2019
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
annual report
Portfolio of Proprietary Development Programs
P R O G R A M
I N D I C AT I O N
Tafasitamab (MOR208)*
B cell malignancies
MOR202**
Multiple myeloma
Autoimmune
Otilimab (MOR103/GSK3196165)***
Rheumatoid arthritis
MOR107 (LP2-3)****
Oncology
M O S T A D V A N C E D
D E V E L O P M E N T S TA G E
1
2
3
E
S
A
H
P
E
S
A
H
P
E
S
A
H
P
P R O G R A M
I N D I C AT I O N
Preclinical and early research
PQ912*****
Oncology
MOR210**
Oncology
*
Global Collaboration and License Agreement with Incyte Corporation; co-commercialization in
the U.S.; Incyte has exclusive commercialization rights outside the U.S.
Sublicensed to I-Mab for development in China, Hong Kong, Macao, Taiwan and South Korea.
**
*** Fully outlicensed to GlaxoSmithKline.
**** Phase 1 study in healthy volunteers completed; currently in preclinical investigation with a focus
on oncology.
***** Option to license from Vivoryon; phase 2a study in Alzheimer’s disease completed; currently in
preclinical investigation.
Clinical Pipeline – Partnered Discovery Programs
Product Candidates in Clinical Development and One Product Launched
P R O G R A M / P A R T N E R
I N D I C AT I O N
Tremfya® (Guselkumab) / Janssen/J&J
Psoriasis
Gantenerumab / Roche
Alzheimer’s disease
Anetumab ravtansine (BAY94-9343) / Bayer
Solid tumors
BHQ880 / Novartis
Multiple myeloma
Bimagrumab (BYM338) / Novartis
Metabolic disease
CNTO6785 / J&J/Shandong Fontacea*
Inflammation
Ianalumab (VAY736) / Novartis
Inflammation
MAA868 / Anthos Therapeutics
Atrial fibrillation
NOV-8 (CMK389) / Novartis
Pulmonary sarcoidosis
NOV-9 (LKA651) / Novartis
Diabetic eye diseases
Setrusumab (BPS804) / Mereo/Novartis
Brittle bone syndrome
Tesidolumab (LFG316) / Novartis
Eye diseases
© MorphoSys, March 2020
M O S T A D V A N C E D
D E V E L O P M E N T S TA G E
1
2
3
E
S
A
H
P
E
S
A
H
P
E
S
A
H
P
D
E
H
C
N
U
A
L
M O S T A D V A N C E D
D E V E L O P M E N T S TA G E
1
2
3
E
S
A
H
P
E
S
A
H
P
E
S
A
H
P
D
E
H
C
N
U
A
L
P R O G R A M / P A R T N E R
I N D I C AT I O N
Utomilumab (PF-05082566) / Pfizer
Cancer
Xentuzumab (BI-836845) / BI
Solid tumors
BAY2287411 / Bayer
Cancer
Elgemtumab (LJM716) / Novartis
Cancer
NOV-7 (CLG561) / Novartis
Eye diseases
NOV-10 (PCA062) / Novartis
Cancer
NOV-11 / Novartis
Blood disorders
NOV-13 (HKT288) / Novartis
Cancer
NOV-14 (CSJ117) / Novartis
Asthma
CNTO3157 / J&J**
Inflammation
Vantictumab (OMP-18R5) / Mereo
Cancer
Pipeline products are under clinical investigation and there is no guarantee
any investigational product will be approved by regulatory authorities
* Sublicensed for China, Hong Kong, Macao, Taiwan and South Korea.
** Formerly PRV-300; Provention Bio terminated the sublicense and returned the program to Janssen
in November 2019.
MorphoSys at a Glance
Figures, data, facts (December 31, 2019)
employees
426
40
nations
pro gr ams in
discovery
62
pro gr ams in
preclinic
pro gr ams in
phase 1
25
More than
70
active clinical studies with
MorphoSys antibodies
10
pro gr ams in
phase 2
13
pro gr ams in
phase 3
5
E
C
N
A
L
G
A
T
A
S
Y
S
O
H
P
R
O
M
–
E
N
I
L
E
P
I
P
T
C
U
D
O
R
P
12
MOR programs
108.4
)
€
n
o
i
l
l
i
m
n
i
(
s
e
s
n
e
p
x
e
d
&
r
39.0
2009
2019
Engineering
the Medicines
of Tomorrow
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Contents
o n l i n e r e p o r t
https://reports.morphosys.com/2019
m ag a z i n e
10
14
Taking Big Steps
Transatlantic Alliance
t h e c o m pa n y
t o o u r s h a r e h o l de r s
Management Board of MorphoSys AG
Letter to the Shareholders
Report of the Supervisory Board
Supervisory Board of MorphoSys AG
MorphoSys on the Capital Market
s u s t a i n a b l e c o r p o r a t e g ov e r n a n c e
Ethical Standards and Regulatory Framework
Patients
Human Resources
Environmental Protection
22
23
28
34
36
39
40
42
43
g r o u p m a n ag e m e n t r e p o r t
47
61
62
77
81
89
90
Fundamentals of the MorphoSys Group
Macroeconomic and Sector-Specific Conditions
Analysis of Net Assets, Financial Position and Results
of Operations
Outlook and Forecast
Risk and Opportunity Report
Subsequent Events
Statement on Corporate Governance, Group Statement on
Corporate Governance and Corporate Governance Report
f i n a n c i a l s tat e m e n t s
120
121
122
124
126
128
186
Consolidated Statement of Profit or Loss (IFRS)
Consolidated Statement of Comprehensive Income (IFRS)
Consolidated Balance Sheet (IFRS)
Consolidated Statement of Changes in
Stockholders’ Equity (IFRS)
Consolidated Statement of Cash Flows (IFRS)
Notes
Responsibility Statement
a d d i t i o n a l i n f o r m at i o n
187
192
195
196
Independent Auditor’s Report
Glossary
List of Figures and Tables
Imprint
Never losing
sight of our goal –
to improve the
lives of patients
suffering from
serious diseases.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY We are deeply rooted
in science. Innovative
technologies and smart
development strategies
are central to our
approach.
In our discovery efforts, we leverage
our expertise in antibody engineering,
antibody libraries and drug development,
aiming to fill MorphoSys’ pipeline with
unique drug candidates.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Our employees
and their
values are our
strongest
asset.
Our success is based on
our employees on both sides
of the Atlantic, who work
closely together, living our
shared company values.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY We will continue to work
relentlessly to advance the
development of our drug
candidates, striving to offer
patients new, urgently
needed treatment options.
Our mission is to make
exceptional, innovative
biopharmaceuticals to
improve the lives of
patients suffering from
serious diseases.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Maga zine
10
Taking B ig Steps
TAKING
BIG
STEP S
MorphoSys is evolving. We talked to
Chief Executive Officer Dr. Jean-Paul Kress
about the challenges and opportunities
facing the company.
Taking B ig Steps
Maga zine
11
Medical Affairs, Market Access, Pricing, Mar-
keting and Sales. Our supporting infrastructure
and services are evolving to serve these new
units, all aimed at achieving the ultimate goal
of better addressing patient need.
Is this transformation being done incremen-
tally?
J.P.K. No, we are making bold moves. We’ve
made an informed and deliberate decision to
go for it. Fast and furious. We just filed for U.S.
marketing approval for our lead investigational
asset, tafasitamab in combination with lena-
lidomide in r/r DLBCL, which has been accepted
and granted priority review by the FDA, with
a PDUFA (Prescription Drug User Fee Act)
goal date of August 30, 2020. We successfully
launched our U.S. subsidiary in Boston and
established the commercial infrastructure to
be prepared for the anticipated launch of tafa-
sitamab – given FDA approval, of course. We
have chosen a partner to accelerate seizing of
the opportunity we have with tafasitamab – our
lead asset and a potential pipeline in a product
in the hematology-oncology space and poten-
tially even beyond.
Why not continue what MorphoSys has been
doing so successfully for over two decades?
What are the benefits of the new business
model?
J.P.K. Our technology provider business model
brought us to where we are today. We learned
a lot in terms of indications, antibody engi-
neering and our R&D spend was partly covered
by our partners. But there is a certain limit to
the value you can generate without becoming
a fully integrated biopharmaceutical company.
We have far greater opportunities if we aim to
be in command of the whole value chain, from
research through clinical development to com-
mercialization. Yes, we were very successful
with the previous model, but we can accomplish
even more, which is why we have decided to
take the next step.
Jean-Paul Kress, you’ve been at MorphoSys
for half a year now. What is your impression
of the company?
J.P.K. MorphoSys is one of the successful Euro-
pean Biotech companies that has clearly passed
the inflection point of transforming into a fully
integrated biopharmaceutical company. The
company is deeply rooted in science with a
great reputation for its antibody generation and
engineering technology platform; it has a strong
track record in successful partnerships and a
culture that embraces change. Lately, MorphoSys
has added an innovative development capabi lity
and commercial operations. This, combined with
a very promising asset – tafasitamab – on the
verge of entering the U.S. market (pending FDA
approval), makes MorphoSys a very exciting
place to be as a CEO.
Before joining MorphoSys you lived and
worked in a number of countries. What do
you like about how business is done in Ger-
many?
J.P.K. Yes indeed, I have split my time between
Europe and the U.S. lately, and, in fact, continue
to do so. First and foremost, MorphoSys’ culture
is that of a global Biotech – based in Germany.
I have an appreciation of agility paired with
precision, innovation paired with robustness,
foresight paired with reliability. Germany and
the adjacent European countries offer a great
talent pool of scientists and engineers with
strong backgrounds and great skills. Our work-
force combines these with exceptional talent
from around the globe and is highly diverse,
creating a multicultural and inspiring envi-
ronment right in the heart of Bavaria and now
also in the U.S.
Not only does MorphoSys have a new CEO,
the company itself is also changing. Could
you tell us a bit about the development
MorphoSys is undergoing right now?
J.P.K. MorphoSys truly lives up to the origin of
its name. Metamorphosis. We are very success-
fully transforming from a leading technology
provider into a fully integrated biopharmaceu-
tical company, aiming to master every step of
the value chain. To be able to excel commercially,
we have added several capabilities including
global Commercial Supply Chain Management,
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Maga zine
12
Taking B ig Steps
“We are making bold
moves. We’ve made an
informed and deliberate
decision to go for it.
Fast and furious.”
At the forefront of this transformation, as
you mentioned, is your leading candidate
tafasitamab.
J.P.K. Tafasitamab is an Fc-enhanced anti-CD19
antibody. CD19 is an antigen that is very broadly
expressed on the cell surface of B cells. Another
particularity of tafasitamab is that it is thought
to activate two key anti-tumoral pathways anti-
body-mediated cell killing and antibody-media-
ted phagocytosis.
Who will benefit from this drug?
J.P.K. We hope to be able to help patients in
potentially a number of hematological malig-
nancies in which there is a high unmet need.
The first patient group with a particularly high
unmet need are those suffering from relapsed
or refractory DLBCL, the most prevalent and
very aggressive form of non-Hodgkin lym-
phoma. If you are a patient with this disease,
and you do not respond or relapse to the first
treatment you receive, your chances of survival
actually decreases significantly. The results of
our L-MIND study, a combination of tafasitamab
plus lenalidomide, in this indication have shown
significant promise.
D R . J E A N - P A U L K R E S S
holds an M.D. degree from Faculté Necker-
Enfants Malades in Paris as well as graduate
and post-graduate degrees in pharmacology
and immunology from École Normale Supé-
rieure in Paris. Prior to joining MorphoSys,
Dr. Kress served as Chief Executive Officer at
Syntimmune (now Alexion), a clinical-stage
biotechnology company developing differenti-
ated drug candidates in autoimmune diseases.
He also held leadership positions at Biogen,
Sanofi-Genzyme, Sanofi-Pasteur MSD, Gilead,
Abbvie and Eli Lilly.
Taking B ig Steps
Maga zine
13
Was finding a partner for tafasitamab
MorphoSys’ biggest challenge in 2019?
J.P.K. It was one of our key objectives, indeed.
And it turned into a great opportunity. One of
my first actions after I joined MorphoSys was
to re-think the partnering strategy with the
management team without preconceived ideas.
And we came to the conclusion that we should
aim for a global partnership with a 50/50 co-
promotion and profit share in the U.S. and
out-licensing ex-U.S. rights. We ended up with
excellent terms – both financial and non-finan-
cial – which put us into a strong position for
future value creation.
Why have you chosen Incyte? Why are they
attractive as a partner?
J.P.K. The whole process and the negotiations
we had were very competitive. We selected
Incyte for both, economic and cultural reasons.
They are like us – absolutely focused and de-
dicated to the asset. Two biotechs joining forces.
They have proven commercialization capabili-
ties and expertise in the hematology-oncology
space. The whole team involved in the partner-
ing process and I really value Incyte’s approach,
their availability, the tone of the discussions
and of course the terms had to be competitive.
I am very confident that together we can unlock
the full potential of tafasitamab.
Before joining MorphoSys you have gathered
a lot of experience in both pharma and biotech
companies. Is there one thing you learned at
each company that will especially help you
to make MorphoSys’ transformation a success?
J.P.K. Thinking back, there were three key learn-
ings during my professional career that will
contribute to the success of MorphoSys. The
first set of experiences is that I have led break-
through specialty care launches in the U.S.
and internationally. Several of these launches
were through partnerships, in a similar fashion
of what we have done recently with Incyte. So
I am familiar with the requirements to be
successful in business partnerships and joint
ventures. There is a bit of an art to this. You
anticipate issues, you put a lot of effort in, it is
like a marriage. The second element that will
help me is my former position as CEO of a VC-
backed biotech company in the U.S., which was
acquired by Alexion. This endowed me with
important M&A corporate strategy experience
which will be certainly helpful for MorphoSys.
Last but not least, I am confident that my ex-
perience in commercial and at leading organi-
zations as well as bridging cultures on both
sides of the Atlantic will ideally complement
our future strategy at MorphoSys. Being famil-
iar with both the U.S. market and European
requirements will help us to become a global
biopharma company.
Looking to a future beyond the launch of
tafasitamab, where do you see MorphoSys?
J.P.K. We deliberately take one bold step a time.
Right now, our focus is on achieving approval
for and successfully launching tafasitamab.
Tafasitamab is a potential pipeline in a product.
We are committed to creating as much value
as reasonably possible, fast and jointly with
our partner Incyte – not just in the U.S. but
globally. Beyond tafasitamab, we have promis-
ing proprietary assets in our pipeline such as
MOR202 in an autoimmune setting and MOR107
in oncology as well as a strong cash position.
We hope we can successfully commence the
clinical development towards a potential future
launch of these assets, supported by our com-
mercial U.S. operations.
o n l i n e r e p o r t
https://reports.morphosys.com/2019/
magazine/taking-big-steps
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Maga zine
14
T
Tr ansatlantic A lliance
A
A
N
N
T
T
R
S
A
We take a look at how MorphoSys US Inc. is preparing
for the potential tafasitamab launch. Tafasitamab
is MorphoSys’ first proprietary drug candidate cur-
rently under FDA-priority review for approval to treat
an especially difficult form of diffuse large B cell
lymphoma. In January 2020, the company signed
a partnering deal with Incyte that will support
MorphoSys to achieve its next goal – to co-commer-
cialize tafasitamab in the United States.
L
I
C
Tr ansatlantic A lliance
Maga zine
15
T
R
S
A
A
A
N
N
T
T
L
I
C
A
L
L
I
A
N
C
E
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Remuneration Report
Maga zine
16
Since July 2018,
Boston has been
the U.S. of fice of
MorphoSys.
Tr ansatlantic A lliance
Boston came as no surprise
MorphoSys planted its flag in Boston. Located
in a brick red high-rise with green-tinted win-
dows overlooking the city’s harbor, MorphoSys
US Inc. is in the middle of one of the most im-
portant life science hubs worldwide. MorphoSys’
decision on Boston, Massachusetts, as the loca-
tion for its U.S. presence is not surprising. With
its world-class universities such as Harvard,
MIT and Boston University only a short ride
away and a number of world-renowned hospi-
tals serving as a repository for biotech innova-
tion and talent, Boston is considered to be the
cradle of biotech in the U.S., and, thus, is the
ideal location for MorphoSys’ U.S. operations.
But selecting the location for the company’s
U.S. presence was only the beginning. The next
challenge was the task of hiring employees.
Because MorphoSys believes its most precious
resource are its people, their values and their
networks of influence, talent acquisition was
a top priority. MorphoSys successfully added
nearly 40 full-time U.S. team members in 2019,
and plans to continue hiring, aiming to increase
the number to over 150 employees by mid-2020.
The MorphoSys U.S. team is comprised of pro-
fessionals from many different disciplines and
is prepared to reach out to all critical stake-
holders including patients, healthcare provi ders,
payers, policy makers and patient advocacy
organizations.
Representing the talented group of profession-
als that have become a part of the MorphoSys
family in the U.S., David Trexler, President of
MorphoSys US Inc., and Dr. Nuwan Kurukula-
suriya, Senior Vice President and Head of Med-
ical Affairs, both seasoned industry experts,
commented on the progress and the importance
of transatlantic collaboration on the way to
bringing tafasitamab to patients in need.
MorphoSys is currently waiting for the poten-
tial approval of its lymphoma drug candidate,
tafasitamab. The company and its U.S. partner
Incyte have signed a collaboration and licen sing
agreement for the global development for taf-
asitamab aiming to work together towards the
shared ambition – to deliver tafasitamab to
patients.
Recognizing the benefits of establishing a U.S.
presence while gearing up towards the expected
launch of tafasitamab, MorphoSys’ management
team started to set-up its subsidiary in the U.S.
as early as July 2018. Over the course of 2019,
the company made great strides in establishing
the required commercial infrastructure and
hiring the right talent for the potential tafasi-
tamab launch. With new CEO Dr. Jean-Paul
Kress splitting his time between both Boston
and Planegg, the team has layed the groundwork
to become a successful fully integrated bio-
pharmaceutical company.
Recognizing the bene-
fits of establishing
a U.S. presence while
gearing up towards the
expected launch of tafa-
sitamab, MorphoSys’
management team
started to set-up its
subsidiary in the U.S.
as early as July 2018.
Tr ansatlantic A lliance
Maga zine
17
01
01
01
Dr. Nuwan Kurukulasuriya,
Senior Vice President and
Head of Medical Af fairs
02 - 03
Insight into the Boston of fice
02
02
03
03
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY Maga zine
18
Tr ansatlantic A lliance
Ensuring close collabora-
tion and optimal commu-
nication, all team mem-
bers on both sides of the
Atlantic, in the Planegg,
Germany headquarters
and the U.S. office in Bos-
ton, will continue to sup-
port each other to ensure
smooth preparatory work
for the planned tafasitamab
launch.
04
David Trexler, President
of MorphoSys US Inc.,
with the U.S. team
04
Tr ansatlantic A lliance
Maga zine
19
“The team we are building is a testament to
the extraordinary pool of talent in the U.S.
biotech space. It is this dynamic and highly
performing team that embodies the spirit of
MorphoSys and shares our company values of
innovation, courage, collaboration and urgency,”
David Trexler said.
“MorphoSys is a very special place,” added
Dr. Nuwan Kurukulasuriya. “Both in Planegg
and in Boston, it brings together like-minded
individuals committed towards the common
goal of improving the lives of patients suffering
from serious diseases.”
Potentially changing the treatment paradigm
in lymphoma
To position itself in the hematology-oncology
community, MorphoSys wants to accomplish
more than informing doctors about its own
clinical data. Complementing the data from its
L-MIND study of tafasitamab in combination
with lenalidomide, the company has also gath-
ered real world data of patients who have been
treated with a lenalidomide monotherapy. More-
over, MorphoSys initiated the clinical develop-
ment of tafasitamab in firstline DLBCL, com-
bining tafasitamab with the current standard
of care, R-CHOP. These data will provide addi-
tional evidence to the lymphoma community
and highlights MorphoSys’ commitment to
further research in the space.
o n l i n e r e p o r t
https://reports.morphosys.com/2019/
magazine/transatlantic-alliance
MorphoSys considers tafasitamab to be a “pipe-
line in a product.” Its opportunities both within
and beyond the non-Hodgkin lymphoma space
are numerous. These opportunities encompass
not only additional treatment lines, but also arise
for several other indications. And MorphoSys
is ideally poised to unlock the greater value of
tafasitamab – both through its own industry
leadership and scientific excellence and through
marrying resources with Incyte, a partner with
great expertise in the hemato-oncology space
and proven commercial capabilities. Having
signed a global licensing deal recently, both
companies will now join forces to realize the
full value proposition of tafasitamab.
Ensuring close collaboration and optimal com-
munication, all team members on both sides of
the Atlantic, in the Planegg, Germany head-
quarters and the U.S. office in Boston, will
continue to support each other to ensure smooth
preparatory work for the planned tafasitamab
launch.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORTTHE COMPANY
T he C ompany
20
C ontents
The
Company
C ontents
T he C ompany
21
Y
N
A
P
M
O
C
E
H
T
t o o u r s h a r e h o l d e r s
22
23
28
34
36
Management Board of MorphoSys AG
Letter to the Shareholders
Report of the Supervisory Board
Supervisory Board of MorphoSys AG
MorphoSys on the Capital Market
s u s ta i n a b l e c o r p o r at e g o v e r n a n c e
39
40
42
43
Ethical Standards and Regulatory Framework
Patients
Human Resources
Environmental Protection
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT
T he C ompany – To O ur Shareholder s
Management B oard of Mor phoSys AG
22
Dr. Jean-Paul Kress, Chief E xecutive Of ficer
Jens Holstein, Chief Financial Of ficer
Dr. Malte Peters, Chief Development Of ficer
Let ter to the Shareholder s
To O ur Shareholder s – T he C ompany
23
Dear ladies and gentlemen,
dear fellow shareholders,
The year 2019 was marked for MorphoSys by major progress and achieve-
ments, as well as corporate evolution. We have made great strides in
evolving from a best-in-class, research-based technology provider towards
becoming a fully integrated biopharmaceutical company covering the
entire value chain from research and development to commercialization of
drug candidates. In particular, the last year took us even closer to our
goal of bringing our first proprietary investigational product, tafasitamab,
to the market in the U.S., a remarkable event we plan for mid-2020,
assuming approval by the U.S. Food and Drug Administration (FDA).
We ended 2019 with the achievement of a significant milestone - the sub-
mission of a Biologics License Application (BLA) for tafasitamab, our lead
proprietary development candidate and key asset, to the U.S. FDA for
the treatment of a particularly aggressive form of blood cancer, diffuse
large B cell lymphoma (DLBCL). The BLA submission was based on data
from two clinical trials, both of which had positive data readouts in 2019.
In May, we announced that the primary endpoint had been met in the
phase 2 trial L-MIND evaluating tafasitamab plus lenalidomide in relapsed
or refractory (r/r) DLBCL patients, confirming the overall positive data
reported previously from this trial. The detailed data were presented at the
15th International Conference on Malignant Lymphoma (ICML) in June
and showed a complete response rate of 43 % and a median response dura-
tion of 22 months, which is very encouraging.
In autumn, we announced that the Re-MIND trial also achieved its pri-
mary endpoint of best objective response rate. This real-world data study
demonstrated the clinical superiority of tafasitamab plus lenalidomide,
based on data from the L-MIND study, compared to lenalidomide alone,
based on real-world patient data.
We believe that the compelling results from the Re-MIND and L-MIND stud-
ies form the basis for a very robust submission package. MorphoSys team
members worked hard to enable us to achieve the BLA submission on time.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
24
Let ter to the Shareholder s
We were pleased that the FDA accepted the filing of our Biologic License
Application (BLA) end of February this year and granted priority review.
The tafasitamab – lenalidomide combination, if approved, could offer
critically ill and heavily pretreated patients a new treatment option and
we are excited that tafasitamab could be our first drug candidate to
reach the market and patients in 2020.
To prepare for a successful launch of tafasitamab, we escalated the build
out of our U.S. commercial organization through 2019 and held the offi-
cial opening of our U.S. subsidiary in Boston in November. During the year,
we filled key positions with highly experienced executives to grow our
U.S. team, including Heads of Commercial Operations, Sales & Marketing,
Medical Affairs and Market Access & Policy. We are pleased with the in-
credible talent we have been able to attract at all levels of the organization.
Our Medical Affairs team and our sales force are following a multi-stake-
holder strategy and are already successfully establishing relationships with
healthcare professionals and oncologists across the U.S.
To complement and amplify our own activities, we made a great start into
2020 and announced in January a worldwide partnership with Incyte
Corporation to further develop and co-commercialize tafasitamab. We had
many suitors, but we chose Incyte as the perfect partner to help us maxi-
mize the opportunity for this product candidate with their strong commit-
ment and commercial and development acumen. The economics are
excellent for MorphoSys, but, beyond the financial aspects of the deal,
we wanted a partner who would consider tafasitamab to be the center-
piece of their product portfolio. Incyte has a strong footprint in hematology-
oncology in the U.S., as well as in Europe, and tafasitamab will be a key
asset for them, as it is for us. In the U.S., we will co-commercialize tafasi-
tamab sharing profits and losses on a 50:50 basis, MorphoSys will lead
the commercial strategy and book all revenue, whereas ex-U.S. we will
benefit from Incyte leading the commercial strategy, paying MorphoSys
royalties on net sales.
In the U.S., our initially most important market, the partnership will enable
us to double the intensity of our efforts to reach patients and physicians and
ensure that tafasitamab is best-positioned for a successful launch. Incyte
plans to submit for marketing approval in Europe in mid-2020, and they
Let ter to the Shareholder s
To O ur Shareholder s – T he C ompany
25
have already indicated that they intend to pursue development in addi-
tional territories beyond the U.S. and Europe, including Japan and China.
Both companies truly believe that tafasitamab is a “pipeline in a product,”
which means that the product candidate could be used as a therapeutic
option in various indications, and both companies are highly committed
to developing tafasitamab in new indications to fully unlock its potential.
We have another ongoing trial in r/r DLBCL – B-MIND – evaluating
tafasitamab in combination with bendamustine. During 2019, following
discussions with regulatory authorities, we amended the trial with a
co-primary endpoint based on a biomarker, which is low baseline peripheral
blood natural killer (NK) cell count. The biomarker identifies a patient
group with a particularly poor prognosis, and we think that tafasitamab’s
potential ability to enhance NK cell recruitment may be of particular
benefit to this group. The trial passed a futility analysis in late 2019.
Also in 2019, we initiated a phase 1b trial – First-MIND – in newly diag-
nosed DLBCL patients to evaluate the safety and preliminary efficacy of
tafasitamab as a first-line treatment in combination with the current stan-
dard of care. This phase 1b study will serve as the basis for a potential
subsequent pivotal phase 3 study in first-line DLBCL. We also have on-
going a phase 2 trial – COSMOS – in chronic lymphocytic leukemia/
small lymphocytic lymphoma; data from this study were presented at the
ASH conference in late 2019.
In summary, tafasitamab is certainly our key proprietary asset, given its
advanced stage and market potential, and we and Incyte are working
hard to be prepared for a successful launch by mid-2020 and to broaden
its development. However, thanks to our strong discovery capabilities
and partnerships, we have a broad pipeline of clinical and pre-clinical
proprietary programs behind our lead candidate, several of which also
made progress over the course of 2019.
We also made good progress during the past year with our anti-CD38
antibody, MOR202. We initiated a phase 1/2 study in membranous
nephropathy, an autoimmune disease affecting the kidneys for which
currently no approved treatments exist. MOR202 is partnered with
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
26
Let ter to the Shareholder s
I-Mab for Greater China, and during 2019, I-Mab initiated two pivotal
trials in multiple myeloma, which triggered milestone payments to
MorphoSys totaling US$ 8 million.
We were pleased that, in mid-2019, GlaxoSmithKline (GSK) started a
phase 3 development program in rheumatoid arthritis (RA) with otilimab
(MOR103), an antibody generated by our proprietary HuCAL® technology.
