cost blocks. Investments in proprietary product and technology development during the first nine months amounted to 26.1 million as compared to 24.1 million in the previous year. Selling, general and administrative expenses amounted to 10.3 million in the first nine months of 2014, compared to 13.2 million in 2013, with the decrease driven by lower expenses for personnel and external services as well as some re-allocations of costs. In the first nine months of 2014, the EBIT from continuing operations amounted to minus 3.7 million, in comparison to a positive 14.6 million for the same period of the previous year. A net loss of 2.0 million was generated by our continuing operations in the first nine months of 2014, compared to a net profit of continuing operations of 10.9 million in the first three quarters of The net loss for the Group amounted to 2.0 million, compared to a Group net profit of 16.9 million in the same period of the previous year. The 2013 Group net profit comprised a one-time disposal gain in connection with the deconsolidation of AbD Serotec, which was booked in Q1 of MorphoSys AG - Q Conference Call Manuscript Page 5 of 15

6 The resulting diluted Group earnings per share amounted to minus 8 Euro Cent, compared to 68 Euro Cent in the previous year. Slide 14: Segment Reporting Let s now have a closer look at our two business segments. The Partnered Discovery segment generated revenues in the amount of 35.5 million in the first nine months of 2014, compared to 40.5 million in the previous year. The segment s revenues from funded research and licensing fees decreased by 12 % to 33.1 million, a result of the previously mentioned one-off effect in connection with the sale of AbD Serotec in the first quarter of Revenues from success-based payments decreased to 2.4 million in the first nine months of 2014, compared to 3.0 million in the previous year. In this figure, the recently announced milestone from Janssen Biotech for Guselkumab is not included. Operating expenses in this segment decreased to 17.2 million. The EBIT amounted to 18.3 million, an EBIT margin of 52 %. The Proprietary Development segment achieved revenues of 11.5 million in the first nine months of this year, compared to 23.0 million in the same period of This year s revenues in the segment were generated from our co-development activities with Celgene in connection with MOR202. Operating expenses in this segment increased from 20.8 million in the first three quarters of 2013 to 24.2 million this year. Slide 15: Balance Sheet On October 31, 2014, MorphoSys held liquid funds and marketable securities as well as other financial assets in the amount of million, compared to million on December This decline in the cash position was driven by the upfront payment made to Emergent in connection with the in-licensing of MOR209, the re-purchase of shares for the company s long-term incentive programs and, finally, a result of the use of cash for our operating activities. Slide 16: Guidance 2014 Before we open the call for your questions, we would like to re-confirm our updated financial guidance issued on October the 22 nd, for the full year We anticipate total Group revenues at the upper end of our guidance range of 58 to 63 million and an EBIT of between minus 5 and minus 8 million. Main reasons for the change are the receipt of a milestone payment from Janssen for the start of three phase 3 trials with Guselkumab, as well as a partial shift of proprietary development expenses to Our strong balance sheet allows us to invest in our existing development programs as needed and to invest also in the acquisition or co-development of compounds coming from third parties as shown with the recent MOR209 deal. Looking beyond 2014, those activities will increase the amount of money we invest in proprietary R&D. To increase our investments in R&D is a deliberate and careful choice. MorphoSys intends to do this in areas where we see compelling opportunities to create long-term value. To summarize: 2014 is another successful year, both operationally and financially, fulfilling or exceeding our set goals. We are very satisfied with the performance in the first nine months MorphoSys AG - Q Conference Call Manuscript Page 6 of 15

7 2014 and we are optimistic for the future, too. The company intends to create value with its R&D investments and we are continuously striving to do so with our two business activities, the partnered business and our proprietary development activities. Ladies and Gentlemen, that concludes my review for the first nine months of 2014, and I ll now hand back to Claudia for the Q&A session. Dr. Claudia Gutjahr-Löser Thank you. We will now open the call for your questions. Diana Na, Analyst, JPMorgan: Hi. Thanks for taking my questions. I have three questions, please. First, could you comment on how the phase 2 trial recruitment is going for MOR208 in the ALL indication? And with Amgen's blinatumomab having recently received FDA priority review, what do you think you can do to speed up the development process there? And secondly, for MOR208 in NHL, to help us sort of put things into context, could you perhaps comment on what level of historical response rate one would normally see in NHL patients from the relapse and refractory setting using current available therapies? And just finally, on MOR103, with GSK recently announcing cost savings, how committed do you think they are with the program, given that it's been more than a year since they've inlicensed this asset but still haven't announced any new trials yet? Many thanks. Dr. Simon Moroney: Those -- I think they're all questions, Arndt, that you'd like to take those on? Dr. Arndt Schottelius: Yes, yes. Sure. Diana, thanks for those questions. I'll start with the -- your first question was MOR208, the phase 2 recruitment in ALL. As we announced at the Q2, we are slightly behind schedule there. We have added sites to the trial. There's still interest in the trial to make this in time. We're still also operationally on track with their recruitment, slightly behind. So, with the addition of additional sites, also with the data that we have now presented, of course, also shared with the investigators, I think there's optimism that this can speed up things here. Of course, you're right with blinatumomab here. That's been good data. That's up there. There's always, of course, competition with those sites. So, it's up to us, which we're doing very actively to talk to those sites, travel there, motivate, explain, share the data, and so on. MOR208, Diana, you had your question about kind of benchmarking what one would expect in the NHL setting. And maybe, since we kind of are focusing on the DLBCL data, also with the fast-tracked announcement, let me just share a few data here in the NHL setting that's out MorphoSys AG - Q Conference Call Manuscript Page 7 of 15

