090428 MOR CompanyUpdate - EQS Group AG

Company Update

April 2009

Safe HarbourSafe Harbour

This presentation includes forward-looking statements.This presentation includes forward looking statements.Actual results could differ materially from those included in the forward-looking statements due to various risk factors and uncertainties including changes in business, economic competitive conditions, regulatory reforms, foreign exchange rate fluctuations and the p , g y , g gavailability of financing. These and other risks and uncertainties are detailed in the Company’s Annual Report.

MorphoSys at a Glancep y

An independent antibody company

Company Broad, attractive pipeline with partnered & un-partnered programs in various indicationsTherapeutic & research antibody segmentsTherapeutic & research antibody segments

OrganizationHQ Martinsried (Munich)/D, subsidiaries in Düsseldorf/D Oxford/UK & Raleigh/USAOrganization Düsseldorf/D, Oxford/UK & Raleigh/USA343 employees worldwide

Frankfurt Stock Exchange TecDAXListed

Frankfurt Stock Exchange, TecDAXADR Level 1

L di i t H CAL l tfTechnology

Leading, proprietary HuCAL platformStrong & undisputed patent estate

Financials Profitable strong balance sheet

© MorphoSys AG© MorphoSys AG

Financials Profitable, strong balance sheet

MorphoSys AG – Company Update – April 2009

Financial Strength in the Downturng

Strong balance sheet with > € 130 million in cash

Operational cash flow in 2008 of approximately € 29 million

Secure revenues 2009 – 2017 in amount of > € 400 million

Milestone & royalty potential >> € 1 billion

© MorphoSys AG© MorphoSys AGMorphoSys AG – Company Update – April 2009

HuCAL PLATINUM: Technology Leadershipgy p

HuCAL stands for Human Combinatorial Antibody Library

Modular gene design & construction

Antibodies are fully humanModular gene construction enables systematic optimization of antibody lead candidates f h th ti li tifor each therapeutic applicationProprietary phage-based CysDisplay screening systemProprietary AutoCAL system for high throughput


HuCAL PLATINUM launched in December 2008


HuCAL PLATINUMBrighter than GOLD

GOLD PLATINUMLibrary size 12 Mrd. 45 Mrd.

Underlying database 1997 2008

Di it f i l t d tib di 1 25Diversity of isolated antibodies 1x 25x

Affinities 1x 4x

Production 1x 3x

HUCAL - Commercial Success Story

Production 1x 3x

More than 50 active therapeutic programsMore than 1,000 custom research antibody projects concludedHuCAL GOLD has generated more than € 200 million in revenues in the form of license and success-based payments and research servicesRoyalties on HuCAL GOLD-based products still to come

© MorphoSys AG© MorphoSys AG Seite 6MorphoSys AG – Company Update – April 2009

Robust Intellectual Property Protected by p y yCore Patent Families

HuCAL Library Design and Use (~2016 expiry)5 US Patents2 EP Patents (several EU states)2 AU PatentsPending applications: CA EP JP USPending applications: CA EP JP US

TRInucleotide Mutagenesis (JHU excl. license) (~2013 expiry)1 US Patent; 1 EP and 1 JP patent; pending in CA

Di lfid Di l (C Di l ) ( 2020 i )Disulfide Display (CysDisplay) (~2020 expiry)1 US and 1 EP PatentPending applications: AU CA EP IL JP NO US

Technology Development (HuCAL PLATINUM®)Several applications pendingCo-exclusive access to various Dyax biologics patent families

Patent applications for antibody drug candidatesPatent filings and inlicensed patents for proprietary candidates


Business Segmentsg

Therapeutic Antibodies Research Antibodies

Broad partnered pipeline, underpinned by Novartis,

ensures substantial cash-flow

Built by merging:

Partnering with leadingh i

Top 20 research antibodypharma companies company

Proprietary pipeline bringseven greater upside

Platform to increase uptake ofHuCAL technology


Value Through Strong Partnershipsg g p

NovartisAstellas

2007 2008 2009 2010 2011 2012

PfizerShionogiSchering-PloughDaiichi SankyoMerck & Co.Boehringer IngelheimOncomedEli LillyRoche

