MorphoSys AG Reports Financial Results for Fiscal Year 2006

MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX) today announced its financial results according to International Financial Reporting Standards (IFRS) for the three-months' period and fiscal year ending December 31, 2006.  The Company achieved Group revenues of EUR 53.0 million, a positive cash flow from operations of EUR 16.3 million, and a net profit of EUR 6.0 million.
 
Highlights of the Year 2006:
  • Therapeutic segment: Conclusion of three new multi-year partnerships with Schering-Plough, OncoMed Pharmaceuticals as well as Japanese pharmaceutical group Daiichi Sankyo; Extension and substantial enlargement of three existing collaborations including Pfizer, Roche and Novartis
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  • Partnered pipeline: Substantial growth of partnered pipeline to 43 therapeutic antibody projects (up from 29 at the beginning of 2006); European Phase 1 clinical trials with HuCAL-derived antibody from partnership with Roche to treat Alzheimer's disease are ongoing.  First preliminary clinical data of HuCAL-derived antibody from partnership with GPC Biotech suggest that antibody is well tolerated, hints of anti-tumor activity were observed
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  • Proprietary pipeline: Development of lead compound MOR103 and MOR202 remain on track; MorphoSys confirms plan to submit all necessary information to regulatory authorities and ethics committees to start clinical trials for MOR103 for rheumatoid arthritis in H2 2007; For MOR202, a formal pre-clinical candidate was selected and MorphoSys intends to continue the pre-clinical development
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  • Research segment: Consolidation of Research Antibody segment through acquisition of the Serotec Group in January 2006 and successful integration
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  • Successful private placement of 384,338 shares raising gross proceeds of approx. EUR 17.1 million
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  • Presentation of new RapMAT antibody technology as one visible result of the ongoing technology development process
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    'Antibodies comprise the largest class of biotherapeutic agents and one of the most important life sciences research tools,' stated Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG.  'In 2006, MorphoSys cemented its position as one of the pre-eminent players in the antibody space.  We expect increasing demand for antibodies and antibody-related capabilities in both the therapeutic and research segments to continue to drive MorphoSys's growth in the years ahead.'
     
    'Both operationally and financially speaking, 2006 represented another banner year for MorphoSys,' commented Dave Lemus, Chief Financial Officer of MorphoSys AG.  'Looking ahead, we believe we are ideally positioned to capitalize on the expanding and lucrative trade for both antibody therapeutics and research reagents.'

    Financial Review for the fiscal year 2006 (IFRS):
     
    Under International Financial Reporting Standards (IFRS), revenues for the year 2006 amounted to EUR 53.0 million (2005: EUR 33.5 million), an increase of 58 % over the prior year.  Revenues arising from the Therapeutic Antibodies segment accounted for 65 % or EUR 34.7 million of total revenues.  The AbD segment, formerly the Research Antibodies segment, generated 35 % or EUR 18.3 million of total revenues.  MorphoSys's revenue growth was driven primarily by revenues arising from extended deals, success-based payments from existing collaborations, as well as the inclusion of Serotec Group revenues, contributing 23 % of total revenues.
     
    Total operating expenses including stock-based compensation for the full year 2006 were EUR 46.9 million (2005: EUR 27.3 million), representing an increase of 72 % over the prior year.  Cost of goods sold (COGS), arising solely from the AbD segment, amounted to EUR 8.0 million (2005: EUR 2.5 million), and largely reflected the inclusion of the Serotec Group in MorphoSys Group accounts.  Research and development expenses rose by EUR 3.5 million to EUR 17.5 million in 2006 (2005: EUR 14.0 million).  The increase in R&D expenses mainly resulted from higher expenses for product and technology development amounting to EUR 3.0 million.  Sales, general and administrative expenses increased by EUR 10.6 million to EUR 21.4 million (2005: EUR 10.8 million).  The increase mainly derived from the inclusion of the Serotec Group in the amount of EUR 8.3 million, higher S,G&A personnel costs at MorphoSys AG in Munich, and integration costs associated with acquired companies.  Non-cash charges related to stock-based compensation amounted to EUR 1.2 million (2005: EUR 1.1 million).  Non-operating expenses, including taxes, amounted in 2006 to EUR 0.1 million (2005: Non-operating expenses of EUR 1.5 million).  As a result of the forecast for taxable income in 2007, a deferred tax asset on tax loss carry-forwards has been capitalized which reduced tax expenses by € 1.2 million.
     
    For the full year 2006 MorphoSys posted a net profit of EUR 6.0 million compared to a net profit of EUR 4.7 million in the same period of the previous year.  The resulting diluted earnings per share for the year 2006 amounted to EUR 0.93 (2005: earnings per share of EUR 0.83).
     
    On December 31, 2006, the Company had EUR 66.0 million in cash, cash equivalents, and marketable securities, compared to the EUR 53.6 million balance as of December 31, 2005.  The increased cash item mainly derived from higher cash inflows as a result of the expanded operational activity and from a capital increase successfully executed in March 2006.  The number of issued shares at December 31, 2006 was 6,715,322 shares, compared to 6,025,863 at December 31, 2005.
     
    Fourth Quarter of 2006 (IFRS):
     
    In the fourth quarter of 2006, the Company generated revenues of EUR 14.0 million, compared to EUR 9.7 million in the same quarter of 2005, an increase of 44 %.  Total operating expenses amounted to EUR 15.7 million, compared to EUR 7.3 million in the same quarter of 2005.  The increase of operating expenses was mainly due to higher product and technology development cost in addition to restructuring costs in the UK, in the fourth quarter of 2006.  The resulting net loss for the fourth quarter 2006 was EUR 0.1 million, compared to a net profit of EUR 0.8 million in the fourth quarter of 2005.

    Financial Outlook for 2007
     
    MorphoSys is projecting total revenues of EUR 60 to 65 million, and profit from operations for the MorphoSys Group of EUR 7 to 10 million for the fiscal year 2007.  Of total Group revenues, the Therapeutic Antibodies segment will provide approximately two thirds of Group revenues, the AbD segment one third.  The Company will provide detailed guidance in today's press conference and conference call.