RA is a chronic and debilitating autoimmune disease for which alternative
treatment options are urgently needed, and we look forward to the on-
going development by our partner GSK. The trial initiation triggered a
€ 22 million milestone payment to us.
In addition to our Proprietary Development programs, we have numerous
Partnered Discovery programs. A great example is Tremfya®, the first prod-
uct generated from our discovery engine to enter the market. Janssen has
the development and commercialization rights to Tremfya. In 2019, which
was Tremfya’s second full year on the market, worldwide sales surpassed
US$ 1 billion, making this drug a blockbuster. MorphoSys receives royalties
and a consistent revenue stream from Tremfya sales. We are pleased by
Janssen’s continuous work and their commitment to expand the indications
for this drug beyond its first approval in plaque psoriasis. In 2019, Janssen
submitted a supplemental BLA for Tremfya for the treatment of psoriatic
arthritis in the U.S. and also for marketing approval in Europe. Several
clinical trials in other indications are ongoing and we look forward to the
emerging data in the years to come.
Other Partnered Discovery programs include bimagrumab, which is be-
ing developed by Novartis for the treatment of type II diabetes. In 2019,
the first data with this antibody were presented from a trial in overweight
and obese patients.
While our strategy is increasingly focused on independently developing our
proprietary programs, we look forward to further progress with our Part-
nered Discovery projects, providing us with potentially significant future
revenue streams to fuel our own pipeline.
Looking back, 2019 was a year of not only achievements but also of change,
and on September 1st, I had the honor and privilege to become CEO of
Let ter to the Shareholder s
To O ur Shareholder s – T he C ompany
27
MorphoSys. I would like to take this opportunity to say how thrilled I am
to lead this incredible team at this transformative time in its history. We
will tread completely new paths to enter the next level during our business
evolution, and I look forward to the exciting times ahead of us.
In this context, I would like to thank Dr. Simon Moroney for his dedicated
leadership over the past 27 years as CEO of MorphoSys. His extraordi-
nary vision and innovative thinking built the ground for the successful
biopharmaceutical company MorphoSys is today.
I would also like to acknowledge Dr. Markus Enzelberger, the company’s
Chief Scientific Officer, who left MorphoSys at the end of February. Although
our tenures only briefly overlapped, I would like to recognize Markus’
vital contribution to our success and convey the gratitude that all of us at
MorphoSys owe him for his exceptional service over the past 17 years.
On behalf of the Management Board, I would like to express our heartfelt
thanks to all of MorphoSys’ employees on both sides of the Atlantic for
their ongoing efforts, creativity and commitment to our company’s success.
It is an exciting and challenging time as we complete our transformation
into a fully integrated biopharmaceutical company, and everyone’s dedica-
tion is truly appreciated.
I would also like to thank you, our shareholders, for your continued sup-
port and for your belief in the company.
In the end, it is patients who are at the core of all we do, and we are
working hard to deliver truly innovative drugs to improve the lives of
patients with serious diseases. We look forward to sharing our progress
and achievements with you in the year ahead.
Sincerely,
Dr. Jean-Paul Kress, M.D.
Chief Executive Officer and Chairman of the Management Board
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
28
Repor t of the Super v isor y B oard
Report of the Supervisory Board
COOPERAT ION OF T HE MANAGEMEN T BOARD AND
SUPERVIS ORY BOARD
During the 2019 financial year, the Supervisory Board com-
prehensively performed the duties assigned to it by law, the
Articles of Association, Rules of Procedure and – with one
exception – the recommendations of the German Corporate
Governance Code (hereinafter referred to as the “Code”). We
regularly advised and continually oversaw the Management
Board in its management of the Company and dealt extensively
with the operational and strategic development of the Group.
The Management Board fulfilled its duty to inform and furnish
us with periodic written and verbal reports containing timely
and detailed information on all business transactions and
events of significant relevance to the Company. The Manage-
ment Board prepared these reports in collaboration with the
respective departments. In our Committee meetings and ple-
nary sessions, we had the opportunity to discuss the Manage-
ment Board’s reports and the proposed resolutions in full.
The Management Board answered our questions on strategic
topics affecting the Company with a great level of detail and
submitted the relevant documents in a timely manner. Any
deviations from the business plan were thoroughly explained
to us and we were directly involved at an early stage in all
decisions relevant to the Company.
An appropriate resolution was passed when the Supervisory
Board’s approval for individual actions was required by law,
the Articles of Association or the Rules of Procedure. The Su-
pervisory Board members approved all actions by the Manage-
ment Board requiring Supervisory Board approval based on
the documentation provided in advance by the Management
Board. When necessary, the Supervisory Board received the
support of the relevant Committees and, together with the
Management Board, discussed any projects requiring deci-
sion. All matters requiring approval were submitted for re-
view by the Management Board to the Supervisory Board on
a timely basis.
Outside of the meetings of the Supervisory Board plenum and
the Committees, the chairman of the Supervisory Board reg-
ularly exchanged information and ideas with the Manage-
ment Board and especially the (now: former) Chief Executive
Officer, Dr. Simon Moroney, and his successor as the (new)
Chief Executive Officer, Dr. Jean-Paul Kress. The Supervisory
Board chairman was always kept promptly informed of the
current business situation and any significant business
transactions. The Chairs of the Committees have also had
regular contact with the Management Board members in
their respective areas of responsibility and individual Man-
agement Board members on demand.
SUPERVISORY BOARD MEET INGS IN THE 2019 FINANCIAL
YEAR AND KEY I T EMS OF DIS CUSSION
A total of ten Supervisory Board meetings were held in the
2019 financial year, whereby four meetings were conducted
by telephone. The Supervisory Board regularly held closed
sessions without participation of the Management Board as
part of their Supervisory Board meetings. With the exception
of one meeting, all Supervisory Board members were present
at all Supervisory Board meetings. A detailed overview of
the participation of all Supervisory Board members in the
respective Supervisory Board and Committee meetings can
be found in the “Statement on Corporate Governance,” which
is available on the Company’s website under the heading
“Media & Investors > Corporate Governance > Statement on
Corporate Governance,” and in the Annual Report on pages
94 to 95. In urgent cases occurring outside of meetings, the
Supervisory Board passed resolutions by written procedure.
During the 2019 financial year, the Supervisory Board paid
particular attention to the following topics and passed resolu-
tions on these topics after a thorough review and discussion:
• Evaluation of the Company’s achievement of the 2018 finan-
cial year corporate targets and defining the corporate tar-
gets for the 2020 financial year;
• agenda and proposed resolutions for the 2019 Annual
General Meeting, particularly the nominations of Krisja
Vermeylen and Sharon Curran as Supervisory Board candi-
dates for re-election and election at the 2019 Annual General
Meeting;
• confirmation of Dr. Marc Cluzel as chair and Frank Morich
as deputy chair of the Supervisory Board and establish-
ment and staffing of the Committees in the Board’s constit-
uent meeting following the 2019 Annual General Meeting;
• appointment of the new Chief Executive Officer, Dr. Jean-
Paul Kress, and conclusion of a corresponding management
board contract;
Repor t of the Super v isor y B oard
To O ur Shareholder s – T he C ompany
29
• conclusion of a release agreement with the former Chief
Executive Officer, Dr. Simon Moroney, following his stepping
down as of August 31, 2019;
• re-appointment of the members of the Management Board
Jens Holstein and Dr. Markus Enzelberger including conclu-
sion of corresponding management board contracts;
• award of the audit contract to the auditor for the 2019 finan-
cial year;
• terms and conditions of the long-term incentive plan 2019
and of the stock option plan 2019 as well as the number of
performance shares and stock options to be granted to the
individual Management Board members under these plans;
• conclusion of a commercial supply agreement for tafasitamab
with Boehringer Ingelheim Biopharmaceuticals GmbH;
• financing of MorphoSys US Inc. as well as further set-up of
the U.S. organization and operations, in particular to ensure
that the organization is ready for a launch of the Company’s
most advanced proprietary drug candidate tafasitamab in the
U.S. by mid-year 2020 following BLA approval by the FDA;
• budget for the 2020 financial year;
• revision of the rules of procedure of the Supervisory Board
as well as of the Management Board, including schedules of
responsibilities.
We also passed a resolution in the Supervisory Board plenum
on the remuneration of Management Board members for the
period July 1, 2019 to June 30, 2020, taking external bench-
marking into consideration. As set out above, we evaluated the
achievement of the 2018 corporate targets that were agreed
with the Management Board and discussed and defined the
corporate targets for 2020. We commissioned an independent
remuneration consultant to confirm the appropriateness of the
Management Board’s compensation and its comparison to the
remuneration of various levels of employees. We discussed
and agreed on the key performance indicators for the long-
term incentive plans for the Management Board, the Senior
Management Group and other employees in key positions.
Furthermore, we approved the financial statements for the
2018 financial year, acknowledged the half-year results for
2019 and discussed the first and third quarter reports as well
as dealt with the Corporate Governance Report and the State-
ment on Corporate Governance.
Our regular discussions in the Supervisory Board’s plenary
meetings were focused on MorphoSys’ long term development
strategy, revenue and earnings development and the regular
financial reports, the communication to the investor com-
munity, the progress of the two business segments Partnered
Discovery and Proprietary Development, the results and
progress of the clinical programs for the development of pro-
prietary drugs, interactions with regulatory authorities and
the development of new technologies. Further focal points
of discussion were the commercialization strategy for tafasi-
tamab and status of activities required for a successful
launch of tafasitamab in the U.S. as well as transforming the
organization into a fully integrated biopharmaceutical com-
pany. Furthermore, we discussed the financial outlook for the
2021/2022 financial years and MorphoSys’ associated future
potential financing needs. In addition, we carried out an effi-
ciency review of the Supervisory Board’s work, which was
performed via a questionnaire that included a joint self-eval-
uation of the Supervisory Board, its Committees and the Man-
agement Board. Furthermore, we kept ourselves regularly
informed with respect to the Company’s asset management
policy, risk management, internal audit results, IT security,
the internal control and compliance management system as
well as status of the implementation of a system of Internal
Control over Financial Reporting (ICoFR) to ensure SOX com-
pliance by end of 2019. We also participated in a training ses-
sion on the German Act implementing the Second Share-
holders’ Rights Directive (Gesetz zur Umsetzung der zweiten
Aktionärsrechterichtlinie, ARUG II), the new German Corpo-
rate Governance Code and relevant implications for the Super-
visory Board. This training was offered by the Company and
held by an external lawyer. And lastly, we monitored the com-
petitive partnership process performed for our proprietary
compound tafasitamab and advised on the respective part-
nership discussions with various potential partners. In this
context, in January 2020 we finally reviewed and approved
the Global Collaboration and License Agreement with Incyte
Corporation (“Incyte”), according to which Incyte will co-com-
mercialize tafasitamab in the U.S. and will receive exclusive
commercialization rights for tafasitamab outside the U.S. (the
“Incyte Agreement”). Pursuant to the Incyte Agreement, we
also resolved an increase of MorphoSys’ share capital by issu-
ing 907,441 new ordinary shares from the Authorized Capital
2017-I, excluding pre-emptive rights of existing shareholders,
to implement the purchase of 3,629,764 American Depositary
Shares by Incyte.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
30
Repor t of the Super v isor y B oard
CONF L IC T S OF IN T ERES T WI T HIN T HE SUPERVIS ORY
BOARD
No conflicts of interest arose within the Supervisory Board in
the 2019 financial year.
AC T IVI T IES AND MEE T INGS OF SUPERVIS ORY BOARD
COMMI T T EES
To ensure that its duties are performed efficiently, the Super-
visory Board has established three permanent committees –
the Audit Committee, the Remuneration and Nomination
Committee and the Science and Technology Committee – to
prepare the issues that fall within the Supervisory Board’s
respective areas of responsibility for the Supervisory Board
plenum. In each Supervisory Board meeting, the chairs of the
Committees report to the Supervisory Board on the Commit-
tees’ work. The minutes of the Committee meetings are made
available to all Supervisory Board members. The composition
of these committees can be found in the “Statement on Corpo-
rate Governance,” which is available on the Company’s web-
site under the heading “Media & Investors > Corporate Gover-
nance > Statement on Corporate Governance,” and in the
Annual Report on pages 91 to 96.
The Audit Committee met on five occasions in the 2019 finan-
cial year, whereby one of those meetings was held by tele-
phone. All Committee members were present at all Audit
Committee meetings. The Committee dealt mainly with ac-
counting issues, quarterly reports, annual financial state-
ments and consolidated financial statements. The Committee
discussed these topics with the Management Board and rec-
ommended the approval of the financial statements to the
Supervisory Board. The auditor took part in all Audit Commit-
tee meetings and informed its members of the audit results.
The Audit Committee made a recommendation to the Super-
visory Board with respect to the Supervisory Board’s pro-
posal at the Annual General Meeting for the election of the
independent auditor for the 2019 financial year. In addition,
the Audit Committee dealt with the annual update of a list of
permitted and pre-approved non-audit services of the auditor.
The Committee also discussed the risk management system,
the compliance management system and the results of the
internal audit conducted in the 2019 financial year, as well as
specific accounting issues under International Financial Re-
porting Standards (IFRS) relevant to the Company. In addi-
tion, the Committee regularly discussed the Company’s asset
management policy and the investment recommendations
made by the Management Board. The Committee also dis-
cussed in depth the 2020 budget and the financial outlook for
the 2021/2022 financial years. Furthermore, the Committee
monitored the status of the implementation of a system of
Internal Control over Financial Reporting (ICoFR) to ensure
SOX compliance by end of 2019 and discussed the proposed
impairment tests in preparation for the annual audit. Finally,
the Committee dealt with the random sampling examination
of the annual financial statements and the consolidated finan-
cial statements of the Company as of December 31, 2018 by
the German Financial Reporting Enforcement Panel (Deut-
sche Prüfstelle für Rechnungslegung e.V. – DPR). The exam-
ination was concluded in November 2019 and did not result in
any findings.
To increase efficiency, there is a joint Remuneration and Nom-
ination Committee, which deliberates on matters relating to
remuneration and nomination. The Committee met on seven
occasions in the 2019 financial year, thereby six times by
way of telephone conference. All Committee members partic-
ipated at all Committee meetings. In its function as a remu-
neration committee, the Committee mainly dealt with the
Management Board’s remuneration system and level of com-
pensation. In this context, the Committee also commissioned
an independent remuneration expert with the task of prepar-
ing a Management Board remuneration report to verify the
appropriateness of the Management Board’s remuneration.
Based on this report, the Committee prepared a recommenda-
tion on the Management Board’s compensation and submit-
ted this to the Supervisory Board for approval. The Commit-
tee also dealt with the ratio of compensation between the
Management Board and the Senior Management Group and
the staff overall and had this ratio reviewed by the commis-
sioned remuneration expert. This expert confirmed the appro-
priateness of these “vertical” compensation ratios. In addition,
the Committee gave careful consideration to the corporate
targets as a basis for the Management Board’s short-term
variable remuneration and offered appropriate recommenda-
tions to the Supervisory Board for resolution. The Committee
discussed the key performance indicators of the long-term
incentive plans for the Management Board, Senior Manage-
ment Group and other employees in key positions. In its
function as the Nomination Committee, the Committee rec-
ommended the appointment of Dr. Jean-Paul Kress as the
new Chief Executive Officer, as well as the re-appointment of
Jens Holstein as Chief Financial Officer and of Dr. Markus
Enzelberger as Chief Scientific Officer and prepared the cor-
responding management board contracts. In addition, this
Committee prepared the release agreement with the former
Chief Executive Officer, Dr. Simon Moroney. Further, the
Repor t of the Super v isor y B oard
To O ur Shareholder s – T he C ompany
31
We also discussed with the Management Board the Compa-
ny’s compliance with the Code’s recommendations and in one
justified case approved an exception to the Code’s recommen-
dations. Based on this consultation, the Management Board
and the Supervisory Board submitted the annual Declaration
of Conformity on November 29, 2019. The current version of
the Declaration of Conformity can be found in this Annual
Report and is permanently available on the Company’s web-
site under the heading “Media & Investors > Corporate Gover-
nance > Declaration of Conformity.”
CHANGES IN T HE COMP OSI T ION OF T HE MANAGEMEN T
BOARD AND SUPERVIS ORY BOARD
The (former) Chief Executive Officer of the Company, Dr. Simon
Moroney, informed the Supervisory Board on February 19, 2019
that he has decided not to renew his contract as a member of
the Company's Management Board. As a result of his decision,
Dr. Moroney stepped down as a member of the Management
Board and Chief Executive Officer of the Company as of the
expiry of August 31, 2019. By decision of the Supervisory
Board of June 24, 2019, Dr. Jean-Paul Kress was appointed as
the new Chief Executive Officer for a term of office of three
years from September 1, 2019 until August 31, 2022. No fur-
ther changes in the composition of the Management Board
took place during the 2019 financial year. However, the Chief
Scientific Officer of the Company, Dr. Markus Enzelberger,
resigned as member of the Management Board and CSO in
November 2019 with effect as of February 29, 2020.
The following changes in the composition of the Supervisory
Board took place during the 2019 financial year: Krisja
Vermeylen was re-elected to the Supervisory Board by the
2019 Annual General Meeting, following expiry of her term of
office, and Sharon Curran was newly elected, following an ex-
tension of the Supervisory Board from six to seven members.
To support the onboarding of new Supervisory Board mem-
bers, the Company has established a respective handbook
outlining principal rights and duties of Supervisory Board
members as well as relevant legal documents, such as Rules
of Procedure of the Supervisory Board and its Committees.
Nomination Committee recommended the nominations of
Krisja Vermeylen and Sharon Curran as Supervisory Board
candidates for re-election and election at the 2019 Annual
General Meeting. In addition, this Committee dealt with suc-
cession planning within the Company.
The Science and Technology Committee met on six occasions
during the 2019 financial year, whereby one of those meetings
was held by telephone. All Committee members participated
in all Committee meetings. The Committee dealt mainly with
the Company’s discovery activities as well as overall strategy
to expand the proprietary drug pipeline, the development of
new technologies, the Company’s drug development plans
and future development strategy, progress in the clinical
trials as well as required budget resources. One major focus
was the approval strategy for tafasitamab and the interac-
tions with the FDA and EMA. The Committee also addressed
the production of clinical trial and commercial materials for
the Company’s proprietary drug candidates including readi-
ness for commercial supply and the competitive and patent
situations of the Company’s proprietary drug candidates.
Finally, the Committee reviewed the development activities
regarding MOR106 and MOR107 as well as the further devel-
opment of MOR202 in autoimmune diseases.
In addition to the three permanent committees, an ad-hoc deal
committee was established in October 2019 to act as sounding
board with regard to the tafasitamab partnership discussions,
advise on deal terms and make the negotiation process and
involvement of the Supervisory Board more efficient in that
regard. The ad-hoc deal committee automatically ended with
the signing of the Incyte Agreement in January 2020.
CORP ORAT E GOVERNANCE
The Supervisory Board devoted its attention to the further
development of MorphoSys’ corporate governance, taking
into consideration the Code as amended by the Regierungs-
kommission Deutscher Corporate Governance Kodex (Gov-
ernment Commission for the German Corporate Governance
Code) in February 2017. The detailed Corporate Governance
Report, including the Corporate Governance Statement ac-
cording to Section 289f HGB and the Group Statement on Cor-
porate Governance according to Section 315d HGB (German
Commercial Code), can be found on the Company’s website
under the heading “Media & Investors > Corporate Gover-
nance > Corporate Governance Report” and in the Annual
Report on pages 90 to 117.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
32
Repor t of the Super v isor y B oard
AUDI T OF T HE ANNUAL F INANC IAL S TAT EMEN T S AND
CONS OL IDAT ED F INANC IAL S TAT EMEN T S
For the 2019 financial year, the Company commissioned Price-
waterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft,
Munich (“PwC”) as its auditor. The audit contract was awarded
by the Supervisory Board in accordance with the resolution of
the Annual General Meeting on May 22, 2019. In accordance
with Item 7.2.1 of the Code, the Supervisory Board obtained a
declaration of independence from the auditor in advance.
The consolidated financial statements and the annual finan-
cial statements of MorphoSys AG, as well as the Management
Report and Group Management Report for the 2019 financial
year, were properly audited by PwC and issued with an un-
qualified audit opinion. The key topics of the audit for the
consolidated and annual financial statements for the 2019
financial year were management override of controls and
fraud in revenue recognition, revenue accounting for complex
out- licensing arrangements and completeness of revenue rec-
ognition, measurement of the carrying amounts of goodwill
and intangible assets that have indefinite useful lives, recog-
nition and measurement of the 2019 share-based payment
programs, accounting for accruals for outstanding invoices
for external laboratory funding and external services, pre-
sentation and measurement of financial assets as well as the
assessment of the design and effectiveness of internal con-
trols in accordance with SOX404.
In addition, the auditor confirmed that the Management
Board had established an appropriate reporting and monitor-
ing system that is suitable in its design and administration
for the early detection of developments that could threaten
the Company’s existence.
The audit reports and documents relating to the annual finan-
cial statements and consolidated financial statements were
provided on a timely basis to all Supervisory Board members
for review. The audit report, the consolidated financial state-
ments, the Group Management Report of the MorphoSys Group
and the audit report, the annual financial statements and the
Management Report of MorphoSys AG were discussed in de-
tail at the Audit Committee meeting on March 10, 2020, and
the meeting of the Supervisory Board on March 11, 2020.
The auditor attended all meetings concerning the consoli-
dated and annual financial statements, the half-year report
and quarterly interim statements and reported on the key
results of his audit and review, respectively. The auditor also
explained the scope and focus of the audit and review and
was available to the Audit Committee and the Supervisory
Board to answer questions and provide further information.
The Audit Committee discussed the audit results in detail
and recommended to the Supervisory Board that it approves
the consolidated and annual financial statements prepared by
the Management Board. The Supervisory Board also took note
of the audit results and, in turn, reviewed the consolidated
and annual financial statements and Management Reports in
accordance with the statutory provisions. Following its own
examination, the Supervisory Board also determined that it
sees no cause for objection. The consolidated and annual finan-
cial statements as well as the Group Management Report and
the Management Report as prepared by the Management
Board and audited by the auditor, were subsequently approved
by the Supervisory Board. Thus, the annual financial state-
ments were adopted.
Repor t of the Super v isor y B oard
To O ur Shareholder s – T he C ompany
33
RECOGNI T ION F OR DEDIC AT ED SERVICE
On behalf of the entire Supervisory Board, I would like to
thank the members of the Management Board and the em-
ployees of MorphoSys for their achievements, their dedicated
service and the inspirational work environment witnessed
during this past financial year. Through their efforts,
MorphoSys’ portfolio has continued to mature and expand,
and important milestones have been achieved.
The Supervisory Board would also like to thank our departed
Management Board members, namely Dr. Simon Moroney for
his extraordinary vision and leadership over the past 27 years
that contributed substantially to making MorphoSys the
biopharmaceutical success story that it is today as well as
Dr. Markus Enzelberger for his exceptional dedication and
contribution to the science and technology expertise at
MorphoSys.
Planegg, March 11, 2020
Dr. Marc Cluzel
Chairman of the Supervisory Board
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
34
Super v isor y B oard of Mor phoSys AG
Supervisory Board
of MorphoSys AG
DR. MARC CL UZEL
Chairman, Montpellier, France
member of the supervisory board of:
Griffon Pharmaceuticals Inc., Canada (Member of the Board of Directors)
Moleac Pte. Ltd., Singapore (Member of the Board of Directors)
DR. F RANK MORICH
Deputy Chairman, Berlin, Germany
member of the supervisory board of:
Cue Biopharma Inc., Cambridge, MA, USA (Member of the Board of Directors)
MICHAEL BRO SNAN
Board Member, Westford, MA, USA
no other supervisory board memberships
The CVs of our Supervisory Board Members can be found on the Company’s website under the heading “Company > Management > Supervisory Board.”
Super v isor y B oard of Mor phoSys AG
To O ur Shareholder s – T he C ompany
35
KRI SJA VERME YL EN
Board Member, Herentals, Belgium
member of the supervisory board of:
Spencer Stuart, Belgium (Member of the Advisory Board)
WEND Y JOHNS ON
Board Member, San Diego, CA, USA
no other supervisory board memberships
DR. GEORGE G OL UMBE SK I
Board Member, Far Hills, NJ, USA
member of the supervisory board of:
Aura Biosciences Inc., Cambridge, MA, USA (Chairman of the Board of Directors)
Carrick Therapeutics Ltd., Dublin, Ireland (Chairman of the Board of Directors)
Enanta Pharmaceuticals, Inc., Watertown, MA, USA (Member of the Board of Directors)
KSQ Therapeutics, Inc., Cambridge, MA, USA (Member of the Board of Directors)
Sage Therapeutics, Cambridge, MA, USA (Member of the Board of Directors)
Shattuck Labs, Inc., Austin, TX, USA (Member of the Board of Directors)
Verseau Therapeutics, Inc., Bedford, MA, USA (Chairman of the Board of Directors)
SHARON CURRAN
Board Member, Dublin, Ireland
member of the supervisory board of:
Circassia Pharmaceuticals plc., Oxford, United Kingdom
(Member of the Board of Directors)
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
36
Mor phoSys on the Capital Mar ket
MorphoSys on the Capital Market
Stock Market Environment and
Morphosys Share Performance
The 2019 trading year turned out to be an exceptional year,
despite the relatively challenging political and economic en-
vironment. Germany’s leading DAX index gained more than
25 % for the full year, while the MDAX rose even higher, gain-
ing more than 30 %. Concerns about a downturn in the global
economy, the trade dispute between the U.S. and China, and
uncertainties surrounding Brexit were not enough to dampen
the favorable performance. The Dow Jones also ended the
year on a positive note, with a gain of 22 %. Biotechnology
stocks benefited from this trend, reflected by the gain in the
Nasdaq Biotech Index of 24 % over the prior year.
MorphoSys AG shares have been trading on the Frankfurt
Stock Exchange since 1999. In April 2018, MorphoSys issued
American Depositary Shares (ADSs) based on MorphoSys’
common stock and began trading on the U.S. Nasdaq exchange.
The Company’s ticker symbol is “MOR” on both exchanges.
MorphoSys’ shares began the reporting year on the Frank-
furt Stock Exchange at a price of € 88.95. After maneuvering
a relatively volatile first half-year, the shares gained consider-
able momentum in July 2019 and broke through the € 100
threshold on July 19, 2019. The shares then began a year-end
rally starting in mid-November and reached their high for the
year on December 16, 2019 at € 129.90. The shares closed the
reporting year at € 126.80, recording a gain of 43 %.
›› S E E F I G U R E 01 – Performance of the MorphoSys Share in 2019 (page 37)
›› S E E F I G U R E 0 2 – Performance of the MorphoSys Share 2015–2019 (page 37)
Liquidity and Index Membership
The average daily trading volume in MorphoSys shares across
all regulated trading platforms grew by approximately 14 %
in 2019 over the prior year and amounted to € 25.6 million
(2018: € 22.5 million). The average daily trading volume on
the TecDAX and MDAX indices also saw a rise of respectively
82 % and 19 %. At the end of 2019, MorphoSys ranked 9th in the
TecDAX in terms of market capitalization* (2018: 10th) and
11th in terms of trading volume (2018: 14th). In the MDAX,
MorphoSys shares ranked 55th in terms of market capitaliza-
tion (2018: 59th) and 57th in terms of trading volume (2018:
65th; the rank refers to DAX (30) and MDAX (60) companies).
*S E E G L O S S A R Y – page 192
On alternative trading platforms (“dark pools”), the average
daily trading volume in MorphoSys shares amounted to appro-
ximately 196,000 shares, valued at € 19.1 million in 2019
(2018: approximately 173,000 shares valued at € 16.2 million),
representing a year-on-year increase of around 17 %.
Capital Structure
The Company’s common stock increased to 31,957,958 shares,
or € 31,957,958, in the reporting year following the exercise
of convertible bonds granted to the Management Board and
the Senior Management Group in 2013. A detailed description
of the convertible bond program can be found in Note 7.2 in
the Notes to the Consolidated Financial Statements.
