Transcript of Speech and Q&A Conference Call Q2 - MorphoSys

MorphoSys AG – Q2 2012 Conference Call Text 

August 2, 2012 

The spoken word shall prevail. 

Mario Brkulj, Senior Manager Corporate Communications & IR, MorphoSys AG 

Slide 2: Today on the Call 

Good afternoon and welcome, this is Mario Brkulj, Senior Manager Corporate 

Communications and Investor Relations of MorphoSys. With Claudia currently traveling it’s 

my pleasure to welcome you today to our Q2 2012 conference call and thank you for 

participating. With me are Simon Moroney, our Chief Executive Officer and Jens Holstein, 

our Chief Financial Officer. 

During the call, we will talk about the Company’s financial results for the first six months of 

2012. Simon will start by giving you an operational overview of the second quarter. Before we 

open the call for your questions, Jens will review the financial results of the first six months of 

2012. 

Slide 3: Safe Harbor 

Before we start, 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. 

I would now like to hand over to Simon Moroney.

Dr. Simon E. Moroney, CEO, MorphoSys AG 

Thank you Mario, and also from me, a warm welcome to the call. 

Slide 4: Q2 2012: Pipeline Update – 73 Therapeutic Antibody Programs Ongoing, 20 in 

Clinical Trials 

This was a quarter of solid operational progress. Today’s focus will be on our main valuedriver, 

our pipeline, which continued to develop well as we reported advances in several 

proprietary and partnered programs. In total, 73 programs are currently ongoing, as two new 

programs were started during the quarter. The number of programs in clinical development is 

20, with several programs on track to complete Phase 2 clinical trials by the end of the year. 

Slide 5: Q2 2012: Pipeline Update – Proprietary Portfolio 

I’ll start the review of Q2 with our proprietary product portfolio. With our most advanced 

program, MOR103, the Phase 1b/2a trial in rheumatoid arthritis patients is complete and we 

are on track to report clinical data during this third quarter. For your orientation, we expect to 

make an announcement in the second half of September. We also expect to be able to 

announce results of the Phase 1 study in healthy volunteers of a sub-cutaneous formulation 

of MOR103 this quarter. Meanwhile, the phase 1b trial of MOR103 in multiple sclerosis 

patients continues on track. 

The second most advanced program in our proprietary portfolio is MOR208, being developed 

for B-cell malignancies. Enrollment in the US phase 1 trial in CLL was completed during the 

second quarter, and we will report the results of this study later in the year. We published 

some exciting pre-clinical data at the ASCO conference in June, which showed synergistic 

effects on target cell killing in models of lymphoma when MOR208 was combined with four 

different, existing cancer therapies, including the anti-CD20 antibodies rituximab and 

ofatumumab. 

To round out the proprietary portfolio, the ongoing clinical development of MOR202 for 

multiple myeloma continues as planned. 

Slide 6: Q2 2012: Pipeline Update – First HuCAL Antibody in Pivotal Trial 

Moving on to our partnered pipeline, the main news during the second quarter was around 

gantenerumab, the HuCAL, anti-amyloid-� antibody being developed by Roche for 

Alzheimer’s disease. Following discussions with the regulatory authorities, Roche has 

upgraded the ongoing phase 2 study to a phase 2/3, potentially pivotal trial. This is a major 

event which means of course that, given a favorable outcome to the trial, a filing for 

registration of the drug may be possible. 

I’m sure you’re all aware of the bapineuzumab data that was recently released. I want to 

make clear that although bapineuzumab is also an antibody targeting amyloid-� for the 

MorphoSys AG Q2 2012 Conference Call Manuscript Page 2 of 17

treatment of Alzheimer’s disease, the data is of limited relevance to gantenerumab. The main 

reason for this is that the two antibodies are being tested in different patient populations. 

Whereas the ongoing phase 3 trials of bapineuzumab are being conducted in mild- to 

moderate Alzheimer’s disease patients, gantenerumab is being developed in prodromal, or 

early stage sufferers. This is an important difference, which reflects current understanding of 

the disease, namely that once symptoms appear, it may be too late for therapeutic 

intervention, and that the best chance of treatment is to intervene at the earliest possible 

opportunity, to prevent the damaging effects associated with the build-up of �-amyloid 

plaques. 

