Commercial Development

PARTNERED DISCOVERY

MorphoSys's partner company Janssen has published trial protocols for three planned phase 3 trials with the HuCAL antibody guselkumab for the treatment of psoriasis. According to the trials’ designs, all studies should be completed in 2016. With this Janssen substantiates its previously published plans to submit the compound for approval by the year 2017. The official start of the first phase 3 trial in October 2014 has triggered a clinical milestone payment.

MorphoSys reached another clinical milestone in its cooperation with Novartis. A payment was triggered by the start of a phase 1 study in the area of ophthalmology.

Since October 2013, MorphoSys has been involved in arbitration proceedings with ContraFect Corp. in relation to the contract concluded between the two companies in 2011. The proceedings, initiated by MorphoSys, have since led to an agreement and the termination of the license agreement as per 15 August 2014. As part of the agreement, under which both parties' outstanding receivables and claims have been settled, ContraFect made a payment to MorphoSys in the amount of € 1 million. This payment was made in the third quarter of 2014.

PROPRIETARY DEVELOPMENT

MorphoSys strives to strengthen its proprietary development portfolio and gain access to advanced product candidates by virtue of new contracts. Such a new contract was signed with Emergent BioSolutions Inc. in the third quarter of 2014.

In August, MorphoSys and Emergent BioSolutions Inc. announced an agreement to jointly develop and commercialize the compound ES414. This compound, to be renamed MOR209/ES414, is a bi-specific anti-PSMA/anti-CD3 antibody targeting prostate cancer. Prostate cancer is the most commonly diagnosed cancer in men living in industrialized nations, with approximately 900,000 new cases per year. There are different forms of prostate cancer with some having aggressive tumors which can metastasize into other tissues, especially in lymph nodes and bones. Although early detection, radiation, surgery, and hormone ablation therapy could significantly improve the treatment of early forms of prostate cancer, there are not many treatment options for patients with metastatic castration-resistant prostate carcinoma (mCRPC). There is a high medical need for well-tolerated and effective treatment methods. The target molecule PSMA is a validated target for the therapy of mCRPC. The global market for therapies against mCRPC is growing and worldwide sales in this segment are expected to rise to more than US$ 5 billion by 2022.

Under this agreement, MorphoSys has secured the commercialization rights worldwide, with the exception of the USA and Canada where Emergent will retain commercial rights. Emergent received an upfront payment of US$ 20 million and is eligible to receive potential milestone payments of up to US$ 163 million. The milestone payments are linked to specific events, including the successful development of MOR209/ES414 in several indications as well as the approval in various markets.

MorphoSys and Emergent will co-develop MOR209/ES414, with MorphoSys assuming 64% of the development costs and Emergent assuming 36% of the costs. Emergent will manufacture and supply clinical material from its manufacturing facilities in Baltimore, Maryland/USA. Emergent will receive low single-digit royalties on product sales in MorphoSys's sales regions and MorphoSys will receive tiered royalties ranging from the mid single-digits up to 20% on product sales in Emergent's sales regions.

ACQUISITION UPDATE

MorphoSys did not acquire any companies in fiscal year 2013 or in the first nine months of 2014.

The in-licensed development candidate MOR209/ES414 has developed well since the contract's signature. Further discussions and interaction with the competent health authorities suggest that the intended clinical start of the program's trial can be achieved.

After balance sheet date, in October 2014, MorphoSys announced the acquisition of LanthioPharma's lanthipeptide technology for drug development. MorphoSys triggered acquisition by excercising an option within an existing collaboration and option agreement between the two companies from November 2012.

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