Committed termOptionalExtensions 2008

B S h iBayer ScheringCentocorProchon

Ongoing antibody programs

58 active partnered therapeutic antibody programsE t d d t hi i 2008 id ti f th 15 dditi l


Extended partnerships in 2008 provide options for more than 15 additional programs


Current Product Pipeline:p62 Programs Ongoing

Name Partner Indication Discovery Preclinic Phase 1 Phase 2 Phase 3 Market

Gantenerumab(R1450) Roche Alzheimer‘s

Disease

BHQ880 Novartis Cancer

n.d. Centocor Immunology/Cancer

31 Partnered Programs Various Various*

58 Partnered Programs

Programs23 Partnered Programs Various Various*

MOR103 - Rheumatoid MOR103 - Arthritis

MOR202 - Cancer 3 Proprietary Programs

MOR203 - Cancer

n.d. MorphoSys/ Novartis n.d. 1 Pre-Dev. Program

© MorphoSys AG© MorphoSys AG MorphoSys AG – Company Update – April 2009

* Includes cancer, inflammatory, autoimmune, infectious, musculoskeletal & central nervous system diseases

Partnered Therapeutic Programs: Structurep g

Partner provides target molecule, assay, disease expertisePartner receives exclusive target license first come-firstPartner receives exclusive target license, first come first servedTarget is reserved and cannot be pursued by other partners or independently by MorphoSysindependently by MorphoSysMorphoSys uses its technology to generate optimized drug candidates against the target

Target Universeg

Discovery Preclinic Phase 1 Phase 2 Phase 3 Market

MorphoSys Partner


Optimised Lead Antibody


Partnerships: Typical Terms per Programp yp p g

Royalties(mid single digits)€9m - €12m

Approvalmilestonemilestone

Phase 3 milestone

Phase 1 milestone

Exclusive license fee; R&D fundingExclusive license fee; R&D funding

MorphoSys costs

Di P li i Ph 1 Ph 2 Ph 3 M k t




Partnered HuCAL Antibodies in Clinic1. Roche‘s Alzheimer Program

Gantenerumab (R1450)HuCAL IgG1 antibodyg yTargeting amyloid-βBinds to Aβ peptidesDepolymerizes aggregated Aβp y gg g βCrosses blood-brain barrier in transgenic mouse, decreasing cerebral Aβ burden

Two Phase 1 studiesSingle dose arm completedMultiple ascending dose arm no longer recruitingp g g gMild-to-moderate Alzheimer’s patientsRandomized, double-blindAntibody behaves as expectedy p


Source: Roche

Partnered HuCAL Antibodies in Clinic2. Novartis‘s Cancer Program

BHQ880HuCAL IgG1 antibodyTargeting DKK-1− Overexpression of DKK-1 by myeloma

cells may upset the normal balance b t t bl t d t l tbetween osteoblasts and osteoclasts

− DKK-1 may play a role in preventing osteolytic bone disease in multiple myeloma patientsmyeloma patients

Phase 1 study is ongoing in the USP li i l t di t th h th iPreclinical studies support the hypothesis that BHQ880 promotes bone formation and thereby inhibits tumor-induced osteolytic diseaseyA phase 1/2 combination study in combination with Zometa/Reclast in relapsed or refractory myeloma patients h t t d i F b 2009


has started in February 2009


Source: Novartis

Partnered HuCAL Antibodies in Clinic3. Centocor‘s Cancer & Inflammation Program

HuCAL-derived fully human antibody in the therapeutic area of oncologygyPhase 1 trial in oncology was started in June 2007, is ongoingIn November 2008, a phase 2 study in an additional indication (immunology) was started(immunology) was startedIND filing for phase 2 study triggered a milestone payment to MorphoSys


Partnered Business:Projected HuCAL Drugs on the Market


P j ti f t d ‘ t d i li

50% 70% 40% 65%

Projection of today‘s partnered pipeline:

5 631 S b bilit f 18%

2.523 Success probability of 11%


2 0 6Success probability of 33%


S b bili f 9%>>100 > 9

2 0.6Success probability of 33%

Projection of committed partnered programs:

