MorphoSys sharpened its focus on therapeutic applications in 2012 and made clear progress in respect of its future technologies and products. The market launch of the new technology platform Ylanthia  enabled the start of the first revenue-generating partnership in 2012. The foundations for future out-licensing agreements were further improved through positive clinical data on its proprietary drug programs MOR103 and MOR208. The sale of substantially all of the business segment AbD Serotec also increased MorphoSys’s financial flexibility to further extend the therapeutics business through strategic transactions and investments in proprietary R&D  activities.

Operations and Business Environment

Organizational Structure


The MorphoSys Group, made up of MorphoSys AG and its subsidiaries, develops and commercializes high-quality antibodies for therapeutic as well as research and diagnostic applications. Industry-leading proprietary technologies form the basis of business activity for the three business segments. The Partnered Discovery segment operates therapeutic development programs for drug candidates in cooperation with renowned biotechnology and pharmaceutical companies. Together with partners, this segment works on solutions to the most urgent health issues of our time. The second segment, Proprietary Development, also operates in the therapeutic market. The goal of this segment is to develop proprietary drug candidates based on innovative therapeutic antibodies made using the Company’s technology. These are to be out-licensed to partners after successful proof of clinical efficacy. The third operating segment, AbD Serotec, supplies public and industrial research institutions as well as diagnostics groups with premium antibodies. The sale of substantially all1 of MorphoSys’s research and diagnostics division, AbD Serotec, to Bio-Rad2 was agreed on 16 December 2012 in order for MorphoSys to focus on the development of proprietary drugs and technologies. The transaction was concluded in January 2013, which has numerous effects on the 2012 reporting year as stated later in this report.

In 2012, MorphoSys had five sites in Germany, Great Britain and the USA. MorphoSys AG, as the parent company of the MorphoSys Group, is located in Martinsried, Germany, and carries out central group functions including accounting, controlling, human resources, legal, intellectual property, corporate communications and investor relations. The two segments Partnered Discovery and Proprietary Development are located here, also. The R&D activities of the AbD Serotec unit are located in Puchheim near Munich, Germany, and Kidlington near Oxford, United Kingdom. MorphoSys’s international sales are handled by the national offices in Germany, the United Kingdom and in the United States of America. With the sale of substantially all1 of the AbD Serotec business unit to Bio-Rad, agreed at the end of 2012, the four sites in Puchheim, Düsseldorf, Kidlington and Raleigh will be transferred to Bio-Rad during 2013.

MorphoSys continues to carefully consider locational advantages such as good infrastructure, a qualified workforce, an appropriate supplier base, plus political support for biotechnology and life sciences as well as synergies resulting from cooperation with regional research institutes in order to support its future growth objectives.


1 Bio-Rad acquired the AbD Serotec segment, not including the subsidiary Poole Real Estate Ltd. and the Slonomics  technology
2 Bio-Rad Inc. and subsidiaries of Bio-Rad Inc., including MorphoSys AbD GmbH, will subsequently be named “purchaser” respectively “Bio-Rad”



MorphoSys AG, a German stock corporation listed in the Prime Standard segment on the Frankfurt Stock Exchange, heads the MorphoSys Group. In accordance with the German Stock Corporation Act, MorphoSys AG has a dual management structure, with the Management Board as the leading body. Its four members are appointed and supervised by the Supervisory Board. For more information regarding Group management, supervision and corporate governance in general, please see the Corporate Governance Report. The Senior Management Group, which completes the MorphoSys AG management team, comprises 14 people from the different MorphoSys departments. In this reporting year, there have been no changes to the legal structure of the MorphoSys Group or its entities compared to the year before. However, the sale of substantially all of the AbD Serotec segment to Bio-Rad completed in January 2013, has laid the foundation for a wide-reaching simplification of the Group-structure and a focus on the therapeutic markets.



MorphoSys’s technology development forms the foundation of its success. For more than ten years the Company has been working with its HuCAL  antibody library, a collection of billions of fully human antibodies. With 76 therapeutic HuCAL programs currently in development, the most advanced of which is a phase 3 trial in Alzheimer’s disease, the Company has one of the broadest product pipelines in the industry.

In order to successfully drive research work in the future, the next generation of antibody technologies was launched under the name of Ylanthia. The Ylanthia technology was specially conceived to eliminate current obstacles in the development of therapeutic antibodies, such as the limitations of biophysical properties or a lack of structural diversity. If necessary, antibodies from the Ylanthia library can be precisely optimized with the help of the Slonomics technology. In this respect Ylanthia differs from the HuCAL platform, which builds on the modular design of antibody genes using predefined gene cassettes for the optimization of antibodies. In November 2012, MorphoSys successfully began marketing this innovative platform with an extension to its existing commercial agreement with Novartis.

