Media Release

Planegg/Munich, Germany, July 28, 2021

MorphoSys AG Reports Second Quarter and First Half 2021

Results

    • Monjuvi U.S. net product sales of € 14.9 million (US$ 18.0 million), 16% growth Q-Q
    • MorphoSys announced and subsequently completed its acquisition of Constellation

    • Pharmaceuticals
  • Announced and closed ~US$ 2.0 billion strategic funding partnership with Royalty Pharma
      • Updated group financial guidance
    • Conference call and webcast (in English) tomorrow, July 29, 2021, at 2:00pm CEST
      (1:00pm BST/8:00am EDT)

MorphoSys AG (FSE: MOR; NASDAQ: MOR) reports financial results for the second quarter and the first half year of 2021.

"We regained the momentum in Monjuvi sales as we exited the second quarter and are encouraged to see that momentum continuing into Q3," said Jean-Paul Kress, M.D., Chief Executive Officer of MorphoSys. "We are seeing the positive impact to our business from the vaccination rollout in the U.S., and remain focused on establishing tafasitamab as a standard of care in the treatment of patients with relapsed/refractory DLBCL."

"With the addition of Constellation's clinical programs to our pipeline, we are in a great position to build a significant presence in hematology-oncology with multiple commercial opportunities."

Tafasitamab Highlights

  • Monjuvi® (tafasitamab-cxix) U.S. net product sales of € 14.9 million (US$ 18.0 million) for the second quarter of 2021 and € 27.8 million (US$ 33.5 million) for the first half of 2021.
  • On April 19, 2021, MorphoSys and Incyte announced that the first patient has been dosed in the placebo-controlled Phase 3 inMIND study evaluating the efficacy and safety of tafasitamab or placebo in combination with lenalidomide and rituximab in patients with relapsed or refractory follicular lymphoma (FL) or marginal zone lymphoma (MZL).
  • On May 11, 2021, MorphoSys and Incyte announced that the first patient was dosed in the pivotal Phase 3 frontMIND study evaluating tafasitamab and lenalidomide in addition to rituximab, cyclophosphamide, doxorubicin, vincristine and prednisone (R-CHOP) compared to R-CHOP alone as first-line treatment for high-intermediate and high-risk patients with untreated diffuse large B-cell lymphoma (DLBCL).
  • From June 4-8, 2021, MorphoSys presented new data from the tafasitamab development program at the 2021 American Society of Clinical Oncology (ASCO) Annual Meeting. Data from the three-yearfollow-up from the Phase 2 L-MIND study showed a long durability of responses and overall survival in patients with r/r DLBCL.
  • On June 25, 2021, MorphoSys and Incyte announced that the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending the conditional marketing authorization for tafasitamab in combination with lenalidomide, followed by tafasitamab monotherapy, for the treatment of

Page 1 of 8

adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT). The Committee for Orphan Medicinal Products (COMP) has also confirmed the orphan drug designation status in mid- July.

  • Together with MorphoSys, Incyte plans to start coreMIND, a pivotal Phase 2 study that will assess tafasitamab in combination with Incyte's Pi3 kinase delta inhibitor in patients with chronic lymphocytic leukemia (CLL).
  • MorphoSys will also initiate MINDway, a study that will look into finding the best treatment schedule for patients with Non-Hodgkin Lymphoma (NHL) who benefit from long-termdisease-control from tafasitamab.