Gantenerumab is the most advanced antibody being developed in this way. Needless to say, 

the medical need and commercial opportunity are enormous. 

Slide 7: Partnered Pipeline: Selected Phase 2 Programs - Outlook 

While gantenerumab is the first partnered compound to enter late-stage clinical development, 

several programs have the potential to progress to this stage fairly quickly. More specifically, 

various active phase 2 studies for three Novartis compounds - including BHQ880 in cancer 

and BYM338 in musculoskeletal diseases – as well as the Janssen compound CNTO888 in 

IPF are scheduled for completion by the end of this year. As a result, we could see clinical 

data being published by our partners for a number of these studies. Success in Phase 2 

could also mean of course additional Phase 3 programs adding maturity to our pipeline. 

Slide 8: Q2 2012: Pipeline Update – Partnered Pipeline (II) 

Regarding other partnered programs, there were several developments during the second 

quarter. 

First, our partner OncoMed presented data on both currently ongoing HuCAL antibody 

programs during and after the end of the quarter. Most importantly, phase 1 data on the anti 

Notch antibody OMP-59R5 presented at ASCO showed that the antibody was generally safe 

and a maximum tolerated dose was established. For OMP-18R5 OncoMed published 

preclinical data demonstrating potent anti-cancer activity and synergistic activity with 

standard-of-care chemotherapeutic agents of the antibody in multiple human tumor models. 

Second, as reported on clinicaltrials.gov, a phase 2 study by Novartis evaluating the safety, 

tolerability and efficacy of BYM338 in patients with sporadic inclusion body myositis has been 

completed. This HuCAL antibody is also the subject of a further two phase 2 trials. 

Third, our partner Bayer HealthCare received orphan drug status in the US for BAY94-9343 

for the treatment of mesothelioma. This drug candidate is an antibody-drug conjugate 

comprising a HuCAL antibody against the target mesothelin, linked to a maytansinoid toxin. 

The program is currently in Phase 1 development. 

To complete the updates on partnered programs, our partner Janssen has reported 

commencing a new phase 2 trial of the HuCAL antibody CNTO1959. In this study, 

CNTO1959 will be compared with the marketed antibody Stelara in about 250 rheumatoid 


arthritis patients. Meanwhile, development of CNTO1959 in psoriasis continues in separate 

Phase 1 and 2 trials. 

Slide 9: AbD Serotec 

I’ll conclude my operational review with AbD Serotec. The research market, which is heavily 

dependent on public research funding, continues to be challenging and this is reflected in 

AbD’s results this quarter. This is one of the reasons why the focus is increasingly on 

diagnostics and larger technology and/or collaborative transactions. We see these larger 

opportunities as being the main drivers of both revenue and profit for AbD for the remainder 

of the year. Meanwhile, we continue to focus on anti-drug-antibodies, where our HuCAL 

technology is particularly suited. The first products are already available: antibodies against 

Rituxan ® , Herceptin ® , Campath ® , and Avastin ® . New products for determination of Humira ® , 

Stelara ® , and Remicade ® will follow shortly. 

That concludes my review of the quarter. I’d now like to hand over to Jens for the financial 

update. 


Jens Holstein, CFO, MorphoSys AG 

Thank you, Simon. 

Ladies and Gentlemen, I would now like to guide you through the most important financial 

figures of the first six months of 2012. 

Slide 10: Consolidated Income Statement (IFRS) 

Total Group revenues amounted to 33.0 million € in the first six months of 2012, compared to 

66.6 million € in the same time period of the previous year. This decrease is still mainly a 

result of the significant one time milestone payment we received in Q1 2011 from Novartis 

due to the internalization of our HuCAL platform at Novartis’s premises in Basel. 

Total operating expenses decreased by approximately 20% to 35.0 million € compared to the 

first half of last year. The main reason for this development was a 25% decrease in R&D 

expenses to 21.2 million €. R&D expenses for proprietary product and technology 

development activities decreased to 12.3 million €. As we already explained in our Q1-call, 

the reduction results from the fact that costly production steps were already expensed in 

2011 and the phase 1b/2a trial of MOR103 in RA is meanwhile completed. Our S, G&A 

expenses also decreased by around 8% to 10.6 million €. 