In addition to therapeutic antibodies, MorphoSys strives to complement its technology platform by securing access to new markets and molecule classes. The technology alliance and equity investment in the Dutch start-up Lanthio Pharma, a pioneer in the field of modern peptide compounds, which was signed in 2012, is an example of this endeavor.


MorphoSys is a leading provider of superior antibody technologies in the therapeutic market. With HuCAL and the novel Ylanthia library, the Company offers established and highly innovative technologies for the pharmaceutical and biotechnology markets. In addition to these services MorphoSys also undertakes proprietary drug development and participates in the successful development of therapeutic antibody candidates. The Company relies on partnerships with pharmaceutical and biotechnology companies to earn revenues that are reinvested in proprietary R&D activities. Alongside significant investments in proprietary development programs, MorphoSys has solid operating results – a unique characteristic in the biotechnology industry.

Smaller biopharmaceutical companies in particular faced great financial challenges in the reporting year, not least because of the global economic situation. This has led to restrictive financing opportunities for many companies that are focused on capital- intensive and long-standing research activities, which require hefty financial resources. In this market environment, MorphoSys can assert itself best as a progressive product and technology provider with extensive capital resources.


The market for therapeutic antibodies is one of the fastest growing in human healthcare. In 2012, the human monoclonal antibody adalimumab (Humira®) led the list of top-selling drugs worldwide for the first time.

According to Datamonitor, there are more than 300 monoclonal antibody candidates currently in clinical development. MorphoSys currently has twenty antibody candidates in the clinical pipeline. Oncology accounts for the highest number of programs in clinical development, with around half of all programs in the various development phases. After oncology, the second-largest therapy area includes autoimmune and inflammatory diseases. The third-most represented therapy area is infectious diseases. These research fields continue expanding with the introduction of new indications such as osteoporosis, muscular atrophy and cholesterol control. Additionally, newly created technologies such as antibody drug conjugates (ADCs), bispecific and trifunctional antibodies, domain antibodies, nanobodies and Fc-antibodies illustrate the diversity of the antibodies market.


Generic Name   Brand®   Company   Indications
(FDA*/EMA* approved)  
Revenues esti-
mate for 2012
in US$ billion  



Rheumatoid Arthritis*, Juvenile Idiopathic Arthritis, Psoriatic Arthritis, Ankylosing Spondylitis, Crohn’s Disease, Plaque Psoriasis 9.48



J&J, Merck, ­Mitsubishi Tanabe

Crohn’s Disease, Pediatric Crohn’s Disease,
Ulcerative Colitis, Pediatric Ulcerative Colitis, Rheumatoid Arthritis, Ankylosing Spondylitis, Psoriatic Arthritis, Plaque Psoriasis*




Non–Hodgkin’s Lymphoma (NHL), Chronic Lymphocytic Leukemia (CLL) Rheumatoid Arthritis (RA), Granulomatosis with Polyangiitis (GPA) and Microscopic Polyangiitis (MPA) 6.94

Adjuvant Breast Cancer, Metastatic Breast
Cancer, Metastatic Gastric Cancer



Metastatic Colorectal Cancer (mCRC), Non-Squamous Non-Small Cell Lung Cancer (NSCLC), Glioblastoma, Metastatic Renal Cell Carcinoma (mRCC) 5.98

Source:, article as of 9 October 2012

In the commercialization of its antibody technologies, MorphoSys competes with other providers of antibody technologies that can be divided into two categories:

  • Antibody and antibody fragment technologies as offered by companies such as Ablynx, Adimab, Bioinvent, Dyax and Genmab.
  • Antibody-mimicking structures (scaff olds), such as those from Molecular Partners (Switzerland) or Pieris (Germany).

There are no market data available that comprehensively capture the marketing of technologies in the area of antibody development. MorphoSys currently has 20 antibody programs in clinical development. Measured by this number, MorphoSys occupies a leading position in this field with its HuCAL technology platform.

MorphoSys competes in the area of therapeutic antibody development and the out-licensing of clinical development candidates with a range of companies. Examples of MorphoSys’s competition are: Biotest, Genmab, Macrogenics and Symphogen.

MorphoSys has not yet out-licensed any proprietary development programs to date, therefore no information on the market share can be given.



MorphoSys’s Partnered Discovery segment business applies the Company’s proprietary technologies to the research, development and optimization of therapeutic antibody drug candidates in partnerships with pharmaceutical and biotechnology companies. While the development costs are borne by the respective partner, MorphoSys profits further from successful programs in the form of milestone payments and potential royalties on product sales.

