DJ EQS-News: MorphoSys AG Reports First Quarter 2024 Financial Results

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EQS-News: MorphoSys AG / Key word(s): Quarterly / Interim Statement
MorphoSys AG Reports First Quarter 2024 Financial Results
2024-04-29 / 22:01 CET/CEST
The issuer is solely responsible for the content of this announcement.
Media Release
Planegg/Munich, Germany, April 29, 2024

MorphoSys AG Reports First Quarter 2024 Financial Results
. Entered into Business Combination Agreement to be acquired by Novartis for EUR 68.00 per share in cash,
representing a total equity value of EUR 2.7 billion
. Received all mandatory antitrust approvals for the proposed acquisition by Novartis
. Shareholder acceptance period for the Novartis offer has commenced and will end on May 13, 2024, at 24:00
hours CEST
. Sold all tafasitamab rights worldwide to Incyte
. EUR 631.9 million in cash and other financial assets as of March 31, 2024

MorphoSys AG (FSE: MOR; NASDAQ: MOR) reports results for the first quarter of 2024.
"The proposed acquisition by Novartis is advancing steadily, and we continue to anticipate its closure in the first
half of 2024. The acceptance period for the acquisition is currently underway, and both our Management Board and
Supervisory Board unanimously recommend that our shareholders accept the offer and tender their shares given the highly
attractive and equitable offer price," said Jean-Paul Kress, M.D., Chief Executive Officer of MorphoSys. "Utilizing its
extensive resources, broad scientific experience and worldwide presence, Novartis will help maximize commercial and
expedite development opportunities across our promising oncology programs."
Novartis' Public Takeover Offer Highlights:
On February 5, 2024, MorphoSys announced the intention of Novartis BidCo AG, a wholly owned indirect subsidiary of
Novartis AG (hereinafter collectively referred to as "Novartis"), to submit a voluntary public takeover offer for all
outstanding MorphoSys no-par value bearer shares at an offer price of EUR 68.00 per share in cash, representing a total
equity value of EUR 2.7 billion. The offer price corresponds to a premium of 94% and 142% on the volume-weighted average
price during the last month and three months, respectively, as of the unaffected January 25, 2024, closing price.
On March 13, 2024, MorphoSys confirmed the receipt of antitrust clearance in Germany and Austria. Subsequently, on
March 22, 2024, MorphoSys announced the receipt of U.S. antitrust clearance. As a result, all mandatory antitrust
approvals for the proposed acquisition have been obtained.
On April 11, 2024, Novartis published its offer document. Following the publication of the offer document, the
MorphoSys Management Board and Supervisory Board issued a joint reasoned statement, recommending that shareholders
accept the offer and tender their MorphoSys shares. The acceptance period for shareholders commenced with the
publication of the offer document on April 11, 2024, and will end on May 13, 2024, at 24:00 hours CEST and 18:00 hours
EDT (also on May 13, 2024).
Medical Conferences Highlights:
On April 24, 2024, MorphoSys announced that new efficacy and safety data from the Phase 3 MANIFEST-2 trial of
pelabresib, an investigational BET inhibitor, in combination with the JAK inhibitor ruxolitinib in JAK inhibitor-naïve
patients with myelofibrosis will be highlighted during an oral presentation on Friday, May 31, at the 2024 American
Society of Clinical Oncology (ASCO) Annual Meeting. Additionally, new data from the Phase 2 study of tulmimetostat, an
investigational next-generation dual inhibitor of EZH2 and EZH1, in patients with advanced solid tumors or hematologic
malignancies will be showcased in a poster presentation at ASCO 2024 on Saturday, June 1.
Financial Results for the First Quarter of 2024 (IFRS):
The financial results presented for the first quarter of 2024 relate to continuing business operations of MorphoSys.
Due to the announcement on February 5, 2024, of the sale and transfer of all rights worldwide related to tafasitamab to
Incyte Corporation ("Incyte"), the entire tafasitamab business has been classified as discontinued operations.
Consequently, the figures reported for the first quarter of 2023 were adapted due to this change in presentation.
Group Revenues: Group revenues from continued operations amounted to EUR 27.5 million (3M 2023: EUR 24.3 million). Group
revenues mainly included revenues from royalties in the amount of EUR 27.0 million (3M 2023: EUR 20.9 million), Additional
Group revenues from continued operations are attributable to licenses, milestones, and other sources, amounting to EUR
0.5 million (3M 2023: EUR 3.5 million).
Cost of Sales: Cost of sales in the first quarter of 2024 amounted to EUR 2.8 million (3M 2023: EUR 1.0 million). The
year-on-year increase is mainly attributable to higher personnel costs.
Research and Development (R&D) Expenses: In the first quarter 2024, R&D expenses were EUR 85.2 million (Q1 2023: EUR 65.4