In the first six months of 2012, the EBIT amounted to minus 1.9 million €, compared to 21.5 

million € in the first half of 2011. The net loss of 1 million € corresponded to a diluted loss per 

share of 4 Cents. 

Slide 11: Segment Reporting 

Let’s now have a closer look at our segment reporting. As in previous periods, nearly three 

quarters of total revenues arose from the therapeutic side of our business, with Partnered 

Discovery generating 23.4 million € in the first half of 2012, compared to 56.1 million € in the 

previous year. 

Revenues in the Proprietary Development segment amounted to 0.8 million €. Those 

revenues have been generated by our funded research activities for Novartis in connection 

with the two pre-development programs into which MorphoSys has the option to opt-in after 

the discovery phase. 

Looking at AbD Serotec, you can see that revenues slightly decreased to 8.8 million € in the 

first half of 2012, compared to 9.4 million € in the first six months of 2011. This decrease is a 

reflection of a weak second quarter, driven by an especially low demand in the research 

market. 

Slide 12: Balance Sheet 

Let’s now take a look at the balance sheet. MorphoSys’s cash, securities and interestbearing 

assignable loans amounted to 133.5 million € at the end of the second quarter. Our 


funds, together with the Company’s sound financial performance, are of great value for the 

company and our shareholders, especially in today’s market environment. As most of you 

know, our cash is reserved for selective strategic transactions, which strengthen our core 

business. The acquisition of Sloning on the technology side and the in-licensing of MOR208 

on the product side could act as role models for the kind of transactions we are looking to 

secure. 

Slide 13: Guidance 2012 

Before we open the call for your questions, we would like to reconfirm our financial guidance 

for 2012. With a number of commercial discussions currently ongoing we are confident to see 

an increased dynamic in our top-line results in the second half of the year compared to the 

first six months. As before, total group revenues are expected to amount to 75 – 80 million € 

this year. As previously explained, this guidance does not reflect a potential successful outlicensing 

of any of our proprietary programs, which could significantly increase revenues. 

Expenses for proprietary development activities will mainly include the clinical development 

of our most advanced drug candidates as well as the development of new technologies and 

are expected to be between 20 million € and 25 million €. For 2012, we anticipate an EBIT in 

the range of 1 million € to 5 million €. 

Ladies and Gentlemen, that concludes my review for the first six months of 2012, and I’ll now 

hand back to Mario for the Q&A session. 


Thank you. We will now open the call for your questions. 


Questions & Answers 

Gunnar Romer, Deutsche Bank 

Good afternoon, everyone. Thanks for taking my question. First question is regarding the 

guidance outlook for the second half. You already mentioned that you're in ongoing 

discussions. I was just wondering to what extent you expect potentially higher revenues also 

in your partnered business excluding what is already ongoing? And, to what extent this really 

refers to Ylanthia? 

Then, secondly on the outlook for AbD, what are you seeing currently? Is there potential for 

improvement in the second half as well or do you think current trends would continue for the 

next couple of quarter? And the last question, you indicated that you've started two new 

programs but I didn't really get what these were. If you could repeat this, please. 

Dr. Simon Moroney, CEO of MorphoSys AG 

Sure, Gunnar, thanks for joining the call today. First of all, in terms of the guidance question, 

and where the revenue is coming from. We don't want to characterize that in detail, just let 

me say that as you know, we have a number of technologies, a number of existing 

partnerships. We're in a number of discussions with potential new partners. We have good 

visibility based on the status of some of those discussions and that visibility gives us the 

confidence to be able to confirm our guidance for the full year. But what we don't want to do 

at this stage is characterize with any precision about precisely what -how those 

collaborations or deals or partnerships may look, what technologies may or may not be 

involved and with whom they may be. But as I say, the visibility is sufficiently strong that 

we're happy to confirm our guidance for the full year. 