8 there. Of course, it's one thing how you compare that, apples to apples. The fairest comparison to other would be same target, like MEDI-551, also single agent, which is in the range slightly below what we have seen in terms of overall response rate. Of course, there is other molecules out there. You know the Sanofi ADC, coltuximab, the one from Seattle Genetics, those are slightly above the overall response rate we have seen. But, keep in mind, these, of course, should not be -- at least in my mind -- not be seen as single agent. They are ADCs. They're already combined with a chemotherapeutic agent. They're around kind of the 30% to 35% overall response rate. Maybe to include CLL in that setting, which in a way is also -- belongs to the family here, of course, to the lymphomas and leukemias, there, you might have seen in the published Byrd Blood paper on the final data in CLL, our data in both criteria, the new CLL 2008 criteria and NCI 1996, compare quite favorably, as well with the on-target competitor MEDI-551. Remember, we had in the highest dose 38% response rate, which is lower. MEDI- 551 has also been in the same range with or slightly lower, lower for ofatumumab, and this is kind of same range, slightly lower, obinutuzumab in phase 2. So, also here, I think we compare favorably and hope that gives you kind of an overview of the benchmarking, what to expect. Then I think your last question was MOR103 GSK. Yes, they have announced cost savings, of course, like many of -- in the industries. We see no change in commitment there whatsoever. I think we all realize they're really focusing, maybe even more so, in inflammatory diseases. Paul Peter Tak, who runs that shop there with immune-inflammation, is very committed. I think one has to understand that companies that size usually don't give detailed updates where they exactly stand. So, I wouldn't make anything negative out of that. We're basically on our way to, again, meet with them. That, we do regularly. We have seen no change in their commitment. I think we are convinced they are as committed as in the beginning. Diana Na: Great. Thank you so much. Sarah Potter, Analyst, BofA Merrill Lynch: Hi there. It's Sarah Potter from Bank of America. Thank you for taking my questions. I've got two on financials and two on MOR208, please. So, firstly, on the financials, thinking about the costs, your release mentioned shifting some proprietary costs from 2014 into I wondered if you could talk a little bit more about what these costs specifically relate to. And then looking ahead, your R&D appears higher in this quarter. So, how much of the EUR 17 million relates to one-off impairments? And how should we think about the quarterly R&D run rate going forward versus the historic run rate of EUR 11 million or EUR 12 million? And then moving onto MOR208, congratulations on the fast-track designation. I was just wondering if you could remind us of the procedure to apply for breakthrough therapy status. Do you have to have a certain amount of data before this can be requested? And when can we expect further color on the additional phase 2 combination trials that you talk about with MOR208? Thank you. Jens Holstein: Yes, Sarah. This is Jens. Thanks for your questions. I'll start with the two financial ones first. Regarding the cost shifts, as you know, we have a couple of co-development activities. We MorphoSys AG - Q Conference Call Manuscript Page 8 of 15