T A B L E 01
Key Data for the MorphoSys Share (December 31)
2019
2018
2017
2016
2015
Total stockholders’ equity (in million €)
394.7
488.4
358.7
415.5
362.7
Number of shares issued (number)
Market capitalization (in million €)
Closing price in € (Xetra)
Average daily trading volume (in million €)
Average daily trading volume (in % of common stock)
31,957,958
31,839,572
29,420,785
29,159,770
26,537,682
4,052
126.80
25.6
0.81
2,832
88.95
22.5
0.77
2,253
76.58
15.6
0.83
1,422
48.75
9.7
0.78
1,530
57.65
14.9
0.87
Mor phoSys on the Capital Mar ket
To O ur Shareholder s – T he C ompany
37
01
Performance of
the MorphoSys Share
in 2019 (January 1,
2019 = 100 %)
150
140
130
120
110
100
90
80
70
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
morphosys xe tr a
morpho sys nas daq
tec da x
mda x
nasdaq b iotech
02
Performance of
the MorphoSys Share
2015–2019 (January 1,
2015 = 100 %)
250
200
150
100
50
0
2015
2016
2017
2018
2019
morphosys
tec da x
nasdaq b iotech
Various voting rights notifications were made pursuant to
Section 26 (1) of the German Securities Trading Act (WpHG)
during the reporting year. The notifications were published
on the MorphoSys website under Media and Investors – Stock
Information – Recent Voting Rights Notifications.
ment Board and Supervisory Board and will depend on our
net assets, financial position, results of operations, capital
requirements and other factors that the Management Board
and Supervisory Board deem relevant.
At the end of the reporting year, the free float in MorphoSys AG
shares, as per the definition of Deutsche Börse, was 99.29 %.
Investor Relations Activities
Dividend Policy
We have not distributed dividends since our inception, and
we do not expect to set or distribute any cash dividends in the
foreseeable future. It is our intention to invest any future
profits in the growth and development of our business. Unless
otherwise required by law, the future determination of any
cash dividends will be at the sole discretion of the Manage-
On June 25, 2019, MorphoSys hosted a “Meet the Team” event
for analysts and investors in New York. During this event,
MorphoSys introduced the members of the U.S. management
team and provided an overview of the proposed commercial
structure in the U.S. and the progress that has been made in
preparation for the market launch of tafasitamab* planned
for mid-2020 (subject to U.S. FDA* approval). MorphoSys also
presented its market access strategy followed by an opportu-
nity for participants to address questions to the management.
Interested parties worldwide were also given access to this
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – To O ur Shareholder s
38
Mor phoSys on the Capital Mar ket
event via webcast. A total of more than 70 investors, analysts
and shareholders watched the Management Board’s presen-
tations.
*S E E G L O S S A R Y – page 192
At the 61st ASH conference in Orlando, MorphoSys held a
corporate event for scientific and medical experts, as well as
a meeting for financial analysts where management was
available to answer questions. Eight of the analysts covering
MorphoSys attended this event.
MorphoSys also participated in more than 25 international
investor conferences in 2019 and held several roadshows
across the U.S. and Europe. The greatest interest continued to
be expressed in the United States, where a number of special-
ized healthcare investors are based.
Conference calls were held with the publication of the annual,
half-year and quarterly results. During these calls, the Man-
agement Board reported on recent and anticipated business
developments and answered questions from analysts and in-
vestors.
The main topics in investor discussions included the develop-
ment and progress of the regulatory filing for our lead product
candidate tafasitamab, as well as the general progress of our
proprietary portfolio and partnered pipeline.
At the end of the year, a total of 16 analysts covered MorphoSys
shares (an increase of two compared to 2018).
T A B L E 0 2
Analyst Recommendations (December 31, 2019)
Buy/Overweight/Market Outperform
Hold/Neutral
Reduce/Underperform
11
4
1
More detailed information on MorphoSys shares, key finan-
cial figures, strategic direction and the latest Group develop-
ments can be found on the Company’s website under Media
and Investors.
Ethical Standards and Regulator y Fr amewor k
Sustainable C or por ate G over nance – T he C ompany
39
Sustainable Corporate Governance
We are conscious of the responsibility we share for present
and future generations and see sustainable action as a pre-
requisite for long-term business success. Meeting the highest
ecological, social and ethical standards is a top priority for us
as a biopharmaceutical company and an integral part of our
corporate culture.
The core task of our company to develop even more effective
and safer drugs and make them available to patients is aimed,
by definition, at exerting a lasting positive influence. To ensure
lasting business success, we incorporate environmental and
social responsibility into our daily business and base our
business model on sustainable growth that protects the inter-
ests of our shareholders, creates long-term value and weighs
our actions in terms of their impact on the environment, soci-
ety, patients and employees.
Our long-term and sustainable business success rests on in-
novative research and development to meet the major chal-
lenge of providing comprehensive healthcare in the future.
Due to a growing and aging population, biotechnology-de-
rived drugs represent a growing portion of the overall health-
care system. In the opinion of management, all aspects of our
current business model support the sustainable investment
interests of our shareholders.
Ethical Standards and Regulatory
Framework
The Management Board monitors the Group’s compliance with
the sustainability strategy, which is based on the Company’s
Credo. The Credo stems from ethical principles that form the
basis for MorphoSys’ activities and those of its employees
and is further reinforced by a Code of Conduct. A committee
comprising six employees and two members of the Manage-
ment Board form our Global Compliance Committee, which is
available to our employees as a point of contact at all times.
The Compliance Officer, who is also a member of the Global
Compliance Committee, coordinates the different aspects of
MorphoSys’ Compliance Management Program (please see
the Corporate Governance Report for more information). Em-
ployees can seek advice on all matters relating to ethical and
legal compliance and report any suspicions or violations. These
steps can also be taken anonymously. Compliance violations
are always brought forward and dealt with accordingly.
Our Code of Conduct establishes the scientific and ethical
principles to be followed when conducting clinical trials* with
humans or animals. Strict compliance with the applicable
national and international regulations is mandatory for all
MorphoSys employees and sub-contractors.
As European and international legislation requires animal
testing to determine the toxicity, pharmacokinetics and phar-
macodynamics of drug candidates, the biotechnology industry
cannot forgo this type of testing. Animal testing for our drug
candidates is outsourced to contract research organizations
(CROs*) as we do not have laboratories suitable for this type
of research. As part of our product development activities, we
award contracts for animal studies in accordance with the
3Rs principle of animal welfare (Replace, Reduce, Refine) as
set out in national, European and international regulations.
We have established a quality assurance system with written
standard operating procedures (SOPs) that are continuously
updated to ensure that we work only with those CROs who
comply with local, national and international guidelines and
animal welfare regulations. Animal studies are conducted
only after the approval of the relevant ethics committee and
under the supervision of the attending veterinarian.
The institutions we work with also need to ensure that they
are complying with the ethical principles and legal require-
ments involving animal research. In certain circumstances,
these facilities are required to have a Good Laboratory Practice
(GLP*) quality assurance certificate. By taking these steps,
we are making sure we meet our moral obligation to treat ani-
mals respectfully as well as our legal obligations. On-site visits
are also conducted with the scope of audits to check the con-
tract research institutes’ test centers, the training and com-
petence of the responsible staff and animal welfare.
When conducting clinical trials, we comply with the ethical
principles contained in the “Declaration of Helsinki” and ad-
here to the guidelines for Good Clinical Practice (GCP*), as
well as all other relevant national and international laws and
regulations. Trials are also carried out in accordance with the
relevant data protection and privacy provisions. At MorphoSys,
we make it a priority to protect the rights, safety and well-be-
ing of all participants involved in clinical trials and maintain
the integrity of the data collected. Clinical trials are initiated
only after approval is received from the relevant independent
ethics committees and/or institutional review bodies. In addi-
tion, clinical trial participants are required to submit a volun-
tary informed consent prior to their participation.
*S E E G L O S S A R Y – page 192
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – Sustainable C or por ate G over nance
Patients
40
Patients
Patients are at the core of what we do. Our goal is to improve
the lives of patients suffering from serious diseases through
innovative biopharmaceuticals. We are fully dedicated to
achieving this goal through our work related to our pro-
prietary portfolio and our collaborations with our partners.
At the end of 2019, we had more than 95 active trials in which
a total of almost 40,000 patients are to be treated with drug
candidates based on our own research and development.
While our proprietary portfolio is particularly focused on
cancer and autoimmune diseases, our pipeline of partnered
programs covers a broad range of indications, including in-
flammatory diseases, Alzheimer’s and diabetes, to name just
a few.
Based on over ten years of experience in the clinical devel-
opment of our own drug candidates we took a decisive step
in 2019 to provide future drugs for patients using our own
distribution structure. With our subsidiary in Boston (Massa-
chusetts, U.S.), we are planning for a potential launch of our
antibody tafasitamab in the U.S. by mid-2020, after we sub-
mitted a Biologics License Application for tafasitamab for the
treatment of relapsed or refractory diffuse large B cell lym-
phoma (r/r* DLBCL*) to the U.S. Food and Drug Administration
(FDA) in December 2019. Our innovative approach to clinical
development strategies enabled this step, which represents an
important milestone on the way to becoming a fully integrated
biopharmaceutical company.
Further on, we intend to provide patients with access to tafa-
sitamab through an expanded access program (EAP*), even
prior to tafasitamab’s potential approval. In February 2020,
we launched this EAP for patients with r/r DLBCL in the
United States who are neither treated satisfactorily with an
approved drug nor able to participate in a clinical trial. An
EAP enables (bio-)pharmaceutical companies and physicians
to address the unmet medical needs of patients suffering from
life- threatening or rare diseases by making innovative medi-
cines available in an ethical and legally compliant manner
before their approval. MorphoSys is providing tafasitamab
free of charge to patients enrolled in the EAP.
We have a special responsibility to comply with the utmost in
quality and safety standards with all processes. We follow
detailed procedures and strict guidelines to avoid patient
safety risks in drug development and ensure the quality of
investigational products, as well as the integrity and reliabili ty
of the data generated.
To control and regulate these processes in our own drug deve-
lop ment activities, we implemented an integrated quality man-
agement system that complies with the applicable principles
of Good Manufacturing Practice (GMP*), Good Clinical Prac-
tice (GCP), Good Laboratory Practice (GLP) and Good Distri-
bution Practice (GDP*). This is how we ensure that all develop-
ment activities follow national and international laws, rules
and guidelines. Our independent quality assurance depart-
ment prepares an annual risk-based audit plan for the objec-
tive auditing of contract research organizations, investiga-
tional sites, suppliers and contract manufacturers selected
for clinical studies as well as our own departments involved
in drug development activities. The Head of Quality Assurance
reports to the Chief Executive Officer to meet the stringent
quality standards, ensure product quality and data integrity,
as well as the safety of volunteers and patients in clinical
trials.
*S E E G L O S S A R Y – page 192
We hold a manufacturing license for the Qualified Person’s
certification of investigational medicinal products, as well as
a certificate from the German authorities of Upper Bavaria
confirming the Company’s compliance with GMP standards
and guidelines.
›› S E E F I G U R E 0 3 – Quality Management System at MorphoSys (page 41)
Patients
Sustainable C or por ate G over nance – T he C ompany
41
03
Quality Management
System at MorphoSys
* S E E G L O S S A R Y :
page 192
C O R P O R AT E R E Q U I R E M E N T S /
D E P A R T M E N TA L R E Q U I R E M E N T S
M A N A G E M E N T B O A R D
Q U A L I T Y
M A N A G E M E N T
S Y S T E M S
1
2
7
6
T R A I N I N G A N D
Q U A L I F I C AT I O N
3
S E L F -I N S P E C T I O N /
I N T E R N A L A U D I T S
R E G U L AT O R Y
R E Q U I R E M E N T S
4
5
E X T E R N A L A U D I T S
( C M O *, C T O *, C R O * ,
C L I N I C A L T R I A L
S I T E S )
S O P S Y S T E M *
D O C U M E N TAT I O N
S Y S T E M
B AT C H R E C O R D
R E V I E W / B AT C H
R E L E A S E
H A N D L I N G O F D E V I AT I O N S ,
C H A N G E C O N T R O L , C O M P L A I N T S ,
O U T O F S P E C I F I C AT I O N ( O O S )
A N D R E C A L L S
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT T he C ompany – Sustainable C or por ate G over nance
Human Resources
42
Human Resources
Our mission is to engineer the medicines of tomorrow. Our
employees, who strive for excellence and cooperate closely
across disciplines, are crucial to our success. We follow a pro-
gressive human resources policy for the long-term retention
of professionally and personally suitable employees from a
variety of fields. In an industry such as ours, where success
largely depends on the creativity and commitment of staff,
factors such as employee retention and employee satisfaction
are crucial for success.
Our employees have access to a broad range of on-site and
external training programs, advanced education, specialized
continuing education and development programs. They are
also encouraged to attend and present at industry confer-
ences. We promote not only our employees’ ongoing profes-
sional education but also their personal development, which
may even include individualized coaching.
Employees who take on management responsibilities at
MorphoSys are generally expected to participate in manage-
ment seminars tailored specifically for our Company. These
seminars consist of several sequential modules whose pur-
pose is to impart participants with theoretical management
expertise and make them aware of the special demands we at
MorphoSys place on our managers.
We continued to actively promote the professional career
paths of our specialists and experts during the reporting
year. The intention with this type of career promotion, which
is also available to employees without personnel responsibili-
ties, is to maintain flat hierarchies and place traditional man-
agement and professional career paths on an equal footing,
even in terms of their titles and compensation structures.
We offer in-house vocational training to help pave the way to
promising careers, particularly for young people. We have
been very successful in our approach to giving young appli-
cants with the same aptitude equal consideration when
awarding apprenticeships, regardless of whether or not they
possess a diploma. On December 31, 2019, MorphoSys had
four trainees in the IT department and six biology laboratory
trainees (December 31, 2018: two IT trainees; six biology labo-
ratory trainees).
Our corporate values – innovation, collaboration, courage and
determination – are cornerstones of our corporate culture.
They guide how we behave and interact. As stated in our Credo,
transparent communication among employees is a funda-
mental aspect. An example of this is our employees’ use of the
Company intranet to obtain target-group-specific informa-
tion. We also hold a general meeting every three weeks to
give the Management Board an opportunity to present the
latest developments and answer questions, and to provide
employees an opportunity to present selected projects. Em-
ployees can submit their questions and feedback directly
in the meeting or in advance in writing – anonymously, if
preferred.
To promote our employer branding, we maintain a LinkedIn
career site that targets potential applicants who want to learn
more about our company. We report on a variety of activities
above and beyond the daily routine and try to convey an au-
thentic and contemporary image of MorphoSys.
We help new employees become familiar with the Group
through a wide range of onboarding activities. Employees
can learn about the Group’s procedures through laboratory
tours and one-day orientation seminars, featuring presenta-
tions from all operating departments. New executives are of-
fered an additional seminar that concentrates specifically on
their future management duties.
We offer free athletic opportunities, such as soccer, volleyball
and basketball, as well as relaxation alternatives from auto-
genic training to massages for a fee. Offering these activities
promotes employee health and socializing across all depart-
ments. Some employees also received training to give exer-
cise instruction to small groups during breaks.
Providing feasible concepts for reconciling a professional ca-
reer with personal life is a strategic success factor for pro-
gressive companies. For several years now, we have been of-
fering employees a diverse range of options that include
flexible time schedules and special part-time work arrange-
ments. Modern IT equipment also gives employees the option
to work conveniently while on business trips or from a home
office. We also make it easier for employees with families to
reenter the workforce and combine their work and family
lives. And finally, we cooperate with an outside provider that
offers our employees additional services related to care and
nursing.
At MorphoSys, we make every effort to protect our employees
from hazards in the workplace, and use preventative mea-
sures to help safeguard their health. During the past report-
ing year, with only one reportable occupational accident, the
number of accidents at the workplace remained at a very low
level and significantly below the average level for the chemi-
cal industry in Germany (14.7 notifiable accidents at work per
1,000 full-time employees in the latest survey by the BG RCI
in 2018). Through the help of guidelines, training and regular
medical check-ups, our goal is to keep the number of acci-
dents at this low level while maintaining the safety and
well-being of all our employees at the highest level possible.
›› S E E F I G U R E 0 4 – Occupational Safety at MorphoSys (page 43)
Human Resources – Env ironmental Protection
Sustainable C or por ate G over nance – T he C ompany
43
04
Occupational Safety
at MorphoSys
O N LY C E R T I F I E D C O M P A N I E S
A R E A U T H O R I Z E D B Y
M O R P H O S Y S T O D I S P O S E
O F C H E M I C A L W A S T E
I N T R O D U C T I O N O F H A Z A R D O U S
M AT E R I A L S F O R R & D P U R P O S E S :
A dedicated biosafety team as defi ned by the
“Gentechnik Sicherheitsverordnung” (Ger-
man Genetic Engineering Safety Directive)
and other safety professionals perform an
internal audit to assess the risk involved
Specifi c safety and evacuation training for
the employees working with the substances
Assurance that all safety measures are
implemented before actual work commences
P AT H O G E N I C O R G A N I S M S
A R E P R O C E S S E D I N
L A B O R AT O R I E S W I T H
P A R T I C U L A R S A F E T Y
S TA N D A R D S
L O W E S T P O S S I B L E
A M O U N T S O F H A Z A R D O U S
S U B S TA N C E S U S E D
ONLY SPECIALLY TRAINED
EMPLOYEES ARE ALLOWED
TO WORK WITH TOXIC
SUBSTANCES
Environmental Protection
Environmental protection is of central importance to
MorphoSys. As a responsible and sustainable company, we
handle resources with care.
We work consciously to minimize the level of toxic sub-
stances used in our laboratory activities. Only a specially
trained group of persons is permitted to handle toxic sub-
stances, and work with infectious pathogens is allowed solely
in secured laboratory rooms. We only commission companies
to dispose of chemical waste that are certified to do so.
MorphoSys does not work with radioactive substances.
MorphoSys’ head office building in Planegg near Munich was
awarded the Gold Certificate from the German Sustainable
Building Council (DGNB) for meeting numerous sustainabil-
ity criteria in the areas of ecology, economy, sociocultural and
functional aspects, technology, processes and location. The
company does not use fossil fuels and cools and heats its of-
fices with a heat pump and groundwater.
FINANCIAL STATEMENTSGROUP MANAGEMENT REPORT G roup Management Repor t
44
C ontents
Group
Management
Report
C ontents
G roup Management Repor t
45
T
R
O
P
E
R
T
N
E
M
E
G
A
N
A
M
P
U
O
R
G
47
61
62
77
81
89
90
Fundamentals of the MorphoSys Group
Macroeconomic and Sector-Specific Conditions
Analysis of Net Assets, Financial Position and Results
of Operations
Outlook and Forecast
Risk and Opportunity Report
Subsequent Events
Statement on Corporate Governance, Group Statement on
Corporate Governance and Corporate Governance Report
FINANCIAL STATEMENTS
G roup Management Repor t
46
Fundamentals of the Mor phoSys G roup
2019 was a successful year for MorphoSys. It is our goal to discover, develop
and commercialize outstanding, innovative therapies for patients suffering from
serious diseases. Cancer is the focus of our business activities, and our lead
candidate is tafasitamab* – our proprietary anti-CD19 antibody in clinical develop-
ment for certain B cell diseases. We reached several milestones on the way to
our goal of obtaining tafasitamab’s approval for relapsed/refractory DLBCL in
the United States. We also reported positive data from the primary analysis
of the phase 2 clinical trial known as L-MIND and positive topline results from
the primary analysis of the retrospective observational matched control cohort
Re-MIND. For B-MIND, we reported the successful passing of the pre-planned
interim analysis for futility. In December, we submitted our Biologics License
Application to the U.S. FDA seeking approval for tafasitamab in combination
with lenalidomide. In preparation for tafasitamab’s market launch, which we
plan for in mid-2020 given U.S. FDA approval, we have continued to grow our
U.S. operations and establish the commercial structures necessary. We have
also initiated clinical development of tafasitamab as a frontline therapy in DLBCL
to expand its development beyond r/r DLBCL.
For our anti-CD38 antibody MOR202, we have initiated the clinical development
for the treatment of an autoimmune kidney disease, while our partner I-Mab initi-
ated the clinical development in Taiwan with MOR202 in multiple myeloma as
second- and third-line treatment and, after receiving IND approval, expanded
these studies to mainland China.
We were also able to report successes of our partners. Our partner Janssen conti nued
to investigate the use of Tremfya®, the first approved and marketed therapeutic
antibody based on MorphoSys’ proprietary technology, in additional indications
and reported positive long-term data in plaque psoriasis and initial data in
psoria tic arthritis. The data in psoriatic arthritis formed the basis for the filing of
a request for approval with both the U.S. FDA and the EMA. We reinvested our
royalty payments, which were significantly higher in 2019, in the development of
our proprietary drug programs and in the establishment of a sales organization.
We aim to become a fully integrated biopharmaceutical company that develops
and commercializes its own drugs. We made important progress on the way to
this goal during the 2019 reporting year.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
47
Fundamentals of the MorphoSys Group
Organizational Structure and
Business Model
The MorphoSys Group, consisting of MorphoSys AG and its sub-
sidiaries, develops and commercializes antibodies and peptides
for therapeutic purposes.
nance Report. The Senior Management Group supports the
Management Board of MorphoSys AG. At the end of the report-
ing year, the Senior Management Group consisted of 36 man-
agers from various departments.
The registered office of MorphoSys AG is located in Planegg
near Munich, Germany. Lanthio Pharma B.V., a wholly owned
subsidiary of MorphoSys AG, and its subsidiary LanthioPep B.V.
are based in Groningen, the Netherlands. MorphoSys US Inc.,
the wholly owned U.S. subsidiary of MorphoSys AG, was esta b-
lished in Boston, Massachusetts, U.S., to facilitate the potential
future commercialization of tafasitamab. The Planegg site is
home to central corporate functions such as accounting, con-
trolling, human resources, legal, patents, purchasing, corporate
communications and investor relations, as well as to the two
segments Proprietary Development and Partnered Discove ry.
The Company’s subsidiaries MorphoSys US Inc. and Lanthio
Pharma B.V. and its subsidiary LanthioPep B.V. are largely inde-
pendent and have their own management, administration, hu-
man resources and financial accounting and business develop-
ment departments. The subsidiaries Lanthio Pharma B.V. and
LanthioPep B.V. also have their own research and development
laboratories. The central departments Medical Affairs, Market
Access, Sales and Marketing, Commercial Operations and Legal
and Finance are all based at MorphoSys US Inc.
Further information on the Group’s structure can be found in
Note 2.2.1 contained in the Notes to the Consolidated Financial
Statements.
L EGAL S T RUC T URE OF T HE MORPHOSY S GROUP :
GROUP MANAGEMEN T AND SUPERVISION
The parent company of the MorphoSys Group is MorphoSys AG,
a German stock corporation listed in the Prime Standard seg-
ment of the Frankfurt Stock Exchange and on the Nasdaq
Global Market. In accordance with the German Stock Corpora-
tion Act, the Company has a dual management structure with
the Management Board as the governing body with its four
members (after the departure of Dr. Enzelberger at the end of
February 2020, the Management Board consists of three mem-
bers) appointed and overseen by the Supervisory Board. The
Supervisory Board is elected by the Annual General Meeting
and currently consists of seven members. Detailed information
concerning the Group’s management and control and its corpo-
rate governance principles can be found in the Corporate Gover-
*S E E G L O S S A R Y – page 192
Targets and Strategy
MorphoSys’ mission is to discover, develop and commercialize
innovative therapies for patients suffering from serious diseases.
The Company’s business activities are focused on cancer. Over
the past few years, we have successfully transitioned from a
technology provider to a drug developer. Now, in this next phase
of our development, our goal is to become an integrated bio-
pharmaceutical company. We have leading expertise in anti-
body, protein and peptide technologies and, together with our
partners, have developed more than 100 therapeutic product
candidates, 28 of which are currently in clinical development.
We see our proprietary compounds in research and develop-
ment as our main value driver, particularly our drug candidate
tafasitamab for the treatment of blood cancers. Guselkumab
(Tremfya®) is marketed by Janssen and is the first commercial
product based on MorphoSys’ proprietary technology. Tremfya®
has received approval in the U.S., Canada, the European Union,
Japan and a number of other countries. As with the majority of
our development programs, this antibody is derived from a
partnership with a pharmaceutical company. MorphoSys in-
tends to use the revenues generated from these partnerships to
expand its proprietary development portfolio. This portfolio
currently consists of twelve programs, one of which is in pivotal
development.
The Proprietary Development segment focuses on the develop-
ment of therapeutic agents based on our proprietary technology
platforms, candidates in-licensed from other companies and
programs co-developed with partners. During clinical develop-
ment, we determine whether and at which point to pursue a
partnership for later development and commercialization. The
drug candidate can then be either completely out-licensed or
developed further in cooperation with a pharmaceutical or bio-
technology company (co-development). Alternatively, individ-
ual projects may be developed on a proprietary basis until they
reach the market and independently commercialized in se-
lected regions.
FINANCIAL STATEMENTS G roup Management Repor t
48
Fundamentals of the Mor phoSys G roup
In the Partnered Discovery segment, MorphoSys generates an-
tibody candidates for partners in the pharmaceutical and bio-
technology industries. We receive contractual payments, which
include license fees for technologies and funded research, as
well as success-based milestone payments and royalties* on
product sales. The funds generated from these partnerships
support our long-term business model and help fund our propri-
etary development activities.
Both segments are based almost exclusively on MorphoSys’
innovative technologies, which include the HuCAL* antibody
library*, which is the basis for more than 20 product candidates
currently in clinical development, and the next-generation
antibody platform Ylanthia*. In recent years, we have also
established two types of stabilized peptide platforms: our lan-
thipeptide platform, which we gained access to following our
acquisition of Lanthio Pharma B.V. in May 2015, and our propri-
etary helix-turn-helix (HTH*) peptide platform. We continue to
apply our resources and expertise to expand and deepen our
technologies. We have also augmented our portfolio with the
addition of the in-licensed and acquired drug candidates tafasi-
tamab and MOR107.
Our goal is to maximize the portfolio’s value by investing in the
development and, if appropriate, the commercialization of our
proprietary drug candidates while maintaining financial disci-
pline and strict cost control.
Group Management and Performance
Indicators
MorphoSys uses both financial as well as non-financial indica-
tors to steer the Group. These indicators help to monitor the
success of strategic decisions and give the Group the opportu-
nity to take quick corrective action when necessary. The Com-
pany’s management also follows and evaluates selected early
indicators so that it can thoroughly assess a project’s progress
and act promptly should a problem occur.
F INANC IAL PERF ORMANCE INDIC AT ORS
Our financial performance indicators are described in detail in
the section entitled “Analysis of Net Assets, Financial Position
and Results of Operations.” The financial indicators used to
measure the Company’s operating performance are primarily
revenues, expenses for proprietary product and technology
development and earnings before interest and taxes (EBIT –
defined as earnings before finance income, finance expenses,
income from impairment reversals/impairment losses on finan-
cial assets and income taxes). The financial performance indica-
tor expenses for proprietary product and technology develop-
ment will be replaced by total operating expenses for research
and development (R&D expenses) as of fiscal year 2020. Ex-
penses for proprietary product and technology development
have already been part of total R&D expenses to date. Manage-
ment considers total R&D expenses to be a more meaningful
indicator for the internal steering of the Group.
MorphoSys’ business performance is additionally influenced by
factors such as liquidity (presented in the following balance
sheet items: “cash and cash equivalents,” “financial assets at
fair value, with changes recognized in profit or loss” and “other
financial assets at amortized cost”), operating expenses and
segment results. These indicators are also routinely analyzed
and evaluated.
