Dear Shareholders,

2023 was a critical and exciting year for MorphoSys.

Our groundbreaking work brought hope to patients and their families facing the burdens of cancer. This progress is the embodiment of our mission: More life for people with cancer.

Pelabresib – Potential Paradigm Shift in Myelofibrosis Treatment

At the American Society of Hematology (ASH) Annual Meeting and Exposition in December 2023, comprehensive results from our Phase 3 MANIFEST-2 study of pelabresib in combination with ruxolitinib in first-line myelofibrosis were presented to a packed room of over 500 attendees. This study demonstrated that the combination of pelabresib, our investigational BET inhibitor, and ruxolitinib improves all four hallmarks of myelofibrosis – enlarged spleen, anemia, bone marrow fibrosis, and disease-associated symptoms – over standard of care at 24 weeks, showcasing the potential for this combination therapy to shift the treatment paradigm for this debilitating and deadly disease.

Notably, in the MANIFEST-2 study, pelabresib and ruxolitinib nearly doubled the proportion of patients achieving at least a 35% reduction in spleen volume (SVR35) over placebo and ruxolitinib, meeting the primary endpoint of the study. This was a meaningful result given the known association between spleen volume reduction and patient survival. Additionally, compared with placebo plus ruxolitinib, the combination of pelabresib and ruxolitinib showed a strong positive trend in reducing symptom burden and improvements across measures of anemia and bone marrow fibrosis. Very importantly, the pelabresib and ruxolitinib combination also demonstrated safety results in line with assessments from prior clinical trials.

While JAK inhibitors have been an important therapeutic advancement since first being approved in 2011, patients with myelofibrosis urgently need new options to treat this disease. Pursuing approval for pelabresib in first-line myelofibrosis is our top priority. We are now diligently preparing regulatory filings with the intention of submitting applications to the U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA). We are confident that our comprehensive pelabresib data package will provide impactful evidence to these regulatory agencies.

Monjuvi® (tafasitamab-cxix) – Sales Growth in Approved Indication

In 2023, eligible patients with relapsed or refractory diffuse large B-cell lymphoma continued to benefit from Monjuvi® (tafasitamab-cxix), a CD19-targeting immunotherapy, in combination with lenalidomide. U.S. net sales grew to US$ 92.0 million (€ 85.0 million) for the full year despite an increasingly competitive environment.

On February 5, 2024, we entered into a Purchase Agreement to sell and transfer all tafasitamab rights worldwide to our long-standing partner, Incyte. We believe Incyte is well positioned to drive tafasitamab’s future growth opportunities forward successfully and more efficiently on its own at this time – ensuring appropriate patients worldwide can benefit from this innovative therapy.

Tulmimetostat – Granted Fast Track Designation by the FDA

Beyond pelabresib, we are also very pleased with the progress of tulmimetostat, our investigational next generation dual inhibitor of EZH2 and EZH1 designed to restore normal gene expression. Preliminary data from our Phase 2 clinical study, presented at the American Society of Clinical Oncology Annual Meeting in June 2023, were met with excitement by physicians, as tulmimetostat showed deep responses in heavily pre-treated patients across a broad array of advanced solid tumors and lymphomas.

In September 2023, the FDA granted Fast Track designation for tulmimetostat for the treatment of patients with advanced, recurrent, or metastatic ARID1A-mutated endometrial cancer, whose disease has progressed following at least one prior line of treatment. The designation underscores tulmimetostat’s potential in patients with limited treatment options. We are continuing investigations of this promising agent and look forward to further elucidating its therapeutic potential.

Strong Financial Resources

In 2023, we maintained a strong financial position, bolstered by our successful raise of € 102.7 million in gross funding following the release of results from our Phase 3 MANIFEST-2 study of pelabresib in first-line myelofibrosis. With this achievement, our cash currently amounts to € 680.5 million, giving us a runway until early 2026.

Grateful for Your Support as We Forge Ahead on Our Journey

Despite a challenging external environment, we delivered on all strategic priorities in 2023, resulting in a strong, mid-to late-stage oncology pipeline with several best and first-in-class opportunities – with pelabresib at the forefront.

As a result of our progress, on February 5, 2024, we also announced that MorphoSys had entered into a Business Combination Agreement to be acquired by Novartis – building on a decade-long development partnership. Novartis intends to offer € 68.00 per share in cash for all MorphoSys’ outstanding common shares, representing a total equity value of € 2.7 billion. The offer price corresponds to a premium of 94% and 142% on the volume weighted average price during the last month and three months, as of the unaffected January 25, 2024 close, respectively.

After a thorough review of all strategic options, we firmly believe that the decision to enter into this agreement with Novartis is in the best interest of MorphoSys, our shareholders, and, most importantly, cancer patients and their families. I am confident that Novartis’ global footprint and leadership in oncology innovation will accelerate the speed and scale at which the significant needs of cancer patients are addressed.

For shareholders, Novartis’ offer provides attractive, immediate, and certain cash value. For cancer patients, Novartis will help accelerate development opportunities and maximize the commercial potential of pelabresib to benefit patients worldwide. Novartis has the necessary financial resources, additional scientific experience, and global footprint, which are unavailable to MorphoSys as a standalone biotech company, to accomplish these goals. The acquisition process is progressing steadily, and we expect to close the proposed transaction in the first half of 2024.

Our progress and the bright future ahead would not have been possible without our exceptional team. I am deeply appreciative of the hard work and unwavering dedication shown by every colleague at MorphoSys. I take immense pride in all we have accomplished together.

I would also like to extend my gratitude and sincere thanks to our shareholders, clinicians, patients, and their families for their trust and steadfast support of our clinical and research endeavors.

What an incredible year 2023 was at MorphoSys, as we continued our pursuit of innovative medicines for cancer patients. We eagerly look forward to accomplishing more together in 2024.

Sincerely,

Jean-Paul Kress, M.D.
Chief Executive Officer