The Company has a significant number of research and development agreements relating to its discovery and development strategy. In the majority of cases, upfront payments at signature, annual license payments in exchange for access to MorphoSys’s technologies, development-dependent milestone payments and royalties on product sales are standard terms of these agreements. The following is a brief description of these agreements, which have had, or may have, a significant financial impact in future years (in alphabetical order).
Astellas Pharma, Inc.
MorphoSys and Astellas Pharma entered into a license agreement for the use of MorphoSys’s HuCAL technology in March 2007. In February 2008, Astellas decided to extend the current collaboration between the two companies for four more years until 2012.
In July 2008, Astellas exercised a pre-existing option to use MorphoSys’s proprietary RapMAT technology* for faster antibody optimization as part of the existing technology transfer agreements between the two companies. As a result, MorphoSys receives annual user fees for the RapMAT technology in addition to user fees for the HuCAL platform.
Bayer Schering Pharma AG
The active collaboration with Bayer Schering Pharma AG was concluded by the end of 2007. Several therapeutic antibody programs are currently in development and could result in future development-dependent milestone payments and royalties on product sales. In September 2009, MorphoSys announced that Bayer Schering Pharma had filed all necessary documentation to initiate a phase 1 clinical trial with a HuCAL-derived antibody-drug conjugate in the therapeutic area of oncology. This achievement triggered a clinical milestone payment to MorphoSys.
Boehringer Ingelheim GmbH
MorphoSys and Boehringer Ingelheim signed an initial collaboration in the field of therapeutic antibodies in February 2003. In March 2005, both companies agreed to expand the existing cooperation involving both research and therapeutic applications
In July 2008, Boehringer Ingelheim exercised a pre-existing option to use MorphoSys’s proprietary RapMAT technology for faster antibody optimization as part of the existing technology transfer agreements between the two companies. As a result, MorphoSys receives annual user fees for the RapMAT technology in addition to user fees for the HuCAL platform.
Centocor Ortho Biotech, Inc.
The active collaboration with Centocor Ortho Biotech, Inc. (formerly known as: Centocor, Inc.), a wholly owned subsidiary of US pharmaceutical company Johnson & Johnson, was concluded by the end of 2007. Several therapeutic antibody programs are currently in development and could result in future development-dependent milestone payments and royalties on product sales. The most advanced compound within this collaboration is currently in a phase 2 clinical trial in an immunology indication and a second phase 2 clinical trial in oncology patients. In June 2009, MorphoSys announced that it had received a milestone payment from Centocor Ortho Biotech in connection with the initiation of a phase 1 clinical trial using a HuCAL-derived antibody in the therapeutic area of inflammation.
Daiichi-Sankyo
In March 2006, MorphoSys and Sankyo Company Limited (part of the joint holding company, Daiichi Sankyo Company Limited) entered into a license agreement and therapeutic antibody collaboration for an initial two-year term with the option of an extension of up to three more years. In March 2008, the collaboration was extended until March 2011. The extension triggered an additional up-front payment
In October 2009, MorphoSys announced the formation of a new alliance with Daiichi Sankyo in the discovery and development of therapeutic antibodies for hospital-acquired infections. Daiichi Sankyo became MorphoSys’s first collaborator for HuCAL PLATINUM-based drug discovery in infectious diseases. Daiichi Sankyo agreed also to fund the development of certain infectious disease-specific technology at MorphoSys, which will be used to identify the most effective antibody-based drugs.
F. Hoffmann-La Roche AG
MorphoSys and F. Hoffmann-La Roche announced the signing of an agreement in September 2000 under which the companies collaborate on the development of human therapeutic antibodies for a Roche biological target associated with Alzheimer’s disease. In the context of the collaboration, MorphoSys is eligible to receive development-related milestone payments and royalties on any marketed products emerging from the collaboration. A phase 1 clinical trial program to evaluate safety and tolerability of the HuCAL-derived antibody program R1450/Gantenerumab in Alzheimer’s disease patients was operationally concluded by Roche in 2009.
Expanding on the relationship in Alzheimer’s disease, MorphoSys and Roche announced a new collaboration to develop new therapeutic antibodies in oncology in March 2006.
Galapagos NV
In November 2008, MorphoSys and Galapagos NV announced the launch of a long-term co-development alliance aimed at discovering and developing antibody therapies based on novel modes of action in bone and joint disease, including rheumatoid arthritis, osteoporosis and osteoarthritis.
The alliance spans all activities from target discovery through to completion of proof of concept clinical trials of novel therapeutic antibodies. Following proof of concept in human clinical trials, programs will be partnered for subsequent development, approval and marketing. Both companies will contribute their core technologies and expertise to the alliance. Galapagos will provide antibody targets implicated in bone and joint disease in addition to its adenoviral target discovery platform to discover further targets for antibody development. MorphoSys will contribute its HuCAL antibody technologies to generate fully human antibodies directed against these targets. Under the terms of the agreement, Galapagos and MorphoSys will share the research and development costs and all future revenues equally.
GeneFrontier Corporation
Under the terms of a therapeutic target-sourcing collaboration signed in 2007, GeneFrontier may utilize MorphoSys’s HuCAL GOLD antibody library to generate novel HuCAL antibodies against targets provided by leading Japanese research institutes and universities. For this purpose, the HuCAL antibody technology was installed at GeneFrontier’s research laboratories at a research facility in Tokyo. GeneFrontier provided MorphoSys with annual license fees for access to the HuCAL technology. The 2004 marketing agreement was concluded in the fourth quarter of 2009.