9 changed a little bit the plans for MOR202 throughout the year. That influenced a little bit the volatility of our figures. And specifically in the area of production of material, we had -- it's becoming that more challenging to really get the right sort of planning for our spending for those trials. So, you have always that slight shift of costs, which we have seen this year. And as I said, it's mostly driven to material impacts here really. In terms of the run rate and how much you can expect, basically, that's what my understanding is what you wanted to address, what the run rate is going forward for the next quarters, specifically for then the full year of 2015, that's actually very difficult to talk -- to say at this point in time. Our R&D spend depends very much on the plans for our proprietary assets, namely MOT208, MOR209, MOR202, and MOR106. And we have added programs here. MOR209 is a totally new one which we have added. MOR106 will create some costs, as well as our co-development activity together with Merck Serono. And then specifically, on MOR208, with the data which we have presented today and forthcoming data, which we're intending to present, which in our view looks very encouraging, we plan to add additional trials going forward. And therefore, you should expect that we will increase our R&D spend in And details to those plans, we still have to be -- we still have to announce. And based on those, I'm able to give you a clearer guidance on our R&D spend beginning of next year. Dr. Simon Moroney: And maybe related to that, let me just pick up, Sarah, on your fourth question. And then I'll hand over to Arndt for that regulatory question on breakthrough therapy designation. So, regarding details on the combo trials for MOR208, again, I think latest at the year-end results conference in February of next year, we would intend to communicate those details as part of a larger picture of what we plan to do in R&D next year. Arndt? Dr. Arndt Schottelius: And then, Sarah, on the question fast track, I think you asked about the procedure, what is needed for breakthrough. As you rightly pointed out, usually, you wait -- one waits a little longer. There's sufficient amount of data together that is also -- has a certain maturity status to apply for that. These are very different and separate application procedures. We did apply for a fast track this time, which we got and, of course, are very happy. We can now interact with the FDA more regularly. This will expedite the program altogether. That, of course, by no means excludes any breakthrough. We want to wait until the data matures more and see where the data is. Of course, one has to convince oneself that it is mature and strong enough to go for breakthrough. Everything is open here. We are happy with the fast track right now. That helps us to interact with the FDA right away. And breakthrough, of course, is still an open option. Sarah Potter: That's great. Thank you very much. MorphoSys AG - Q Conference Call Manuscript Page 9 of 15

10 Igor Kim, Analyst, Close Brothers Seydler: Hello, everyone. I have a few questions. The first one is regarding the SG&A costs. It's been much lower compared to the prior year and the first nine months. So, what should we expect for the last quarter? I suppose a similar run rate that we saw in the first three quarters. And the second question, could you probably shed more light regarding your new partner program with Novartis? Could you provide some color regarding a future timeline? And when should we expect the next milestone from this program? And the third question is regarding guselkumab. Janssen started the phase 3 trial in October. So, did they inform you when they expect the filing or any further hints regarding further development? Thank you. Jens Holstein: Let me quickly start with the question on the SG&A costs, Igor. Thanks very much for the question. I would expect for the last quarter something which is in the range of last year and the run rate which we have seen for the first three quarters. The last quarter's always a little bit higher in comparison to the first three quarters. So, the sort of difference you have seen between the total cost for SG&A in the first nine months of this year in comparison to last year is sort of different, which you could apply also for the total cost of 2014 in comparison to Dr. Simon Moroney: And, Igor, regarding the second and third questions, so, the new program with Novartis, unfortunately, we can't say more about this than we've already said, that it's in the area of diabetic eye diseases. We're not able to disclose the target at this stage. I think you can assume it's a normal phase 1 study that's being conducted there. But, you'd have to go to Novartis to ask for any guidance regarding timelines and potential next events in that development program. It's not something that we can share at this stage. Regarding guselkumab, here, Janssen is on record actually publicly as saying that this is one of a number of compounds that they intend to file within the time period leading up to So, I think based on that information, we would anticipate that, if all goes well, obviously, in the trial that it could be ready for filing in Igor Kim: Okay. Thanks. Steve Chesney, Analyst, Goldman Sachs: Afternoon, gentlemen. Thanks for taking my questions. Steve Chesney from Goldman Sachs. Just wanted to ask two questions on MOR202 if I could. Just kind of leafing through the ASH abstracts, it looks as if your competitor Genmab has submitted an abstract for daratumumab. Now, this is in vitro, and it kind of purports to compare an analog of MOR202 and other anti- CD38 antibodies to daratumumab. And their conclusions are essentially that daratumumab is the only one efficiently -- capable of efficiently inducing complement-dependent cytotoxicity. And they go on to theorize that that's key for efficacy for multiple myeloma in the clinic. I'm MorphoSys AG - Q Conference Call Manuscript Page 10 of 15