A budget planning for the current financial year is revised and
updated quarterly with special attention given to the statement
of profit or loss and liquidity. Each year, the Company prepares
a mid-term plan for the subsequent three years. An in-depth
cost analysis is prepared regularly and used to monitor the
Company’s adherence to financial targets and make compari-
sons to previous periods.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
49
T A B L E 0 3
Development of Key Financial Performance Indicators1
in million €
MORPHOSYS G ROUP
Revenues
Operating expenses
EBIT2
Liquidity3
PROPRIE TARY DE VELOPMENT
Segment revenues
Segment EBIT
PARTNERED DISC OVERY
Segment revenues
Segment EBIT
2019
2018
2017
2016
2015
71.8
(179.9)
(107.9)
357.4
34.3
(109.1)
37.5
26.8
76.4
(136.5)
(59.1)
454.7
53.6
(53.3)
22.8
13.3
66.8
(133.8)
(67.6)
312.2
17.6
(81.3)
49.2
30.2
49.7
(109.8)
(59.9)
359.5
0.6
(77.6)
49.1
31.0
106.2
(93.7)
17.2
298.4
59.9
10.7
46.3
20.4
1 Differences may occur due to rounding.
2 Contains unallocated expenses (see also Item 3.3 of the Notes): 2019: € 25.7 million, 2018: € 19.2 million, 2017: €16.5 million.
3 Liquidity presented in the following balance sheet items: as of December 31, 2019, 2018 “cash and cash equivalents,” “financial assets at fair value, with changes recognized in
profit or loss” as well as “other financial assets at amortized cost”; as of December 31, 2017, 2016, 2015 “cash and cash equivalents,” “available-for-sale financial assets and
bonds” as well as “financial assets classified as loans and receivables.”
NON-F INANC IAL PERF ORMANCE INDIC AT ORS
MorphoSys is transitioning from a technology provider focused
on the discovery and development of innovative antibody-based
therapies to a fully integrated biopharmaceutical company. The
Group’s focus continues to be on the steady development of the
product pipeline and the Company’s proprietary drug candi-
dates. Preparing for the potential launch of MorphoSys’ first
proprietary drug in 2020 is becoming increasingly more im-
portant, and thus the focus in the 2019 reporting year was on
the development of tafasitamab, the Company’s most advanced
proprietary product candidate. A decisive milestone was reached
at the end of December 2019 with the submission of the Bio-
logics License Application (BLA*) to the U.S. Food and Drug
Administration (FDA*) for the treatment of relapsed/refractory
diffuse large B cell lymphoma (r/r* DLBCL*). With a total of 116
therapeutic product candidates at the end of the reporting year
(end of 2018: 115), twelve of which in the Proprietary Develop-
ment segment, the number of pipeline programs in 2019 re-
mained stable while the product candidates continued to mature.
*S E E G L O S S A R Y – page 192
FINANCIAL STATEMENTS
G roup Management Repor t
50
Fundamentals of the Mor phoSys G roup
T A B L E 0 4
Sustainable Development Key Performance Indicators (SD KPIs*) at MorphoSys (December 31)
PROPRIE TARY DE VELOPMENT (NUMBER OF INDIVIDUAL ANTIBODIES)
Programs in Discovery
Programs in Preclinic
Programs in Phase 11
Programs in Phase 2
Programs in Phase 32
TOTAL1
PARTNERED DISC OVERY (NUMBER OF INDIVIDUAL ANTIBODIES)
Programs in Discovery
Programs in Preclinic
Programs in Phase 1
Programs in Phase 2
Programs in Phase 33
Programs Launched3
TOTAL
2019
2018
2017
2016
2015
6
1
1
1
3
12
56
24
9
12
2
1
6
1
1
3
1
12
55
24
11
11
2
1
7
1
2
2
1
13
54
24
11
10
2
1
8
1
2
3
0
14
54
22
10
12
2
0
104
103
101
100
8
2
1
3
0
14
43
25
9
9
3
0
89
1 Including MOR107, for which a phase 1 study in healthy volunteers was completed; the compound is currently in preclinical investigation.
2 Thereof the fully out-licensed program otilimab, out-licensed to GSK; and MOR202, out-licensed to I-Mab Biopharma for the development in China, Hong Kong, Macao and
Taiwan.
3 We still consider Tremfya® as a phase 3 compound due to ongoing studies in various indications. Therefore the number of “Programs in Phase 3” as well as the “Programs
Launched” both include Tremfya®. Regarding the total number of programs in the pipeline, however, we only count it as one program.
*S E E G L O S S A R Y – page 192
L EADING INDIC AT ORS
MorphoSys follows regularly a variety of leading indicators to
monitor the macroeconomic environment, the industry and the
Company itself. At the Company level, economic data is gath-
ered on the progress of the segments’ individual programs.
MorphoSys uses general market data and external financial
reports to acquire information on leading macroeconomic in-
dicators such as industry transactions, changes in the legal
environment and the availability of research funds and reviews
these data carefully.
For active collaborations, a joint steering committee meets reg-
ularly, i.e. usually quarterly, to update and monitor the pro-
grams’ progress. These ongoing reviews give the Company a
chance to intervene at an early stage if there are any negative
developments and provide it with information about expected
interim goals and related milestone payments well in advance.
Partners in non-active collaborations regularly, i.e. once a year,
provide MorphoSys with written reports so that the Company
can follow the progress of therapeutic programs.
Market analyses that assess the medical need for innovative
therapies for serious diseases, with a focus on cancer, but also
generally in relation to new technologies in the market, serve as
early indicators of business development. By continuously moni-
toring the market, MorphoSys can quickly respond to trends and
requirements and initiate its own activities or partnerships.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
51
Business Activities
T ECHNOL OGIES
MorphoSys has developed a number of technologies that pro-
vide direct access to human antibodies for the treatment of dis-
eases. MorphoSys uses these technologies for programs in both
the Proprietary Development and Partnered Discovery segments.
One of MorphoSys’ most important technologies is HuCAL,
which is a collection of several billion fully human antibodies
and a system for their optimization. Another important plat-
form is Ylanthia, a large antibody library representing the next
generation of antibody technologies. Ylanthia is based on an
innovative concept for generating highly specific and fully
human antibodies. MorphoSys expects Ylanthia to set a new
standard in therapeutic antibody development in the pharma-
ceutical industry in this decade and beyond. Slonomics* is the
Company’s patented, fully automated technology for gene syn-
thesis and modification, which is used to generate highly diverse
gene libraries in a controlled process to be used, for example,
for the improvement of antibody properties. The lanthipeptide
technology developed by Lanthio Pharma B.V., a wholly owned
MorphoSys subsidiary, complements existing antibody libraries
and opens up new opportunities for drug discovery based on
stabilized peptides. MorphoSys technology portfolio is further
strengthened by its proprietary helix-turn-helix (HTH) peptide
technology. In contrast to lanthipeptides*, which are stabilized
by amino acid modification, HTH peptides are inherently stable
as a result of their structure. In addition, we entered into an
agreement with Vivoryon Therapeutics AG in July 2019 grant-
ing us an exclusive option to license Vivoryon’s small molecule
QPCTL* inhibitors in the field of oncology. We are now conduct-
ing preclinical validation experiments in combination with our
antibodies, above all with tafasitamab.
DRUG DEVEL OPMEN T
MorphoSys has a broad development pipeline and develops
drugs using its own research and development (R&D) and in
collaboration with pharmaceutical and biotechnology partners
and academic institutions.
›› S E E F I G U R E 0 5 – Active Clinical Studies with MorphoSys Antibodies (page 52)
The core business is the development of new therapies for pa-
tients suffering from serious diseases. In 2017, the first thera-
peutic compound (Tremfya®) based on MorphoSys’ proprietary
technology and developed by the licensee Janssen received reg-
ulatory approval in the United States, Canada, the European
Union, Japan and a number of other countries. Figure 06 shows
the revenue development of the MorphoSys Group broken down
into the Group’s two business segments: Proprietary Develop-
ment and Partnered Discovery. These segments are described
in more detail in the “Targets* and Strategy” section above.
*S E E G L O S S A R Y – page 192
›› S E E F I G U R E 0 6 – Revenues of the MorphoSys Group by Segment (page 52)
Our Proprietary Development programs are critical to our goal
of becoming a fully integrated biopharmaceutical company that
develops and commercializes its own drugs. We are focusing
our development activities on cancer treatments, but also have
selected programs in inflammatory diseases.
The ability of monoclonal antibodies to bind to specific antigens*
on tumors or activate the immune system against cancer to un-
leash a therapeutic effect in patients has led to their dominant
role in targeted cancer therapies. According to the report
“Global Oncology Trends 2018” from the IQVIA Institute, global
spending on cancer medicines in 2018 exceeded US$ 133 bil-
lion. The global market for oncology therapies is predicted to
reach as much as US$ 180–200 billion over the next five years.
Chronic inflammatory and autoimmune diseases affect millions
of patients worldwide and impose an enormous social and eco-
nomic burden.
MorphoSys’ most advanced proprietary development programs
are described in the Research and Development section below.
Our clinical-stage Partnered Discovery programs are devel-
oped entirely under the control of our partners. These programs
include not only those in our core area of oncology but also in
indications where we have not established proprietary exper-
tise. The most advanced Partnered Discovery programs are out-
lined in the Research and Development section below.
COMMERC IAL IZAT ION
In July 2018, we established a subsidiary in the United States
– MorphoSys US Inc. – in preparation for the potential market-
ing approval of tafasitamab. The subsidiary’s registered office
is located in Boston, Massachusetts, U.S. In the course of the
reporting year, we filled several key positions, such as U.S.
Head of Operations, as well as other management positions in-
cluding Medical Affairs, Market Access, Sales & Marketing,
Commercial Operations and Legal and Finance. Our Medical
Affairs team and sales staff follow a multi-stakeholder strategy
and have already started to establish a network with oncolo-
gists and healthcare professionals. At the end of 2019, we had
36 people employed to support our commercial structure. By the
time we reach tafasitamab’s market entry planned for mid-2020,
we expect to have hired more than 100 additional employees to
further strengthen our U.S. presence.
INF LUENC ING FAC T ORS
Good public medical care is a political goal in many countries.
The need for new forms of therapy is growing as a result of de-
mographic change. Cost savings in Europe and the U.S. can
slow down the industry’s development by closely regulating the
pricing and reimbursement of drugs.
FINANCIAL STATEMENTS G roup Management Repor t
52
05
Active Clinical Studies*
with MorphoSys Antibodies
(December 31)
* S E E G L O S S A R Y :
page 192
06
Revenues of the
MorphoSys Group by
Segment (in million €)1
1 Diff erences due to
rounding.
Fundamentals of the Mor phoSys G roup
P H A S E
1
2
3
29
19
12
29
25
10
27
31
14
26
32
15
24
31
17
2015
2016
2017
2018
2019
106.2
49.7
66.8
76.4
71.8
59.9
46.3
49.1
49.2
53.6
37.5
34.3
17.6
22.8
0.6
2015
2016
2017
2018
2019
partnered disc ov ery
pro prie tary de v elo pment
Regulatory approval processes in the U.S., Europe and else-
where are lengthy, time-consuming and largely unpredictable.
Approval-related laws, regulations and policies and the type
and amount of information necessary to gain approval may
change during the course of a product candidate’s clinical de-
velopment and may vary among jurisdictions.
Generic competition, which is already common in the field of
small molecule drugs, now poses an increasing challenge to
the biotechnology industry due to drug patent expires. The
technological barriers for generic biopharmaceuticals, or bio-
similars*, are expected to remain high. Nevertheless, many
drug manufacturers, particularly those from Europe and Asia,
are now entering this market and placing more competitive
pressure on established biotechnology companies. In the U.S.,
the approval of biosimilars as an alternative form of treatment
has been very slow; they are, however, gaining more attention
because of the growing pressure in the healthcare sector to re-
duce costs. According to the McKinsey & Company consulting
firm, the global market for biosimilars is expected to reach
US$ 15 billion by 2020 (“The biosimilars market: Five things
you need to know” as of July 2018).
06
Revenues of the
MorphoSys Group by
Segment (in million €)1
1 Diff erences due to
rounding.
106.2
49.7
66.8
76.4
71.8
59.9
46.3
49.1
49.2
53.6
37.5
34.3
17.6
22.8
0.6
2015
2016
2017
2018
2019
partnered disc ov ery
pro prie tary de v elo pment
Fundamentals of the Mor phoSys G roup
Research and Development
G roup Management Repor t
53
2019 BUSINESS PERF ORMANCE
In the 2019 financial year, MorphoSys made solid progress in
advancing product candidates at various stages of development.
to a group of white blood cells. CD19 enhances B cell receptor
signaling, which is an important factor in B cell survival and
growth, making CD19 a potential target in B cell malignancies.
The key measures of value for MorphoSys’ research and develop-
ment activities include:
• the initiation of projects and the progress of individual develop-
ment programs;
We are developing tafasitamab in accordance with a collabora-
tion and license agreement that we entered into in June 2010
with Xencor, Inc. (Xencor), under which Xencor granted us an
exclusive worldwide license to tafasitamab for all indications.
• collaborations and partnerships with other companies to
broaden our technology base and pipeline of compounds and
to commercialize our therapeutic programs;
• clinical and preclinical research results;
• regulatory guidance of healthcare authorities for the approval
of individual therapeutic programs; and
• robust patent protection to secure MorphoSys’ market position.
PROPRIE TARY DEVEL OPMEN T
At December 31, 2019, there were twelve proprietary develop-
ment programs, three of which were either fully out-licensed or
out-licensed for specific regions only. Of these programs, five
are in clinical development, one is in preclinical development
and six are in the drug discovery phase. Our Proprietary Devel-
opment activities are currently focused on the following four
clinical candidates:
• tafasitamab – an antibody for the treatment of blood cancers
and MorphoSys’ most advanced proprietary product candidate;
• MOR202 – an antibody for the treatment of multiple myeloma
as well as certain autoimmune diseases, for which MorphoSys
concluded a regional license agreement with I-Mab Biopharma
for the development and commercialization in China, Hong
Kong, Taiwan and Macao;
• MOR107 – a lanthipeptide developed by the Lanthio Pharma
B.V. subsidiary, which is currently in preclinical trials in on-
cological indications; and
• otilimab* – (GlaxoSmithKline [GSK]) is currently conducting
clinical trials* with otilimab in rheumatoid arthritis*. The
program originated as a proprietary MorphoSys program and
was fully out-licensed to GSK in 2013.
In addition to the programs listed above, we are pursuing sev-
eral proprietary programs in earlier-stage research and devel-
opment, including MOR210, a preclinical antibody that was
out-licensed to I-Mab in November 2018 for China and certain
other territories in Asia. We also entered into an agreement
with Vivoryon Therapeutics AG in July 2019, granting us an
exclusive option to license Vivoryon’s small molecule QPCTL
inhibitors in the field of oncology. We are currently evaluating
the potential to combine these inhibitors preclinically with our
antibodies, led by tafasitamab.
TAFASITAMAB
OV ERV I E W
Tafasitamab* (MOR208, formerly Xmab5574) is a humanized
monoclonal antibody directed against the CD19* antigen*. CD19
is selectively expressed on the surface of B cells*, which belong
Our preclinical and clinical development program is currently
focused on developing tafasitamab in non-Hodgkin’s lymphoma
(NHL*), particularly in diffuse large cell B cell lymphoma
(DLBCL).
Lymphomas collectively represent approximately 4 % of all can-
cers diagnosed in the United States. NHL is the most prevalent
of all lymphoproliferative diseases. According to the National
Cancer Institute, an estimated 74,200 new cases occurred in the
United States in 2019 (“Cancer Stat Facts 2019: Non-Hodgkin
Lymphoma”). DLBCL is the most frequent type of malignant lym-
phoma and accounts for approximately one-third of all NHLs
globally. Frontline treatment of B cell malignancies, including
DLBCL, most commonly consists of a combination chemotherapy
regimen plus the antibody rituximab (Rituxan®), also referred to
commonly as R-CHOP* (R, rituximab; CHOP, cyclophosphamide,
doxorubicin, vincristine and the corticosteroid prednisone). Yet,
despite the therapeutic success of frontline R-CHOP in DLBCL,
up to 40 % of patients do not respond to the treatment (refractory)
or relapse after initial treatment with fast progression of disease.
The market research and consulting firm GlobalData expects
the therapeutic market for non-Hodgkin’s lymphoma (NHL) to
reach approximately US$ 9 billion in 2024 (report “B-cell NHL:
Opportunity Analysis 2017–2027”).
Tafasitamab received fast track designation from the U.S. FDA
during its development in 2014 and breakthrough therapy des-
ignation in October 2017 based on the results of the L-MIND*
study.
On December 30, 2019, we submitted the Biological License Ap-
plication (BLA) for tafasitamab in combination with lenalidomide
for the treatment of relapsed or refractory DLBCL (r/r DLBCL).
O N G O I N G C L I N I CA L T R I A LS W I T H TA FAS I TA M A B A N D C L I N I CA L
DATA PRESEN T ED
There are currently four clinical trials ongoing with tafasitamab:
• L-MIND (phase 2 trial in relapsed/refractory DLBCL [r/r
DLBCL]);
• B-MIND* (phase 2/3 trial in r/r DLBCL);
• First-MIND (phase 1 study with tafasitamab in combination
with R-CHOP or lenalidomide in addition to R-CHOP in pa-
tients with untreated DLBCL); and
• COSMOS* (phase 2 trial in r/r chronic lymphatic leukemia
(CLL*) and small lymphocytic lymphoma [SLL*]).
*S E E G L O S S A R Y – page 192
FINANCIAL STATEMENTS G roup Management Repor t
54
Fundamentals of the Mor phoSys G roup
Important new data from the ongoing trial of tafasitamab was
presented in 2019:
L-MIND: L-MIND is a phase 2 single-arm study of tafasitamab in
combination with lenalidomide (LEN) in patients with r/r DLBCL
who are not eligible for high-dosage chemotherapy (HDC) and
autologous stem cell transplantation (ASCT*). Based on the in-
terim results of the L-MIND study, the U.S. Food and Drug Ad-
ministration (FDA) granted breakthrough therapy status for
tafasitamab in combination with lenalidomide in October 2017.
The data of the primary analysis (November 30, 2018 cut-off
date and a follow-up period of at least twelve months for all pa-
tients) were presented on June 22, 2019 at the 15th Interna-
tional Conference on Malignant Lymphoma (ICML) in Lugano,
Switzerland. The efficacy results in this update were based on
the response rates of 80 patients and evaluated by an indepen-
dent review committee. The primary endpoint, defined as the
best objective response rate (ORR*) compared to published data
for the corresponding monotherapies, was met. The ORR was
60 % (48 of 80 patients) and the complete response rate (CR*)
was 43 % (34 of 80 patients). Median progression-free survival
(mPFS*) was 12.1 months with a median follow-up of 17.3 months.
The median duration of response (mDoR*) was 21.7 months.
On October 29, 2019, we announced topline results from the
primary analysis of the retrospective observational matched
control cohort (Re-MIND). The study was designed to compare
the effectiveness of lenalidomide monotherapy based on real-
world patient data with the efficacy outcomes of the tafasitamab-
lenalidomide combination, as investigated in our L-MIND trial
and to demonstrate the single-agent activity of tafasitamab in
combination with lenalidomide to the authorities. For this pur-
pose, we collected Re-MIND outcome data from 490 non-
transplant eligible patients with relapsed/refractory diffuse
large B cell lymphoma (r/r DLBCL) and have received lenalido-
mide monotherapy in the U.S. or the EU. For the matching-based
comparison with the patients from the L-MIND study, qualify-
ing characteristics for matching patients in both studies were
precisely specified in advance. As a result, 76 eligible Re-MIND
patients were identified and matched 1:1 to 76 of the 80 L-MIND
patients based on important baseline characteris tics. Objective
response rates (ORR) were validated for both Re-MIND and
L-MIND based on this subset of 76 patients.
The primary endpoint of Re-MIND was met and showed a statis-
tically significant superior best objective response rate (ORR) of
the tafasitamab-lenalidomide combination compared to lenalido-
mide monotherapy. ORR was 67.1 % (95 % confidence interval
(CI: 55.4 – 77.5) for the tafasitamab-lenalidomide combination,
compared to 34.2 % (CI: 23.7 – 46.0) for the lenalidomide mono-
therapy (p < 0.0001). Superiority was consistently observed across
all secondary endpoints, including complete response (CR) rate
(tafasitamab-lenalidomide combination 39.5 %; CI: 28.4 – 51.4
versus lenalidomide monotherapy with 11.8 %; CI: 5.6 – 21.3;
p < 0.0001), as well as in pre-specified statistical sensitivity
analyses. A significant difference was also observed in overall
survival, which was not reached in the tafasitamab-lenalido-
mide combination as compared to 9.3 months in the lenalido-
mide monotherapy (hazard ratio 0.47; CI: 0.30 – 0.73; p < 0.0008).
Based on the primary analysis data of both studies as well as
the results of the tafasitamab monotherapy NHL study, we sub-
mitted a Biologics License Application to the U.S. Food and
Drug Administration (U.S. FDA) for tafasitamab in combination
with lenalidomide for the treatment of r/r DLBCL in late Decem-
ber 2019.
In mid-2019, we announced our intention to submit a Marketing
Authorization Application (MAA*) to the European Medicines
Agency (EMA*) based on the L-MIND trial. A letter of intent
was submitted to EMA in early July 2019, and it is planned to
submit the MAA submission by mid-2020 at the latest.
B-MIND: B-MIND is a phase 2/3 randomized, multicenter trial
evaluating tafasitamab plus bendamustine compared to ritux-
imab (Rituxan®) plus bendamustine in patients with r/r DLBCL
who are not eligible for HDC and ASCT. This ongoing trial enrolls
patients in Europe, the Asia/Pacific region and in the United
States. The study is currently in phase 3.
In the first quarter of 2019, after consultation with the U.S.
FDA, we expanded the study to include a co-primary endpoint.
The co-primary endpoint is based on a biomarker defined as a
low baseline peripheral blood natural killer (NK low) cell count.
In November 2019, the B-MIND study successfully passed the
pre-planned, event-driven interim analysis for futility. As part
of the analysis for futility, the data were reviewed by an inde-
pendent monitoring committee (IDMC) to determine the likeli-
hood of a futile outcome of the study at the time of study com-
pletion. The IDMC evaluated efficacy data in the entire patient
population as well as in the biomarker-positive patient subpopu-
lation and recommended an increase in the number of patients
from 330 to 450. We expect the topline results of the study to be
available in 2022.
In addition to the aforementioned clinical development in r/r
DLBCL, MorphoSys initiated a phase 1b clinical trial of tafasi-
tamab as a firstline therapy in DLBCL at the end of 2019 (First-
MIND). The study evaluates tafasitamab or tafasitamab plus
lenalidomid in addition to R-CHOP (the current standard thera py)
in patients with newly diagnosed DLBCL. The primary endpoint
of the study is the incidence and severity of treatment-emer-
gent adverse events (AEs*). The secondary endpoints are objec-
tive response rate (ORR) and complete response rate (CR) at the
end of treatment, incidence and severity of AEs in the 18-month
follow-up period, the best ORR and CR by the end of the study
(approximately 24 months), progression-free survival (PFS*),
event-free survival (ES*) and overall survival (OS*) at twelve
and 24 months. This study should pave the way for a pivotal
phase 3 study with tafasitamab plus lenalidomide in combina-
tion with R-CHOP.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
55
The fourth ongoing clinical trial is COSMOS, a multicenter,
open-label, phase 2 trial with two cohorts evaluating the pre-
liminary safety and efficacy of tafasitamab in combination with
idelalisib (cohort A) or venetoclax (cohort B) in patients with r/r
CLL or SLL previously treated with the Bruton tyrosine kinase
inhibitor (BTKi*) ibrutinib. Data from the primary analysis of
both cohorts were presented at the ASH conference in Orlando
in December 2019. In cohort A, eleven patients were enrolled
and received tafasitamab plus idelalisib. Patients were in the
study for a median of 7.4 months. The rate of best overall re-
sponse was 91 % and one patient achieved complete remission.
Eight patients were tested for minimal residual disease (MRD*),
two of these eight patients achieved MRD negativity in blood,
one of three patients also achieved MRD negativity in bone
marrow. In cohort B, 13 patients were enrolled and treated with
tafasitamab plus venetoclax. The median time in the study was
15.6 months. In the intent-to-treat population, the best overall
response was 76.9 %, 46.2 % of patients also achieved complete
remission. Seven patients were tested for the presence of mini-
mal residual disease. Six of these seven patients achieved MRD
negativity in blood, two of four patients achieved MRD negativ-
ity in bone marrow. The COSMOS study showed that combina-
tions of tafasitamab with idelalisib or venetoclax were general ly
well tolerated.
MOR202
OV ERV I E W
MOR202 is a recombinant human monoclonal IgG1 HuCAL an-
tibody directed against the target molecule CD38*. CD38 is a
broadly expressed and clinically validated target in multiple
myeloma (MM*). Scientific studies suggest that an antibody di-
rected against CD38 may also have therapeutic activity in auto-
immune and other diseases caused by autoantibodies, such as
membranous nephropathy and systemic lupus erythematosus.
Multiple myeloma (MM) is a blood cancer that develops in ma-
ture plasma cells in the bone marrow. MM is the second most
common form of blood cancer worldwide. The development of
MOR202 in MM is currently concentrated in China, where the
number of patients has increased in recent years due to an ag-
ing population. Current therapies are associated with serious
side effects and limited efficacy.
REG I O N A L AG REEM EN T W I T H I - M A B B I O PH A RM A
We have an exclusive regional licensing agreement for MOR202
with I-Mab Biopharma. Under the terms of the agreement
signed in November 2017, I-Mab has the exclusive rights to de-
velop and commercialize MOR202 in China, Taiwan, Hong
Kong and Macao. Upon signing the agreement, MorphoSys re-
ceived an immediate upfront payment of US$ 20 million. We
are also entitled to receive additional success-based clinical
and commercial milestone payments from I-Mab of up to
US$ 100 million, as well as tiered double-digit royalties on net
sales of MOR202 in the agreed regions.
O N G O I N G C L I N I CA L ST U D I ES
In October 2019, we initiated a phase 1/2 trial for the treatment
of anti-PLA2R*-positive membranous nephropathy, an autoim-
mune disease affecting the kidneys. This proof-of-concept trial
called M-PLACE is an open-label, multicenter study and will
primarily evaluate the safety and tolerability of MOR202. Sec-
ondary endpoints are the effect of MOR202 on serum anti bodies
against PLA2R and the evaluation of the immunogenicity and
pharmacokinetics of MOR202; an exploratory goal is to deter-
mine clinical efficacy. The trial will enroll difficult-to-treat
patients with high anti-PLA2R titers and patients who have not
responded to previous therapy.
In a phase 2 trial initiated in March 2019, I-Mab is investigating
MOR202/TJ202 as a third-line therapy in r/r multiple myeloma,
as well as in a phase 3 trial in combination with lenalidomide
as a second-line therapy in multiple myeloma initiated in
April 2019. The start of the trials triggered milestone payments
to MorphoSys totaling US$ eight million. On October 14, 2019,
MorphoSys and its partner I-Mab Biopharma announced that
I-Mab had received Investigational New Drug (IND*) approval
for MOR202/TJ202 from the Chinese National Medical Pro ducts
Administration (NMPA). This approval allows I-Mab to expand
its current phase 2 and phase 3 trials of MOR202/TJ202 in mul-
tiple myeloma that are currently underway in Taiwan also to
mainland China.
MOR106
MOR106 is a human monoclonal antibody from our Ylanthia
platform against IL 17, which was jointly discovered by Galapa-
gos and MorphoSys. In July 2018, Galapagos and MorphoSys
signed an exclusive worldwide development and commerciali-
zation agreement with Novartis for MOR106. In October 2019,
Galapagos, MorphoSys and Novartis announced that the clini-
cal development of MOR106 in atopic dermatitis (AD*) for all
studies (two phase 2 studies, IGUANA and GECKO, as well as a
phase 1 bridging study for subcutaneous formulation and a Japa-
nese ethno-bridging study) had been stopped due to the results
of an interim analysis for futility performed in the IGUANA
phase 2 study. The analysis detected a low probability to meet
the primary endpoint of the study, defined as the percentage
change in the eczema area and severity index (EASI*). The
three parties will review the future strategy for MOR106.