Regarding the question about AbD, as we mentioned during the presentation the research 

market is definitely weak. A lot of the scientists that are our customers who depend on grants 

from governments around the world, a lot of that grant funding has dried up to a large extent 

and the growth in that research market is close to zero, quite frankly at the moment. So - and 

we don't expect that to change in the near term, certainly not before the end of the year. 

Nevertheless, we're confident that AbD will reach its targets, but the kinds of opportunities 

that we're looking at are rather larger deals with companies, commercial organizations, rather 

than selling antibodies to individual researchers. And as we mentioned, our increasing focus 

on bigger opportunities, diagnostics for example, helps us and will help AbD to reach its 

targets for the remainder of the year, rather than relying on that basic research business. 

Coming to your third question regarding the two new programs. Just to be very clear, these 

were two new program starts and we haven't, I believe, indicated where they came from, the 

origin of those programs, but you should have seen that they are new discovery programs, 

so they're coming in right at the front of the pipeline. 

Gunnar Romer 

Okay, thank you. But just with regard to the two new programs, that would mean that you 

have discontinued two as well? 


Simon Moroney 

No, because the count at the last call, Q1, was 71. 

Gunnar Romer 

Right. Okay. 

Simon Moroney 

So, we added two now so that makes it 73 now. 

Gunnar Romer 

Okay. Then one final question on MOR103 and the upcoming data points. I mean you're 

already pretty precise in terms of timing, I was wondering whether this was just relating to the 

phase I/2 trial or whether we should expect subcutaneous data also in the second half of 

September. 

Simon Moroney 

Yes, we haven't finalized the timing of those two announcements with precision, but we 

expect both sets of data to be available roughly around the same time and so precisely when 

we'll announce them we haven't yet finalized, but roughly around the same time. 

Gunnar Romer 

Okay, thank you. 

Daniel Wendorff, Commerzbank 

Good afternoon and thanks for taking my question, two if I may. Starting off with your chart 

on page - on slide four, question from my side would be as you haven't specified the various 

partners for preclinical and discovery projects and aside from that I count six Novartis 

partnered programs as well as co-development programs, could you quantify the total 

number of programs you are working with or you have been working on for Novartis. That 

would be a helpful number for me. 

And second question would be on your investment guidance for proprietary R&D. Is it fair to 

assume that you would rather be in the lower half for 2012 than in the upper half of that 

guidance range? Any comment there would be helpful as well. Thank you very much. 

Simon Moroney, MorphoSys AG 

Okay, Daniel, thanks for the questions. I'll - let me take the first one and then Jens will take 

the second one. So in terms of the total number of Novartis programs, to tell you the truth, I 

don't have the precise number in mind, but I think it's fair to assume that its more than half of 

the total number or around half, somewhere in that ballpark. 


If you need a precise number, we may be able to get that to you, but as I say, the orientation 

it's around half approximately. 

Daniel Wendorff 

So maybe a quick question there, so half of the partner programs, or half of the 73 overall. 

Simon Moroney 

Half of the partnered, sorry. 


Yes, okay. 

Simon Moroney 

30 odd, low 30 something like that. 


Okay. 

Jens Holstein, CFO of MorphoSys AG 

And on the R&D expenses for proprietary, its - I mean we just reiterated our guidance for 20 

to 25 and we would like to keep it at that level. We haven't specified it nearer and I wouldn't 

like to do that at this point in time. 


Yes, fair enough. Thank you. 

Gary Waanders, Nomura Securities 

Hi there. Excuse me. Just a question on the AbD Serotec revenue and the focus on 

diagnostics. There are already a number of anti-monoclonal - anti therapeutic monoclonal 

antibodies now available through AbD Serotec. Can you give us an idea of how much of the 

turnover of 8.8 was due to sales related to these sorts of programs? And what your sort of 

goal long term might be, as a proportion? 

Simon Moroney 

Yes, Gary, I think it's safe to assume that the contribution is not substantial at this stage. The 

newly launched product which is just getting going. We do hope and expect them to pick up 

and the beauty of these kinds of products, of course is that those royalty streams that flow to 

us are pure profit and so the intention and the belief here is that over time as they - as those 


products grow, they will also contribute to an increase in the underlying profit margin of the 

business and that's one of the reasons why we expect in the years to come that the profit 

margin for AbD can improve significantly beyond the current sort of midsingle digits net that 

we have at the moment into somewhere into the mid teens and if not into the 20% range. But 

its early days yet, these are brand new products, they're just getting going and the 

contribution is not substantial at this stage. 