11 wondering if you guys have kind of seen that paper, seen that abstract and just kind of get your takeaway on the data. And then, obviously, we're going to be seeing more daratumumab and more data from Sanofi at the ASH conference as well. Wondering if you can give us just a quick update on when you think we might be seeing data for MOR202. Thanks very much. Dr. Arndt Schottelius: Steve, I'll take that -- both questions on MOR202. Your first was the -- which, of course, we have seen -- the abstract from Genmab comparing the different CD38s in vitro. Let me preface with some caution here. What was done is, first of all, making the antibodies, including our CD38, in a different framework that we use that makes the comparison, I think, somewhat limited. And let me jump right to the question about CDC. Your question really was, what does that mean? How does our compare in the comparison? It was described MOR202 has lower CDC. Of course, we have communicated that all along. We maintain our opinion that it yet to - - remains to be seen how the CDC component of a CD38 really relates -- translates into the clinic. Keep in mind, ofatumumab, for example, big buzz about the CDC here, how that would translate into the clinic. I think we really haven't seen that. I think we have a very strong ADCC, ADCP antibody. Nothing changed here with our optimism to the data that we will be presenting next year -- that's the question you have. As we said at the last Q2 call, we are adding the combination cohorts right now. We are looking more to pharmacologically explore the different dosing regimens, having added dexamethasone. And as we said, we haven't decided on the conference yet, but we will present clinical data next year. Steve Chesney: Thank you. Jason Kantor, Analyst, Credit Suisse: Great. Thanks for taking my question. A bunch of them have been asked. But, I'm just wondering, on the MOR208 data at ASH, are we going to get full data from stage 2 when that data's actually presented at the conference? And secondly, the chart that you showed from the abstract in your presentation has quite a number of patients listed as unknown. And I'm wondering, if you back out those patients, the response rates are actually quite high. So, are those patients that just have yet to be scanned, and we don't know, or how should we think about those patients and what you think the real response rate is, for example, in DLBCL? Dr. Arndt Schottelius: Yes, Jason, I think I'll take those questions for MOR208. First, you asked about, will we see full stage 2 data for the different subforms? No, not yet. This was data cut kind of around February. We have said that we are getting close to recruiting for two subforms that we have following up, follicular lymphoma, DLBCL, recruiting the stage 2 by the end of the year, but we won't have all the data ready for the poster already. That will mature more. But, there will be more patients included. And I think your question about the unknown patients - that is a mixture. It's some of those patients that haven't made it to the assessment points or have MorphoSys AG - Q Conference Call Manuscript Page 11 of 15

12 dropped out. And we will give details at the poster. So, you're right. When you look at the full picture of the valuable patients that could slightly change. And I think let's wait for the poster, where we give all of the details. Hope that answers your questions, Jason. Jason Kantor: Certainly. Thank you. Mark Pospisilik, Analyst, Kempen & Co.: Hi, hello, everyone. Thanks for taking my question. Just one more on MOR208, just qualitatively. Love to get your comments on how you see the positioning of MOR208, in particular with respect to newer agents in hematological cancers, such as ibrutinib. Dr. Arndt Schottelius: I'll be glad to take that question. So, in terms of, Mark, your question -- thanks for that. In terms of ibrutinib, of course, great success can be combined with the anti-cd20s out there. Let me kind of make a broad statement. I think what we really like with our MOR208 antibody, it has such good safety profile, it can be easily combined with any chemotherapeutic agent, any of the newer and upcoming TKIs, small molecules that are out there. Any of those combinations are thinkable. You can imagine we go through those iterations, think about all combinations. And as Simon already said, we would update you on the first combo trials we will be starting next year, probably at the February conference. So, does that answer your question, Mark? Mark Pospisilik: No, that's helpful. I know it's early days, and you guys are still waiting to see the data before making concrete decisions. So, that's helpful. Thanks. Olav Zilian, Analyst, Helvea Baader Bank: Hi there. Thank you for taking my question. It's actually a follow up to a previous one regarding the CD38 environment. So, could you please comment on that, where you see benefits of the different antibodies or the risks and how you will position your antibody going forward? Any hints are welcome. Dr. Simon Moroney: And maybe I can start just before maybe Arndt wants to add something to that. I think it's a little bit early to say at this stage. We haven't yet released any clinical data from MOR202, our program. And therefore, it's a little bit difficult, obviously, to compare MOR202 with the Sanofi and the Genmab programs. But, there's definitely a three-way race ongoing at the moment in this space with those three different antibodies. And obviously, we're keen to see how our MorphoSys AG - Q Conference Call Manuscript Page 12 of 15