OTILIMAB
OV ERV I E W
Otilimab (formerly MOR103/GSK3196165) is a fully human
HuCAL-IgG1 antibody directed against granulocyte-macro-
phage colony-stimulating factor (GM-CSF*). Due to its diverse
functions in the immune system, GM-CSF can be considered a
target for a broad spectrum of anti-inflammatory therapies
such as in rheumatoid arthritis (RA*). Rheumatoid arthritis is a
chronic inflammatory disease that affects the synovial mem-
brane of the joints and is accompanied by painful swelling that
can lead to bone destruction and joint deformity.
*S E E G L O S S A R Y – page 192
FINANCIAL STATEMENTS G roup Management Repor t
56
Fundamentals of the Mor phoSys G roup
MorphoSys discovered otilimab and advanced the antibody into
clinical development before fully out-licensing the program to
GlaxoSmithKline (GSK) in 2013. GSK is now independently de-
veloping the antibody for the treatment of rheumatoid arthri-
tis (RA) and bears all costs incurred. MorphoSys participates
in the potential development and commercialization success
of the program through milestone payments totaling up to
€ 423 million and tiered, double-digit royalties on net sales. In
2013, MorphoSys received a payment of € 22.5 million.
The total market for RA drugs is growing steadily. According to
the market research and consulting firm Decision Resources,
the market for RA drugs will reach US$ 28.8 billion in 2020 (in
G7 countries) (report “Market Forecast Assumptions Rheuma-
toid Arthritis 2018-2028”). The market research and consulting
company GlobalData expects the market to grow to US$ 26.3 bil-
lion in 2020 (in the U.S., EU5, Japan and Australia) (report
“Rheumatoid Arthritis: Market Analysis 2017–2027”). MorphoSys
believes that otilimab has the potential to become the first anti-
GM-CSF antibody to receive marketing approval for the treat-
ment of RA.
O N G O I N G C L I N I CA L ST U D I ES
On July 3, 2019, GSK announced the start of a phase 3 program
with otilimab in RA, which resulted in a milestone payment of
€ 22.0 million to MorphoSys. The phase 3 program, named
ContRAst, comprises three pivotal studies and one long-term
extension study and will evaluate the antibody in patients with
moderate to severe RA. In connection with the start of the clini-
cal program, GSK also announced that the antibody has been
given the INN* name otilimab.
MOR107
Lanthipeptides are a class of modified peptide molecules engi-
neered for improved selectivity and stability. MOR107 is based
on the proprietary technology platform of our Dutch subsidiary
Lanthio Pharma B.V. This compound has demonstrated angio-
tensin II type 2 (AT2) receptor-dependent activity in preclinical
studies and may have the potential to treat a variety of dis-
eases. In 2017, we successfully completed a phase 1 trial in
healthy volunteers, in which this active ingredient was clini-
cally tested for the first time in human application. In 2019, we
continued our preclinical testing of MOR107, primarily in oncol-
ogy indications.
MOR210
OV ERV I E W
MOR210 is a human antibody directed against C5aR*, derived
from our HuCAL library. C5aR, the receptor of complement fac-
tor C5a*, is being investigated as a potential new drug target in
the fields of immuno-oncology and autoimmune diseases. Tu-
mor cells generate high levels of C5a, which is believed to con-
tribute to an immuno-suppressive and, consequently, tumor
growth-promoting microenvironment by recruiting and acti-
vating myeloid-derived suppressor cells (MDSCs). MOR210 is
engineered to neutralize the immuno-suppressive function of
MDSCs by blocking the interaction between C5a and its recep-
tor and enabling the immune system to fight the tumor.
MOR210 is currently in preclinical development.
REG I O N A L AG REEM EN T W I T H I - M A B B I O PH A RM A
In November 2018, we announced that we had entered into an
exclusive strategic collaboration and regional licensing agree-
ment for MOR210 with I-Mab Biopharma. Under the agreement,
I-Mab has exclusive rights to develop and commercialize
MOR210 in China, Hong Kong, Macao, Taiwan and South Korea,
while MorphoSys retains rights in the rest of the world. The
agreement deepens our existing partnership with I-Mab and
builds on the existing collaboration to develop MOR202.
Under the agreement, I-Mab will exercise exclusive rights to
develop and commercialize MOR210 in the territories covered
by the agreement. With our support, I-Mab will conduct and
fund all worldwide development activities for MOR210, includ-
ing clinical trials in China and the U.S., up to proof-of-concept
in oncology.
We received a payment of US$ 3.5 million from I-Mab and are
also eligible for development and commercial-related milestone
payments of up to US$ 101.5 million, as well as to tiered, mid-
single-digit percentage royalties on net sales generated with
MOR210 in I-Mab’s contracted territories. In return for conduct-
ing a successful proof-of-concept clinical trial, I-Mab is entitled
to receive low single-digit royalties on net sales of MOR210 out-
side of I-Mab’s territory and a tiered percentage of sub-licensing
revenue.
Q P C TL INHIBITORS
OV ERV I E W
QPCTL inhibitors are low molecular weight substances and in-
hibitors of glutaminyl peptide cyclotransferase-like enzymes.
This enzyme has been shown to interfere with the interaction
of CD47* and SIRP alpha*, which is also known as the “don’t eat
me” signal. This signaling pathway enables cancer cells to es-
cape the body’s innate immune system by inhibiting the phago-
cytic activity of macrophages. As a result, the use of QPCTL
inhibitors to block the “don’t eat me” signal from CD47/SIRP
alpha interaction could be a possible approach in immuno-on-
cology. We are currently investigating the QPCTL inhibitors
preclinically, including an analysis of the potential benefits of
combining them with our proprietary antibody tafasitamab.
AG REEM EN T W I T H V I VO RYO N T H ER A PEU T I C S AG
In July 2019, MorphoSys and Vivoryon Therapeutics AG an-
nounced an agreement granting MorphoSys an exclusive op-
tion to license Vivoryon’s small molecule QPCTL inhibitors in
the field of oncology. The option covers the worldwide develop-
ment and commercialization of candidates from Vivoryon’s
family of inhibitors of the glutaminyl peptide cyclotransfer-
ase-like (QPCTL) enzyme, including the lead compound PQ912,
in the field of oncology.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
57
In return for this option, MorphoSys purchased a minority
stake in Vivoryon. Vivoryon issued 7,674,106 ordinary bearer
shares within the scope of a capital increase executed on Octo-
ber 24, 2019 and recorded in the commercial register on Octo-
ber 25, 2019. MorphoSys acquired a 13.4 % stake in Vivoryon in
this capital increase by subscribing to 2,673,796 ordinary
bearer shares worth € 15.0 million.
PAR T NERED DIS COVERY
At the end of 2019, one of our Partnered Discovery programs
had received approval, 23 programs were in clinical develop-
ment, 24 Partnered Discovery product candidates were in pre-
clinical development and 56 were in the drug discovery phase.
Below we present our most advanced programs and a recently
expanded strategic partnership.
Guselkumab (Tremfya®) – a HuCAL antibody targeting IL-23
that is being developed and commercialized by our partner Jans-
sen in plaque psoriasis* and other indications. Guselkumab
(Tremfya®) is approved in the United States, Canada, the Euro-
pean Union, Japan and a number of other countries.
Gantenerumab – a HuCAL antibody targeting amyloid beta* that
is in phase 3 clinical development for the treatment of Alzhei-
mer’s disease by our partner Roche.
Other programs – in addition to the two programs described,
we have a large number of programs in various stages of re-
search and development stemming from our partnerships with
major pharmaceutical companies.
LEO Pharma – we have a strategic partnership with LEO Pharma
for the research and development of therapeutic antibodies and
peptides for the treatment of skin diseases.
GUSELKUMAB ( TREMF YA ®)
OV ERV I E W
Guselkumab (Tremfya®) is a human HuCAL antibody targeting
the p19 subunit of IL-23 that is being developed and commer-
cialized by Janssen. It is the first commercial product based on
our proprietary technology. It is approved for the treatment of
patients with moderate to severe psoriasis (plaque psoriasis) in
the United States, Canada, the European Union, Japan, China
and a number of other countries. In Japan, it is also approved for
the treatment of patients with various forms of psoriasis, psori-
atic arthritis and palmoplantar pustulosis.
ing company GlobalData has similar expectations and is pro-
jecting the market for psoriasis drugs to grow from a level of
approximately US$ 17.5 billion in 2018 to approximately
US$ 24 billion in 2027 (in G7 countries) (report “Plaque Psoria-
sis: Market Analysis 2017–2027”).
Tremfya® is currently being investigated in various forms of
psoriasis and psoriatic arthritis in several phase 3 trials, in
Crohn’s disease*, ulcerative colitis*, pityriasis rubra pilaris and
hidradenitis suppurativa in phase 2 trials, and in familial ade-
nomatous polyposis in a phase 1 trial. In addition, Janssen an-
nounced that it had submitted a supplemental Biologics License
Application (sBLA) for Tremfya® for the treatment of psoriatic
arthritis to the U.S. FDA in September 2019, as well as a mar-
keting authorization application for Tremfya® for the treatment
of psoriatic arthritis submitted to EMA in October 2019. At the
end of 2019, Janssen also announced it had received the ap-
proval for Tremfya® in China for the treatment of psoriasis.
MorphoSys receives royalties on net sales of guselkumab
(Tremfya®) and is also entitled to milestone payments on se-
lected future development activities.
GANTENERUMAB
OV ERV I E W
Gantenerumab is a HuCAL antibody targeting amyloid beta be-
ing developed by our partner Roche as a potential treatment for
Alzheimer’s disease. Amyloid beta refers to a group of peptides
that play an important role in Alzheimer’s disease as they are
the main component of the amyloid plaques found in the brains
of Alzheimer’s patients. Gantenerumab binds to the N-terminus
and a section in the middle of the amyloid beta peptide. The
antibody appears to prevent the formation of amyloid plaques
and amyloid oligomers and could also lead to their elimination
by recruiting microglial cells. According to the market research
and consulting company GlobalData, the value of the global
market for the treatment of Alzheimer’s disease is expected to
reach approximately US$ 15 billion in 2026 (report “Alzheimer’s
Disease- Global Forecast 2016–2026”).
*S E E G L O S S A R Y – page 192
According to figures from the Alzheimer’s Association, 5.8 mil-
lion people in the United States live with Alzheimer’s, and this
number is expected to rise to nearly 14 million by 2050. Alzhei-
mer’s is the sixth-leading cause of death in the United States
(https://www.alz.org/alzheimers-dementia/facts-figures).
Psoriasis is a chronic, autoimmune inflammatory disorder of
the skin characterized by abnormal itching and physically
painful skin areas. It is estimated that around 125 million peo-
ple worldwide are affected by psoriasis, a quarter of who suffer
from a moderate to severe form of the disease. The market re-
search and consulting company Decision Resources estimates
the market for psoriasis drugs, which was worth approximately
US$ 16 billion in 2018, will rise to approximately US$ 24 billion
in 2028 (in G7 countries) (report ”Market Forecast Assump-
tions Psoriasis 2018–2028“). The market research and consult-
O N G O I N G C L I N I CA L ST U D I ES
In June 2018, we announced that our partner Roche initiated a
new phase 3 development program for patients with Alzhei-
mer’s disease. The program consists of two phase 3 trials –
GRADUATE 1 and GRADUATE 2 – which are expected to enroll
approximately 1,520 patients in up to 350 study centers in 31
countries worldwide. The two multicenter, randomized, dou-
ble-blinded, placebo-controlled studies are investigating the
efficacy and safety of gantenerumab in patients with early (pro-
dromal to mild) Alzheimer’s disease. The primary endpoint for
FINANCIAL STATEMENTS G roup Management Repor t
58
Fundamentals of the Mor phoSys G roup
both studies is the assessment of the signs and symptoms of
dementia, measured as the clinical dementia rating-sum of
boxes (CDR-SOB) score. Patients receive a significantly higher
dose of gantenerumab than in Roche’s previous trials as a sub-
cutaneous injection.
In addition to the two GRADUATE studies, gantenerumab is be-
ing tested in two open-label extension studies based on the
phase 2/3 studies Scarlet RoAD and Marguerite RoAD, and in
the DIAN-TU study in patients at risk for or suffering from a
type of early-onset Alzheimer’s disease caused by a genetic
mutation which is conducted by the Washington University
School of Medicine.
OTHER PRO GR AMS
Other programs of our partners continued to make progress in
2019, with encouraging data from bimagrumab announced in
2019.
BIMAGRUMAB
In November 2019, our partner Novartis presented the phase 2
results for bimagrumab, a monoclonal antibody generated using
MorphoSys’ proprietary HuCAL antibody technology and clini-
cally developed by Novartis. Data from the study in overweight
and obese adults with type 2 diabetes (T2D) were presented as
a poster at the Obesity Week 2019 in Las Vegas, on November 7,
2019. The double-blinded, placebo-controlled study showed that
treatment with bimagrumab over 48 weeks was safe and
well-tolerated. The treatment reduced body fat and weight and
increased lean body mass (LBM). At week 48, fat mass had de-
creased by 21 % (7.5 kg) in the bimagrumab group compared to
0.5 % (0.2 kg) in placebo-treated subjects (p<0.001), and HbA1c
had decreased by 0.76 % points in the bimagrumab group com-
pared to an increase of 0.04 % points in the placebo group
(p=0.005). Weight decreased by 6.5 % (5.9 kg) in bimagrumab
compared to 0.8 % (0.8 kg) in placebo-treated subjects (p < 0.001);
LBM increased 3.6 % (1.7 kg) in the bimagrumab group vs. a
decrease of 0.8 % (0.4 kg) in the placebo group (p < 0.001); and
BMI was reduced 6.7 % (2.2 kg/m2) in the bimagrumab group
vs. 0.8 % (0.3 kg/m2) in the placebo group (p < 0.001).
PATENTS
Our proprietary technologies and drug candidates derived
therefrom are our most valuable assets. It is therefore crucial to
our success that these assets are appropriately protected
through, for example, patents and patent filings. This is the
only way we can ensure that these assets are exclusively uti-
lized. It is also the reason our Intellectual Property (IP) Depart-
ment seeks out the best strategy to protect our products and
technologies. The rights of third parties are also actively moni-
tored and respected.
Our core technologies, such as the Ylanthia antibody library,
form the base for our success. All of our technologies are pro-
tected by a multitude of patent families. Our most important
patents have now been granted in all major territories, includ-
ing Europe, the U.S. and Asia.
The same applies to our development programs. Next to our
patents protecting the drug candidates themselves, we have
filed additional patent applications that cover other aspects of
the programs. The relevant patents for our development candi-
dates otilimab (out-licensed to GSK) and MOR202 (out-licensed
to I-Mab for Greater China) do not expire before 2026. They also
enjoy additional protection of up to five years through supple-
mentary protection certificates and lifetime extensions. The
tafasitamab program is also protected by numerous patents
with core patents to expire on schedule in 2029 (U.S.) and 2027
(Europe). These expirations do not include the added protection
of up to five years that is possible through supplementary pro-
tection certificates or lifetime extensions. All of our develop-
ment programs have also been granted regulatory exclusivity.
The programs developed jointly with or for partner companies
are also fully protected by patents. Our patent department
works closely with the corresponding partners. The patents for
these drug development programs have a lifetime that far ex-
ceeds the term of the underlying technology patents. We are
also monitoring our competitors’ activities so that we can take
any steps necessary if required.
During the 2019 financial year, we further consolidated the pa-
tent protection of our development programs and growing tech-
nology portfolio, which are the core value drivers of our Com-
pany. We currently have more than 60 different proprietary
patent families worldwide, in addition to the numerous patent
families we pursue with our partners.
In April 2016, MorphoSys filed a patent infringement suit in the
U.S. District Court of Delaware against Janssen Biotech and
Genmab A/S for infringement of U.S. patents. On January 25,
2019, based on a hearing on November 27, 2018, the U.S. Dis-
trict Court of Delaware ruled that the claims of our three pa-
tents were invalid. In a summary judgment, the court granted
a motion filed by Janssen Biotech and Genmab A/S to invalidate
the three patents held by MorphoSys. On January 31, 2019, we
announced that we had settled the dispute with Janssen Bio-
tech and Genmab A/S. The parties agreed to drop their counter-
claims related to the legal dispute.
Corporate Developments
On February 5, 2019, MorphoSys announced the appointment of
David Trexler as President and Member of the Board of Directors
of MorphoSys US Inc. effective February 6, 2019. Mr. Trexler will
lead the ongoing build-up of MorphoSys’ U.S. subsidiary with a
focus on establishing the company’s commercial capabilities.
On February 19, 2019, Simon Moroney, CEO and co-founder of
MorphoSys AG, informed the Company’s Supervisory Board
that he would not renew his contract as a member of the
MorphoSys AG Management Board.
Fundamentals of the Mor phoSys G roup
G roup Management Repor t
59
07
Total Headcount of
the MorphoSys
Group (December 31)
(Number)
T O TA L E M P L O Y E E S
365
345
326
329
426
2015
2016
2017
2018
2019
249
246
300
209
t
n
e
m
g
e
s
y
b
s
e
e
y
o
l
p
m
e
71
49
116
61
n
o
i
t
c
n
u
f
y
b
s
e
e
y
o
l
p
m
e
62
21
86
40
2018
2019
2018
2019
pro prie tary
de v elo pment
partnered
disc ov ery
unallo cated
adminis tr atio n
employees
in r&d
employ ees
in sales
At the Annual General Meeting of MorphoSys AG on May 22,
2019, our shareholders approved all resolutions proposed by the
Company’s management with the required majority of votes.
On May 22, 2019, the MorphoSys AG Annual General Meeting
elected Sharon Curran as a new member of the Company’s Su-
pervisory Board. Ms. Curran is a non-executive director in the
life sciences and healthcare industries and brings extensive
commercial and specialist pharmaceutical experience to the
Company. Also at this meeting, Krisja Vermeylen was re-
elected to the Supervisory Board as of the end of her term of
office.
On June 24, 2019, Dr. Jean-Paul Kress was appointed by the Su-
pervisory Board as the new Chief Executive Officer (CEO) of
MorphoSys AG and assumed his new position on September 1,
2019. He succeeded Dr. Simon Moroney, who stepped down as
CEO at the end of August 31, 2019. Dr. Kress brings over 20
years of experience in the pharmaceutical and biotechnology
industry, with a strong track record of commercial and opera-
tional leadership in various senior management roles in North
America and Europe.
On June 25, 2019, MorphoSys introduced the members of its
U.S. management team to analysts and investors at a “Meet the
Team” event in New York.
FINANCIAL STATEMENTS
G roup Management Repor t
60
08
Employees
by Gender
(December 31)
)
r
e
b
m
u
n
(
s
e
e
n
i
a
r
t
)
%
n
i
(
s
e
e
y
o
l
p
m
e
l
a
t
o
t
Fundamentals of the Mor phoSys G roup
50
33
34
24
)
r
e
b
m
u
n
(
s
e
v
i
t
u
c
e
x
e
6
6
4
2
2018
2019
2018
2019
63
2018
37
58
2019
42
On July 8, 2019, MorphoSys and Vivoryon Therapeutics AG an-
nounced an agreement granting MorphoSys an exclusive op-
tion to license Vivoryon’s small molecule QPCTL inhibitors in
the field of oncology in return for a minority interest in Vivory-
on’s capital increase scheduled for the end of 2019. This capital
increase was executed on October 24, 2019, issuing a total of
7,674,106 ordinary bearer shares, and was recorded in the com-
mercial register on October 25, 2019. MorphoSys acquired a
13.4 % stake in Vivoryon through its subscription of 2,673,796
ordinary bearer shares valued at € 15.0 million.
In mid-November 2019, we announced that our U.S. subsidiary
has moved from Princeton (New Jersey, U.S.) to Boston (Massa-
chusetts, U.S.). The new U.S. office is located at 470 Atlantic
Avenue on the Boston waterfront, one of the world’s leading in-
novation and biotechnology centers, and will allow us to estab-
lish and expand our presence in the U.S. ahead of the potential
commercialization of tafasitamab.
On November 20, 2019, Dr. Markus Enzelberger, Chief Scientific
Officer (CSO) of MorphoSys, announced his decision to step
down as the Company’s CSO and member of the Management
Board to explore new opportunities. Dr. Enzelberger will leave
MorphoSys on February 29, 2020. Following his departure,
MorphoSys’ research organization will be integrated into the
Clinical Development segment under the lead of Chief Develop-
ment Officer (CDO) Dr. Malte Peters.
GROUP HEADCOUN T DEVEL OPMEN T
On December 31, 2019, the MorphoSys Group had 426 employees
(December 31, 2018: 329), 152 of whom hold Ph.D. degrees (De-
cember 31, 2018: 134). The MorphoSys Group employed an
average of 374 people in 2019 (2018: 327).
Of the current 426 employees, 300 worked in research and de-
velopment, 86 in general and administrative positions and 40
in sales and marketing. All of these employees are based at our
locations in Planegg near Munich (Germany), Groningen (the
Netherlands) and Boston (U.S.). We do not have collective wage
agreements with our employees, and there were no employee
strikes during the reporting year.
At the end of the reporting year, our workforce comprised em-
ployees representing 40 different nationalities (2018: 34).
›› S E E F I G U R E 0 7 – Total Headcount of the MorphoSys Group (page 59)
›› S E E F I G U R E 0 8 – Employees by Gender (page 60)
In order to successfully compete for the best employees,
MorphoSys conducts an annual comparison of the Company’s
compensation with that paid by other companies in the biotech
industry and similar sectors and makes adjustments when nec-
essary. The remuneration system at MorphoSys consists of fixed
compensation and a variable annual bonus that is linked to the
achievement of corporate goals. Individual goals promote both
the employees’ personal development and the achievement of
higher-level corporate goals. A “spot bonus” (given “on the
spot”) is also promptly awarded to employees for outstanding
accomplishments. We continued to use this instrument fre-
quently during the reporting year.
Macroeconomic and Sector- Specif ic C onditions
G roup Management Repor t
61
Macroeconomic and Sector-Specific
Conditions
CHANGES IN T HE BUSINESS ENVIRONMEN T
In January 2020, the International Monetary Fund (IMF) was
forecasting global economic growth in 2019 to reach 2.9 % (report
“World Economic Outlook January 2020”). This slight decline is
primarily a reflection of the negative surprises in economic ac-
tivity in some emerging market economies, particularly India,
which led to a reassessment of the growth outlook for the com-
ing two years. In a few cases, this reassessment also reflected
the impact of increasing social unrest.
The IMF’s growth forecast for the advanced economies in 2019
was 1.7 % (2018: 2.2 %), and the forecast for the emerging and
developing economies was 3.7 % (2018: 4.5 %). The IMF’s fore-
cast for growth in the euro zone in 2019 was 1.2 % (2018: 1.9 %),
next to 0.5 % for Germany (2018: 1.5 %); 6.1 % for China (2018:
6.6 %), 1.1 % for Russia (2018: 2.3 %) and 1.2 % for Brazil (2018:
1.3 %).
When managing its business activities, MorphoSys takes a
number of potential macroeconomic risks and opportunities
into consideration. Our business activities remained unaffected
by the volatility in any one country.
CURRENC Y DEVEL OPMEN T
The EUR/USD exchange rate remained in a range of 1.09 to
1.11 until the end of December 2019. Deteriorating economic
data, unresolved trade conflicts between the U.S. and China
and the U.S. and the EU, and the risk of an unregulated Brexit
make it very difficult to forecast the EUR/USD exchange rate.
The majority of our business transactions are conducted in eu-
ros or U.S. dollars. As a result of our commercial and launch
activities in the U.S., a decline in the euro versus the U.S. dollar
would have a direct positive impact on our future operating in-
come. Consequently, a stronger euro would reduce the royalty
payments we receive – which are converted from U.S. dollars to
euros – on sales of guselkumab (Tremfya®). We mitigate this
risk in advance as much as possible with currency hedging
transactions with maturities of twelve months or less.
DEVEL OPMEN T OF T HE AN T IBOD Y SEC T OR
In 2019, six new antibodies were approved by the FDA in the
U.S. or the EMA in the EU, and regulatory filings were also re-
viewed for a further 13 novel antibody therapies. According to
the article “Antibodies to Watch in 2020” published in the
mAbs Journal, 79 new antibodies are currently in late-stage
clinical development, compared to 62 antibodies in the previ-
ous year. Of the 79 antibodies, 39 are being developed for the
treatment of cancer, and two of these are in late clinical phases.
Our lead product candidate from our proprietary development,
tafasitamab, was also included in this report.
We view the successful development and commercialization of
the antibody segment as a positive signal and a confirmation
of our strategy to focus our development activities on this class
of drugs. Still, we cannot predict the clinical or market success of
individual drug candidates.
FINANCIAL STATEMENTS G roup Management Repor t
62
A nalysis of Net Assets , F inancial Position and Results of O per ations
Analysis of Net Assets, Financial
Position and Results of Operations
This report on the net assets, financial position and results of
operations should be read in conjunction with the annual con-
solidated financial statements and the notes thereto, which also
form part of this annual report. In addition to historical finan-
cial information, the following report contains forward-looking
statements that reflect our plans, estimates and opinions. Our
actual results may differ materially from these forward-looking
statements. Factors that could cause or contribute to these dif-
ferences or cause our actual results or the timing of selected
events to differ materially from those anticipated in these for-
ward-looking statements.
Our consolidated financial statements comply with both the
IFRSs* published by the International Accounting Standards
Board (IASB) and those adopted by the EU. The consolidated
financial statements also take into account the supplementary
provisions under commercial law, which must be applied in ac-
cordance with Section 315e (1) of the German Commercial Code
(Handelsgesetzbuch – HGB).
*S E E G L O S S A R Y – page 192
Results of Operations
REVENUES
Revenues in the 2019 reporting year declined by 6 %, or
€ 4.6 million, to € 71.8 million (2018: € 76.4 million). Revenues
were generated primarily from royalties received from Janssen
in the amount of € 31.8 million based on the net sales of
Tremfya® (2018: € 15.4 million). A milestone payment from GSK
in the amount of € 22.0 million also contributed to sales and
was triggered by the dosing of the first patient upon the initi-
ation of a phase 3 clinical development program. Revenues
in 2018 resulted mainly from the receipt of a payment of
€ 47.5 million, which was fully recognized in 2018 following
the signing of an exclusive worldwide license agreement with
Novartis Pharma AG for the development and commercializa-
tion of MOR106.
On a regional basis, revenues from biotechnology and pharma-
ceutical companies in the U.S. and Canada increased by 67 %, or
€ 12.9 million, from € 19.4 million in 2018 to € 32.3 million in
the reporting year. This development was driven primarily by
success-based payments received mainly from Janssen. Reve-
nues with customers in Europe and Asia declined by 31 %, or
€ 17.6 million, to € 39.5 million in 2019 (2018: € 57.1 million),
mainly due to the fact that 2018 had contained a Novartis pay-
ment for MOR106. The absence of such a payment in the 2019
reporting year was partly compensated for by a milestone pay-
ment from GSK in the amount of € 22.0 million.
A total of 89 % of the revenues generated in 2019 were attribut-
able to activities with our partners Janssen, GSK and I-Mab Bio-
pharma. In 2018, 95 % of the revenues generated were attribut-
able to activities with our partners Novartis, I-Mab Biopharma
and Janssen.
Revenues in 2018 rose by 14 %, or € 9.6 million, to € 76.4 mil-
lion (2017: € 66.8 million). The main source of this increase was
a € 47.5 million payment received and fully recognized as rev-
enue by MorphoSys in 2018. This payment followed the signing
of an exclusive worldwide license agreement with Novartis
Pharma AG for the development and commercialization of
MOR106. In 2017, revenues were positively affected by funded
research and licensing income originating from a collaboration
agreement with Novartis that had expired at the end of 2017.
