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MorphoSys AG Presents Strong Results for Fiscal Year 2016

March 09, 2017 / 7:00 am, CET

Planegg/Munich, Germany, March 9, 2017

MorphoSys AG Presents Strong Results for Fiscal Year 2016

Financial guidance for 2016 met in full

Conference call and webcast (in English) at 2:00pm CET (1:00pm GMT/8:00am EST)

  • Group revenues of EUR 49.7 million (Guidance: EUR 47 to 52 million)
  • EBIT of EUR -59.9 million (Guidance: EUR -58 to -68 million)
  • Proprietary R&D expenses of EUR 78.5 million (Guidance: EUR 76 to 83 million)
  • Strong cash position of EUR 359.5 million at year-end (Dec. 31, 2015: EUR 298.4 million)
  • First MorphoSys antibody filed for market approval
  • Proprietary antibodies MOR208 and MOR202 with promising advances in blood cancer indications
  • Clinical development of proprietary drug candidates key focus of investment activities in 2017

MorphoSys AG (FSE: MOR; Prime Standard Segment, TecDAX; OTC: MPSYY), a leader in the field of therapeutic antibodies, today reported results for the financial year 2016, as well as a financial and operational outlook on 2017.

"2016 was a rewarding year for us. The first therapeutic antibody from our platform was filed for market approval by our pharma partner Janssen, which is a major milestone in our company's history. We expect the decision on regulatory filing of guselkumab in the second half of 2017," said Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "In parallel, we made significant progress with our own drug candidates in 2016. Across our pipeline we see many programs which have the potential to transform the treatment of the diseases they address and thus to create value and benefit for all our stakeholders, including our partners, investors and patients."

"With a record-high of 114 programs in R&D, MorphoSys's portfolio is one of the broadest in the biopharmaceutical industry. This pipeline is supported by financial resources of close to EUR 360 million at year-end 2016. We strengthened our financial position by a successful capital increase with gross proceeds of EUR 115.4 million in November 2016. Our financial strength enables us to invest strongly in the development of our own drug candidates to grow the Company's value, without losing sight of our prudent and efficient use of resources," commented Jens Holstein, Chief Financial Officer of MorphoSys AG.

Financial Review for the Fiscal Year 2016 (IFRS)

In 2016 MorphoSys continued to focus on the research and development of drug candidates both for partners and on its own account. Group revenues came in at EUR 49.7 million, fully in line with expectations (2015: EUR 106.2 million). Adjusted for a 2015 one-off income of approximately EUR 59 million, 2016 revenues rose by 5% compared to the previous year.

In the Proprietary Development segment, MorphoSys focuses on the research and clinical development of its own drug candidates in the fields of cancer and inflammation. In 2016, this segment recorded revenues of EUR 0.6 million, an almost flat revenue development compared to 2015, as previous year's numbers (2015: EUR 59.9 million) included a one-off effect of approximately EUR 59 million from the termination of the MOR202 co-development and co-promotion agreement with Celgene.

In the Partnered Discovery segment, MorphoSys applies its proprietary technology to discover new antibodies for pharmaceutical companies, benefitting from the partners' development advancements through success-based milestone payments and royalties. In 2016, revenues were up 6% to EUR 49.1 million (2015: EUR 46.3 million). The increase was mainly driven by milestone payments from partners. Segment revenues in 2016 comprised EUR 43.6 million in funded research and license fees (2015: EUR 42.3 million) and EUR 5.6 million in success-based payments (2015: EUR 4.0 million).

Total operating expenses came in at EUR 109.8 million, exceeding last year's numbers by 17% (2015: EUR 93.7 million). While general and administrative expenses were reduced by 7% to EUR 14.1 million (2015: EUR 15.1 million), research and development expenses were increased by 22% to EUR 95.7 million (2015: EUR 78.7 million). Intensified clinical trials with MorphoSys's proprietary drug candidates, in particular the start of three phase 2 studies with the lead compound MOR208 in selected blood cancer indications, were the main area of focus. Proprietary R&D expenses, including technology development, rose by 39% to EUR 78.5 million (2015: EUR 56.6 million), fully meeting the Company's guidance.

