MorphoSys and Novartis Forge Strategic Antibody Alliance

May 19, 2004 / 12:00 am, CEST

MorphoSys AG (Frankfurt Stock Exchange: MOR; Prime Standard Segment) and Novartis AG (NYSE: NVS) today announced a significant strategic collaboration to discover and develop antibody-based biopharmaceuticals as therapeutic agents, in order to address unmet medical need across a variety of diseases. MorphoSys brings validated and robust human antibody technologies (HuCAL GOLD®) to Novartis’ new strategic research directions, building a collaboration that will identify and develop novel therapeutic agents rapidly and efficiently.

“Novartis is committed to therapeutic antibodies as key weapons in the medical armamentarium alongside small molecule drugs. We believe that these antibodies will become increasingly important components of our already strong pipeline in order to better address unmet medical needs with innovative medicines across a variety of diseases. We have chosen MorphoSys as the ideal partner for this element of our strategy because of their highly differentiated technology, which we believe will significantly strengthen and accelerate our antibody research,” stated Dr. Mark Fishman, President of the Novartis Institutes for BioMedical Research.

MorphoSys scientists will work directly with Novartis scientists across the global sites of the Novartis Institutes for BioMedical Research (NIBR), including the new world headquarters in Cambridge, MA, USA. The MorphoSys HuCAL GOLD® technology will be an integral part of Novartis’ drug discovery and development efforts, with the goal of identifying and developing multiple HuCAL GOLD®-derived therapeutic antibodies against many different targets. During the three year term of the agreement, which may be extended up to a total of five years, Novartis will fund internal research at MorphoSys that will generate and optimize HuCAL GOLD® antibodies against targets identified by Novartis. In addition, Novartis will have access to the current MorphoSys HuCAL GOLD® library at two of its sites. This technology, in conjunction with Novartis’ leading research and development capabilities, will potentially enable Novartis to shorten the time needed to generate novel therapeutic as well as research antibodies.

Additionally, under the terms of this collaboration Novartis will be MorphoSys’ first partner to receive a non-exclusive option on internalization of the entire MorphoSys technology platform, which would trigger an additional payment by Novartis to MorphoSys.

Underscoring the strategic nature of the collaboration, Novartis will make an approx. € 9 million investment in MorphoSys by purchasing non-interest bearing convertible bonds of MorphoSys. The convertible bonds can be converted into 490,133 common MorphoSys shares, to be issued from conditional capital. In addition, MorphoSys will receive over US$ 30 million in committed R&D funding and technology license fees over the first three years. MorphoSys also stands to receive technology license payments, research and developmental milestones, as well as royalties on marketed antibody products.

“This is our largest collaboration to date. We are delighted to see our HuCAL® technology become an integral part of drug development at Novartis,” commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. “Building on the strengths of both companies, this collaboration will focus on the seamless transition of HuCAL® antibodies from target validation tools to optimized human therapeutic products. Together with Novartis, we will apply the HuCAL® technology on a large scale in treating disease.”

About MorphoSys:
MorphoSys develops and applies innovative technologies for the production of synthetic antibodies, which accelerate drug discovery and target characterization. Founded in 1992, the Company’ s proprietary Human Combinatorial Antibody Library (HuCALâ) technology is used by researchers worldwide for human antibody generation. The Company currently has licensing and research collaborations with Bayer (Berkeley, California/USA), Biogen Idec Inc. (Cambridge, Massachusetts/USA), Boehringer Ingelheim (Ingelheim, Germany), Bristol-Myers Squibb (Wilmington, Delaware/USA), Centocor Inc. (Malvern, Pennsylvania/USA), GPC Biotech AG (Munich/Germany), Hoffmann-La Roche AG (Basel/Switzerland), ImmunoGen Inc. (Cambridge, Massachusetts/USA), Oridis Biomed GmbH (Graz/Austria), Pfizer Inc. (Delaware/USA), ProChon Biotech Ltd. (Rehovot/Israel), Schering AG (Berlin/Germany) and Xoma Ltd. (Berkeley, California/USA). For further information please visit the corporate website at: http://www.morphosys.com/.

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.

About Novartis
Novartis AG (NYSE: NVS) is a world leader in pharmaceuticals and consumer health. In 2003, the Group’s business achieved sales of USD 24.9 billion and a net income of USD 5.0 billion. The Group invested approximately USD 3.8 billion in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ about 78, 500 people and operate in over 140 countries around the world. For further information please consult http://www.novartis.com.

Disclaimer:
This release contains certain forward-looking statements, relating to the Company’s business, which can be identified by the use of forward-looking terminology such as “will present”, “potential … to enhance”, “provide treatment options”, “committed to developing”, “to maintain”, or similar expressions, or by express or implied discussions regarding the potential development and commercialization of new products or regarding potential future sales from any such products. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results to be materially different from any future results, performances or achievements that may be expressed or implied by such forward-looking statements. Any such commercialization or sales can be affected by, among other things, uncertainties relating to product development and clinical trials, regulatory actions or delays or government regulation generally, the ability to obtain or maintain patent or other proprietary intellectual property protection and competition in general, as well as factors discussed in the Company’ s Form 20-F filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

For further information, please contact:


MorphoSys AG

Dave Lemus
Chief Financial Officer
Tel.: +49 (0) 89 / 899 27-439
Fax: +49 (0) 89 / 899 27-5309

Dr. Claudia Gutjahr-Löser
Manager Corporate Communications
Tel.: +49 (0) 89 / 899 27-122
Fax: +49 (0) 89 / 899 27-5122

Mario Brkulj
PR Specialist
Tel.: +49 (0) 89 / 899 27-454
Fax: +49 (0) 89 / 899 27-5454

Fintan R. Steele, Ph.D
VP Communications, Novartis Institutes for BioMedical Research
Tel: +1 617 871-3100
Fax: +1 617 871-3331