The Company’s largest alliance is the 2007 agreement signed with Novartis, a pharmaceutical partner with a growing biologics pipeline. This collaboration was expanded through an additional agreement in November 2012. Within the framework of the agreement, both companies implemented MorphoSys’s next generation antibody platform Ylanthia to generate therapeutic antibodies. MorphoSys plans to broadly license the technology with new partnerships in the future. Partnered drug development allows MorphoSys to be active in a broad range of indications that the Company normally would not pursue due to a lack of expertise, for instance:


With the antibody compound gantenerumab, developed together with its partner Roche, MorphoSys’s portfolio contains a promising treatment option for Alzheimer’s disease (AD). There are currently no drugs that can fundamentally influence the course of AD. In the reporting year 2012, the competitive situation in the Alzheimer’s therapy field changed significantly in terms of the development of existing antibody compounds. Negative trial results with the two therapeutic antibodies bapineuzumab (Pfizer) and solanezumab (Eli Lilly) from patients in the mild to moderate stages of the disease have shifted the focus to earlier intervention. Roche is already carrying out its current pivotal phase 2/3 trial in patients in the early stages of the disease. The HuCAL antibody gantenerumab is now recognized as one of the most advanced compounds in development.


An important goal for MorphoSys is generating value above and beyond its Partnered Discovery segment by developing innovative proprietary antibody products. MorphoSys’s scientists concentrate on indications such as inflammatory and autoimmune diseases, as well as cancer and infectious diseases. The first clinical trial data, published in 2012, support the great potential value of MorphoSys’s proprietary drugs. Furthermore, the solid patent position around our development programs greatly improves the Company’s standing.


Program Name   MorphoSys Partner   Indication   Market Potential  

Roche Alzheimer’s Disease (AD)

  • High unmet medical need due to lack of disease-modifying drugs
  • High potential market growth rate due to aging population, earlier and improved diagnosis and the emergence of ­accompanying immunotherapies that will be prescribed in addition to existing treatments
  • Expected CAGR*: 10.7 %, with a total market size of around US$ 11.8 billion in 2018


Inclusion Body Myositis*

Inclusion Body Myositis:

  • Slowly progressive degenerative inflammatory disorder of skeletal muscles with very low prevalence of 1–9/100.000 (orphan disease)
  • No Curative treatment exists so far


  • Emaciation by waste of muscles and fat
  • 55 % of all cancer patients are affected in the course of their disease. This makes about 1.9 million of 3.5 million cancer patients in the seven major markets*


Janssen Biotech

Rheumatoid Arthritis


  • Life-long disease with high morbidity and severe impact on patients’ quality of life
  • New biologic therapies as market value driver; sales growth to US$ 5.5 billion in 2020; CAGR: 2.2 % (2011 through 2020)*

Rheumatoid Arthritis:

  • Inflammatory autoimmune disease that leads to reduced ­mobility
  • In 2010 there have been about 4.6 million people* with RA
  • Expected CAGR: 2.9 %*, with a market potential of US$ 18 billion in 2020

Sources:, Datamonitor
* Seven major markets: USA, Japan, France, Germany, Italy, Spain and Great Britain


Chronic inflammatory and autoimmune disorders are a substantial social and economic burden, affecting millions of patients worldwide. The IMS Institute for Healthcare Informatics forecasts a world market for the treatment of autoimmune diseases of between US$ 33 billion and US$ 36 billion by 2016.

MorphoSys’s most advanced program, MOR103, targets the GM-CSF  target molecule, an important factor in the pathophysiology of inflammatory diseases. The clinical phase 1b/2a trial for the treatment of rheumatoid arthritis (RA) was concluded in September 2012 with outstanding data on safety and efficacy. A phase 1b trial for multiple sclerosis (MS) continued in 2012. Furthermore, MOR103 was safe and well tolerated and demonstrated a favorable and competitive pharmacokinetic profi le in a clinical phase 1 study in healthy volunteers.

The RA market bears great commercial opportunities; more than 80 % of total turnover already consists of biological therapies. The overall market is constantly growing, with a total estimated value of around US$ 18 billion in 2020. Several transactions in the RA area in recent years underline the interest of pharmaceutical companies in novel biological treatment methods.

Biotechnology drugs already make up the majority of disease-modifying treatment processes in the MS market, both in terms of turnover and the number of approved therapies. The current most-sold MS drugs reach a joint annual turnover of around US$ 11 billion and the market is predicted to grow further. Differences in relation to the course and severity of MS lead to market segmentation into subtypes of the disease, for example relapsing-remitting MS or primary and secondary progressive forms of MS. This segmentation opens up various market approval pathways for new therapeutic compounds.

