MorphoSys and Novartis 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. In November 2012 MorphoSys and Novartis agreed to update the alliance with the latest technology platform Ylanthia. This expansion of the existing strategic alliance marks the commercial launch of Ylanthia and should result in even better therapeutic antibodies which can be made faster than was previously possible.
In accordance with the contract, the collaboration has ended at the end of November 2017. MorphoSys will continue to benefit from potential success-based milestone payments as well as royalties based on net sales related to products originating from the collaboration. At the end of 2017, the collaboration has resulted in 14 antibodies in clinical development and numerous further programs currently in preclinical and research stages, thus making our collaboration with Novartis one of the most successful antibody alliances in our industry.