Business Ethics and Compliance

This chapter deals with MorphoSys’ compliance organization and anti-corruption strategy, bioethics in preclinical research as well as in clinical development, and selling practices and labeling.

Compliance Organization and Anti-Corruption

We are committed to good corporate governance practices which include the highest standards in business ethics and compliance as set up in our ›› Code of Conduct. For further information please also see our latest ›› Corporate Governance Report. With the acquisition of Constellation Pharmaceuticals the organizational structure of the compliance department changed. The Head of Global Compliance is now responsible for MorphoSys AG, MorphoSys US Inc. and Constellation Pharmaceuticals. We recognized that it is critically important to ensure the same commitment to business ethics across all three companies. MorphoSys AG, MorphoSys US Inc. and Constellation Pharmaceuticals share a Code of Conduct, and are under the scope of MorphoSys Global policies to help achieve this goal.MorphoSys’ Compliance Management Program (CMP) addresses the needs of various organizations across the company, including Research, Development, Commercial, Medical Affairs, and others.

Our Global Compliance Committee comprises three Management Board members of MorphoSys AG, the General Manager of MorphoSys US Inc., the Site Head of Constellation Pharmaceuticals and five executives in the legal, compliance, medical and human resources functions, and is chaired by the Head of Global Compliance. The Committee meets quarterly and is available to our employees as a point of contact at all times.

Compliance-Management-Programm (CMP)

Our U.S. Compliance Committee has representation from U.S. business heads and meets quarterly to discuss U.S.-specific activities and compliance with applicable laws and regulations. The U.S. Compliance Committee is chaired by the U.S. General Counsel and Head of U.S. Compliance.

Our Compliance Subcommittee with Incyte meets quarterly as well to discuss compliance matters related to co-commercialization. Additionally, the Head of Global Compliance provides a report twice a year to the Audit Committee of the Supervisory Board, and coordinates different aspects of MorphoSys’ CMP based on the feedback.

Our maxim “Integrity in all we do” sets the direction for all our business activities. Our CMP addresses anti-bribery and anti-corruption topics in line with our corporate culture, our values and applicable internal and external regulations. It is set up to protect patients, investors, other stakeholders, and MorphoSys´ reputation thereby supporting business continuity and sustainable growth.

Our goal is to nurture the culture of integrity and compliance and prevent compliance violations as far as possible through continuous risk assessment, monitoring of our activities, and training of all our employees.

Focus in 2021

In 2021 our main focus was the execution of Monjuvi® commercialization and the integration of Constellation Pharmaceuticals. We are working on a new Code of Conduct which will be implemented in 2022 and we are working on a new e-learning platform for our new Code of Conduct and Anti-Bribery concepts that will guide our employees on applicable standards and best practices. As our business model has evolved we updated our MorphoSys Credo to include our commitments regarding commercialization and bringing medicines to patients. In the fourth quarter of 2021, we conducted a compliance risk assessment which included several interviews with MorphoSys employees in Germany and the U.S. as well as an online survey based on a tailored risk register. This compliance risk-assessment covered MorphoSys AG and MorphoSys US Inc., and will inform our compliance strategy and efforts going forward in 2022.

Training also remains an important focus of our CMP. It is our goal to ensure that our employees receive relevant compliance training in line with our values, culture and ethical standards. Examples of compliance training delivered in 2021 include: appropriate use of social media, compliance with transparency regulations, and compliant interactions with healthcare professionals and other stakeholders. Company-wide training incorporated Constellation Pharmaceuticals employees after the acquisition, including training on thoughtful communication. The U.S. organization also conducted numerous training and employee engagement activities on U.S.-specific laws and associated compliance policies.

MorphoSys utilizes various methods to deliver training, including via “live” webcast presentation of content, delivery of e-leaning modules through the Company’s new learning management platform Learn4MOR, and through regular knowledge assessments via the Company’s intranet page. All training courses have been well received by employees and have already been successfully completed by a vast majority of the workforce.

In November 2021 we held our second “Compliance Week,” which was successfully launched in 2020. In 2020, the Compliance Week generated a great deal of interest in the Company, including successful social media posts on Twitter and LinkedIn and internal adoption of Compliance concepts such as “Integrity in all we do” throughout various business functions. The 2021 Compliance Week increased awareness of the Compliance function, provided the opportunity to communicate live with the Compliance team for all MorphoSys employees in Planegg and Boston.