Gary Waanders 

Okay, and if I might just quickly on MOR103, will you have the complete data analysis at that 

point when you release the report or will there be further analysis to conduct after that? 

Simon Moroney 

It will be a pretty complete package that we'll be able to announce in the second half of 

September. So, it will be more than simply headline data. 


Okay. 

Simon Moroney 

So we're taking the opportunity to really go through the data in detail and get a 

comprehensive and we hope meaningful package. 


Okay, thanks very much. 

Elmar Kraus, DZ Bank 

Good afternoon, gentlemen, and thanks for taking my question. The first one with the 

EBITDA margin has just been answered so I'm left with just one more that's on the overall 

revenue line. Considering the fact that you had one milestone payment in the last quarter and 

still, inverted commas, “only” an overall revenue of 16.5, is it fair to assume that you now 

have reached your baseline revenue quantity of let's say around 15 million. Is that fair to say? 

Thank you. 

Jens Holstein, CFO of MorphoSys AG 

Yes, and thanks for the question. Well just maybe to clarify the Q2 figure was 16.9. 

Elmar Kraus 

Sorry. 


Jens Holstein 

Yeah, no worries. As you know, I mean there are - the milestone payments are coming in 

special deals on technologies and so on they're also coming in. So there is a fluctuation. As 

you know, what's safe in terms of the top line is always what we get from Novartis for FTE 

funding as well as for the license fee and on top of that, there will be always millions on - for 

this sort of deals which have been mentioned by Simon before and which I just mentioned. 

So, I can't confirm what you're saying that it is a decision ballpark which like “on 15 million it’s 

safe”. There will be fluctuations in the future and certainly we are aiming that the numbers by 

quarter are higher than what you have just addressed as the number. 

Elmar Kraus 

Thank you. 

Thomas Schiessle, EQUI.TS 

Thomas Schiessle from EQUI.TS in Frankfurt. Hello gentlemen. I would like to ask two 

questions, one on Ylanthia. Simon could you - could you confirm whether there might be at 

least one deal in the current business year? A technology deal? 

And the other question is on the partners portfolio, the recent fluctuation of the number of 

partnered projects is approximately between 65, some more, some less. Is this the run rate 

we shall assume for the future? So, you are working at some 60 projects in the future as 

well? Thank you for clarification. 


Thanks, Thomas. Nice to hear from you. Just in terms of the types of deals that we're going 

to be doing between now and year end, as we indicated. We're confident based on the 

technologies we have to enter deals, let me say plural, until year end. We anticipate that 

Ylanthia will be a component of the activities that we engage in before year end, but you 

should think in terms of kind of packages of technology as well. The Slonomics platform for 

example is an integral part of what we have to offer today. We see it being used in 

conjunction with Ylanthia for example. So, we're really in the nice position of having a suite of 

technologies if you like that we can offer and its therefore difficult to think about how 

individual deals might look and we don't really want to get into detailed discussions of that at 

this stage, but all of the - all of the technologies that we've developed and that are available 

are a subject of those discussions that are currently ongoing. 

In terms of the partnered portfolio, the way we think about this is that the number of new 

starts we're always aiming at somewhere in the ballpark of 10 or so per year. What is difficult 

to predict is the attrition rate, how many ongoing programs fall out and at what time they fall 

out. That's a little bit hard to predict, it can go in waves. But we hope that the net effect 

overall is that the total number of programs increases. Okay, but again, given the 

unpredictability of attrition, it's hard to predict at what rate that total will increase, but we do 


anticipate and expect and plan for a continuous increase in the number of - or a steady 

increase year on year in the number of programs that are actually started. 

Thomas Schiessle 

So the number of employees working on those projects will still be the same range. 