Revenues were also boosted significantly by the signing of an
exclusive regional license agreement with I-Mab Biopharma for
the development and commercialization of MOR202 in China,
Taiwan, Hong Kong and Macao.
Revenues from biotechnology and pharmaceutical companies
in the U.S. and Canada in 2018 increased by more than
100.0 %, or € 10.7 million, climbing from € 8.7 million in 2017
to € 19.4 million in 2018. This increase was driven mainly by
success-based payments received by MorphoSys from Janssen.
Revenues with customers in Europe and Asia in 2018 declined
by 2.0 %, or € 1.0 million, to € 57.1 million (2017: € 58.1 million).
In 2018, 95 % of revenues were attributable to activities with
our partners Novartis, I-Mab Biopharma and Janssen; in 2017,
90 % of revenues were attributable to activities with these part-
ners. The year-over-year increase resulted from the signing of
the MOR106 agreement with Novartis in 2018 and the receipt of
a related upfront payment.
›› S E E F I G U R E 0 9 – Revenues by Region (page 63)
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
63
09
Revenues by Region
(December 31) (in %)
41
59
90
10
87
13
75
25
55
45
2015
2016
2017
2018
2019
euro pe and asia
no rth ameri ca
T O TA L
106.2
49.7
66.8
76.4
71.8
10
Revenues Proprietary
Development and
Partnered Discovery
(December 31)
(in million €)1
1 Diff erences due to
rounding.
59.9
42.3
43.6
41.9
4.0
5.6
0.6
17.6
7.3
53.6
19.3
33.2
34.3
3.5
4.3
2015
2016
2017
2018
2019
segment partnered disc ov ery
segment partnered disc ov ery
funded research and licensing fees
success-based payments
segment proprietary
de v elo pment
FINANCIAL STATEMENTS
G roup Management Repor t
64
A nalysis of Net Assets , F inancial Position and Results of O per ations
PROPRIE TARY DEVEL OPMEN T
In 2019, revenues in the Proprietary Development segment de-
creased by € 19.3 million to € 34.3 million (2018: € 53.6 mil-
lion). This decline was a result of the revenues recognized in
2018 from a payment MorphoSys received under the MOR106
agreement concluded with Novartis in 2018. The absence of
such a payment in 2019 was partially offset by € 29.1 million
higher success-based payments.
€ 2.0 million, to € 108.4 million in the reporting year (2018:
€ 106.4 million). In 2019, selling expenses amounted to
€ 22.7 million compared to € 6.4 million in 2018, mainly due to
higher personnel expenses and expenses for external services.
General and administrative expenses increased by 68 %, or
€ 14.8 million, from € 21.9 million in 2018 to € 36.7 million in
2019, also primarily as a result of higher personnel expenses
and expenses for external services.
In 2018, revenues in the Proprietary Development segment in-
creased by € 36.0 million to € 53.6 million (2017: € 17.6 mil-
lion). This increase resulted from the revenues generated by
the payment received by MorphoSys under the MOR106 agree-
ment with Novartis signed in 2018.
PAR T NERED DIS COVERY
The Partnered Discovery segment recorded an increase in rev-
enues of € 14.7 million to a total of € 37.5 million in 2019 (2018:
€ 22.8 million). These revenues included success-based pay-
ments, primarily from Janssen, of € 33.2 million in 2019 and
€ 19.3 million in the previous year. The success-based pay-
ments primarily included royalties on net sales of Tremfya® in
the amount of € 31.8 million in 2019 and € 15.4 million in 2018.
The Partnered Discovery segment also included revenues in the
amount of € 4.3 million from funded research and licensing
fees in the reporting year and € 3.5 million in 2018.
The Partnered Discovery segment reported a decline in reve-
nues of € 26.4 million to € 22.8 million in 2018 (2017: € 49.2 mil-
lion). These revenues included € 3.5 million from funded re-
search and licensing fees in 2018 and € 41.9 million in 2017.
The lower revenues were mainly a result of the expiration of the
collaboration agreement with Novartis in 2017. The Partnered
Discovery segment also included success-based payments, pri-
marily from Janssen, in the amount of € 19.3 million in 2018
and € 7.3 million in 2017. Revenues in the Partnered Discovery
segment included royalties on net sales of Tremfya® in the
amount of € 15.4 million in 2018 and € 1.9 million in 2017.
›› S E E F I G U R E 10 – Revenues Proprietary Development and Partnered Discovery
(page 63)
Operating Expenses
In 2019, operating expenses increased by 32 %, or € 43.4 mil-
lion, from € 136.5 million in 2018 to € 179.9 million. An in-
crease in cost of sales, research and development expenses,
selling expenses and general and administrative expenses con-
tributed to this development. Cost of sales increased from
€ 1.8 million in 2018 to € 12.1 million in 2019, primarily due to
an € 8.7 million impairment to a net realizable value of zero on
inventory of tafasitamab that was manufactured prior to regu-
latory approval but is available for subsequent commercializa-
tion. Research and development expenses increased by 2 %, or
Operating expenses in the Proprietary Development segment
increased by 34 %, or € 36.5 million, in the reporting year and
totaled € 143.5 million (2018: € 107.0 million). The main factors
that led to this increase were higher selling expenses and
higher general and administrative expenses as a result of es-
tablishing the sales organization in the U.S. Research and de-
velopment expenses in the Proprietary Development segment
(including technology development) increased by 0.3 %, or
€ 0.3 million, to € 98.6 million in the reporting period (2018:
€ 98.3 million).
Operating expenses in the Partnered Discovery segment in
2019 increased by 13 % or € 1.2 million to € 10.7 million (2018:
€ 9.5 million), mainly due to higher research and development
expenses. Research and development expenses in the Part-
nered Discovery segment increased by 14 %, or € 1.2 million, to
€ 9.7 million in 2019 (2018: € 8.5 million).
In 2018, operating expenses increased by 2 %, or € 2.7 million,
from € 133.8 million in 2017 to € 136.5 million in 2018. This
increase was driven by higher cost of sales and selling ex-
penses as well as higher administrative expenses. The line
item “cost of sales” was presented for the first time in the third
quarter of 2018 and consisted of expenses in connection with
services being rendered while transferring projects to custom-
ers such as I-Mab Biopharma. In 2018, cost of sales amounted to
€ 1.8 million. The Group started presenting “selling expenses”
as a separate line item since January 1, 2018. In 2018, selling
expenses amounted to € 6.4 million compared to € 4.8 million
in 2017. The presentation of selling expenses led to a change in
the presentation of research and development expenses and
general and administrative expenses for 2017. These items
were reduced by € 3.5 million and € 1.3 million, respectively,
and the corresponding amounts are now included in “selling
expenses.” Research and development expenses decreased by
6 %, or € 6.9 million, from € 113.3 million in 2017 to € 106.4 mil-
lion in 2018, mainly as a result of decreased expenses for exter-
nal services related to development activities in our Proprietary
Development segment as well as decreased expenses in our
Partnered Discovery segment. General and administrative ex-
penses increased by 39 %, or € 6.2 million, from € 15.7 million
in 2017 to € 21.9 million in 2018, mainly due to higher person-
nel expenses and costs for external services.
›› S E E F I G U R E 11 – Selected R&D Expenses (page 65)
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
65
11
Selected R&D Expenses
(December 31)
(in million €)
T O TA L
78.7
94.0
113.3
106.4
108.4
61.1
60.7
44.3
47.9
29.2
25.6
21.0
25.1
22.3
28.5
21.1
25.3
30.9
30.1
3.0
2.3
2.6
2.3
14.7
2.9
2015
2016
2017
2018
2019
e x ternal l ab o r ato ry fundin g
perso nnel
c o nsumab les
other (includes expenses for intan-
gible assets, technical infrastructure
and external services)
Operating expenses in the Proprietary Development segment
in 2018 increased by 8 %, or € 7.9 million, and amounted to
€ 107.0 million (2017: € 99.1 million). The main causes of this
increase were higher research and development expenses and
higher selling expenses. Research and development expenses
in the Proprietary Development segment (including technology
development) increased by 2 %, or € 2.0 million, to € 98.3 mil-
lion in 2018 (2017: € 96.3 million), primarily as a result of
higher expenses related to tafasitamab.
Operating expenses in the Partnered Discovery segment in
2018 decreased by 50 %, or € 9.4 million, to € 9.5 million (2017:
€ 18.9 million) mainly due to lower research and development
expenses. Research and development expenses in the Part-
nered Discovery segment decreased by 51 %, or € 8.8 million, to
€ 8.5 million in 2018 (2017: € 17.3 million). In 2017, research
and development expenses in the Partnered Discovery segment
were mainly related to the collaboration with Novartis, which
was terminated at the end of 2017.
RESEARCH AND DEVEL OPMEN T EXPENSES
In 2019, research and development expenses increased by 2 %,
or € 2.0 million, to € 108.4 million (2018: € 106.4 million). This
increase was mainly the result of higher expenses for external
laboratory services and personnel, which were partially offset
by lower expenses for intangible assets. Expenses for external
laboratory services, together with legal and scientific consult-
ing services, increased from € 47.9 million in the previous year
to € 60.7 million in the year under review. The increase was
primarily due to higher expenses for external laboratory ser-
vices in connection with the development of tafasitamab. Per-
sonnel expenses rose from € 25.3 million in the previous year
to € 30.1 million in the year under review, mainly due to an in-
crease in the expenses related to the development of tafasi-
tamab (totaling € 5.5 million).
FINANCIAL STATEMENTS G roup Management Repor t
66
A nalysis of Net Assets , F inancial Position and Results of O per ations
Expenses for intangible assets amounted to € 5.6 million in
2019 (2018: € 22.8 million). In the reporting year, these were
mainly influenced by impairment charges of € 1.3 million re-
lated to an impairment of the in-process-R&D program MOR107.
Depreciation and other expenses related to infrastructure in-
creased from € 5.4 million in 2018 to € 5.9 million in 2019,
mainly due to higher insurance expenses. Other expenses in-
creased from € 2.8 million in 2018 to € 3.1 million. Expenses
for consumable supplies rose from € 2.3 million in the previous
year to € 2.9 million in 2019.
Research and development expenses in 2018 decreased by 6 %,
or € 6.9 million, to € 106.4 million (2017: € 113.3 million)
mainly as a result of lower expenses for external laboratory
services and personnel, which were partially offset by higher
expenses for intangible assets. Expenses for external labora-
tory services and other expenses (including legal and scientific
consulting services) decreased from € 61.1 million in 2017 to
€ 47.9 million in 2018, mainly due to lower expenses for exter-
nal laboratory services in connection with the license agree-
ments for MOR202 and MOR106. Personnel expenses decreased
from € 28.5 million in 2017 to € 25.3 million in 2018, mainly
due to lower expenses for share-based payments and severance
payments (of € 1.5 million in total).
In 2018, expenses for intangible assets increased to € 22.8 mil-
lion (2017: € 13.5 million). This item was mainly impacted by
impairment charges of € 19.2 million in 2018 in connection
with the goodwill impairment of MOR107 and € 9.8 million in
2017 in connection with the termination of the collaboration
with Aptevo Therapeutics for the development of MOR209. De-
preciation and other infrastructure expenses increased from
€ 4.9 million in 2017 to € 5.4 million in 2018, mainly due to
higher insurance expenses. Other expenses remained un-
changed at € 2.8 million. Expenses for consumables and sup-
plies were reduced from € 2.6 million in 2017 to € 2.3 million in
2018.
SEL L ING EXPENSES
In 2019, selling expenses increased by more than 100 % or
€ 16.3 million to € 22.7 million (2018: € 6.4 million). This in-
crease primarily resulted from higher expenses for external
services and personnel expenses. The cost of external services
increased by € 11.2 million to € 14.2 million in 2019 due to in-
creasing activities for the preparation of the commercialization
of tafasitamab (2018: € 3.0 million). Personnel expenses in-
creased to € 7.0 million (2018: € 2.5 million) due to intensified
marketing activities for tafasitamab.
In 2018, selling expenses rose by 33 %, or € 1.6 million, to
€ 6.4 million (2017: € 4.8 million). This increase was mainly
due to higher personnel expenses and expenses for external
services. Personnel expenses increased to € 2.5 million (2017:
€ 1.8 million) due to intensified marketing activities for tafasi-
tamab. The cost of external services increased by € 0.3 million
to € 3.0 million in 2018 (2017: € 2.7 million).
GENERAL AND ADMINIS T RAT IVE EXPENSES
General and administrative expenses increased by 68 %, or
€ 14.8 million, in 2019 and amounted to € 36.7 million (2018:
€ 21.9 million). The main sources of this increase were higher
personnel expenses and expenses for external services. Per-
sonnel expenses rose from € 15.0 million in the previous year
to € 23.4 million in the year under review, largely due to higher
expenses for share-based compensation programs and salaries.
Expenses for external services rose from € 4.5 million in the
previous year to € 9.2 million in the year under review, espe-
cially in connection with the preparation of the commercializa-
tion of tafasitamab. Other expenses rose from € 1.0 million in
2018 to € 1.9 million in 2019, mainly due to higher travel ex-
penses.
General and administrative expenses increased by 39 %, or
€ 6.2 million, in 2018 and amounted to € 21.9 million (2017:
€ 15.7 million). The main reasons for this increase were higher
personnel expenses and expenses for external services. Per-
sonnel expenses increased from € 11.8 million in 2017 to
€ 15.0 million in 2018 primarily due to higher expenses for
share-based compensation programs and salaries. Expenses
for external services increased from € 2.2 million in 2017 to
€ 4.5 million in 2018 and were mainly related to one-time ex-
penses in connection with the IPO on the Nasdaq Global Mar-
ket. Other expenses rose from € 0.7 million in 2017 to € 1.0 mil-
lion in 2018, mainly due to higher rental expenses.
Other Income
Other income decreased by 50 %, or € 0.8 million, to € 0.8 mil-
lion in the reporting year (2018: € 1.6 million) and mainly in-
cluded currency gains of € 0.2 million (2018: € 0.7 million),
research grants of € 0.1 million (2018: € 0.2 million) and mis-
cellaneous income of € 0.5 million (2018: € 0.4 million). The
year 2018 included one-time gains from the capitalization of
previously unrecognized intangible assets in the amount of
€ 0.4 million (resulting from the contribution in kind in con-
nection with the investment in adivo GmbH).
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
67
In 2018, other income increased by 45 %, or € 0.5 million, to
€ 1.6 million (2017: € 1.1 million) and mainly included currency
gains of € 0.7 million (2017: € 0.5 million), gains from the capi-
talization of previously unrecognized intangible assets of
€ 0.4 million (2017: € 0) resulting from the contribution in kind
in connection with the investment in adivo GmbH, research
grants in the amount of € 0.2 million (2017: € 0.2 million) and
miscellaneous income in the amount of € 0.5 million (2017:
€ 0.4 million).
Other Expenses
Other expenses decreased by 14 %, or € 0.1 million, from
€ 0.7 million in 2018 to € 0.6 million in 2019 and consisted
mainly of currency losses of € 0.4 million (2018: € 0.5 million)
and other expenses of € 0.2 million (2018: € 0.2 million).
Other expenses decreased by 59 %, or € 1.0 million, from
€ 1.7 million in 2017 to € 0.7 million in 2018 and consisted
mainly of currency losses of € 0.5 million (2017: € 0.8 million)
and other expenses of € 0.2 million (2017: € 0.8 million).
EBIT
EBIT, defined as earnings before finance income, finance ex-
penses, income from impairment reversals/impairment losses
on financial assets and income taxes, amounted to € –107.9 mil-
lion in 2019, compared to € –59.1 million in the previous year
and € –67.6 million in 2017.
Finance Income
Finance income rose by more than 100 %, or € 2.4 million, in the
reporting year to € 2.8 million in the reporting year (2018:
€ 0.4 million), which mainly included gains from derivatives in
the amount of € 1.5 million (2018: € 0.3 million), gains from
changes in the fair value of financial assets recognized in profit
or loss in the amount of € 1.1 million (2018: € 0.1 million) and
interest income of € 0.2 million (2018: € 0.1 million) from in-
vestments in term deposits with fixed or variable interest rates.
Finance income fell by 43 %, or € 0.3 million, to € 0.4 million in
2018 (2017: € 0.7 million) as a result of lower investment re-
turns, which mainly included realized gains from derivatives
in the amount of € 0.3 million (2017: € 0.4 million) and interest
income of € 0.1 million (2017: € 0.2 million) from investments
in term deposits with fixed or variable interest rates.
Finance Expenses
Finance expenses increased by more than 100 %, or € 1.5 mil-
lion, to € 2.3 million in the reporting year (2018: € 0.8 million)
and primarily consisted of losses from changes in the fair value
of financial assets recognized in profit or loss in the amount of
€ 0.3 million (2018: € 0.1 million), interest expenses from finan-
cial assets and liabilities at amortized cost in the amount of
€ 0.8 million (2018: € 0.2 million) and losses from derivatives of
€ 0.2 million (2018: € 0.4 million). In 2019, with the application
of the new IFRS 16 standard on leases, interest expenses of
€ 0.9 million from the compounding of non-current lease liabil-
ities were recognized for the first time.
Finance expenses decreased by 5 %, or € 1.1 million, to € 0.8 mil-
lion in 2018 (2017: € 1.9 million) and primarily consisted of
losses from marketable securities and derivatives in the
amount of € 0.4 million (2017: € 1.5 million) and interest ex-
penses in the amount of € 0.3 million (2017: € 0.5 million).
Income Tax Expenses
In the reporting year, income tax benefits amounted to € 3.5 mil-
lion (2018: € 4.3 million). In 2019, income tax benefits were
mainly due to the reduction of deferred tax liabilities resulting
from amortization of intangible assets and a decrease in the tax
rate in the Netherlands. The effective income tax rate decreased
to 3.3 % in the year under review (2018: 7.1 %). The difference to
the expected tax rate of 26.7 % (which would have resulted in
income tax benefits of € 28.4 million (2018: € 16.1 million) is
mainly due to the fact that deferred tax assets on tax losses of
the past year in the amount of € 27.0 million (2018: € 14.5 mil-
lion) were not recognized.
In 2018, income tax benefits amounted to € 4.3 million. In 2017,
income tax expenses amounted to € 1.0 million. Income tax
benefits were mainly due to the reduction of a deferred tax lia-
bility, which in turn resulted from the impairment of intangible
assets. The effective income tax rate rose to 7.1 % in 2018 (2017:
– 1.5 %). The difference to the expected tax rate of 26.7 % (which
would have resulted in income tax benefits of € 16.1 million
(2017: € 18.3 million)) is mainly due to the fact that deferred tax
assets on tax losses of the past year of € 14.5 million (2017:
€ 22.0 million) were not recognized. In addition, permanent dif-
ferences from transaction costs in connection with the U.S. IPO
of € – 3.7 million arose in 2018 and deferred tax assets on tem-
porary differences of € 0.3 million were not recognized in 2018.
FINANCIAL STATEMENTS G roup Management Repor t
68
A nalysis of Net Assets , F inancial Position and Results of O per ations
Consolidated Net Profit/Loss for the
Period
In 2019, the net loss amounted to € 103.0 million (2018: loss of
€ 56.2 million; 2017: loss of € 69.8 million).
T A B L E 0 5
Multi-Year Overview – Statement of Profit or Loss1
in million €
Revenues
Cost of Sales
Research and Development Expenses2
Selling Expenses2
General and Administrative Expenses2
Other Income/Expenses
EBIT
Finance Income/Expenses
Income from Reversals of Impairment Losses/
(Impairment Losses) on Financial Assets
Income Tax Benefit/(Expenses)
Consolidated Net Profit/(Loss)
Earnings per Share, basic and diluted3
Earnings per Share, basic
Earnings per Share, diluted (in €)
2019
2018
2017
2016
2015
71.8
(12.1)
76.4
(1.8)
66.8
0.0
(108.4)
(106.4)
(113.3)
(22.7)
(36.7)
0.2
(107.9)
0.5
0.9
3.5
(103.0)
(3.26)
–
–
(6.4)
(21.9)
1.0
(59.1)
(0.3)
(1.0)
4.3
(56.2)
(1.79)
–
–
(4.8)
(15.7)
(0.6)
(67.6)
(1.2)
1.0
(1.0)
(69.8)
(2.41)
–
–
49.7
0.0
(94.0)
(2.4)
(13.4)
0.2
(59.9)
0.1
0
(0.5)
(0.4)
(2.28)
–
–
106.2
0.0
(78.7)
0.0
(15.1)
4.7
17.2
3.4
0.0
(5.7)
14.9
–
0.57
0.57
–
Shares Used in Computing Earnings per Share (in units), basic and diluted3
31,611,155
31,338,948
28,947,566
26,443,415
Shares Used in Computing Earnings per Share (in units), basic
Shares Used in Computing Earnings per Share (in units), diluted
Dividends Declared per Share (in € and $)
–
–
–
–
–
–
–
–
–
–
–
–
26,019,855
26,244,292
–
1 Differences due to rounding.
2 In 2018, selling expenses were presented for the first time. In order to provide comparative information for the previous year, the figures for 2017 and 2016 have been adjusted
accordingly. The figures for 2015 were not adjusted due to materiality reasons.
3 Basic and diluted earnings per share are the same in each of the years ended December 31, 2019, 2018, 2017, 2016, because the assumed exercise of outstanding stock options
and convertible bonds would be anti-dilutive due to our consolidated net loss in the respective period.
Liquidity and Capital Resources
S OURCES OF F UNDING
We have funded our operations primarily through ordinary
share issues and cash proceeds from ongoing business opera-
tions, including upfront fees, milestone payments, license fees,
royalties, and service fees from strategic partners and govern-
ment grants.
Liquidity is defined as the sum of the balance sheet items “cash
and cash equivalents,” “financial assets at fair value with
changes recognized in profit or loss” and “other financial assets
at amortized cost.”
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
69
On December 31, 2019, cash and cash equivalents amounted to
€ 44.3 million, financial assets at fair value with changes rec-
ognized in profit or loss amounted to € 20.5 million and other
current and non-current financial assets at amortized cost
amounted to € 292.7 million. On December 31, 2018, we had
cash and cash equivalents of € 45.5 million, financial assets at
fair value with changes recognized in profit or loss of € 44.6 mil-
lion and other current and non-current financial assets at amor-
tized cost of € 364.7 million.
Cash in excess of immediate working capital requirements is
invested in accordance with our investment policy, primarily
with a view to liquidity and capital preservation. Investments
are primarily made in money market funds, corporate bonds
and term deposits with fixed or variable interest.
We do not have any financial liabilities and are not subject to
any operating covenants or capital requirements.
USES OF F UNDS
Our primary use of cash is to fund research and development
costs related to the development of our product candidates and
to commercialize tafasitamab. Our primary future funding re-
quirements include the development and commercialization of
our proprietary clinical pipeline (primarily tafasitamab) and
the advancement of our earlier-stage, wholly owned or co-de-
veloped product candidates.
We believe that we have sufficient cash and cash equivalents
and other financial assets (including cash invested in various
financial assets as described above) to cover expected operat-
ing expenses for at least the next twelve months.
We have based this estimate on assumptions that may prove to
be wrong, and we could use our capital resources sooner than
we currently expect. Additionally, the process of investigating
product candidates in clinical trials and the process of commer-
cializing a product are costly. Both the timing and progress of
development trials as well as the success of commercialization
cannot be predicted with certainty.
Since our product candidates are in various stages of develop-
ment and the outcome of our activities is uncertain, we cannot
estimate the amounts required to successfully complete the
development and commercialization of our product candidates,
or whether and when we will be profitable.
We may require additional capital for the further development
of our existing product candidates, obtain regulatory approval,
expand our commercial structures and finance our operations
as a public company in the U.S. We may also need to raise addi-
tional funds on short notice to pursue other in-licensing or de-
velopment activities related to additional product candidates. If
we cannot generate revenues quickly enough to cover pipeline
developments, we may finance future cash needs through pub-
lic or private equity or bond offerings, including convertible
bonds. Additional capital may not be available at reasonable
terms, if at all. If we are unable to raise additional capital in
sufficient amounts or on terms acceptable to us, we may have to
significantly delay, scale back or discontinue the development
or commercialization of one or more of our product candidates.
If we raise additional capital through the issuance of debt or
equity instruments, it could result in dilution to our existing
shareholders, increased fixed payment obligations, or the secu-
rities may have rights senior to those of our ordinary shares or
the ADSs. If we incur indebtedness, we could become subject to
covenants that would restrict our operations and potentially
impair our competitiveness, such as limitations on our ability
to assume additional debt, limitations on our ability to acquire,
sell or license intellectual property rights and other operating
restrictions that could adversely impact our ability to conduct
our business.
Cash Flows
NE T C ASH PROVIDED BY/( USED IN ) OPERAT ING
AC T IVI T IES
In the reporting year, the net cash used in operating activities
amounted to € 80.1 million, primarily driven by the consoli-
dated net loss of € 103.0 million, which was partially offset by
non-cash expenses of € 5.1 million, and changes in operating
assets and liabilities and taxes paid of € 17.8 million. The con-
solidated net loss of € 103.0 million was largely due to expenses
we incurred to fund our ongoing operations, particularly cost of
sales, research and development expenses, selling expenses,
and general and administrative expenses. The main contribu-
tors to non-cash charges were expenses for share-based payment
of € 6.7 million and depreciation and amortization of tangible
and intangible assets and of right-of-use assets of € 6.2 million,
offset by recognition of contract liabilities of € 5.3 million and
income tax benefits of € 3.5 million. Changes in operating as-
sets and liabilities for 2019 consisted primarily of an increase
in accounts payable and accruals by € 13.2 million, contract li-
abilities in the amount of € 6.1 million incurred during the
year, as well as a decrease in accounts receivable by € 2.7 mil-
lion. This was offset by an increase in prepaid expenses and
other assets by € 4.4 million. The increase in external labora-
tory services outstanding at year-end, primarily related to tafa-
sitamab, was the primary driver of the higher trade payables
and accrued liabilities. The contract liability incurred during
the year was largely related to prepayments received from con-
tract partners. The decrease in accounts receivable was due to
a comparatively lower level of receivables outstanding at year-
end. The increase in prepaid expenses and other stemmed
mainly from higher prepayments and higher receivables due
from tax authorities from input tax surplus.
In the prior year, the net cash used in operating activities
amounted to € 33.3 million, primarily driven by the consoli-
dated net loss of € 56.2 million, which was partially offset by
non-cash expenses of € 27.4 million, and changes in operating
FINANCIAL STATEMENTS G roup Management Repor t
70
A nalysis of Net Assets , F inancial Position and Results of O per ations
assets and liabilities and taxes paid of € 4.5 million. The consol-
idated net loss of € 56.2 million was largely due to expenses we
incurred to fund our ongoing operations, particularly research
and development expenses, selling expenses and general and
administrative expenses. The main contributors to non-cash
charges were impairment on intangibles assets in the amount
of € 24.0 million, expenses for share-based payment of
€ 5.6 million and depreciation and amortization of tangible and
intangible assets of € 3.8 million, offset by an income tax bene-
fit of € 4.3 million. Changes in operating assets and liabilities
for 2018 consisted primarily of an increase in accounts receiv-
able by € 6.6 million and a decrease in other liabilities by
€ 2.7 million, offset by contract liabilities in the amount of
€ 2.4 million incurred during the year as well as an increase in
accounts payable and accruals by € 1.9 million. The increase in
accounts receivable was due to a comparatively higher level of
receivables outstanding at year-end. The decrease in other lia-
bilities stemmed mainly from the payment of tax liabilities and
the repayment of a governmental cost subsidy. The contract lia-
bility incurred during the year was largely related to annual
license fees. The increase in external laboratory services out-
standing at year-end was the primary driver of the higher trade
payables and accrued liabilities.
In 2017, net cash used in operating activities was € 38.4 mil-
lion, primarily driven by the consolidated net loss of € 69.8 mil-
lion incurred to fund our ongoing operations, in particular
research and development expenses and general and adminis-
trative expenses. Changes in operating assets and liabilities
consisted primarily of € 18.4 million in deferred revenue in
2017, a € 7.8 million increase in accounts payable and accruals
and a € 3.1 million increase in other liabilities. The deferred
revenue in 2017 related to annual license fees. The increase in
accounts payable and accruals was the result of an increase in
external laboratory services still outstanding at the end of the
year primarily related to tafasitamab. Most of the increase in
other liabilities originated from a deferral of the rent-free pe-
riod under our rental agreement for our headquarters.
