Our Sustainability Approach

About this Non-Financial Group Report

With the following separate non-financial report, MorphoSys AG provides information pursuant to Section 315b and Section 289b ff. HGB (German Commercial Code) on material non-financial aspects for the Group’s fiscal year 2021 (January 1, 2021 to December 31, 2021) and thus on those aspects relevant for an understanding of the Group’s business development, results of operations and group management as well as the effects of its business activities and pursuant to Article 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on establishing a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the “EU Taxonomy”).

The requirements of the CSR Directive Implementation Act (CSR-RUG) were taken into account in the preparation of the non-financial report. In particular, the analysis of the material aspects as well as the description of the concepts were additionally oriented on the Global Reporting Initiative (GRI) standards. A full application of the GRI standard is too extensive for the MorphoSys Group at the current time and therefore not expedient.

Unless otherwise stated, the report applies to the entire MorphoSys Group according to the scope of consolidation for financial reporting purposes. In July 2021, we completed the acquisition of Constellation Pharmaceuticals Inc. (hereinafter “Constellation Pharmaceuticals”). The transaction added two clinical-stage cancer drug candidates, that complement and enhance MorphoSys’ own proprietary pipeline. Constellation Pharmaceuticals is therefore also in the scope of this report, and statements relating only to Constellation Pharmaceuticals are shown accordingly.

PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) has been engaged on a voluntary basis to perform a limited assurance on the non-financial report in accordance with ISAE 3000 (Revised). The report can be found ›› here.

References made in this non-financial report to information outside of the Annual Report are additional information and are therefore not part of the assurance engagement.

Our Understanding of Sustainability

We are conscious of the responsibility we share for present and future generations and see sustainable action as a prerequisite for long-term business success. MorphoSys is dedicated to the discovery, development and commercialization of outstanding, innovative therapies for patients, with a focus on cancer and autoimmune diseases. To ensure sustainable business success, we incorporate Environmental, Social and Governance (ESG) into our daily business and base our business model on sustainable growth that is aligned with the interests of stakeholders. We are focused on creating long-term value and weigh our actions in terms of their impact on the environment, society, patients and employees.

Our Business Model

Information on our business model can be found in the 2021 Annual Report on ›› page 9.

Non-Financial Risk Analysis

According to the CSR-RUG on the disclosure of non-financial information, companies must, in addition to reporting on material aspects, also disclose related risks that are linked to their own business activities, business relationships, products and services, and that are very likely to have or will have serious negative effects on the material aspects according to Section 289c (2) HGB. The Group has not identified any such risks in the financial year under review on a net basis in accordance with Section 289c (3) Nos. 3 and 4 HGB. Further information on opportunities and risks can be found in the Risk and Opportunity Report section of the 2021 Annual Report ›› page 61

Statement on the Impact of the Global COVID-19 Pandemic

MorphoSys recognizes the impact of the global COVID-19 pandemic on healthcare systems and society worldwide, as well as the resulting potential impact on preclinical and clinical programs, especially clinical trials. Measures to mitigate the impact of the pandemic on MorphoSys’ employees and patients were implemented immediately. We continuously monitored the situation and took appropriate decisions on a case-by-case basis to ensure the safety of our employees, patients, clinical trial personnel and other stakeholders, as well as to safeguard data integrity.

More detailed information on mitigation measures and efforts to ensure normal business operations in the different areas can be found in the respective paragraphs of this report.

Materiality Analysis

The report presents the material non-financial aspects that have been determined according to their business relevance and the Group’s impact on the aspects according to Section 289c (3). The analysis was based on a business analysis and involved the responsible departments as well as MorphoSys’ Executive Committee in 2020.

In 2021 we reviewed the analysis of all identified non-financial aspects of sustainability at MorphoSys. A yearly review is necessary to consider all current developments in selecting the most material topics for our non-financial report and to adjust the priorities as necessary. The validation has been done by internal experts and two members of our Management Board, and we have made an adjustment of the material topics accordingly.

The following three topics have been identified as most relevant: business ethics and compliance, social matters, and employee matters with the respective subcategories.

Materiality Analysis

EU Taxonomy Regulation

Background and objectives of the regulation

On June 22, 2020, the EU Taxonomy Regulation was published in the Official Journal of the European Union (EU) which entered into force on July 12, 2020. The basis for this is the Sustainable Finance Action Plan, which is one of the four pillars of the European Green Deal. To achieve the climate and energy targets 2050 of the EU it is necessary to redirect capital flows towards a more sustainable economy.

The EU Taxonomy is a classification system for environmentally sustainable economic activities. The intention is to create greater transparency with regard to the degree of sustainability of corporate activities, investments and operating expenditures.