MOR103 has potential to be the first in class anti-GM-CSF antibody. Other advanced programs in development are mavrilimumab (CAM-3001) from Medimmune, part of the AstraZeneca Group, which is currently being evaluated in a phase 2 clinical trial, MT203 from Amgen and Takeda, and KB003 from Kalobios Pharmaceuticals. MorphoSys is one of the few independent providers to possess a clinically validated GM-CSF antibody, which is available to commercial partners for licensing.

MorphoSys has a collaboration with Galapagos for the discovery and development of antibody therapies based on novel modes of action in bone and joint diseases, including rheumatoid arthritis, osteoporosis and osteoarthritis. Both companies contribute their core technologies and expertise to the alliance. Under the terms of the agreement, Galapagos and MorphoSys will equally share the research and development costs and all future revenues.


The ability of monoclonal antibodies to bind to specific antigens has led to their dominant position in the area of targeted cancer therapies. The global market for innovative biological therapies in cancer treatment is constantly growing. More precisely, the biologicals segment in oncology is forecast to almost double in size by 2014, eventually exceeding US$ 50 billion in the next five to ten years, according to BCC Research. MorphoSys has advanced two proprietary cancer programs, namely MOR202 and MOR208, into clinical development in the past two years.

MorphoSys’s antibody MOR208 targets the molecule CD19, which is of particular interest for many B-cell-derived cancers. The therapeutic market for B-cell malignancies is about US$ 4 – 5 billion according to market research fi rm Decision Resources. Existing biological therapies against B-cell malignancies, including the blockbuster product Rituxan®, target the cell marker CD20. Due to the target molecule being expressed on a broader range of B-cells – compared to CD20  – anti-CD19 antibodies are considered to be an alternative approach. In addition, MOR208 is improved by the modifi cation of the constant Fc part  of the antibody, leading to increased antibody-dependent cellular cytotoxicity ( ADCC  ) and antibody-dependent cellular phagocytosis ( ADCP  ).

MOR208 successfully concluded a phase 1/2a trial in chronic lymphocytic leukemia ( CLL  ) patients in 2012, with initial clinical data presented in December 2012 at the American Society of Hematology’s annual meeting. MorphoSys is planning to start further MOR208 phase 2 trials in non-Hodgkin’s lymphoma ( NHL  ) and in acute lymphoblastic leukemia ( ALL  ).

The most advanced competitive anti-CD19 antibody is Amgen’s antibody blinatumomab (MT103), which is currently being evaluated in phase 2 trials for the treatment of acute lymphoblastic leukemia (ALL). Other clinical programs against the same target are pursued by companies including AstraZeneca/MedImmune and Sanofi /Immunogen. MorphoSys is one of the few independent providers to possess a clinically proven CD19  antibody that is still available to commercial partners for licensing.

In the area of B-cell diseases, various so-called small molecules are also being developed, for example ibrutinib from Johnson&Johnson/Pharmacyclics and idelalisib from Gilead Sciences, which demonstrated very high efficacy in phase 2 trials during 2012.

MorphoSys’s antibody MOR202 is being developed for the treatment of multiple myeloma (MM), and targets CD38. At the end of 2012, the patent protection for MOR202 was further reinforced when the US Patent and Trademark office (USPTO) granted an additional patent for the antibody’s functional properties against CD38.

Despite being a relatively small oncology indication in terms of incidence, the MM market has logged impressive turnover figures in recent years, with a potential market size of US$ 9 billion. significant achievements in clinical practice and the launch of several effi cacious premium-priced drugs have driven market expansion. However, untapped market potential remains for treatments that can improve the survival rate and reduce side effects compared to currently available compounds. Despite major improvements in terms of survival, the disease is only rarely curable and the majority of patients relapse. As a result, alternative treatments like those targeting surface antigen CD38  are especially sought-after. Besides MOR202, there are other development programs targeting CD38: Genmab’s daratumumab, a human monoclonal antibody, is currently involved in a phase 1/2 trial. In August 2012, Genmab signed a partnership with Johnson & Johnson for the further development of daratumumab. Another antibody targeting CD38 is SAR650984 from Sanofi /Immunogen, a humanized antibody in a phase 1 clinical trial. The partnering of daratumumab in the 2012 reporting year in particular demonstrated the pharmaceutical industry’s growing interest in CD38 as a target molecule for the treatment of MM. MorphoSys is one of the few independent providers to possess a CD38 antibody, which is still available to commercial partners for licensing.