NE T C ASH PROVIDED BY/( USED IN ) INVES T ING
AC T IVI T IES
In 2019, net cash provided by investing activities was € 78.6 mil-
lion, primarily driven by proceeds from the sale of financial
assets in the amount of € 371.9 million, of which € 318.7 mil-
lion were classified at amortized cost, partially offset by the
purchase of financial assets in the amount of € 274.8 million, of
which € 246.5 million were classified at amortized cost. Cash
provided by investing activities primarily related to shifts in
the composition in our investment portfolio as financial assets
matured and were sold and new, similar financial assets were
purchased. Additionally, in 2019, € 15.0 million were used to
purchase a minority interest of 13.4 % in Vivoryon Therapeu-
tics AG.
In the prior year, net cash used in investing activities was
€ 177.3 million, primarily driven by the purchase of financial
assets in the amount of € 451.3 million, of which € 366.8 mil-
lion were classified at amortized cost, partially offset by pro-
ceeds from the sale of financial assets in the amount of
€ 276.4 million, of which € 150.0 million were classified at
amortized cost. Cash used in investing activities primarily re-
lated to the investment of the proceeds from our initial public
offering on the Nasdaq as well as a shift in the composition in
our investment portfolio as financial assets matured and were
sold and new, similar financial assets were purchased.
In 2017, net cash provided by investing activities was € 32.9 mil-
lion, primarily driven by proceeds from the sale of financial
assets in the amount of € 210.2 million, partially offset by the
purchase of financial assets in the amount of € 164.4 million, of
which € 108 million were classified as loans and receivables.
Cash provided by investing activities primarily related to a
shift in the composition in our investment portfolio as financial
assets matured and were sold and new, similar financial assets
were purchased.
NE T C ASH PROVIDED BY/( USED IN ) F INANC ING
AC T IVI T IES
In 2019, net cash provided by financing activities was € 0.4 mil-
lion and mainly related to proceeds from the exercise of con-
vertible bonds by related parties in the amount of € 3.7 million
offset by lease and interest payments in the amount of € 3.4 mil-
lion.
In the prior year, net cash provided by financing activities was
€ 179.5 million and mainly related to the gross proceeds from
our initial public offering on the Nasdaq of € 193.6 million off-
set by the related issuance costs of € 15.0 million.
In 2017, net cash provided by financing activities was € 8.2 mil-
lion and mainly related to exercises of convertible bonds by
members of the Management Board and the Senior Manage-
ment Group.
Investments
In 2019, MorphoSys invested € 3.1 million in property, plant
and equipment (2018: € 1.8 million), mainly laboratory equip-
ment (i.e. machinery) and tenant fixtures. Depreciation of prop-
erty, plant and equipment in 2019 increased to € 2.0 million
(2018: € 1.8 million).
The Company invested € 0.6 million in intangible assets in 2019
(2018: € 0.6 million). Amortization of intangible assets was be-
low the prior year’s level and amounted to € 1.5 million in 2019
(2018: € 1.9 million). In 2019, impairment of € 1.5 million was
recognized on in-process R&D programs and patents. In 2018,
impairment of € 15.1 million was recognized on the in-process
R&D programs, thereof € 13.4 million on the MOR107 program.
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
71
T A B L E 0 6
Multi-Year Overview – Financial Situation1
in million €
2019
2018
2017
2016
2015
Net Cash Provided by/Used in Operating Activities
Net Cash Provided by/Used in Investing Activities
Net Cash Provided by/Used in Financing Activities
Cash and Cash Equivalents (as of 31 December)
Financial Assets at Fair Value through Profit or Loss2
Other Financial Assets at Amortized Cost, Current Portion2
Other Financial Assets at Amortized Cost, Net of Current Portion2
Available-for-sale Financial Assets2
Bonds, Available-for-sale2
Financial Assets Categorized as Loans and Receivables, Current Portion2
Financial Assets Categorized as Loans and Receivables, Net of Current Portion2
(80.1)
78.6
0.4
44.3
20.5
207.7
84.9
0.0
0.0
0.0
0.0
(33.3)
(177.3)
179.5
45.5
44.6
268.9
95.7
0.0
0.0
0.0
0.0
(38.4)
32.9
8.2
76.6
0.0
0.0
0.0
86.5
0.0
149.1
0.0
(46.6)
(80.8)
110.4
73.9
0.0
0.0
0.0
63.4
6.5
136.1
79.5
(23.5)
86.3
(4.1)
90.9
0.0
0.0
0.0
64.3
33.1
94.6
15.5
1 Differences due to rounding.
2 Since 2018, due to the first-time adoption of IFRS 9 Financial Instruments, the items representing liquidity are presented in different balance sheet items than in prior years.
L IABIL I T IES
Current liabilities increased from € 45.9 million on Decem-
ber 31, 2018 to € 61.6 million on December 31, 2019, primarily
as a result of an increase of € 12.3 million in the item “accounts
payable and accruals” and the initial recognition of the item
“lease liabilities, current portion” in the amount of € 2.5 million
due to the application of the new IFRS 16 standard on leases.
Non-current liabilities (December 31, 2019: € 40.2 million; De-
cember 31, 2018: € 4.5 million) increased primarily due to the
initial recognition of the item “lease liabilities, net of current
portion” in the amount of € 40.0 million as a result of the appli-
cation of the new IFRS 16 standard for leases.
Net Assets
ASSE T S
Total assets on December 31, 2019 amounted to € 496.4 million
and were € 42.4 million lower than on December 31, 2018
(€ 538.8 million). Current assets fell by € 85.2 million, mainly
driven by a decline in financial assets and cash and cash equiv-
alents.
On December 31, 2019, a total of € 20.5 million (December 31,
2018: € 44.6 million) was invested in various money market
funds and reported under the item “financial assets at fair value,
with changes recognized in profit or loss.” The item “other finan-
cial assets at amortized cost” include financial instruments
totaling € 207.7 million (December 31, 2018: € 268.9 million)
and consist primarily of term deposits with fixed or variable
interest rates and corporate bonds.
Non-current assets rose by € 42.8 million to € 192.7 million
(December 31, 2018: € 149.9 million), primarily as a result of
the initial recognition of the item “right-of-use, net” in the
amount of € 43.2 million due to the application of the new IFRS
16 standard on leases and the increase in “investments at fair
value, with changes recognized in other comprehensive in-
come” by € 13.8 million due to a minority interest of 13.4 % in
Vivoryon Therapeutics AG, acquired in October 2019. This in-
crease was offset by a decrease in non-current other financial
assets at amortized cost of € 10.8 million.
FINANCIAL STATEMENTS G roup Management Repor t
72
A nalysis of Net Assets , F inancial Position and Results of O per ations
S T OCKHOL DERS’ EQUI T Y
As of December 31, 2019, Group equity totaled € 394.7 million
compared to € 488.4 million on December 31, 2018. As of De-
cember 31, 2019, the Company’s equity ratio amounted to 80 %
compared to 91 % on December 31, 2018.
The number of shares issued totaled 31,957,958 as of Decem-
ber 31, 2019, of which 31,732,158 shares were outstanding (De-
cember 31, 2018: 31,839,572 shares issued and 31,558,536
shares outstanding). Common stock was higher as a result of
the exercise of 118,386 convertible bonds granted to the Man-
agement Board and former employees. The weighted-average
exercise price of the convertible bonds was € 31.88.
As of December 31, 2019, the Company held 225,800 shares of
treasury stock valued at € 8,357,250, representing a decline of
€ 2,041,523 compared to December 31, 2018 (281,036 shares,
€ 10,398,773 ). The decline was the result of the transfer of
52,328 shares of treasury stock valued at € 1,934,043 to the
Management Board and Senior Management Group from the
performance-based 2015 Long-Term Incentive plan (LTI). The
vesting period for this LTI plan expired on April 1, 2019 and
beneficiaries had the option to receive a total of 52,328 shares
by December 31, 2019. In addition, 2,908 shares of treasury
stock valued at € 107,480 were transferred to related parties.
T A B L E 0 7
Multi-Year Overview – Balance Sheet Structure1
in million €
AS SE TS
Current Assets
Non-current Assets
TOTAL
EQUIT Y AND LIABILITIES
Current Liabilities
Non-current Liabilities
Stockholders’ Equity2
TOTAL
12/31/2019
12/31/2018
12/31/2017
12/31/2016
12/31/2015
303.7
388.9
340.7
308.1
300.1
192.7
496.4
61.6
40.2
394.7
496.4
149.9
538.8
45.9
4.5
488.4
538.8
74.7
415.4
47.7
9.0
358.7
415.4
155.5
463.6
38.3
9.8
415.5
463.6
100.0
400.1
27.5
9.9
362.7
400.1
1 Differences due to rounding.
2 Includes common stock as of December 31, 2019: € 31,957,958; December 31, 2018: € 31,839,572; December 31, 2017: € 29,420,785; December 31, 2016: € 29,159,770;
December 31, 2015: € 26,537,682.
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
73
Contractual Obligations
The following table summarizes our contractual obligations as
of December 31, 2019:
T A B L E 0 8
Contractual Obligations (December 31, 2019)
(in € thousands)
Leases
Other
L EASE OBL IGAT IONS
We enter into long-term leases for facilities, company cars and
equipment. The majority of these leasing contracts can be re-
newed on a yearly or quarterly basis, and some agreements
may be terminated prematurely.
O T HER COMMI T MEN T S
Other commitments may become due for future payments for
outsourced studies. As of December 31, 2019, we expected to
incur approximately € 164.7 million of expenses for outsourced
studies, of which approximately € 64.4 million will be paid in
the next twelve months. Additionally, if certain milestones are
achieved in the Proprietary Development segment, for example,
by filing an application for an investigational new drug, or IND,
for specific target molecules, this may trigger regulatory and
sales milestone payments to licensors of up to an aggregate of
US$ 287 million. The next milestone payments of US$ 37.5 mil-
lion are anticipated to occur in the next twelve months. No ac-
cruals have been recorded in our consolidated balance sheet for
these amounts. They are also not included in the table above as
the timing and payment are uncertain.
Payments due by period
Total
50,858
1,632
less than
1 year
1 to
3 years
3 to
5 years
More than
5 years
3,515
1,294
6,730
338
6,730
0
33,883
0
OF F-BAL ANCE-SHEE T ARRANGEMEN T S
We do not currently have any off-balance-sheet arrangements
and did not have such arrangements in the years 2019 or 2018.
Comparison of Actual Business
Results Versus Forecasts
MorphoSys demonstrated solid financial performance during
the 2019 reporting year. A detailed comparison of the Company’s
forecasts versus the actual results can be found in Table 09*.
*C R O S S - R E F E R E N C E to page 74
FINANCIAL STATEMENTS
G roup Management Repor t
74
A nalysis of Net Assets , F inancial Position and Results of O per ations
T A B L E 0 9
Comparison of Actual Business Results Versus Forecasts
2019 Targets
2019 Results
Financial
targets
Group revenues between € 65 million and € 72 million
(initial forecast € 43 – 50 million; revised on July 3, 2019 upon
announcement of GSK milestone payment for initiation of
phase 3 program with otilimab)
Group revenues of € 71.8 million; initial forecast exceeded due
to GSK milestone payment for initiation of phase 3 program with
otilimab
Expenses for proprietary product and technology development
of € 95 – 105 million
Expenses for proprietary product and technology development
of € 98.6 million
EBIT of € – 105 million to € – 115 million
(initial forecast: € – 127 million to € – 137 million; revised on July 3,
2019 upon announcement of GSK milestone payments for initia-
tion of phase 3 program with otilimab)
Proprietary Development segment:
R&D expenses remain high (2018: € 107.0 million)
EBIT loss sharply higher Y-o-Y due to continued high level of R&D
expenditures for proprietary programs (2018: € 53.2 million)
EBIT of € - 107.9 million; initial forecast exceeded due to GSK
milestone payment for initiation of phase 3 program with otilimab
Proprietary Development segment:
R&D expenses of € 97.1 million
EBIT of € - 109.1 million
Partnered Discovery segment:
R&D expenses lower than in the prior year (2018: € 8.5 million)
EBIT positive (2018: € 13.3 million)
Partnered Discovery segment:
R&D expenses of € 9.7 million
EBIT of € 26.8 million
Proprietary
Development
Tafasitamab
• Continued discussions with the U.S. FDA on Breakthrough
Tafasitamab
• Regular updates provided on progress toward potential market-
Therapy Designation status
ing authorization
• Completion of data analysis of all 81 patients with r/r DLBCL
participating in the fully recruited L-MIND study according to
the current study protocol; presentation of study results based
on data at the time of primary completion analysis
• L-MIND: Data analysis completed (June): the primary endpoint,
defined as the best objective response rate (ORR), was met; pre-
sentation of the data at the ICML in Lugano. In addition, the Re-
MIND study was conducted as a retrospective observational
matched control cohort: primary endpoint, defined as best com-
parative ORR to published data for the respective monotherapies
– was met. ORR was 60 % (48 of 80 patients), 43 % of patients (34
of 80) showed a complete response (CR). 82 % of CRs are con-
firmed by PET (positron emission tomography)
• Initiation of phase 1b study of tafasitamab as frontline treat-
• End of December: initiation of a phase 1 study with tafasitamab
ment of DLBCL in the second half of 2019
• Continuation of the pivotal phase 3 trial B-MIND evaluating taf-
asitamab in combination with bendamustine in comparison to
rituximab plus bendamustine in r/r DLBCL
• Continuation of the phase 2 COSMOS study of tafasitamab in
CLL/SLL in combination with idelalisib or venetoclax, respec-
tively, and presentation of study data
• Completion of the BLA for regulatory marketing approval, in-
cluding clinical and CMC* (chemistry, manufacturing and con-
trol) data for tafasitamab and submission of the BLA to the U.S.
FDA by year-end
as frontline treatment in DLBCL (first patient dosed)
• B-MIND: Amendment of the study protocol to include a biomark-
er-based co-primary endpoint (March); study successfully
passed futility analysis (November); data were evaluated by an
independent data monitoring committee (IDMC), which recom-
mended increasing the number of patients from 330 to 450
• Continuation of the COSMOS study, data from the primary analy-
sis were presented at the ASH conference (December)
• End of December: BLA for tafasitamab in combination with lenalid-
omide submitted to the U.S. FDA for the treatment of r/r DLBCL;
BLA based on data from the primary analysis of the L-MIND study
of tafasitamab in combination with lenalidomide in patients with
r/r DLBCL and data from the primary analysis of the retrospective
observational matched control cohort (Re-MIND), which is evaluat-
ing the efficacy of lenalidomide monotherapy in r/r DLBCL patients
• Continue building sales structure in the U.S. to establish a
• Continued build-up of sales structures; establishment of
foundation for the planned marketing of tafasitamab
MOR202
• Preparation and start of an exploratory clinical trial of MOR202
in an autoimmune indication
MorphoSys US Inc. in Boston, Massachusetts, U.S., to support
the planned commercialization of tafasitamab in the United
States
MOR202
• First clinical sites activated for phase 1/2 trial in anti-PLA2R
antibody-positive membranous nephropathy (aMN) (October)
A nalysis of Net Assets , F inancial Position and Results of O per ations
G roup Management Repor t
75
2019 Targets
2019 Results
MOR106
• Continuation of ongoing clinical trials of MOR106 in atopic der-
matitis together with our development partner Galapagos under
the existing global license agreement with Novartis
MOR106
• Clinical development of MOR106 in atopic dermatitis stopped
after results of an interim analysis for futility in the IGUANA
phase 2 trial (October)
MOR107
• Continuation of preclinical testing of MOR107 with focus on
MOR107
• Continuation of preclinical studies in oncology indications
oncology indications
Otilimab – GSK
• Continuation of clinical activities in rheumatoid arthritis
Otilimab – GSK
• Initiation of phase 3 clinical program in rheumatoid arthritis (July)
Continuation and/or initiation of development programs in the
field of antibody identification and preclinical development
Partnered
Discovery
Progress in development programs with partners
• Exclusive license option for Vivoryon’s small molecule QPCTL in-
hibitors in the field of oncology (July)
• Continuation of early drug discovery programs
Increase in number of partner programs (104 programs) and pipe-
line maturing
Guselkumab (Tremfya®; Partner: Janssen):
• Initiation of clinical development in ulcerative colitis (January)
• U.S. approval for Tremfya® One-Press for self-administration of
Tremfya® for adults with moderate to severe psoriasis (February)
• Initiation of clinical development in familial adenomatous polypo-
sis (April)
• Publication of topline results of the phase 3 studies DISCOVER 1
and 2 (June): the studies investigated the efficacy and safety of
Tremfya® compared to a placebo in adult patients with active
moderate to severe psoriatic arthritis (PsA)*
• Submission of an application for approval for the treatment of
adults with active psoriatic arthritis to the U.S. FDA (September)
and EMA (October)
• Marketing approval for Tremfya® for the treatment of psoriasis in
China (December)
Presentation of the results of a phase 2 study for bimagrumab in
obesity and type 2 diabetes by partner Novartis (November)
*S E E G L O S S A R Y – page 192
The Management Board’s General
Assessment of Business Performance
Our mission is to become a fully integrated biopharmaceutical
company that develops and markets its own drugs. In the re-
porting year, we made important progress toward this goal.
The 2019 reporting year was marked by operational highlights
and positive events in our development programs. Following
the successful listing on the Nasdaq stock exchange in
April 2018, our visibility in the U.S. continued to increase in
2019. During the reporting year, we continued to focus on tafa-
sitamab, our antibody for the treatment of blood cancers. We
have reached several milestones on the way to achieving our
goal of obtaining marketing approval for tafasitamab for re-
lapsed/refractory DLBCL in the United States. Based on posi-
tive data from the primary analysis of the phase 2 L-MIND trial
and positive topline results from the primary analysis of the
retrospective observational matched control cohort Re-MIND,
we submitted the Biologics License Application for tafasitamab
to the U.S. FDA in December. For B-MIND, we reported that the
study successfully passed the pre-planned futility interim
analysis. In preparation for the market launch of tafasitamab,
which is planned for mid-2020, if U.S. FDA approval is granted,
we have further developed our U.S. subsidiary in 2019 and es-
tablished the commercial structures necessary for the planned
commercialization. To expand the clinical development of tafa-
sitamab beyond r/r DLBCL, we have also initiated a phase 1b
trial as frontline therapy in DLBCL.
FINANCIAL STATEMENTS
G roup Management Repor t
76
A nalysis of Net Assets , F inancial Position and Results of O per ations
In the Partnered Discovery segment, we were also able to re-
port on the successes of our partners. Our partner Janssen
continued to evaluate the use of guselkumab (Tremfya®), the
first approved and marketed therapeutic antibody based on
MorphoSys’ proprietary technology, in additional indications
and reported positive long-term data in plaque psoriasis and
initial data in psoriatic arthritis, which formed the basis for
marketing authorization applications to both the U.S. FDA and
EMA. In December 2019, Tremfya® was also approved for the
treatment of psoriasis in China. In 2019, we had a sharp rise in
our royalty payments, which we reinvested in the development
of our proprietary drug programs and in the establishment of a
sales organization.
At the end of 2019, our pipeline comprised a total of 116 drug
candidates (twelve proprietary and 104 partnered programs),
28 of which are currently in clinical development.
Revenues in the 2019 financial year declined to € 71.8 million,
and EBIT amounted to € –107.9 million. The revenues in 2019
contained amongst others a milestone payment from GSK in
the amount of € 22.0 million. Moreover, guselkumab (Tremfya®)
sales grew rapidly during 2019 resulting in royalty payments
with strong year-on-year growth as compared to 2018. The de-
creased EBIT compared to the prior year resulted from in-
creased expenses for the development and preparations for the
commercialization of tafasitamab. The net cash outflow from
operating activities amounted to € 80.1 million, which was
mainly the result of the planned expenses for proprietary re-
search and development. Our equity ratio of 80 % and liquid
funds of € 357.4 million are a confirmation of the strength of
the Company’s financial resources.
Our other Proprietary Development and Partnered Discovery
programs also made significant progress in 2019. In the Propri-
etary Development segment, we have initiated clinical develop-
ment of our anti-CD38 antibody MOR202 for the treatment of
an autoimmune kidney disease, while our partner I-Mab initi-
ated the clinical development in Taiwan with MOR202 in multi-
ple myeloma in second- and third-line treatment and, after re-
ceiving IND approval, expanded these studies also to mainland
China.
For otilimab, our antibody against GM-CSF out-licensed to GSK,
GSK initiated a phase 3 clinical program in rheumatoid arthri-
tis in mid-2019.
In July 2019, we entered into an agreement with Vivoryon Thera-
peutics AG granting us an exclusive option to license Vivoryon’s
small molecule QPCTL inhibitors, including the lead molecule
PQ912, in the field of oncology, which we are now investigating
preclinically in combination with our antibodies, particularly
tafasitamab.
In October 2019, we had to report, together with Galapagos, that
the clinical development of MOR106 in atopic dermatitis was
stopped due to an interim analysis for futility in the phase 2
IGUANA study. The joint decision of all three partners in-
volved – MorphoSys, Galapagos and Novartis – was based on a
lack of efficacy, not on safety concerns. The three parties are
currently evaluating the future strategy for MOR106.
O utlook and Forecast
G roup Management Repor t
77
Outlook and Forecast
MorphoSys’ business model is focused on developing innova-
tive drug candidates derived from its proprietary technologies,
such as the HuCAL and Ylanthia antibody libraries. We develop
drug candidates both on a proprietary basis and together with
partners with the goal of giving patients access to better treat-
ment alternatives. Our proprietary development activities focus
mainly on oncology compounds, which we aim to bring to mar-
ket and commercialize. We continue to concentrate on further
developing our technologies in the fast-growing, innovation-
driven areas of the life sciences sector as the foundation of our
business model.
General Statement on Expected
Development
MorphoSys’ strategic focus is on the development of innovative
drugs to improve the lives of patients suffering from severe
diseases. At the center of this focus is the development of tafa-
sitamab, our most advanced drug candidate, for the treatment
of certain forms of blood cancer, which we intend to further
develop and market together with our collaboration partner
Incyte pursuant to the collaboration and licensing agreement
signed in early 2020. Our continued investment in the develop-
ment of validated and innovative technology platforms is an
important basis for our business. In the Partnered Discovery
segment, the commercialization of our technologies provides
contractually secured cash flows from our partnerships with
pharmaceutical companies.
The Management Board anticipates the following develop-
ments, among others, to take place in 2020:
• Market launch of tafasitamab in combination with lenalido-
mide for r/r DLBCL in the U.S. planned for mid-2020 (given
U.S. FDA approval), together with our partner Incyte under the
collaboration and license agreement signed in January 2020;
• Support of Incyte for the submission of a marketing authoriza-
tion application for tafasitamab in combination with lenalido-
mide for r/r DLBCL to the European EMA by mid-2020; Incyte
has exclusive commercialization rights outside of the U.S.;
• Continued expansion of the commercial structures and strate-
gic presence in the U.S. to ensure the readiness for the market-
ing of tafasitamab by mid-2020 following regulatory approval,
complemented by the commercial expertise and infrastructure
of Incyte;
• Continuation of the phase 1b study with tafasitamab initiated
in December 2019 in firstline DLBCL;
• Expansion of tafasitamab’s clinical development beyond DLBCL
under the collaboration and licensing agreement signed with
Incyte in January 2020;
• Advancing the development of the other proprietary product
candidates: continuation of the clinical development of
MOR202 in autoimmune kidney disease and further support
of the development of MOR202 by our partner I-Mab in multi-
ple myeloma in Greater China;
• Preclinical testing of Vivoryon’s QPCTL inhibitors in the field
of oncology and in combination with our antibodies, above all
tafasitamab;
• Benefiting from our partners’ successful clinical development
and product sales and further investing these funds in the de-
velopment of our own programs;
• Exploration of new strategic agreements based on the Com-
pany’s proprietary technologies to gain access to innovative
targets and compounds;
• Further expansion of the Company’s proprietary development
activities through potential in-licensing, company acquisi-
tions, development collaborations and new in-house develop-
ment; and
• Investments in proprietary technology development to defend
and expand our position in therapeutic antibodies and related
technologies.
Strategic Outlook
MorphoSys invests a significant portion of its financial re-
sources in proprietary research and development, as well as in
establishing its own commercialization structures. The Man-
agement Board believes that this is the best approach to in-
creasing the Company’s value in the long term. Our business
activities are focused on cancer, and our strategy is increas-
ingly emphasizing the independent development of projects up
to the later stages of clinical research, and even leading them to
commercialization. Our primary focus is tafasitamab, our most
advanced proprietary program. We are currently awaiting the
U.S. FDA’s decision on our application for marketing approval
for tafasitamab in the U.S. and plan to market it there together
with our collaboration partner Incyte. We also intend to advance
tafasitamab’s develop ment together with Incyte into firstline
treatment of DLBCL and other indications.
Another strategic goal is to advance our other proprietary de-
velopment candidates and further strengthen our technology
platform. Revenues from R&D funding, royalties, license and
milestone payments, and a strong cash position give us the re-
sources to further expand our proprietary drug and technology
development, as well as the Company’s operational development.
FINANCIAL STATEMENTS G roup Management Repor t
78
O utlook and Forecast
To prepare for tafasitamab’s potential market entry, we will
continue to support our subsidiary MorphoSys US Inc. (head-
quartered in Boston, Massachusetts, U.S.). During the report-
ing year, we successfully filled key positions, such as the U.S.
Head of Operations, as well as other management positions in
the areas of Medical Affairs, Market Access, Sales & Marketing,
Commercial Operations, and Legal and Finance, among others.
Our Medical Affairs team follows a multi-stakeholder strategy
and has already started to establish networks with healthcare
professionals and oncologists. At the end of 2019, we had 36
people employed to support our commercial structure. By the
time we reach tafasitamab’s market entry planned for mid-2020,
we expect to have hired more than 100 additional employees to
further strengthen our U.S. presence.
We also take advantage of emerging opportunities to explore
our proprietary drug candidates in other disease areas such as
inflammatory or autoimmune diseases. On a case-by-case ba-
sis, MorphoSys enters into partnerships with other companies
to co-develop its proprietary candidates or out-license them in
selected countries or globally.
Our Partnered Discovery segment generates contractually
guaranteed cash inflows based on various collaborations with
pharmaceutical companies. The majority of the development
candidates in recent years have been generated within the
scope of our partnership with Novartis. Although this partner-
ship ended in November 2017, we expect that development can-
didates from this and other partnerships to continue to be de-
veloped and potentially lead to further revenue sharing in the
form of milestone payments in the future. In 2017, the drug
Tremfya®, developed and marketed by Janssen, was the first
antibody from our Partnered Discovery program to receive
marketing approval. Since Tremfya®’s launch, Janssen has ob-
tained approval for the treatment of psoriasis in several coun-
tries and is pursuing broad clinical development in many other
indications. We expect Tremfya® to continue to generate a large
part of our royalty income in the foreseeable future. Due to its
breadth and stage of development, the partnered pipeline could
yield further marketable therapeutic antibodies in the future. If
successful, our financial participation in the form of royalties
on product sales would increase.
Expected Economic Development
In its January 2020 report, the International Monetary Fund
(IMF) projected global economic growth of 3.3 % in 2020, com-
pared to a forecast of 2.9 % for the year 2019. Growth in ad-
vanced economies is anticipated to reach 1.6 % in 2020, com-
pared to the forecast of 1.7 % for 2019. The IMF expects growth
in the euro zone to increase to 1.3 % in 2020 compared to the
1.2 % forecast for 2019. Growth in Germany is anticipated to rise
to 1.1 % in 2020 (2019: 0.5 %), and the IMF projection for U.S.
economic growth in 2020 is 2.0 % (2019: 2.3 %). The IMF’s 2020
growth forecast for the emerging and developing countries is
4.4 % (2019: 3.7 %), and growth in China in the coming year is
projected at 6.0 % (2019: 6.1 %). Russia’s economy is anticipated
to grow 1.9 % (2019: 1.1 %). Brazil is also expected to experience
positive growth, projected at 2.2 % for 2020 (2019: 1.2 %).