Merck & Co., Inc.
In December 2005, MorphoSys signed a five-year license agreement with US pharmaceutical company Merck & Co., Inc., for the use of MorphoSys’s HuCAL GOLD and AutoCAL technologies in research and development of human therapeutic antibodies. The agreement enables Merck to develop up to ten HuCAL-derived therapeutic antibodies in a range of indications.
Novartis AG
MorphoSys and Novartis AG started working together in 2004 in a collaboration that has so far resulted in multiple active therapeutic antibody programs across various diseases and the first IND filing in September 2007 — just three years after initiation. In December 2007, MorphoSys and Novartis substantially extended their previous relationship and forged one of the most comprehensive strategic alliances in the discovery and development of biopharmaceuticals. Based on a ten-year term, committed annual payments total more than US$ 600 million in technology access, internalization fees and R&D funding, excluding reimbursement of R&D costs related to early-stage development activities. Total payments under the agreement, including committed payments and probability-weighted success-based milestones, contingent upon successful clinical development and market approval of multiple products, could potentially exceed US$ 1 billion, assuming the collaboration successfully runs its maximum term. In addition to these payments, MorphoSys would also be entitled to royalty payments and/or profit sharing on any future product sales. Additionally, MorphoSys also has options to participate in certain development activities in various programs, with part of the early-stage costs being funded by Novartis. Under the codevelopment options, MorphoSys may elect to participate in these projects through cost and profit-sharing with financial participation reflecting its level of investment in the respective programs.
In 2009, Novartis committed to a ten-year term of the strategic alliance. The decision was based on MorphoSys’s successful achievement of certain predefined improvements in its proprietary technologies. The collaboration will run until 2017 and may be extended by Novartis for an additional two years beyond that time under the same financial terms and conditions. The most advanced compound within this collaboration, BHQ880, is currently in a phase 2 clinical trial in oncology. In May 2009, MorphoSys announced that it had received a milestone payment from Novartis in connection with the initiation of a phase 1 clinical trial using a HuCAL-derived antibody.
OncoMed Pharmaceuticals, Inc.
In June 2006, MorphoSys and US-based biopharmaceutical company OncoMed Pharmaceuticals, Inc., announced the signing of a license agreement on the use of MorphoSys’s HuCAL technology in the research and development of human therapeutic antibodies for the treatment of various cancers, including breast, lung, colon and prostate, by targeting cancer stem cells. In June 2008, the collaboration was extended until the end of May 2010. The contract includes an option for OncoMed to develop up to five HuCAL-derived therapeutic antibodies.
Pfizer, Inc.
In December 2003, MorphoSys entered into a collaboration with US pharmaceutical company Pfizer, Inc., for the development of therapeutic antibodies. In December 2006, the collaboration with Pfizer was extended to the end of 2011. The extension triggered a one-time payment from Pfizer to MorphoSys. MorphoSys uses its HuCAL GOLD library to generate therapeutic antibodies against multiple targets from Pfizer. Pfizer is responsible for the preclinical and clinical development and the subsequent marketing of resultant products. The potential value to MorphoSys in committed funding and potential developmental milestone payments on future products is in excess of US$ 100 million, not including royalties.
ProChon Biotech Ltd.
An agreement between MorphoSys and ProChon Biotech Ltd., an Israeli biotechnology company and spin-off of the Weizmann Institute, was signed in May 2000. Under the agreement, MorphoSys applied its innovative HuCAL antibody library to generate human antibodies against a human growth factor receptor associated with various skeletal disorders including achondroplasia, the most common form of human dwarfism, and certain cancers. MorphoSys is eligible to receive development-related milestone payments and royalties on any marketed products emerging from the collaboration.
Schering-Plough Corporation
In May 2006, MorphoSys and Schering-Plough Corporation signed a license agreement for the use of MorphoSys’s HuCAL GOLD technology in the research and development of human therapeutic antibodies. The collaboration has a maximum term of five years until 2011 and may be extended by Schering-Plough after each single year. In June 2009, MorphoSys announced that Schering-Plough Corporation had triggered its pre-existing option to extend the current collaboration between the two companies for another year.
Shionogi & Co., Ltd.
MorphoSys AG and Japanese pharmaceutical company Shionogi & Co., Ltd., signed a three-year license agreement on the use of MorphoSys’s HuCAL technology in September 2005. In September 2008, the partnership was extended for three additional years, allowing Shionogi the use of the MorphoSys HuCAL GOLD library for research purposes at one of its research sites. In April 2009, MorphoSys and Shionogi entered into an agreement under which Shionogi was allowed to test HuCAL PLATINUM, the latest and most powerful MorphoSys antibody library. Shionogi found the new library to be considerably better and will now have the right to use HuCAL PLATINUM for research purposes at one of its sites. In return, MorphoSys receives a higher annual user fee during the remaining life span of the agreement.
Xencor, Inc.
In June 2010, MorphoSys AG and US-based biopharmaceutical company Xencor, Inc., signed a worldwide exclusive license and collaboration agreement for the antibody The agreement provided MorphoSys with an exclusive worldwide license to XmAb5574/MOR208 for the treatment of cancer and other indications. As part of the agreement, the companies will collaborate on the phase 1 trial in patients with chronic lymphocytic leukemia in the US. MorphoSys will be solely responsible for further clinical development after successful completion of the phase 1 clinical trial.