The healthcare sector in general is faced with serious cost-cutting measures worldwide due to the economic crisis. Even if good medical care for its population is the stated goal of all states and the demand for new forms of treatment is constantly growing as a result of demographic change, financial cuts can slow the progress of the industry. As a result of funding cuts, governments throughout Europe, the USA and Asia are tightening healthcare provision, and reviewing the general reimbursement of drugs.

As is already the case with small-molecule drugs, generic drug competition due to expiring drug patents is now also increasingly challenging the biopharmaceutical industry. The technological barriers to copying biological drugs, however, remain high. Still, many drug developers, mainly from Europe and Asia, are entering this market now, thereby increasing the pressure on traditional biotechnology companies. According to a market analysis from IMS Institute for Healthcare Informatics, the worldwide market for biosimilars will grow from US$ 693 million in 2011 to between US$ 4 billion and US$ 6 billion by 2016.


MorphoSys pursues an early disease program targeted against infections with MRSA  (methicillin-resistant Staphylococcus aureus). As part of this initiative, MorphoSys signed a licensing and commercial agreement with UK-based Absynth Biologics, providing access to novel target molecules associated with Staphylococcus aureus infections, including MRSA. MorphoSys developed these antibodies, which are currently undergoing further early stage tests, using its proprietary HuCAL PLATINUM antibody library. MorphoSys will be solely responsible for the development and out-licensing of any resulting compounds.


In its third operating segment, MorphoSys provided antibodies under the AbD Serotec brand to customers in the life science research and modern clinical diagnostics sectors. AbD Serotec’s sales model is based on a comprehensive catalog business with currently more than 15,000 immediately available products and is complemented by the production of antibodies in larger quantities on behalf of diagnostic customers.


Driven by technological advances, the market for in vitro  diagnostics (IVD) in particular has experienced significant growth in recent years. The demand for biomarker-based tests accounts for a large part of this development, and molecular diagnostics are seen as the fastest-growing segment. The total IVD market, mainly dominated by North America, Europe and Japan, was worth US$ 44 billion in 2011 and is estimated to grow by around 45 % until 2016.

AbD Serotec currently has relations with more than 20 diagnostic companies. The first diagnostic test kits using HuCAL antibodies as a key component entered the market in 2011.


The sector for research and diagnostic antibodies also faces challenges in the form of legislative decisions on healthcare infrastructure in general, and depends to a large extent on public research funding through grants. As a result, the highest growth potential for IVD products is currently being seen in the BRIC states of Brazil, Russia, India and China, where public health is being driven by demographic change.

Due to the continued debt crisis, there is heavy pressure on the research budgets of public institutions in the established markets of industrialized nations, e.g. research facilities and universities. This has negative effects on market growth and the development of turnover for the companies in this market segment.


In 2012, several events had a major impact on the Company’s performance:

  • MorphoSys generated excellent data on safety and efficacy in its trial with proprietary drug candidate MOR103 in RA. Additionally, a phase 1 trial on the subcutaneous delivery of the compound was successfully concluded. These most recent successes underscore the potential value of MOR103 in chronic inflammatory diseases.
  • At the end of 2012, the Company announced the extension of the antibody alliance with its partner Novartis. Novartis will transition from HuCAL to Ylanthia. At the same time, MorphoSys secured the maneuvering space to partner Ylanthia on a broader scale.
  • MorphoSys’s product portfolio also moved ahead in the reporting period and remains one of the broadest antibody pipelines in the industry. At the end of 2012, it included a total of 76 programs, of which 20 are in clinical development. In the Proprietary Development segment in particular, significant advances were recorded for both MOR208 in CLL; MOR202 in MM; and MOR103 in inflammatory diseases. The promising preclinical data for MOR202 and MOR208 were presented in June 2012 at the American Society of Oncology (ASCO) meeting and in December 2012 at the American Society of Hematology (ASH) annual meeting.
  • With its partner programs, MorphoSys achieved an important milestone in the cooperation with Roche when the clinical trial for the evaluation of gantenerumab in Alzheimer’s patients was extended to a pivotal phase 2/3 trial.
  • MorphoSys initiated a technology partnership with Lanthio Pharma for a new class of therapeutic peptides. Within the framework of the agreement, the companies will jointly implement their technologies to produce high-quality and diverse lantipeptide libraries. Furthermore, MorphoSys participated in the Series A financing round for Lanthio Pharma with an equity investment and now holds a minority stake in Lanthio Pharma.
  • The sale of substantially all of MorphoSys’s research and diagnostics division, AbD Serotec, to Bio-Rad was agreed in December 2012. The sale was completed on 10 January 2013.

For detailed information about the progress of MorphoSys’s business activities in the reporting year, see the Research & Development section as well as Commercial Development.