Earnings before interest and taxes (EBIT) stood at EUR -59.9 million (2015: EUR 17.2 million). Adjusted for the one-off effect in 2015, the operating loss for 2016 rose by approximately 43%, mainly based on the planned expansion of R&D activities. The Proprietary Development segment reported an EBIT of EUR -77.6 million (2015: EUR 10.7 million). EBIT in the Partnered Discovery segment was up by 52% to EUR 31.0 million (2015: EUR 20.4 million), mainly based on the increase in success-based milestone payments from partners and lower costs incurred in the segment.

In 2016, the consolidated net result amounted to EUR -60.4 million (2015: EUR 14.9 million). The diluted net result per share for 2016 was EUR -2.27 (2015: EUR 0.57).

At year-end 2016, the Company had a cash position of EUR 359.5 million compared to EUR 298.4 million on December 31, 2015. On the balance sheet, this cash position is reported under the items: cash and cash equivalents; available-for-sale financial assets; bonds, available-for-sale; financial assets classified as loans & receivables; and financial assets classified as loans & receivables, net of current portion.

The number of shares issued totaled 29,159,770 at year-end 2016 (year-end 2015: 26,537,682). The increase in the number of shares resulted from the capital increase on November 15, 2016 with gross proceeds of EUR 115.4 million, in which 2,622,088 shares were issued.

Financial Guidance and operational outlook for 2017

For the financial year 2017, MorphoSys expects to generate Group revenues in the range of EUR 46 to 51 million. R&D expenses for proprietary drug development are anticipated in a corridor of EUR 85 to 95 million. The Company expects earnings before interest and taxes (EBIT) of EUR -75 to -85 million. This guidance does not include any additional revenue from potential future collaborations and/or licensing partnerships nor effects from potential in-licensing or co-development deals for new development candidates.

"We continue to invest in our growing portfolio of highly promising proprietary drug candidates which are nearing the decisive stages of clinical development. In 2017 we will start a phase 3 study with our lead candidate MOR208 in the blood cancer indication diffuse large B cell lymphoma (DLBCL), where we see a high unmet medical need. This will be the first pivotal trial with one of our own antibodies. This marks another important step on our way to becoming a fully-integrated biopharmaceutical company, that will be increasingly based on product-based revenue streams," commented Dr. Simon Moroney.

In the Proprietary Development segment, MorphoSys expects the following events in 2017:

  • MOR208: Completion of the phase 2 safety run-in of the B-MIND study and initiation of the pivotal phase 3 part of the study, in which MOR208 will be tested in combination with bendamustine in comparison to rituximab and bendamustine in DLBCL.
  • MOR208: Presentation of first preliminary data of the phase 2 trial of MOR208 in combination with lenalidomide in DLBCL (L-MIND study).
  • MOR208: Initiation of another study arm of the ongoing phase 2 COSMOS trial with MOR208 in CLL in order to test MOR208 with a further combination drug. Currently, the Company is investigating the combination of MOR208 and idelalisib in this study.
  • MOR202: Completion of the phase 1/2a dose-escalation trial in multiple myeloma, including the results of MOR202 in the highest dose of 16 mg/kg alone and in combinations with pomalidomide and with lenalidomide.
  • MOR209/ES414: Continuation of the phase 1 trial of MOR209/ES414 with adapted dose regimen in prostate cancer (mCRPC) as part of the collaboration with Aptevo.
  • MOR106: Completion of the phase 1 trial of MOR106, co-developed with Galapagos, in atopic dermatitis.
  • MOR107: Completion of a phase 1 study in healthy volunteers.
  • MOR103/GSK3196165: For this HuCAL antibody, which has been fully out-licensed to GSK, MorphoSys expects data from a phase 2b study in rheumatoid arthritis and from a phase 2a study in hand osteoarthritis, both conducted by GSK.

In its Partnered Discovery segment, MorphoSys expects the following events in 2017:

  • Guselkumab: the first partner-developed therapeutic antibody based on MorphoSys's HuCAL technology could receive market approval in 2017. MorphoSys expects that the US regulatory authority FDA should make a decision in the second half of 2017 on Janssen's application for the approval of guselkumab to treat adults with moderate to severe psoriasis. In addition, a regulatory filing for guselkumab in Europe has been submitted.
  • Anetumab ravtansine, a HuCAL antibody drug conjugate developed by Bayer, is expected to report results in 2017 from a pivotal phase 2 trial in the cancer indication mesothelioma. Favourable results could support a regulatory filing of the compound.
  • Novartis collaboration: As previously communicated and as reflected in the Company's 2017 guidance, MorphoSys expects the collaboration with Novartis to end at the end of November 2017 in accordance with the contract. The Company does not believe that Novartis will exercise its option to extend the contract.
  • In total, results may be disclosed from up to 31 different clinical studies in various phases conducted by partners with antibodies based on MorphoSys technology.