Initial reporting for fiscal year 2021

According to Art. 8 EU Taxonomy Regulation and Art. 10 of the Art. 8 Delegated Act, all companies covered by the CSR-RUG must also provide information on the share of their group turnover, capital expenditure (CapEx) and operating expenditure (OpEx) for the reporting period 2021, which are associated with Taxonomy-eligible economic activities related to the first two environmental objectives (climate change mitigation and climate change adaptation). As the CSR-RUG applies to MorphoSys, we provide information on the EU taxonomy within our non-financial report.

Basis of reporting

Identification of Taxonomy-eligible activities

The first step for the implementation of the EU Taxonomy for MorphoSys was the identification of the activities that could apply to our business activities based on the NACE (nomenclature statistique des activités économiques dans la Communauté) codes. As the business model of MorphoSys is to discover, develop and deliver innovative medicines for patients impacted by cancer and autoimmune diseases, we have not identified any EU Taxonomy-eligible economic activities. MorphoSys is therefore not covered by the Climate Delegated Act and not identified as a relevant source of greenhouse gas emissions.

Accounting Policy

The specification of the KPI´s is determined in accordance with Annex 1 of Art. 8 Delegated Act. We determine the Taxonomy-eligible KPI´s in accordance with the legal requirements. In the following section we describe the accounting policy for turnover, Capital Expenditure and Operating Expenditure.

Turnover KPI

Definition

The turnover KPI is defined as Taxonomy-eligible turnover from product sales, license fees, milestone payments, service fees and royalties (numerator) divided by our total group turnover (denominator).

For further details on our accounting policies regarding our total turnover, please see ›› page 119 of our Annual Report 2021.

As we have not identified any Taxonomy-eligible activities for the financial year 2021, this results in a share of Taxonomy-eligible economic activities in our total turnover of 0%.

Reconciliation

Our consolidated turnover can be reconciled to our consolidated statement of profit and loss (IFRS) on ›› page 103 of our Annual Report 2021 (“Revenues”).

Capital Expenditure (CapEx) KPI

Definition

The CapEx KPI is defined as Taxonomy-eligible CapEx (numerator) divided by our total CapEx (denominator).

The denominator comprises additions to property, plant and equipment and intangible assets during the financial year under review before depreciation, amortization and re-measurements, including those resulting from revaluations and impairments as well as excluding changes in fair value. It includes additions to fixed assets (IAS 16), intangible assets (IAS 38) and right-of-use assets (IFRS 16). Additions resulting from business combinations are also included. Goodwill is not included in CapEx as it is not defined as an intangible asset under IAS 38. As we report the numerator as zero, there is no risk of double counting of economic activities.

For further details on our accounting policies regarding our CapEx, please see ›› page 128 and 129 of our Annual Report 2021.

Reconciliation

Our total CapEx can be reconciled to our consolidated balance sheet (IFRS) on page 105 of our Annual Report 2021 (“Property, Plant and Equipment”, “Intangible Assets”); to our notes to the balance sheet on page 128 (“5.8 Property, Plant and Equipment- Additions”), on page 128 (“5.9 Leases-Additions”) and on page 129 (“Intangible Assets-Additions”).

Operating Expenditure (OpEx) KPI

Definition

The OpEx KPI is defined as Taxonomy-eligible OpEx (numerator) divided by our total OpEx (denominator).

Our OpEx has been determined via the following accounts as of the reporting date December 31, 2021: research and development costs, building renovation costs, short-term leases, maintenance and repair costs and all other direct costs necessary to operate the asset. This does not include depreciation, amortization, impairment, and raw material costs. For further details on our accounting policies regarding our OpEx, please see ›› page 88 of our Annual Report 2021.

Explanations on the numerator of the CapEx KPI and the OpEx KPI

As MorphoSys has not identified Taxonomy-eligible economic activities for the reporting period 2021, we do not record CapEx and OpEx related to Taxonomy-eligible economic activities in the numerator of the CapEx KPI and OpEx KPI.

Only “category c” for CapEx and OpEx apply to MorphoSys. This refers to economic activities that contribute to become low-carbon or to reduce greenhouse gas emissions (Sect. 1.1.2.2. (c) of Annex 1 to the Art. 8 Delegated Act). No expenses were inurred in fiscal year 2021.

MorphoSys is committed to sustainability but due to the current EU Taxonomy requirements, we do not have EU Taxonomy-eligible economic activities. Furthermore, due to our business model and non-manufacturing nature, we have currently no sustainable CapEx and OpEx.

Proportion of Taxonomy-eligible and EU Taxonomy-non-eligible economic activities in total turnover, CapEx and OpEx