Success probability of 9%100 > 9

Projected number of marketed HuCAL drugs: > 18


Source: MorphoSys internal statistics & Tufts Centre for the Study of Drug Development

Pipeline: Strategyp gy


gram

s

Optimized Lead Antibody

tner

ed P

rog

Part

s

€/$

yPr

ogra

ms

PoC in Humans

Prop

rieta

ry


P


Proprietary Product Pipeline:p y pFour Programs Ongoing


RheumatoidMOR103 - Rheumatoid Arthritis

MOR202 - Cancer 3 Proprietary Programs

MOR203 - Cancer

n.d. MorphoSys/ Novartis n.d. 1 Pre-Dev. Program

4 proprietary programs are currently ongoing, another target was already selectedFocus on inflammation & cancer

Target Selection

Scientific Target sources: Dedicated target scouts, co-development (e.g. Galapagos) & in-licensingRigorous target selection processMedical IP Rigorous target selection process

Detailed scientific evaluation (e.g. target biology)Medical need, therapeutic potential, developability, etc.IP: FTO and patentability

Medical IP

Commercial


Commercial: Market potential and competition

MOR103Proprietary Inflammation Program

MOR103, a fully human HuCAL antibody targeting GM-CSFGM-CSF plays a central role in inflammation and auto-immunityGM CSF plays a central role in inflammation and auto immunity

MOR103 blocks binding of GM-CSF to its receptor with pM affinity

Primary indication: Rheumatoid arthritisCommercial opportunity: Anti-TNF therapies Enbrel, Remicade, Humira are successful biologic products for treating RA, but still under 25% of RA patients are adequately treatedPromising scientific and preclinical data

Successful completion of phase 1 in healthy volunteers (favorable safety profile after 5 cohorts led to trial-extension; in total 7 cohortssafety profile after 5 cohorts led to trial extension; in total, 7 cohorts with 9 volunteers each, were treated)

Data support development of GM-CSF mAb therapy in different inflammatory diseases (rheumatoid arthritis multiple sclerosis) andinflammatory diseases (rheumatoid arthritis, multiple sclerosis) and lung diseases (COPD, asthma)


MOR103IP and Outlook 2009

Broad patent protection for MOR103 in the US, the largest RA market:

ANTIBODYPatent applications covering key features of the MOR103

U.S. 7,455,836

key features of the MOR103 program Exclusive License

US patent covering key uses of antibodies against GM-CSF

WO 2006122797

Outlook 2009:Final results from phase 1 in healthy volunteers in Q2/2009Start of phase 1b/2a study in RA patients in H2 2009Decision on second indication, based on efficacy in disease models in 2009


models in 2009


MOR202Proprietary Cancer Program

MOR202, a fully human HuCAL antibody, targeting CD38,a 45 kDa ectoenzyme heavily over-expressed in 95% of MM cell-y y plines and some leukemia linesFunction: Induces cell-killing by ADCC, CDC & apoptosisPrimary indication: Multiple myeloma (MM)Primary indication: Multiple myeloma (MM)Commercial opportunity

10 % of hematological cancers / 1% of all cancers / 2% of cancer deathsNo curative therapiesMedian survival 24 – 30 months, all patients eventually relapse

Outlook 2009:Further evaluation in animal models of multiple myelomaStart of non clinical safety study to support clinical testingStart of non-clinical safety study to support clinical testingStart of preclinical efficacy studies in second indication Production and release of mAb material for animal safety testing


and in preparation for phase 1/2a clinical testing in 2010


Additional Proprietary Activitiesp y

Novartis

Nomination of first pre-development programNovartis funds joint efforts until the program

h f l li i l d l treaches formal pre-clinical developmentOption for MorphoSys to enter a formal co-developmentup to 50%

Galapagos

Access Galapagos’s proven target discovery capabilities and disease know-how Access novel antibody targets iny gbone & joint disease with a high unmet medical needComplement MOR’s development efforts in inflammation and arthritis


and arthritis

Proprietary Product Pipeline:p y pProjected Status Year-End 2009


Rheumatoid

MOR103 -

Rheumatoid ArthritisRespiratoryMS

MOR202 - Cancer

MOR203 - Cancer

MOR205 C

Up to 7 Proprietary Programs

MOR205 - Cancer

MORxxx - n.d.