Acquisition of Constellation Pharmaceuticals and Strategic Funding Partnership

  • On June 2, 2021, MorphoSys entered into a definitive agreement to acquire Constellation Pharmaceuticals (Constellation) for US$ 34.00 per share in cash, which represents a total equity value of US$ 1.7 billion. The transaction has been unanimously approved and subsequently was completed on July 15, 2021.
  • MorphoSys gets access to mid- to late-stage product candidates: Pelabresib (CPI 0610) has the potential to be a first-in-class and best-in-class BET inhibitor that is currently being evaluated in a Phase 3 trial for the treatment of myelofibrosis. CPI-0209 is a mid-stage EZH2 inhibitor, which is currently in a Phase 2 clinical trial and has best-in-class potential for treating both hematologic and solid tumors.
  • MorphoSys entered into a long-term strategic funding partnership with Royalty Pharma: o US$ 1.425 billion upfront payment
    o Up to US$ 350 million in Development Funding Bonds o Up to US$ 150 million milestone payments
    o Royalty Pharma Investments 2019 ICAV, a subsidiary of Royalty Pharma plc, purchased US$ 100 million in shares (1,337,552 shares) of MorphoSys at a price of € 63.35 per share on July 16, 2021
  • MorphoSys also announced today that Jigar Raythatha, President and Chief Executive Officer of Constellation, will resign effective July 31, 2021. Barbara Krebs-Pohl, PhD, Senior Vice President, Global Head of Business Development, Licensing, and Alliance Management at MorphoSys, has been appointed as Site Head of Constellation and Chief Integration Officer.

Tremfya:

  • MorphoSys to continue to record Tremfya royalties on its income statement. Royalty Pharma is entitled to receive 100 percent of Tremfya royalties starting with royalties for the second quarter of 2021.
  • Tremfya royalties of € 13.7 million for the second quarter of 2021 and € 25.4 million for the first half of 2021.

Page 2 of 8

Financial Results for the Second Quarter of 2021 (IFRS)

Total revenues for the second quarter of 2021 amounted to € 38.2 million (Q2 2020:

  • 18.4 million). The revenues include success-based payments of € 14.2 million, primarily from Janssen (Q2 2020 success-based payments: € 12.8 million).

in € million

Q2 2021

Q2 2020

Change

Total revenues

38.2

18.4

>100%

Monjuvi product sales

14.9

-

-

Royalties

13.7

10.8

27%

Licenses, milestones and other

9.6

7.6

26%

Cost of Sales: In the second quarter of 2021, cost of sales increased to € 10.1 million (Q2

2020: income of € 7.2 million).

Research and Development (R&D) Expenses: In the second quarter of 2021, research and

development expenses were € 40.5 million (Q2 2020: € 30.9 million). Growth over 2020 reflects the increased investment to support the advancement of proprietary programs and consisted primarily of expenses for external laboratory services and personnel expenses.

Selling, General and Administrative (SG&A) Expenses: Selling expenses decreased

slightly in the second quarter of 2021 to € 28.5 million (Q2 2020: € 29.3 million) and general

and administrative expenses amounted to € 30.5 million (Q2 2020: € 13.8 million). The increase of general and administrative expense in the second quarter was due to the transaction costs related to the Constellation and Royalty Pharma agreements.

Operating Loss: Operating loss amounted to € 71.4 million in the second quarter of 2021 (Q2

2020: operating loss of € 48.4 million).

Consolidated Net Profit / Loss: For the second quarter of 2021, consolidated net profit was

  • 20.9 million (Q2 2020: consolidated net loss of € 53.1 million).

Page 3 of 8

Financial Results for the First 6 Months of 2021 (IFRS)

Total revenues for the first six months of 2021 amounted to € 85.4 million (H1 2020: € 269.7 million). The revenues include success-based payments of € 43.1 million, primarily from Janssen (H1 2020 success-based payments: € 23.1 million) The year-over-year decline was driven by the upfront payment of the collaboration and license agreement with Incyte in the first quarter 2020 for the out-licensing of tafasitamab outside the U.S.

in € million*

H1 2021

H1 2020

Change

Total revenues

85.4

269.7

(68%)

Monjuvi product sales

27.8

-

-

Royalties

25.4

20.1

26%

Licenses, milestones and other

32.3

249.5

(87%)

*Differences due to rounding

Cost of Sales: In the first six months of 2021, cost of sales increased to € 15.2 million (H1

2020: income of € 4.0 million).

Research and Development (R&D) Expenses: In the first six months of 2021, research and

development expenses were € 73.8 million (H1 2020: € 52.4 million). Growth over 2020 reflects the increased investment to support the advancement of proprietary programs and consisted primarily of expenses for external laboratory services and personnel expenses.