Maintaining open lines of communication is also a fundamental aspect of our CMP. As part of the Constellation Pharmaceuticals integration, the Company provided access to the Integrity Line of MorphoSys. This electronic incident management system is hosted by an external provider, and allows employees to report any compliance concerns in three languages, along with having the option to remain anonymous. MorphoSys frequently informs employees about the MorphoSys Integrity Line in a variety of channels, including training, communication, and other awareness initiatives. We make clear that retaliation or harassment against anyone who makes a report in good faith is prohibited. The MorphoSys Compliance department reviews potential compliance cases, escalates them to the responsible local or global Compliance Committee where necessary, and manages investigations and follow-up actions, where required, in line with the respective policies.

MorphoSys frames its CMP on several key regulations and guidances, where notably we use the Seven Elements of a Compliance Management Program as communicated by the Office of Inspector General (OIG), the updated Guidance 2020 of the U.S. Department of Justice, as well as applicable EU Directives and regulations. In addition, there are Entity Level Controls in the framework of Sarbanes-Oxley Act (SOX) addressing key compliance elements on a regular basis. These indicators are constantly monitored and improved.

Our key priorities for 2022 will be finalizing the integration of Constellation Pharmaceuticals regarding the extension of our global policies as well as building lean and business-friendly processes including the approval process for Constellation Pharmaceuticals activities. Additional priorities in 2022 include compliance with the U.S. Open Payments law (or “Sunshine Act”) and related U.S. state laws on a federal and state level for which MorphoSys has been preparing via successful launch of an aggregate spend tool, continuing to develop relevant compliance training and communication, and continuing a risk-based approach to monitoring our business activities to ensure compliance and continuous improvement.

Bioethics in Preclinical Research

Our research and discovery activities are guided by the highest ethical standards. As European and international legislation requires animal testing to determine the toxicity, pharmacokinetics and pharmacodynamics of drug candidates, we as a biopharmaceutical company cannot forgo this type of testing. Animal testing for our drug candidates at MorphoSys AG is outsourced to contract research organizations (CROs) as we do not have laboratories suitable for this type of research.

As part of our product development activities at MorphoSys AG, we award contracts for animal studies in accordance with the 3Rs principle of animal welfare (Replace, Reduce, Refine) as set out in national, European and international regulations. We aim to improve animal welfare by closely monitoring the adherence to the 3Rs principle. The principle describes the use of methods in research which replace the use of animals where possible, which enable researchers to obtain the same level of information from fewer animals (reduce), and which alleviate or minimize potential pain or distress for the animals (refine).

We have established a quality assurance system with written standard operating procedures (SOPs) at MorphoSys AG that are continuously updated to ensure that we work only with those CROs who comply with local, national and international guidelines and animal welfare regulations.

The institutions we work with also need to ensure that they are complying with the ethical principles and legal requirements involving animal research. In case Good Laboratory Practice (GLP) studies are conducted, as required by applicable the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) guidelines, these facilities are required to have a GLP quality assurance certificate. These steps are intended to help fulfill our moral obligation to treat animals respectfully as well as our legal obligations. On-site visits are also conducted to check the contract research institutes’ test centers, the training and competence of the staff responsible and animal welfare.

The department is in regular contact with the Head of Research, who reports to the responsible Management Board Member for Research and Development.

Focus in 2021

In the reporting year MorphoSys AG continued to strictly apply the 3Rs principle of animal welfare which is tracked by various metrics. All scientists working in the preclinical research area at MorphoSys AG are instructed in regular meetings to comply with this principle, and 3R newsletters are distributed.

One CRO visit planned for 2021 was conducted by MorphoSys AG and further visits are planned for next year.

Bioethics in Clinical Development

We conduct clinical trials in accordance with the ICH Harmonized Tripartite Guidelines for Good Clinical Practice (ICH-GCP), with applicable local regulations and with the ethical principles laid down in the Declaration of Helsinki. At MorphoSys, we make it a priority to protect the rights, safety and well-being of all participants involved in clinical trials. Clinical trials are only initiated after the Independent Ethics Committee (IEC)/Institutional Review Board (IRB) and/or regulatory authorities give written approval or a favorable opinion as required. In addition, written informed consent of clinical trial participants must be obtained prior to their participation.