MORxxx - n.d.MORxxx n.d.

MORxxx - n.d.

n.d. MorphoSys/ Novartis n.d. 1 Pre-Dev. ProgramNovartis g

Establish a rich proprietary pipeline based on proven HuCAL technology


Establish a rich proprietary pipeline based on proven HuCAL technology

Clinical Pipeline p

89Number of Partnered and Proprietary Clinical Compounds at Year-End

3

567

51

345

12

43

5

012

02005 2006 2007 2008 2009E

Phase 1 Phase 2

Clinical Antibody Pipeline is Future Value Driver


Clinical Antibody Pipeline is Future Value Driver

Business Segmentsg

Therapeutic Antibodies Research Antibodies

Broad partnered pipeline, underpinned by Novartis,

ensures substantial cash-flow

Built by merging:

Partnering with leading h i

Top 20 research antibody pharma companies company

Proprietary pipeline brings even greater upside

Platform to increase uptake of HuCAL technology


AbD SerotecBusiness and Outlook

CUSTOM SERVICE BUSINESS

20% of MarketBUSINESS

USP: mAbs in 8 weeksOutlook:

G t f t i t iGreater footprint in diagnostics markets Research

Antibody Market: a etUS$ 1bn

CATALOG BUSINESS12 000 antibodies available

OEM BUSINESSAntibodies in bulk for

12,000 antibodies availableOutlook:

Should benefit fromstimulus package

single industrial customersOutlook:

Broaden customer base

80% of Market


stimulus package

AbD SerotecHighlights & Challenges

Profitable General market slowdown for research

Highlights Challenges

First HuCAL antibody now marketed in diagnostics kit by partner Phadia

C ti ith th 20

antibodies

Research funding doesn’t grow, e.g. NIHCooperation with more than 20

diagnostics customers

Introduction of more than 5,000 new

e.g. NIH

Weak USD and GBP compared to Euro

Write-down on UK property (Poole Real ,products to catalog

Appointment of Dieter Feger from Abbott Diagnostics to head the unit

p p y (Estate)

Abbott Diagnostics to head the unit


FinancialsProfit & Loss Statement (Group)

In EUR millions Q1 2009 Q1 2008

Revenues 19.1 16.3

Cost of Goods Sold 1.7 1.7

R&D Expenses 8 5 5 3R&D Expenses 8.5 5.3

S,G&A Expenses 4.8 5.2

Total Operating Expenses 14 9 12 2Total Operating Expenses 14.9 12.2

Profit from Operations 4.2 4.1

Non-Operating Income 0 9 0 6Non Operating Income 0.9 0.6

Profit Before Taxes 5.1 4.7

Income Tax Benefit/(Expense) 1.6 1.4Income Tax Benefit/(Expense) 1.6 1.4

Net Profit 3.5 3.3

Earnings per Share (diluted) in EUR 0.16 0.15


Earnings per Share (diluted) in EUR 0.16 0.15

FinancialsCondensed Balance Sheets (Group)

In EUR millions 03/31/2009 12/31/2008

Assets

Cash, Cash Equivalents & MarketableSecurities 136.1 137.9

Other Current Assets 13.5 12.3

Total Non-Current Assets 51.8 53.2

Total Assets 201.3 203.3

Liabilities

Total Current Liabilities 22.7 27.4

Total Non-Current Liabilities 12.9 13.9

Total Shareholders’ Equity 165.7 162.0

T t l Li biliti 201 3 203 3


Total Liabilities 201.3 203.3

Guidance 2009

I EUR illi 2009E* 2008A 2009E* 2008A

MorphoSys Group AbD SegmentIn EUR millions 2009E* 2008A

Total Group Revenues 80 – 85 71.6

In EUR millions 2009E* 2008A

AbD ~ 20 18.2

Group Operating Profit 8 – 11 16.4 AbD Operating

Profit Marginat least level of 2008 (%) 2%

Total proprietary R&D investmentEUR 18 – 20 million Success-based payments will amount to