MorphoSys plans to establish additional collaborations with pharmaceutical and biotechnology companies based on the Ylanthia technology, similar to its partnership with LEO Pharma established in 2016.

MorphoSys Group Key Figures (IFRS, end of financial year: December 31)

in EUR million 2016 2015 Change Q4/2016 Q4/2015 Change
Revenues 49.7 106.2* -53% 13.0 12.3 +6%
Operating expenses 109.8 93.7 +17% 40.7 30.1 +35%
R&D expenses 95.7 78.7 +22% 36.9 25.6 +44%
Proprietary R&D expenses 78.5 56.6 +39% 32.3 16.7 +93%
G&A expenses 14.1 15.1 -7% 3.8 4.5 -16%
EBIT -59.9 17.2* >-100% -27.6 -17.5 +58%
Net result -60.4 14.9 >-100% -28.7 -13.3 >100%
Net result per share (diluted) (in EUR) -2.27 0.57 >-100% -1.04 -0.58 +79%
Cash position (end of period) 359.5 298.4 +20% 359.5 298.4 +20%
Equity ratio (end of period) (in %) 90% 91% -1 PP** 90% 91% -1 PP**
No of R&D programs (end of period) 114 103 +11 114 103 +11
No of clinical programs (end of period) 29 25 +4 29 25 +4
No of proprietary clinical programs (end of period) 5 4 +1 5 4 +1

* Adjusted by a positive one-off effect of approximately EUR 59 million in revenue and EBIT of 2015, total Group revenues reached approximately EUR 47 million and the total Group EBIT approximately EUR -42 million in 2015.
** Percentage point

MorphoSys will hold its conference call and webcast today to present the annual financial results 2016 and the outlook 2017.

Dial-in number for the analyst conference call (in English) at 02:00 pm CET; 01:00 pm GMT; 08:00 am EST (listen-only):

Germany: +49 (0) 89 2444 32975
For UK residents: +44 (0) 20 3003 2666
For US residents: +1 202 204 1514

Please dial in 10 minutes before the beginning of the conference.

A live webcast and slides will be made available at http://www.morphosys.com.

Approximately two hours after the press conference, a slide-synchronized audio replay of the conference and a transcript will be available on http://www.morphosys.com.

Consolidated Financial Statements 2016 (IFRS) are available on our website:
http://www.morphosys.com/FinancialReports

About MorphoSys:
MorphoSys developed HuCAL, the most successful antibody library technology in the pharmaceutical industry. By successfully applying this and other patented technologies, MorphoSys has become a leader in the field of therapeutic antibodies, one of the fastest-growing drug classes in human healthcare.
Together with its pharmaceutical partners, MorphoSys has built a therapeutic pipeline of more than 100 human antibody drug candidates for the treatment of cancer, rheumatoid arthritis, and Alzheimer's disease, to name just a few. With its ongoing commitment to new antibody technology and drug development, MorphoSys is focused on making the healthcare products of tomorrow. MorphoSys is listed on the Frankfurt Stock Exchange under the symbol MOR. For regular updates about MorphoSys, visit http://www.morphosys.com.

HuCAL(R), HuCAL GOLD(R), HuCAL PLATINUM(R), CysDisplay(R), RapMAT(R), arYla(R), Ylanthia(R), 100 billion high potentials(R), Slonomics(R), Lanthio Pharma(R) and LanthioPep(R) are registered trademarks of the MorphoSys Group.

This communication contains certain forward-looking statements concerning the MorphoSys group of companies. The forward-looking statements contained herein represent the judgment of MorphoSys as of the date of this release and involve risks and uncertainties. Should actual conditions differ from the Company's assumptions, actual results and actions may differ from those anticipated. MorphoSys does not intend to update any of these forward-looking statements as far as the wording of the relevant press release is concerned.

For more information, please contact:

MorphoSys AG
Anke Linnartz
Head of Corporate Communications & IR

Jochen Orlowski
Associate Director Corporate Communications & IR

Alexandra Goller
Senior Manager Corporate Communications & IR

Tel: +49 (0) 89 / 899 27-404
investors@morphosys.com