Selling, General and Administrative (SG&A) Expenses: Selling expenses increased in the

first six months of 2021 to € 56.6 million (H1 2020: € 42.1 million) and general and

administrative expenses amounted to € 40.8 million (H1 2020: € 23.9 million). The year-over- year increase in selling expenses was primarily driven by the full first half year 2021 impact of the expenses for services provided by Incyte as part of the joint U.S. marketing activities for Monjuvi. The year-over-year increase in general and administrative expenses was driven primarily by the transaction costs related to the Constellation and Royalty Pharma agreements.

Operating Loss: Operating loss amounted to € 101.0 million in the first six months of 2021

(H1 2020: operating profit of € 155.1 million).

Consolidated Net Profit / Loss: For the first six months of 2021, consolidated net loss was

  • 20.7 million (H1 2020: consolidated net profit of € 179.8 million).

Cash and Investments: As of June 30, 2021, the Company had cash and investments of

  • 1,129.2 million compared to € 1,244.0 million on December 31, 2020. Pro forma cash after the closing of the Constellation and Royalty Pharma transactions, including the sale of ordinary shares, was € 1,168.0 million.

Number of shares: The number of shares issued totaled 32,892,540 at the end of Q2 2021

(year-end 2020: 32,890,046). After the share capital increase on July 16, 2021, to implement the purchase of 1,337,552 new ordinary shares by Royalty Pharma, the number of shares issued totaled 34,227,598.

Page 4 of 8

Adjusted Financial Guidance and Operational Outlook for 2021

in € million

Updated Financial Guidance

Prior Financial Guidance

2021

(ex-Constellation)

Group Revenues*

155 to 180

150 to 200

435 to 465

Operating Expenses**

(includes one-time transaction

355 to 385

costs of € 36.0 million)

R&D expense as a % of Operating

Expenses excluding one-time transaction

52 to 57%

45 to 50%

costs

*Group revenues include full year Tremfya royalties and exclude any royalties from potential tafasitamab sales outside of the U.S. as well as any significant milestones from development partners and/or licensing partnerships other than those that were already recorded in the half-year. This revenue guidance is subject to a number of uncertainties including the potential for variability from the first full year of the Monjuvi product launch, the limited visibility that MorphoSys has on the Tremfya royalty stream as well as the ongoing COVID-19 pandemic and the impact on our as well as our partner's business operations.

**Operating expenses is comprised of R&D and SG&A, inclusive of Incyte's share of Monjuvi selling costs in the U.S.

MorphoSys expects the following events and activities in 2021:

Tafasitamab:

  • Continuation of the phase 1b trial with tafasitamab in previously untreated DLBCL (firstMIND);
  • Continuation of the pivotal phase 3 frontMIND trial of tafasitamab in previously untreated
    DLBCL;
  • Continuation of the pivotal phase 3 inMIND trial of tafasitamab in patients with relapsed or refractory follicular lymphoma (r/r FL) or marginal zone lymphoma (MZL);
  • Investigation of tafasitamab, plamotamab and lenalidomide in patients with relapsed or refractory DLBCL, first-line DLBCL and relapsed or refractory follicular lymphoma (r/r FL) jointly with Incyte and Xencor (study start expected end of 2021/early 2022);
  • Continuation of the L-MIND study of tafasitamab and evaluate the long-term efficacy and safety data;
  • Continuation of the phase 3 B-MIND study of tafasitamab in combination with bendamustine for r/r DLBCL;
  • Decision of the European Commission on the Marketing Authorization Application (MAA), seeking conditional marketing authorization of tafasitamab in combination with lenalidomide, followed by tafasitamab monotherapy, for the treatment of adult patients with r/r DLBCL which is currently under review;
  • Support of Incyte in submitting marketing authorization applications in other markets for tafasitamab.

Page 5 of 8

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original document
  • Permalink

Disclaimer

MorphoSys AG published this content on 28 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2021 20:13:14 UTC.