Simon Moroney 

To the extent that new deals come in, which require collaboration and support on our side 

then new employees may be necessary to do those. Just that currently the bulk of employees 

working on these partnered projects are assigned to Novartis, as you know, and that is 

essentially a steady state. So that number of FTEs is fixed and doesn't change and is based 

on the inflow of programs, targets that come to us from Novartis. But beyond that, new deals 

could mean new employees. 


Okay, may I ask an additional question on AbD? 

Simon Moroney 

Please. Yes. 


You emphasized that the research market is more of less down, so you switched to - luckily 

you switched to a more to diagnostics. How - what amount of investments in - you have to 

spend to be in a good position to run this business with diagnostic. Is there anything to spend 

in the near future or is this ongoing investment? 

Simon Moroney 

Yes, the investments aren't huge here. That's really the beauty of this business. Its - what 

we're doing is we're really taking advantage of preexisting expertise that we have around the 

HuCAL technology and the HuCAL - of course applying the HuCAL technology itself, which 

turns out to have certain genuine advantages in the diagnostic setting, in addition to its 

already established and known advantages and therapeutics. And amongst these 

advantages is the ability to make anti idiotypic antibodies, which is the subject of all these 

products that we talked about during the presentation. 

So to - actually we're - and AbD is kind of blessed with having this existing expertise and 

technology platform which is now simply being applied in a new area. So, it's a relatively easy 

step for us to take to move into this diagnostic space. 


Okay, thanks for the information. Thank you. 


Daniel Wendorff, Commerzbank 

Thanks for taking my follow up for question and that is also related to the potential 

partnerships or technology deals you might find and do in the second half of 2012. Is it fair to 

assume that it's also an - well, how shall I say that, a possibility and that might also be a 

HuCAL partnership in the area of infectious diseases? Or is that not something which you 

would regard as likely? Thank you. 


Could be. 


Okay. 

Simon Moroney 

That's - you've rightly spotted of course that we have freedom to - full freedom to operate with 

HuCAL in the infectious disease space and amongst the list of discussions, negotiations and 

things that are ongoing that is included. 


Okay, so you have discussions in that area with potential partners. 

Simon Moroney 

Yes. 


Okay, thanks. 

Sachin Soni, Kempen & Co. 

Good afternoon everyone. I have three questions. First is regarding the current status of 

technology platform, you have upgraded the platform substantially after certain acquisitions, 

do you think there is still more room for improvements if yes, what direction would you go in 

improving the current technology platform. 

Then second is, regarding out licensing strategy. Is it correct to assume that you're internal 

biases towards out licensing and asset after proof of concept or would you consider your 

proprietary assets to be out licensed earlier than that as well? 


And third question, the potential deal on technology platform which we have been talking, am 

I understanding correctly to assume that this deal is a part of guidance already in revenues? 

Thank you. 

Simon Moroney, MorphoSys 

Okay, thanks Sachin. Let me start with the technology platform. So, first of all, it cannot be 

improved further probably. We think that there are ways in which what we have can be 

expanded and proved, made more useful and if you think about it, it's really around the 

potential application for antibodies. The challenges at the moment are what types of targets 

can you hit. There are definitely classes of targets at the moment that are difficult to hit, 

which it would be great if you could go after and I think GPCRs, ion channels and so on, this 

is well known in the community. Could you get antibodies into cells for example and thereby 

access a whole new class of targets? Could you administer antibodies differently than 

intravenously or subcutaneously? So, it's a fantastic class of drugs, but there's definitely 

scope to improve on it further and these are some of the challenges - just some of the 

challenges that we are thinking about at the moment. 

While we're on the subject of technologies, I'll come to your third question which is are the 

types of deals that we referred to included in the guidance for the remainder of the year, the 

answer is definitely a yes to that one. 

And then finally, coming back to your second question in terms of out licensing, the intention 

for MOR103 is certainly not to take that forward in an indication like rheumatoid arthritis on 

our own and we feel that given good proof of concept data that's an ideal time to find a good 

partner for that program. For the remaining programs, MOR208 and MOR202 for example, 

the current plan is to go to proof of concept, because we feel that that's where we can 

establish the greatest value for those two programs and not to partner them earlier than that. 

