MORPHOSYS AG AND BAYER SIGN AGREEMENT TO APPLY ...

Press Release
Munich/Martinsried & Leverkusen, Germany, 22 December, 1999
MORPHOSYS AG AND BAYER SIGN AGREEMENT TO APPLY
INNOVATIVE TECHNOLOGY TO ACCELERATE DRUG
DISCOVERY
Double Digit Million US Dollar Investment
Martinsried / Leverkusen – MorphoSys AG (Neuer Markt: MOR) and Bayer AG today
announced a research collaboration and licence agreement for the application of
MorphoSys’ proprietary technologies in a number of Bayer’s research and development
programmes. The value of the deal to MorphoSys is in a double digit US million dollar
range. Under the terms of the collaboration Bayer will make up-front payments and pay
license fees to MorphoSys as well as milestone payments and royalties on any resulting
antibody product. The agreement is scheduled to last for two years with an option for
Bayer to extend for another four years, and will initially involve MorphoSys scientists
working together with Bayer scientists.
The agreement specifies four areas in which the two companies will apply the
MorphoSys technologies. MorphoSys’ HuCAL (Human Combinatorial Antibody Library)
technology will be used to generate fully human therapeutic antibodies against up to ten
targets provided by Bayer. Secondly, Bayer has an option to develop antibodies
generated using the HuCAL technology as in vitro diagnostics. Thirdly, HuCAL will be
used to identify antibodies for use in monitoring the progress of clinical trials with
selected drugs. The fourth area of application will use the MorphoSys technologies to
identify and validate new targets emerging from Bayer’s genomics programme, which
will be used by Bayer in screens for new drug candidates.
Under the terms of the agreement Bayer will make an up-front payment to MorphoSys
as well as paying annual technology access fees including support for R&D at
MorphoSys. In addition, Bayer will pay exclusivity fees for using the HuCAL technology
on up to ten potential targets, as well as milestone fees on antibodies delivered by
MorphoSys which meet pre-agreed success criteria. Any antibody-based products
developed in the collaboration will trigger development-related milestone and royalty
payments by Bayer to MorphoSys.
“The signing of this agreement is a major milestone for us”, commented Dr. Simon
Moroney, Chief Executive Officer of MorphoSys. “It is a vote for confidence in our
technologies from Bayer, a company which has a reputation for choosing the very best
partners for its R&D programmes. The committed funding is significant and if, as we
expect, a series of products flows from the programme, the resulting milestone and
royalty payments make this a very important deal for MorphoSys.”

“We have entered this agreement with MorphoSys because of the strength of their
HuCAL technology”, said Prof. Dr. Wolfgang Hartwig, Head of Research, Pharmaceuticals
Business Group, Bayer AG. “We see this collaboration as an essential component of
Bayer’s strategy of accessing those technologies which will play an important role in the
development of tomorrow’s drugs.”
Professor Dr. Wolf-Dieter Busse, Head of Bayer’s Biotechnology Business in Berkeley,
California, added: “The collaboration with MorphoSys will add an important element to
the enabling technology platforms at Bayer Biotechnology, aiming at the discovery of
novel protein therapeutics.”
MorphoSys develops and applies innovative technologies for the production of synthetic
antibodies which accelerate drug discovery and target characterisation. Founded in 1992,
the Company's proprietary Human Combinatorial Antibody Library (HuCAL) technology is
used by researchers world-wide for human antibody generation. The Company has
partnered with several international pharmaceutical companies. In March 1999,
MorphoSys AG became the first biopharmaceutical company to list on Germany's new
stock market segment “Neuer Markt”.
Bayer is an international, research-based group with major businesses in life sciences,
polymers and specialty chemicals. With 145,000 employees world-wide, the group
recorded income before taxes of DM 5.3 billion on sales of DM 54.9 billion in 1998. For
the current year DM 5.2 billion is earmarked for capital expenditures. A record DM 4.3
billion is budgeted for research and development, attesting to the company’s drive for
innovation.
Statements included in this press release which are not historical in nature are intended to be, and are
hereby identified as, “forward-looking statements” for purposes of the safe harbour provided by Section 21E
of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by words including “anticipates”, “believes”, “intends”,
“estimates”, “expects” and similar expressions. The company cautions readers that forward-looking
statements, including without limitation those relating to the company’s future operations and business
prospects, are subject to certain risks and uncertainties that could cause actual results to differ materially
from those indicated in the forward-looking statements. Factors that may affect future operations and
business prospects include, but are not limited to, clinical and scientific results and developments concerning
corporate collaborations and the company’s proprietary rights and other factors described in the prospectus
relating to the company’s recent public offering.
For more information, please contact:
MorphoSys AG
Simon Moroney, Chief Executive Officer
Dave Lemus, Chief Financial Officer
Tel: +49 (0) 89 899 27 0
Fax: +49 (0) 89 899 27 222
Bayer AG
Dr. Michael Diehl
Tel: +40 214 30 58532
e-mail: michael.diehl.md@bayer-ag.de
Bayer Corporation
Mary E. Stutts
Tel: +1 510 705 4835
e-mail: mary.stutts.b@bayer.com