approximately EUR10 million

MorphoSys Group

MOR103 / MOR202

pp yProprietary R&D spend will double to EUR18 to EUR20 million

OutlookDiscovery programs Aiming for 10%–20% annual revenue

growthMaintain profitability, while strengthening


* Estimated numberspipeline

Shareholder Structure

15% Strategic Holders

15%41%

gGermanyUSAUK

11%

8%6%4%

SwitzerlandAustriaOther/Unidentified

3-for-1 stock split took place on Dec. 23, 2008

Sh I d t M h 31 2009 22 492 287Shares Issued at March 31, 2009 22,492,287Novartis ~ 7 %AstraZeneca ~ 5 %

Frankfurt Stock Exchange

ISIN: DE0006632003

SE Code: MOR

Bl b MOR GR

Management & Supervisory Board ~ 2.5 %Massachusetts Mutual Life Insurance 3.15 %


Bloomberg: MOR GRFree float 88 %

Goals 2009

• Revenues of €80 million – €85 millionCorporate • Operating profit of €8 million – €11 million Corporate

• 2 – 4 INDs• 20 new program starts

Partnered Discoveryy

• MOR103: Phase 1 data & start of phase 2 RA trialProprietary R&D p• Up to 5 new programs in cancer & inflammationProprietary R&D

• Revenues of approx. €20 million• Profit margin at least on 2008 levelAbD


Future Value Creation

Own Compounds on Market

Supporting Factors:

First HuCAL-based Drugs on Market

Financial strength makes MorphoSys independent from capital markets and

Out-licensing of Own Compounds

from capital markets and financial crisisSteady 10-20 % revenue

th

I t i O

Phase II / III Compounds

growthUse free cash flow to fund proprietary development

Invest in Own Compounds

Transformational D l ith N ti

Pipeline is increasingly the Company’s value driver

Deal with Novartis

MorphoSys Today


Appendix

Novartis Deal: Financial Details

Landmark deal, comprising€400m committed funding (see below)

Revenue to MorphoSys

€400m committed funding (see below)>€250m in milestones (probability-weighted assessment)Does not include royaltiesNo additional equity investment beyond current 7%No additional equity investment, beyond current 7%

Committed Approx. €400m over 10 years

Approx. half (€200m) in technology license fees plus internalization fee for Funding HuCAL, comprising contingent double digit success payment

Approx. half (€200m) in research funding for team at MorphoSys

10 years with Novartis having options to:Term

10 years, with Novartis having options to:Extend to 12 yearsTerminate after 7 years if certain technology goals are not met

Milestones & Royalties On all programs

C d l Sh d & fi ( lidi l ) d l d


Co-development Shared costs & profits (sliding scale) on co-developed programs


Management Boardg

Dr. Simon E. Moroney, CEODr. Moroney is one of MorphoSys’s co-founders. He studied chemistry in his native New Zealand, and was a Commonwealth Scholar to the University of Oxford, where he completed a D. Phil. in 1984. Subsequently he was an Commonwealth Scholar to the University of Oxford, where he completed a D. Phil. in 1984. Subsequently he was an Associate in the Harvard Medical School, Boston, USA, and an employee of ImmunoGen Inc. Dr. Moroney has held positions at the University of Cambridge, UK, the University of British Columbia, Canada, and the ETH in Zurich, Switzerland. In 2002 he was awarded the German Cross of the Order of Merit by German President Johannes Rau.

Mr Dave Lemus CFOMr. Dave Lemus. CFOMr. Lemus joined the Company in 1998, and took MorphoSys public in 1999. Mr. Lemus joined MorphoSys from Roche, where he worked from 1993-1998, and last served as Controller and Operations Manager of 90 pharma-ceutical markets. Before this time, he served as Group Treasurer of Lindt & Sprüngli in Zurich, Switzerland, and prior to this, worked in treasury management for Electrolux AB in various countries. Mr. Lemus holds a B.S. degree from the University of Maryland, a M.S. degree from the MIT, and is a Certified Public Accountant (CPA) in the USA.