Focus in 2021

The acquisition of Constellation Pharmaceuticals has accelerated the growth of the MorphoSys pipeline with the addition of two compounds in mid- to late-stage clinical development, CPI-0209 and pelabresib respectively.

Focus in 2021 was the integration of Constellation Pharmaceutical’s development activities into MorphoSys, leveraging on the current established infrastructure of MorphoSys and building one global Development Organization.

Despite an improving situation of the global COVID-19 pandemic, restrictions on visits to healthcare facilities, increased demands on healthcare services and changes in the availability of study personnel are still present. MorphoSys continuously monitors the situation and decides on a case-by-case basis to ensure the safety of patients, study personnel and other stakeholders, as well as to safeguard data integrity in the conduct of all ongoing studies of tafasitamab, felzartamab, pelabresib and CPI-0209 programs.

Our Clinical Pipeline

Selling Practices and Labeling

In 2020 the U.S. Food and Drug Administration (FDA) approved our immunotherapy Monjuvi® (tafasitamab-cxix) under accelerated approval. MorphoSys US Inc. and Incyte have a partnership to co-commercialize Monjuvi® in the U.S. Outside of the U.S., Incyte has exclusive commercialization rights of tafasitamab-cxix which is sold under the trade name Minjuvi®. As Monjuvi® is co-commercialized, a joint multidisciplinary review committee (RC) has been established to review and approve all commercial materials and tactics. The joint RC consists of Legal, Medical and Regulatory functional reviewers represented by both MorphoSys US Inc. and Incyte and convenes on a weekly basis, in order to review and approve materials. For commercial materials not covered by the co-commercialization agreement with Incyte, MorphoSys US Inc. has an independent RC, which consist of the same functional representatives.

All sales and marketing materials must be reviewed and approved by the joint RCs prior to submission to the health authorities. Due to the accelerated approval subpart E pathway for Monjuvi®, once commercial materials are submitted to the FDA, there is a 30-day review period required prior to the use of any promotional materials supporting the product.

The formal training of our sales representatives is an essential element of our commercial operations aligned to business ethics and compliance policies. Each representative completes detailed training on the product and disease state. Successful certification is required before engagement with any healthcare professionals. A learning management system and a new validated learning platform tracks training progress and certification. In addition, our sales representatives are trained on all relevant compliance and legal policies by the MorphoSys compliance and legal teams. As we are consistently evaluating the evolving landscape and the effectiveness of our promotional materials, enhancements may be made to our materials, including the use of new data, as appropriate. Subsequent and continuous training and certification of the sales representatives on how to appropriately educate customers using new material is always planned and completed prior to actual use.

The balance of efficacy and safety consistent with product labeling is always displayed in all promotional materials. As this is the primary information that can be shared with healthcare providers, we attach great importance to ensure all relevant information is included to achieve the highest quality standards.

Focus in 2021

Despite the global COVID-19 pandemic, our focus in 2021 was to continue to execute on the launch of Monjuvi® to support patients with relapsed or refractory DLBCL (r/r DLBCL). As the pandemic impacted the physical access to hospitals and other healthcare facilities across the U.S., MorphoSys US Inc. adapted its engagement approach and accelerated our digital personal and non-personal efforts to provide educational information to healthcare professionals and customers.We anticipate the mix between in-person and virtual customer engagements will continue to evolve during the COVID-19 pandemic.

In addition to adapting our customer engagement model, we have made it easier for healthcare professionals to directly request the information they need to support treatment decisions. Now available on the MorphoSys website is an option for healthcare providers to compliantly notify the organization of their interest for an engagement with a sales representative.

In 2022, we plan to continue in the future to increase the awareness of Monjuvi® and its efficacy and safety data with healthcare professionals so that they can make the best treatment choices for their patients impacted by r/r DLBCL. We will continue in the future to improve our peer-to-peer healthcare educational resources inclusive of case-based roundtable discussions and the development of Hematologic Oncology expert “On Demand” video series reviewing Monjuvi® data. Lastly, to increase our understanding of and support for the people living with and directly impacted by DLBCL, we will appropriately and compliantly strengthen our partnerships in the future with patient advocacy groups.