13 clinical data from the ongoing trial, when it's complete, compares with those two other compounds. But, at this stage, I think it's just a little bit premature to draw any conclusions about how these compounds could be positioned relative to each other. Arndt, I don't know whether there's anything you want to add, any additional color around that? Dr. Arndt Schottelius: No, I think you said the most important points. Olav, if you were looking for potential kind of differentiators, of course, one way would be to go with different combination partners, just to hint at the mechanistic rationale we've provided with our preclinical abstract. And as we said, of course, we will go in those combinations with pomalidomide. That will be interesting to see how that will be different than some of the other combination partners used. Also, what helps to differentiate and position, of course, are also convenience, if you think about infusion time. Here, we have a consistent two-hour infusion time. I think it's known out there that, for example, the Genmab antibody has had different times and longer. So, these are some of the aspects that will help to position in the future. Olav Zilian: So, may I add here -- how do these antibodies compare with respect to the toxicity? Can they be potentially equally combined with chemotherapeutics? And how would this class of monoclonal antibodies compare with the antibody-drug conjugates for multiple myeloma? Dr. Arndt Schottelius: Yes, maybe just in light of what Simon just said, since, Olav, we haven't presented any data yet, of course, we cannot comment on our safety. In principle, if I understand your question correctly, of course, there are naked antibodies, not ADCs. So, they can be combined, which we see. That's expected. That will be the new treatment paradigm. I think that's clearly evolving, the combination of CD38s with active agents, here, the IMiDs and immunomodulators. And so, I think that will be the main route of development. Olav Zilian: And with respect to the risk-benefit profile, how would the naked antibodies compare with the ADCs? Dr. Arndt Schottelius, MorphoSys AG, CDO Well, I think it's expected -- again, kind of a general comment, the ADCs, we have seen that to take the -- it's true for the CD38 but also CD19. You would expect a higher toxicity with the ADCs. Clearly, let me give the CD19, an example, where you see clear ocular toxicity, depending. It's always, of course, depending on the agent that is linked there. So, yes, the ADCs will have more difficult safety, of course, than the naked antibodies. MorphoSys AG - Q Conference Call Manuscript Page 13 of 15

14 Olav Zilian: Okay. Thank you very much. Victoria English, MedNous: Yes. Simon, apologies for taking you way from -- or us away from the cancer subject. But, I was wondering whether there'll be anything to say between now and the end of the year on gantenerumab with Roche. Dr. Simon Moroney: Thanks, Victoria. Not that we're aware of. So, it's -- as you know, it's in an ongoing Phase III trial -- actually, two ongoing Phase III trials at the moment. So, we anticipate that we probably won't hear anything about that until those trials are completed, the first of which will be in 2016 and the second of which will be in Victoria English: Thank you very much. Mick Cooper, Analyst, Edison: Good afternoon, everybody. A couple of questions. Firstly, following the deal with Emergent, are you -- and the MOR106 advancing to formal preclinical, are you comfortable with the -- with how your pipeline developing, or do you still feel that you need to in-license or would like to in-license a further product? And secondly, for Jens, could you give us an update on where you expect the cash to be at the end of the year? You had a bit more cash than I was forecasting at this stage. Dr. Simon Moroney: Yes, Mick, let me start with that. Many thanks. We're always on the lookout to add compounds to the pipeline. We feel very good about what we have. We like the programs. Having said that, we have capacity. And we have the resource to engage in more programs. And therefore, there's a constant ongoing business development process here to try and identify new programs that we can bring in. And that will continue. We never give guidance, of course, on what to expect when. But, just so that you know, we're constantly on the lookout for new programs. So, you shouldn't be surprised at any stage if we were to announce such a new inlicensing arrangement. MorphoSys AG - Q Conference Call Manuscript Page 14 of 15

15 Jens Holstein: And then on the back -- thanks, Mick, for the question. On the back of that message, we have the financial resources, as you know, to do so. Our expectation towards the year-end cash figures in the range of EUR 345 million to EUR 355 million. Mick Cooper: Thanks very much. Dr. Simon Moroney, CEO, MorphoSys AG Closing Remarks Thank you. To conclude the call I d like to remind you of the key messages. The quarter just completed has seen excellent progress in our product pipeline. We ve added a further proprietary program, MOR209, to our portfolio, a new Novartis program becomes the 21 st clinical candidate, and Janssen s guselkumab becomes the 3 rd phase 3 program, and we just received fast track designation for MOR208 in DLBCL. Second, our technology capabilities are strengthened by the full implementation of our Ylanthia platform and the acquisition of Lanthio Pharma s lanthipeptide technology. And finally, our strong operational performance is mirrored in the improved financial guidance which we recently communicated and re-confirm today. Claudia Gutjahr-Löser, Head of Corporate Communications & IR, MorphoSys AG That concludes the call. If any of you would like to follow up, we are in the office for the remainder of the day. Thank you for your participation on the call and goodbye. HuCAL, HuCAL GOLD, HuCAL PLATINUM, CysDisplay, RapMAT, aryla, Ylanthia and 100 billion high-potentials are registered trademarks of MorphoSys AG. Slonomics is a registered trademark of Sloning BioTechnology GmbH, a subsidiary of MorphoSys AG. MorphoSys AG - Q Conference Call Manuscript Page 15 of 15