That is the plan that we have for those two remaining programs. 

Sachin Soni 

Great, thank you. 

Gary Waanders, Nomura Securities 

Hi there, just to follow up on the platform discussion. Has there been any noticeable shift in 

the collaborative efforts with Novartis following the internalization of the HuCAL platform? It’s 

kind of the first part of that. And what is their stance vis a vis Ylanthia and development, 

discovery programs. Thanks. 


So, thanks Gary. Regarding the first part of that question, it was always part of the deal that 

they would internalize the HuCAL platform and it was also always part of the deal that there 

would be a constant, a steady state number of programs that would be pursued here. And 

that continues to be the case. So, the fact that they've internalized the HuCAL platform 


doesn't really have any bearing on the collaboration as such because there's a constant 

amount of work going on. 


Okay. 

Simon Moroney 

New targets come in as old targets are handed back or targets that have been worked up are 

handed back. 

With regards to Ylanthia, our view is that Ylanthia is a more and will be a more powerful 

technology than HuCAL. We believe therefore that it's the technology of choice for all 

therapeutic applications. We therefore absolutely want to have that as a part of our 

collaboration with Novartis and we're currently working closely with Novartis to figure out how 

that will precisely work and at what stage it should be brought into the collaboration, but that's 

absolutely the joint intention of the two parties that we together use the Ylanthia platform to 

make the next generation of therapeutic antibodies. 


Okay, thanks. 

Gunnar Romer, Deutsche Bank 

Thanks for taking my follow up. This would be probably a question for Jens. I was wondering 

whether you could give us an idea of why the uptake in SG&A, what's behind that and then 

also with regard to partnered R&D, I noticed, was a little bit higher in Q2. Just was curious 

about whether there's a relationship also between partnered R&D and SG&A here? 

Jens Holstein, MorphoSys AG 

First, thanks Gunnar for the question. First maybe coming to the second question which you 

have addressed in the partner business. In absolute terms you're right, the amount went up 

but please be reminded that there is also - there are also some technology development 

expenses in there and this is certainly influencing the figures and here, I think we also see 

fluctuations. So therefore, I think in terms of what we have seen in the first half of last year as 

spending and in the first half of this year as spending for the partner business. You run in the 

sort of range of 9 to 11 million for that segment which we run and I think something like this is 

pretty much stable for each half year. So, I mean if you think of your model, I think something 

like this ballpark is pretty much okay. 

In terms of the SG&A expenses, I mean you have seen that we'll have in comparison to the 

first - so the second three months for the second quarter of last year that we have reduced 

our SG&A expenses and as such, I think we assumed that also in terms of the full year when 

we are not too far away of what we have seen for the first half year in terms of what we can 


expect of total expenses. I mean there is some specifics always, some consultancy expenses 

which cause some deviation, but in that sort of ballpark, I think assumptions are well placed. 

Gunnar Romer 

Okay, that's helpful, but there's no significant let's say kind of upfront investments for 

upcoming technology deals that might go away in the second half. 

Jens Holstein 

Well, most likely those technology deals will be CapEx for us. 

Gunnar Romer 

Right. Okay. 

Jens Holstein 

Yes, and as such, we would book them accordingly. 

Gunnar Romer 

Okay, thank you. 


Dr. Simon E. Moroney, CEO, MorphoSys AG 

To conclude the call, I’d like to remind you of the main points to take away. First, the 

Company’s greatest source of value, its drug pipeline, continues to develop well. We are on 

track to report clinical data from our two most advanced programs MOR103 and MOR208 

later this year as planned. Second, our partnered pipeline continues to grow and to mature 

with the transition of gantenerumab to a potentially pivotal trial for Alzheimer’s disease being 

the main highlight. And finally, we’re happy to re-confirm that we are on track to hit our 

financial targets for the year. 


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 ® , Ylanthia ® , CysDisplay ® , RapMAT ® and 

arYla ® are registered trademarks of MorphoSys AG. 

Slonomics ® is a registered trademark of Sloning BioTechnology GmbH, a subsidiary of 

MorphoSys AG.

Transcript of Speech and Q&A Conference Call Q2 - MorphoSys

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