million). The increase consists mainly in personnel expenses resulting from probable effects of both an accelerated
vesting of certain share-based compensation programs and the recognition of remuneration-related provisions following
the proposed acquisition by Novartis.
Selling, General and Administrative (SG&A) Expenses: Selling expenses in the first quarter 2024 were EUR 18.5 million (Q1
2023: EUR 3.4 million). The increase in selling expenses is mainly due to the probable effects of accelerated vesting of
certain share-based payment programs and the recognition of remuneration-related provisions following the proposed
acquisition by Novartis. General and administrative (G&A) expenses amounted to EUR 185.5 million (Q1 2023: EUR 10.6
million). The increase in general and administrative expenses is mainly due to the probable effects of accelerated
vesting of certain share-based payment programs and the recognition of remuneration-related provisions following the
proposed acquisition by Novartis. Expenses resulting from external services mainly increased due to the expected
transaction costs in connection with the proposed acquisition by Novartis.
Operating Loss: Operating loss amounted to EUR 264.4 million in the first quarter 2024 (Q1 2023: operating loss of EUR 56.1
million).
Consolidated Net Loss: For the first quarter 2024, consolidated net loss was EUR 311.0 million (Q1 2023: consolidated net
loss of EUR 32.2 million).
Monjuvi/Minjuvi^® Update (Discontinued Operations):
On February 5, 2024, MorphoSys entered into a purchase agreement with Incyte to sell and transfer all rights worldwide
related to tafasitamab to Incyte.
Monjuvi (tafasitamab-cxix) U.S. net product sales of USUSD 6.4 million (EUR 5.9 million) prior to the sale of tafasitamab
to Incyte on February 5, 2024.
Minjuvi royalty revenue of EUR 0.6 million for sales outside of the U.S. prior the sale of tafasitamab to Incyte on
February 5, 2024.
Since February 5, 2024, all research and development activities in connection with tafasitamab are in the
responsibility of Incyte, and hence MorphoSys does no longer recognize research and development expenses from such
activities.
Full Year 2024 Financial Guidance:
As a consequence of the sale and transfer of tafasitamab to Incyte on February 5, 2024, MorphoSys' 2024 financial
guidance published on January 30, 2024, cannot be maintained and therefore was revoked. For the time being, MorphoSys
will no longer make a forecast for the gross margin or revenues from Monjuvi product sales, as no such revenues are
expected to be realized this year.
For 2024, MorphoSys expects R&D expenses of EUR 170 million to EUR 185 million on a standalone basis. R&D expenses mainly
represent our investments in the development of pelabresib and tulmimetostat. Selling, administrative and general
expenses are expected to be between EUR 90 million and EUR 105 million on a standalone basis. Potential effects from the
implementation of the Novartis takeover offer, including any first quarter 2024 related provisions and expenses
associated with the change of control, are not included in this forecast. The overall forecast is subject to a number
of uncertainties, including inflation and foreign currency effects.
Operational Outlook:
The following activity is planned for 2024:
. Following the anticipated close of the proposed acquisition by Novartis in the first half of 2024, submit
a New Drug Application for pelabresib in combination with ruxolitinib in myelofibrosis to the U.S. Food and Drug
Administration (FDA) and a Marketing Authorization Application to the European Medicines Agency in the second half
of 2024.
MorphoSys Group Key Figures (IFRS, end of the first quarter: March 31, 2024)

in EUR million                                                                           Q1 2024     Q1 2023       ? 
Revenues                                                                                   27.5        24.3      13 % 
Royalties                                                                                  27.0        20.9      29 % 
Licenses, Milestones and Other                                                              0.5         3.5    (86) % 
Cost of Sales                                                                             (2.8)       (1.0)     >100% 
Gross Profit                                                                               24.7        23.3       6 % 
Total Operating Expenses                                                                (289.1)      (79.4)     >100% 
Research and Development                                                                 (85.2)      (65.4)      30 % 
Selling                                                                                  (18.5)       (3.4)     >100% 
General and Administrative                                                              (185.5)      (10.6)     >100% 