Dr. Arndt Schottelius, CDODr. Schottelius joined MorphoSys from Genentech Inc., San Francisco, where he served as Medical Director, Immu-nology Development. Prior to his position at Genentech, Dr. Schottelius held science and management positions in

D M li S ll CSO

gy p p , g pimmunology research at Berlex Biosciences, USA, and Schering , Germany. After medical studies in Germany, UK and Switzerland Dr. Schottelius received his PhD and MD degrees from the Albert-Ludwigs-University, Freiburg, Germany. Subsequently he practiced medicine as a resident physician at the Charité University Hospital, Berlin.

Dr. Marlies Sproll, CSODr. Marlies Sproll joined MorphoSys in October 2000 as R&D department head. In November 2005, Dr. Sproll was promoted to CSO. Before joining MorphoSys, Dr. Sproll worked for seven years at the Vienna research facility of Boehringer Ingelheim. From 1988 to 1993, Dr. Sproll was lab leader at Merck KGaA in Darmstadt, Germany, where she was involved in the preclinical development of therapeutic antibodies. Dr. Sproll has a Ph.D. from the Max


she was involved in the preclinical development of therapeutic antibodies. Dr. Sproll has a Ph.D. from the Max Planck Institute in Tübingen, Germany, and was awarded a Doctor of Natural Science by the University of Stuttgart.

Supervisory Boardp y

Dr. Gerald MöllerChairman

Prof. Dr. Jürgen DrewsVice Chairman

Managing Director of HBM BioVentures,Former President Boehringer-Mannheim

Former Director Global Research, F.Hoffmann-La Roche

Mannheim

Dr. Daniel CamusCFO, Electricité de France,

Dr. Walter A. BlättlerFormer Executive Vice President, C O, ect c té de a ce,

Former CFO, Aventis,

Science and Technology, ImmunoGen

Dr. Metin ColpanS i Di t QIAGEN

Dr. Geoffrey VernonCh i Zi H ldi Li it dSupervisory Director, QIAGEN

Former CEO and Founder, QIAGENChairman, Ziggus Holding LimitedFormer Executive Director Rothschild Asset Management


Corporate Calendar 2009p

April 28, 2009 Q1 2009 ResultsApril 28 2009 LBBW German Mid & Small CapApril 28, 2009 LBBW German Mid & Small Cap

Conference, London, UKMay 13, 2009 AGM, MunichMay 18 - 19, 2009 Deutsche Bank's

34th Annual Health Care ConferenceBoston, USA

May 23-24, 2009 German & Austrian Corporate ConferenceFrankfurt, Germany

June 17-18,2009 Jefferies 3rd Annual Healthcare ConferenceJune 17 18,2009 Jefferies 3rd Annual Healthcare ConferenceNew York, USA

July 29, 2009 Q2 2009 Results


Covering Analystsg y

Institution Contact

B b B k M Al d R hBerenberg Bank Ms. Alexandra Roche

Commerzbank Mr. Daniel Wendorff

Credit Suisse Dr Yasir Al-WakeelCredit Suisse Dr. Yasir Al-Wakeel

Deutsche Bank Mr. Holger Blum

DZ Bank Dr. Elmar Kraus

Equinet Institutional Services Dr. Martin Possienke

Landesbank Baden-Württemberg Dr. Hanns Frohnmeyer

MIDAS Research Mr. Thomas Schiessle

Nomura Code Dr. Gary Waanders

Sal. Oppenheim Dr. Christian Peter

SG Securities Mr. Rudolphe Besserve

W tLB AG D C li Th


WestLB AG Dr. Cornelia Thomas


Thank You.

www.morphosys.com

Dr. Claudia Gutjahr-LöserHead of Corporate Communications & IR

Phone +49 (0)89 / 899 27-122

Dave LemusChief Financial Officer

Phone +49 (0)89 / 899 27-439 ( )Fax +49 (0)89 / 899 27-5122Email [email protected]

( )Fax +49 (0)89 / 899 27-5439Email [email protected]

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, CysDisplay®, RapMAT® and AutoCAL® are registered trademarks of MorphoSys AG

090428 MOR CompanyUpdate - EQS Group AG

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