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Operating Profit / (Loss)                                                               (264.4)      (56.1)     >100% 
Other Income                                                                                0.8         2.1    (62) % 
Other Expenses                                                                            (0.4)       (1.8)    (78) % 
Finance Income                                                                              9.6        50.8    (81) % 
Finance Expenses                                                                         (56.8)      (25.2)     >100% 
Income from Reversals of Impairment Losses / (Impairment Losses) on Financial Assets        0.1         0.5    (80) % 
Share of Loss of Associates accounted for using the Equity Method                         (1.5)       (2.5)    (40) % 
Income Tax Benefit / (Expenses)                                                             1.6         0.0       n/a 
Consolidated Net Profit / (Loss) from Continued Operations                              (311.0)      (32.2)     >100% 
Consolidated Net Profit / (Loss) from Discontinued Operations                             (3.9)      (12.2)    (68) % 
Earnings per Share, Basic and Diluted (in EUR) from continued operations                   (8.27)      (0.94)     >100% 
Cash and other financial assets (end of period)                                           631.9    680.5  *     (7) % 

* Value as of December 31, 2023
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Conference call

Due to the pending acquisition of MorphoSys by Novartis, MorphoSys will not be hosting its quarterly conference call and does not expect to do so in future quarters. Earnings materials are publicly available on the Investor Relations page of our website at www.morphosys.com/en/investors. Please direct any questions to MorphoSys Investor Relations using the contact information provided below. About MorphoSys

At MorphoSys, we are driven by our mission: More life for people with cancer. As a global biopharmaceutical company, we develop and deliver innovative medicines, aspiring to redefine how cancer is treated. MorphoSys is headquartered in Planegg, Germany, and has its U.S. operations anchored in Boston, Massachusetts. To learn more, visit us at www.morphosys.com and follow us on Twitter and LinkedIn.

About Pelabresib

Pelabresib (CPI-0610) is an investigational selective small molecule designed to promote anti-tumor activity by inhibiting the function of bromodomain and extra-terminal domain (BET) proteins to decrease the expression of abnormally expressed genes in cancer. Pelabresib is being investigated as a treatment for myelofibrosis and has not been approved by any regulatory authorities. Its safety and efficacy have not been established.

The development of pelabresib was funded in part by The Leukemia and Lymphoma Society®.

About MANIFEST-2

MANIFEST-2 (NCT04603495) is a global, double-blind, Phase 3 clinical trial that randomized 430 JAK inhibitor-naïve adult patients with myelofibrosis 1:1 to receive pelabresib in combination with ruxolitinib or placebo plus ruxolitinib. The primary endpoint of the study is a 35% or greater reduction in spleen volume (SVR35) from baseline at 24 weeks. The key secondary endpoints of the study are the absolute change in total symptom score (TSS) from baseline at 24 weeks and the proportion of patients achieving a 50% or greater improvement in total symptom score (TSS50) from baseline at 24 weeks. TSS is measured using the myelofibrosis self-assessment form (MFSAF) v4.0, which asks patients to report the severity of seven common symptoms, rating each of them on a scale from 0 (absent) to 10 (worst imaginable).

Additional secondary endpoints include progression-free survival, overall survival, duration of the splenic and total symptom score response, hemoglobin response rate and improvement in bone marrow fibrosis, among others.

Constellation Pharmaceuticals, Inc., a MorphoSys company, is the MANIFEST-2 trial sponsor.

About Tulmimetostat

Tulmimetostat (CPI-0209) is an investigational compound designed to exert anti-tumor activity by inhibiting the function of enhancer of zeste homolog 1 and 2 (EZH1 and EZH2) proteins to reactivate tumor suppressor genes or silencing the oncogenic pathways. Tulmimetostat is being tested as a once-daily oral treatment in a Phase 1/2 trial (NCT04104776) in patients with advanced solid tumors or lymphomas, including ARID1A-mutated ovarian clear cell carcinoma and endometrial carcinoma, diffuse large B-cell lymphoma, peripheral T-cell lymphoma, BAP1-mutated mesothelioma and castration-resistant prostate cancer. The primary objectives of the trial include determining the maximum tolerated dose and/or recommended Phase 2 dose and evaluating antitumor activity of tulmimetostat monotherapy. The safety and efficacy of tulmimetostat have not been established.

About Tafasitamab

Tafasitamab is a humanized Fc-modified CD19 targeting immunotherapy. In 2010, MorphoSys licensed exclusive worldwide rights to develop and commercialize tafasitamab from Xencor, Inc. Tafasitamab incorporates an XmAb^® engineered Fc domain, which mediates B-cell lysis through apoptosis and immune effector mechanism including Antibody-Dependent Cell-Mediated Cytotoxicity (ADCC) and Antibody-Dependent Cellular Phagocytosis (ADCP).

In the United States, Monjuvi^® (tafasitamab-cxix) is approved by the U.S. Food and Drug Administration in combination with lenalidomide for the treatment of adult patients with relapsed or refractory DLBCL not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT). This indication is approved under accelerated approval based on overall response rate. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s). Please see the U.S. full Prescribing Information for Monjuvi for important safety information.

In Europe, Minjuvi^® (tafasitamab) received conditional marketing authorization in combination with lenalidomide, followed by Minjuvi monotherapy, for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplant (ASCT).

Tafasitamab is being clinically investigated as a therapeutic option in B-cell malignancies in several ongoing combination trials. Its safety and efficacy for these investigational uses have not been established in pivotal trials.

Monjuvi^® and Minjuvi^® are registered trademarks of Incyte. Tafasitamab is marketed under the brand name Monjuvi^® in the U.S., and Minjuvi^® in Europe and Canada.

XmAb^® is a registered trademark of Xencor, Inc.

Additional Information and Where to Find It

This communication is neither an offer to purchase nor a solicitation of an offer to sell shares of MorphoSys AG (the "Company"). Following approval by the German Federal Financial Supervisory Authority (the "BaFin"), Novartis BidCo AG (formerly known as Novartis data42 AG) (the "Bidder") has published an offer document containing the final terms and further provisions regarding the offer to purchase all outstanding Company no-par value bearer shares, including all no-par value bearer shares represented by American Depositary Shares, at an offer price of EUR 68.00 per share in cash (the "Takeover Offer"). The Bidder and Novartis AG have also filed with the U.S. Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule TO containing the offer document, the means to tender and other related documents (together, the "Takeover Offer Documents"). The Takeover Offer is being made solely pursuant to the Takeover Offer Documents, which contain the full terms and conditions of the Takeover Offer. The Company's management board and supervisory board have issued a joint reasoned statement in accordance with sec. 27 of the German Securities Acquisition and Takeover Act and the Company has filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC (together with the joint reasoned statement, the "Recommendation Statements"). THE COMPANY'S STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ THE TAKEOVER OFFER DOCUMENTS AND THE RECOMMENDATION STATEMENTS, AS WELL AS OTHER DOCUMENTS FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TAKEOVER OFFER. The Tender Offer Statement on Schedule TO and the Solicitation/ Recommendation Statement on Schedule 14D-9 are available for free at the SEC's website at www.sec.gov. Additional copies may be obtained for free by contacting the Bidder or the Company. Free copies of these materials and certain other offering documents are available on the Company's website in English at morphosys.com/en/investors/ Novartis-TakeoverOffer and in German at morphosys.com/de/investoren/Novartis-TakeoverOffer, by mail to MorphoSys AG, Semmelweisstrasse 7, 82152 Planegg, Germany or by phone at +49 89 8992 7179.

In addition to the Takeover Offer Documents and the Recommendation Statements, the Company files other information with the SEC. The Company's filings with the SEC are also available for free to the public from commercial document-retrieval services and at the website maintained by the SEC at www.sec.gov and are also available free of charge under the "SEC Filings" section of the Company's website at www.morphosys.com/en/investors.

In order to reconcile certain areas where German law and U.S. law conflict, Novartis AG and the Bidder obtained no action and exemptive relief from the SEC to conduct the Takeover Offer in the manner described in the Takeover Offer Documents.

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