MorphoSys AG has implemented a business continuity plan to
prevent the collapse of critical business processes to a large
extent or to enable the resumption of critical business processes
in case a natural disaster, public health emergency, such as the
novel coronavirus, or other serious event occurs. However, de-
pending on the severity of the situation, it may be difficult or in
certain cases impossible for us to continue our business for a
significant period of time. Our contingency plans for disaster
recovery and business continuity may prove inadequate in the
event of a serious disaster or similar event and we may incur
substantial costs that could have a material adverse effect on
our business.
Expected Development of the
Life Sciences Sector
While investors entered 2019 with one of the largest quarterly
drops ever seen in the biotech sector, 2020 began on a much
brighter note following very strong performance in the final
quarter of 2019. According to research by BioCentury (“Politics
aside, 2020 could be a good year for bringing back generalists”
as of January 4, 2020, “Fewer FDA approvals in 2019, but a bas-
ket of firsts” as of January 1, 2020, “It’s been a hell of a millen-
nium – and it’s just getting started” as of December 21, 2019),
the investment community is split on if and how far this strong
performance will carry into 2020. With large cap biotechs hav-
ing overall cheap valuations and Biogen’s unexpected positive
news about its Alzheimer’s disease product candidate, adu-
canumab, some see the potential for generalist investors to
come back to the sector after a hiatus of several years. Others
disagree. Investors do agree, however, that there will be a spate
of financings early in the year, as companies seek to raise
funds ahead of an expected U.S. pre-election lull. The senti-
ment is that strong companies will be able to raise the cash
they need. Weaker companies may have more trouble as inves-
tors will have a lot of choice and can thus be more selective. The
political turmoil in the U.S. in this election year and the drug
pricing debate could put downward pressure on stocks, al-
though some think that a more conservative pricing scenario
has already been priced in.
M&A activity was high in the last quarter of 2019, another fac-
tor to increase interest in the sector. According to the report
“Global Pharma & Life Sciences deals insights Year-end 2019”
issued by PricewaterhouseCoopers (PwC), 2020 is expected to
be another active year in terms of M&A, although perhaps not
as high in terms of deal value as in 2019. Mid-sized biotechs are
expected to continue to drive the activity. PwC expects the key
contributing factors that will drive an active M&A market in
O utlook and Forecast
G roup Management Repor t
79
2020 to be: access to capital, promising biotech innovation, and
a need for companies to act on their growth strategies.
Biotech innovation was highlighted by the number of U.S. FDA
novel drug approvals in 2019. While falling short of the all-time
high of 59 in 2018, there were 48 new molecular entities ap-
proved in 2019, ahead of the 46 approved in 2017. The count
does not include approvals from the Center for Biologics Evalu-
ation and Research (CBER), which included approval of the first
gene therapy for spinal muscular atrophy and vaccines against
Ebola and Dengue. In 2019, the European Medicines Agency
(EMA) recommended approval of 30 new active substances. In
a BioCentury article reviewing the major medical advances of
the last twenty years, optimism that the industry will continue
to develop transformative medicines remains. The challenges
of the next 20 years, according to the article, will be to ensure
equitable access. The role of biosimilars in reducing costs and
expanding access is still a question, and manufacturing and
pricing issues must still be resolved before it can be seen how
extensively new modalities such as gene and cell therapies will
be able to transform disease.
Future Research and Development
and Expected Business Performance
PROPRIE TARY DEVEL OPMEN T
MorphoSys will continue to invest in research and development.
The majority of investment will fund the development of our
proprietary drug candidates tafasitamab and MOR202 and our
discovery efforts. The lion’s share of that funding will be dedi-
cated to the clinical development of tafasitamab. Further invest-
ment will be made in the areas of target molecule validation and
antibody and technology development. We will also continue to
seek collaborations with partners such as academic institutions
to gain access to new target molecules and technologies.
The planned investments into the Company's proprietary drug
candidates and technologies should also lead to a further ma-
tured proprietary pipeline in the future.
The events and development activities planned for 2020 include
the following:
• Market launch of tafasitamab for usage in combination with
lenalidomide in r/r DLBCL in the U.S. planned for mid-2020
(given U.S. FDA approval), together with our collaboration part-
ner Incyte as part of the co- commercialization strategy under
the licensing agreement;
• Support of Incyte for the submission of a marketing authoriza-
tion application for tafasitamab to be used in combination with
lenalidomide for r/r DLBCL to the European EMA by mid-2020;
Incyte has exclusive commercialization rights outside of
the U.S.;
• Continued expansion of the commercial structures and strate-
gic presence in the U.S. to ensure the readiness for the market-
ing of tafasitamab by mid-2020 following regulatory approval,
complemented by the existing marketing structures of Incyte;
• Continue phase 1b study with tafasitamab started in Decem-
ber 2019 in previously untreated DLBCL;
• Continue pivotal phase 3 trial evaluating tafasitamab plus
bendamustine in r/r DLBCL in comparison to rituximab and
bendamustine (B-MIND trial); increase the number of pa-
tients to 450;
• Continue phase 2 COSMOS trial of tafasitamab with idelalisib
and venetoclax in CLL/SLL;
• Expansion of tafasitamab’s clinical development beyond DLBCL
under the collaboration and licensing agreement signed with
Incyte in January 2020. Further indications and also various
studies initiated by investigators are planned;
• Continue clinical development of MOR202 in an autoimmune
disease that affects the kidney as well as potentially other
autoimmune indications;
• Explore the future strategy for MOR106, together with Gala-
pagos and Novartis;
• Conduct preclinical investigation of Vivoryon’s QPCTL inhi-
bitors in oncology and in combination with our antibodies, led
by tafasitamab. Depending on the results of the preclinical
phase, the option agreed last year could be exercised in 2020;
• Continue preclinical investigations of MOR107 with a focus
on oncological indications; and
• Continue and/or initiate development programs in the area of
antibody discovery and preclinical development.
PAR T NERED DIS COVERY
MorphoSys will continue to focus primarily on advancing its
proprietary development pipeline. In the Partnered Discovery
segment, MorphoSys will carefully review its options to enter
into new collaborations based on its proprietary technologies
with pharmaceutical and biotechnology companies, compara-
ble to its dermatology collaboration with LEO Pharma based on
our Ylanthia antibody platform. This partnership was initiated
in 2016 and expanded in 2018 to include MorphoSys’ own pro-
prietary peptide platform.
Based on information on the clinicaltrials.gov website, more
than 15 phase 2 and phase 3 clinical trials conducted by part-
ners to evaluate antibodies based on MorphoSys technology
could be completed by the end of 2020. These trials include a
series of clinical studies of Tremfya® (guselkumab) conducted
by our partner Janssen. In 2019, Janssen submitted marketing
authorization applications to the U.S. FDA and EMA for Tremfya®
for the treatment of psoriatic arthritis. Decisions on these appli-
cations could potentially be made in 2020.
Since the clinical development of the drug candidates pro-
gresses, we expect individual product candidates in the part-
nered pipeline to further mature. Whether, when, and to what
extent news will be published following the primary comple-
tion of trials in the Partnered Discovery segment is at the full
discretion of our partners.
FINANCIAL STATEMENTS G roup Management Repor t
80
O utlook and Forecast
Expected Development of the Financial
Position And Liquidity
Revenues in the 2020 financial year are expected to be signifi-
cantly above those achieved in 2019, mainly driven by the col-
laboration and licensing agreement signed with Incyte. The
Management Board is projecting Group revenues of € 280 mil-
lion to € 290 million in the 2020 financial year. This forecast
does not take into account tafasitamab revenues and revenues
from future collaborations and/or licensing agreements. Reve-
nues are expected to include royalty income from Tremfya®
ranging from € 37 million to € 42 million.
R&D expenses are expected in the range of € 130 million to
€ 140 million in 2020. Most of these expenses will stem from
the development of tafasitamab and MOR202 and early-stage
development programs and include planned expenses for the
further development of our technology and our partnered pro-
grams.
MorphoSys will continue to build commercial structures in the
U.S. in preparation for the potential commercialization of tafa-
sitamab, pending regulatory approval, and therefore expects to
incur a significant amount of selling expenses in the high dou-
ble-digit million euro range for 2020. Significant increases are
also expected for general and administrative expenses, to sup-
port the further development of commercialization structures.
The Company expects an EBIT in the range of approximately
€ – 15 million to € 5 million in 2020. The guidance is based on
constant currency exchange rates and does not include any
contributions from tafasitamab revenues and any effects from
potential in-licensing or co-development deals for new develop-
ment candidates.
The guidance does not include a potential impact of the ongoing
global COVID-19 crisis on MorphoSys’ business operations in-
cluding but not limited to the Company’s supply chain, clinical
trial conduct, as well as timelines for regulatory and commer-
cial execution.
The Company expects the Partnered Discovery segment to gen-
erate a positive operating result, as in previous years.
In the years ahead, one-time events, such as the in-licensing and
out-licensing of development candidates and larger milestone
payments and royalties from the market maturity of HuCAL
and Ylanthia antibodies could have an impact on the Compa-
ny’s net assets and financial position. Such events could cause
financial targets to change significantly. Similarly, failures in
drug development could have negative consequences for the
MorphoSys Group. Negative effects of a pandemic in light of the
recent expansion of the coronavirus outside China are also pos-
sible or cannot be excluded. Revenue growth in the near- to
medium-term will depend on the Company’s ability to secure
regulatory approval for launch and successfully commercialize
its first proprietary program tafasitamab. In addition, revenues
should increasingly benefit from royalties based on sales of
Tremfya® (guselkumab).
At the end of the 2019 financial year, MorphoSys had liquidity
of € 357.4 million (December 31, 2018: € 454.7 million). In 2020,
we expect a significant increase in our liquidity position. In
accordance with the collaboration and license agreement with
Incyte, we expect to receive an upfront payment of US$ 750 mil-
lion and have received an equity investment of US$ 150 million.
We received final antitrust clearance for the global collabora-
tion and license agreement between MorphoSys and Incyte
for tafasitamab on or before March 2, 2020 and the transaction
became effective on March 3, 2020. With its strong liquidity
position, MorphoSys sees itself in a position to finance its fur-
ther corporate growth through strategic measures such as the
investment in the Company's proprietary portfolio and the
potential in-licensing of technologies and compounds as well as
partnering agreements with promising companies.
Dividend
In the separate financial statements of MorphoSys AG, pre-
pared in accordance with German Generally Accepted Account-
ing Principles (German Commercial Code), the Company is re-
porting an accumulated deficit, which prevents it from
distributing a dividend for the 2019 financial year. In view of
the anticipated losses in 2020, the Company expects to con-
tinue to report an accumulated loss for the 2020 financial year.
MorphoSys plans to invest further in the development of proprie-
tary drugs and in building its commercial capabilities in the
U.S. It will also pursue new in-licensing agreements and acqui-
sitions to open up new growth opportunities and increase the
Company’s value. Based on these plans, the Company does not
expect to pay a dividend in the foreseeable future.
This outlook takes into account all known factors at the time of
preparing this report and is based on the Management Board’s
assumptions of events that could influence the Company in
2020 and beyond. Future results may differ from the expecta-
tions described in the section entitled “Outlook and Forecast.”
The most significant risks are described in the risk report.
Risk and O ppor tunit y Repor t
G roup Management Repor t
81
Risk and Opportunity Report
We operate in an industry characterized by constant change
and innovation. The challenges and opportunities in the health-
care sector are influenced by a wide variety of factors. Global
demographic changes, medical advances and the desire to im-
prove the quality of life provide excellent growth opportunities
for the pharmaceutical and biotechnology industries; however,
companies must also grapple with growing regulatory require-
ments in the field of drug development as well as cost pressure
on the healthcare systems.
We make a great effort to systematically identify new opportu-
nities and leverage our business success to generate a lasting
increase in enterprise value. Entrepreneurial success, however,
is not achievable without conscious risk-taking. Through our
worldwide operations, we are confronted with a number of risks
that could affect our business performance. Our risk manage-
ment system identifies these risks, evaluates them and takes
suitable action to avert risk and reach our corporate objectives.
A periodic strategy review ensures that there is a balance be-
tween risk and opportunity. We only assume risk when there is
an opportunity to increase the Company’s value.
Risk Management System
The risk management system is an essential element of our cor-
porate governance and ensures adherence to good corporate
governance principles and compliance with regulatory require-
ments.
We have a comprehensive system in place to identify, assess,
communicate and deal with risk. Our risk management system
identifies risk as early as possible and details the actions we
can take to limit operating losses and avoid risks that could
jeopardize our Company. All actions to minimize risk are as-
signed to risk officers, who are also members of our Senior
Management Group.
All of our material risks in the various business segments are
assessed using a systematic risk process that is carried out
twice a year. Risks are evaluated by comparing their quantifi-
able financial impact with their probability of occurrence and
without initiating a risk mitigation process. This method is ap-
plied over assessment periods of twelve months and three
years to include the risk related to our proprietary development
that has a longer duration. Additionally, there is a long-term
strategic risk assessment that spans more than three years
(qualitative assessment). An overview of the current risk as-
sessment can be found in Tables 10* and 11*.
*C R O S S - R E F E R E N C E to page 87 and page 88
Risk managers enter their risks into an IT platform that makes
monitoring, analyzing and documenting risks much easier. The
risk management system distinguishes risk owners from risk
managers. For risks in relation to clinical development, the risk
owner is the responsible business team head for the respective
clinical program. For non-clinical risks, the risk owner is the
responsible department head. Employees from the respective
area of the risk owner can be risk managers as long as the risks
included in the risk management system fall under their area of
responsibility. Risk owners and risk managers are required to
update their risks and assessments at half-yearly intervals.
This process is coordinated and led by the Internal Controls &
Risk Management Department, which is also responsible for
monitoring the evaluation process and summarizing the key
information. The information is presented regularly to the Man-
agement Board which, in turn, presents the results to the Su-
pervisory Board twice a year. The entire evaluation process is
based on standardized evaluation forms. Risk management and
monitoring activities are carried out by the relevant managers.
The changes in the risk profile resulting from these activities
are recorded at regular intervals. It is also possible to report
important risks on an ad hoc basis should they occur outside of
the regular intervals. The risk and opportunity management
system combines a bottom-up approach for recognizing both
short- and medium-term risks with a top-down approach that
systematically identifies long-term global risks and opportuni-
ties. As part of the top-down approach, workshops are held twice
per year with selected members of the Senior Management
Group. These workshops assess and discuss the long-term risks
and opportunities, including those exceeding a period of three
years, in different areas of the Company. The evaluation pro-
cess is solely qualitative. The risks are listed in Table 11*.
*C R O S S - R E F E R E N C E to page 88
Principles of Risk and Opportunity
Management
We continually encounter both risks and opportunities that
could have a potential material impact on our net assets and fi-
nancial position as well as a direct effect on intangible assets,
such as our image in the sector or our brand name.
We define risk as an internal or external event that has a direct
impact. In handling risk, we include an assessment of the po-
tential financial impact on our goals. There is a direct relation-
ship between opportunity and risk. Seizing opportunities has a
positive influence on our goals, whereas the emergence of risk
has a negative influence.
FINANCIAL STATEMENTS G roup Management Repor t
82
Risk and O ppor tunit y Repor t
Responsibilities under the Risk and
Opportunity Management System
Our Management Board is responsible for the risk and opportu-
nity management system and ensures that all risks and oppor-
tunities are evaluated, monitored and presented in their en-
tirety. The Internal Controls & Risk Management Department
coordinates the risk management process and reports regu-
larly to the Management Board. The Supervisory Board has ap-
pointed the Audit Committee to monitor the effectiveness of our
risk management system. The Audit Committee periodically
reports its findings to the entire Supervisory Board, which is
also directly informed by the Management Board twice a year.
›› S E E F I G U R E 12 – Risk and Opportunity Management System at MorphoSys (page 83)
Accounting-Related Internal Control
System
In order to ensure accurate bookkeeping and accounting and
maintain reliable financial reporting in the consolidated finan-
cial statements and group management report, we use internal
controls through our financial reporting, which we have ex-
panded pursuant to the SOX* regulations (Sarbanes-Oxley Act of
2002, Section 404), in addition to Group-wide reporting guide-
lines and other measures, such as employee training and ongo-
ing professional education. This essential component of Group
accounting consists of preventative, monitoring and detection
measures intended to ensure adequate security and control in
accounting and operating functions. Detailed information
about the internal control system for financial reporting can be
found in the Corporate Governance Report.
*S E E G L O S S A R Y – page 192
Risks According to the Risk
Management System
RISK C AT EGORIES
Within the scope of our risk assessment, we assign risks to six
categories, which are described below. The assessment of the
relevance of the risks is not distinguished according to catego-
ries but according to impact and probability of occurrence.
Consequently, Table 10*, which lists our greatest risks, does not
necessarily include risks from all six categories.
*C R O S S - R E F E R E N C E to page 87
FINANCIAL RISK
Our financial risk management seeks to limit financial risk and
reconciles this risk with the requirements of our business.
Financial risk can arise in connection with licensing agree-
ments; for example, when projects (products or technologies) do
not materialize, are delayed or out-licensed at terms and condi-
tions other than initially expected. Risk also arises when reve-
nues do not reach their projected level or when costs are higher
than planned due to higher resource requirements. Detailed
project preparations, such as those made through in-depth ex-
changes with internal and external partners and consultants,
ensure the optimal starting point early in the process and are
important for minimizing risk. The financial risk relating to the
fully proprietary program tafasitamab remains entirely with
us, as do the long-term obligations to our contractors to make
the product available before its launch on the market especially
if tafasitamab does not receive approval in the U.S. by the U.S.
FDA currently planned for mid-2020. We also retain some risk
with respect to the clinical development of programs intro-
duced into partnerships; for example, MOR106.
Continuing economic difficulties in Europe indicate that poten-
tial bank insolvencies still pose a financial risk. This is the rea-
son we continue to invest only in those funds and bank instru-
ments that are deemed safe – to the extent this is possible and
foreseeable – and that have a high rating and/or are secured by
a strong partner. We limit our dependence on individual finan-
cial institutions by diversifying and/or investing in lower risk
money market funds. However, a strategy that eliminates all
risk of potential bank insolvency would be too costly and im-
practical. German government bonds, for example, are a very
secure form of investment but currently trade with negative
interest rates. A further risk is the receipt of adequate interest
on financial investments, particularly in light of today’s nega-
tive key interest rates. It is currently very difficult for us to in-
vest within the scope of our company policies and still avoid
negative interest rates. We invest, when possible, in instru-
ments that yield positive interest rates. There is no guarantee,
however, that secure positive interest-bearing investments will
always be available.
In the Partnered Discovery segment, there is a financial risk
associated with royalties on Tremfya® product sales. Revenues
generated by our partner Janssen from the drug approved in
2017, are difficult to predict and may lead to deviations from the
budgeted revenue.
We plan to continue to invest a significant portion of our funds
in the development of our product candidates. This includes
identifying target molecules and drug candidates, conducting
preclinical and clinical studies, producing clinical material,
supporting partners and co-developing programs. Our current
financial resources and projected revenues are expected to be
sufficient enough to meet our current and short-term capital
needs. This does not guarantee, however, that sufficient funds
will be available over the long term at all times.
G roup Management Repor t
83
Risk and O ppor tunit y Repor t
12
Risk and Opportunity
Management System
at MorphoSys
C O R P O R AT E
G O V E R N A N C E
S U P E R V I S O R Y
B O A R D
M A N A G E M E N T
B O A R D
C O M P L I A N C E
M A N A G E M E N T
R I S K A N D
O P P O R T U N I T Y
M A N A G E M E N T
I N T E R N A L
C O N T R O L
S Y S T E M
I N T E R N A L
R E V I S I O N
D E F I N E
O B J E C T I V E S
D I S C U S S I O N
F O R U M
M O N I T O R
S Y S T E M
A S S E S S
R I S K
T E C H N O L O G Y
S C O U T I N G
B U S I N E S S
D E V E L O P M E N T
I M P L E M E N T
M E A S U R E S
I N N O V AT I O N
C A P I TA L
I N T E R N A L
A U D I T
FINANCIAL STATEMENTS G roup Management Repor t
84
Risk and O ppor tunit y Repor t
OPER ATIONAL RISK
Operational risk includes risks related to the exploration and
development of proprietary drug candidates.
The termination of a clinical trial prior to out-licensing to part-
ners – which does not necessarily imply the failure of an entire
program – can occur when the trial does not produce the ex-
pected results, shows unexpected adverse side effects or the
data were compiled incorrectly. Clinical trial design and drafts
of development plans are always completed with the utmost
care. This gives the trials the best opportunity to show relevant
data in clinical testing and persuade regulatory agencies and
possible partners of the potential of the drug candidate. Exter-
nal experts also contribute to our existing internal know-how.
Special steering committees and panels are formed to monitor
the progress of clinical programs.
Any changes with respect to clinical trials, such as the trial’s
design or the ability to recruit patients quickly, as well as any
emerging alternative therapies, may lead to a delay in develop-
ment and, as a result, have a negative impact on the trial’s eco-
nomic feasibility and economic potential.
Programs in the drug discovery phase pose a risk, as they may
be delayed or terminated for various scientific reasons due to
the exploratory nature of early-stage research. Great care is
taken to ensure constant scientific monitoring and optimal
project management to ensure the quality and timing of the
programs and support the renewal of our pipeline.
There is also a risk associated with proprietary programs if
partnerships fail or are delayed.
STR ATEGIC RISK
Access to sufficient financing options also poses a strategic risk
for the Company. Following our decision to develop our proprie-
tary portfolio internally, the financing of research and develop-
ment is now a key focus. Risks in this context may arise as a
result of our cost estimates, current losses, future revenues,
capital requirements and/or our ability to raise additional fi-
nancing. We have established an extensive budgeting process
to mitigate such risks. We also have various departments and
external consultants working, if necessary, to ensure the smooth
execution of capital market transactions. The lack of competence
to identify and develop new products or successfully conclude
new partnerships and/or further develop our therapeutic tech-
nology platform constitutes a certain strategic risk.
A further strategic risk is the danger that a development pro-
gram introduced into a partnership may fail. Partnerships can
be terminated prematurely, forcing us to search for new develop-
ment partners or bear the substantial cost of further develop-
ment alone. This may result in a delay or even the termination
of the development of individual candidates and could lead to
additional costs or a potential long-term loss of revenue due to
delayed market entry.
A further strategic risk is that preliminary data from clinical
trials may lead to the trial’s termination or a change in the tri-
al’s design. In addition, regulatory authorities may not accept
our proposed clinical development strategy or may not accept
our application based on the data and/or not grant us market-
ing approval.
E X TERNAL RISK
We face external risk in areas such as intellectual property. The
patent protection of our proprietary technologies and compounds
is especially important. To minimize risks in this area, we mon-
itor new patents and patent applications and analyze the corre-
sponding results. We also develop strategies to ensure that the
patents and patent applications of third parties do not restrict
our own activities. We strive to maintain as much flexibility as
possible for our proprietary technology platforms and products.
External risk can also emerge through the enforcement of our
intellectual property rights vis-à-vis third parties. The accompa-
nying processes may be associated with high costs and require
considerable resources. There is also a risk that third parties
may file counterclaims. External risks may also arise as a re-
sult of changes in the legal framework. This risk is minimized
through continued training of the relevant staff and discussions
with external experts. It is also conceivable that competitors may
challenge our patents or infringe on our patents or patent fami-
lies, which in turn could cause us to take legal action against our
competitors. Such procedures are costly and represent a signifi-
cant financial risk, particularly when they take place in the U.S.
As an internationally operating biotechnology company with
numerous partnerships and an internal research and develop-
ment department for developing drug candidates, we are sub-
ject to a number of regulatory and legal risks. These risks in-
clude those related to patents, potential liability claims from
existing partnerships, environmental protection and competi-
tion, tax and antitrust laws. The Regulatory Affairs department
is also affected by this risk in terms of the feedback it receives
from regulators on study design or by price controls or restric-
tions on patient access. There is significant pricing pressure in
the U.S. market, as a result of which some states have imple-
mented pharmaceutical price controls and restrictions on pa-
tient access under the Medicaid program. Other states are
weighing or considering implementing price regulations for
the segment of the population not covered by the Medicaid pro-
gram. Future legal proceedings are conceivable and cannot be
anticipated. Therefore, we cannot rule out that we may incur
expenses for legal or regulatory judgments or settlements that
are not or cannot be partially or fully covered by insurance and
may have a significant impact on our business and results.
Lastly, MorphoSys AG has implemented a business continuity
plan to prevent the collapse of critical business processes to a
large extent or to enable the resumption of critical business
processes in case a natural disaster, public health emergency,
such as the novel coronavirus, or other serious event occurs.
However, depending on the severity of the situation, it may be
difficult or in certain cases impossible for us to continue our
Risk and O ppor tunit y Repor t
G roup Management Repor t
85
business for a significant period of time. Our contingency plans
for disaster recovery and business continuity may prove inade-
quate in the event of a serious disaster or similar event and we
may incur substantial costs that could have a material adverse
effect on our business.
ORGANIZ ATIONAL RISK
Organizational risks arise, for example, when building up a mar-
keting structure and incurring the related costs through our
fully owned subsidiary in the U.S., MorphoSys US Inc. Based on
the development and strong growth of MorphoSys US Inc., a joint
interdisciplinary and global U.S. launch team has been formed
and is preparing for the market launch of tafasitamab in the U.S.
ment applies to the Group as a whole as well as to each Group
company. This conclusion is based on several factors that are
summarized below.
• We have an exceptionally high equity ratio.
• The Management Board firmly believes that the Group is
well-positioned to cope with any adverse events that may occur.
• We control a comprehensive portfolio of preclinical and clini-
cal programs in partnerships with a number of large pharma-
ceutical companies and have a strong base of technologies to
expand our proprietary portfolio.
Despite these factors, it is impossible to rule out, influence or
control risk in its entirety.
And finally, risk also arises from missing or delayed informa-
tion within the organization on patent issues.
Opportunities
C OMPLIANCE RISK
Compliance risk can arise, for example, when quality standards
are not met or business processes are not conducted properly
from a legal standpoint. To counter this risk, we are committed
to ensuring that our business operations meet the highest qual-
i ty standards, as set out in our Sustainability Report.
Specific risk can arise, for example, when the internal quality
management system does not meet the legal requirements or
when there is no internal system for detecting quality prob-
lems. If the internal controls are not able to detect violations of
Good Manufacturing Practice (GMP*), Good Clinical Practice
(GCP*), Good Laboratory Practice (GLP*) or Good Distribution
Practice (GDP*), then this also would represent a compliance
risk. To minimize risk, the internal quality management sys-
tem is also regularly audited by external experts and subjected
to recurring audits by an internal, independent quality assurance
department.
*S E E G L O S S A R Y – page 192
A further risk is that the Company fails to fully understand the
operational challenges and, as a result, does not establish a
compliance management program in accordance with regula-
tory requirements and industry standards. To address this risk,
we have implemented a risk-based compliance management
program that complies with all of the latest trends and applica-
ble requirements, including the Code of Conduct, the Global
Anti-Corruption Policy, the Global Policy on Interaction with
Healthcare Professionals, Healthcare Organizations, Patients
and Patient Organizations, the Global Policy on Fair Market
Value, and other key elements.
The latest antibody technologies, excellent know-how and a
broad portfolio of validated clinical programs have made us one
of the world’s leading biotechnology companies in the field of
therapeutic antibodies. Because this therapeutic class is now
one of the most successful and highest revenue-generating in
cancer therapy, there is a considerable number of pharmaceuti-
cal and biotechnology companies in the field of antibodies that
could potentially become customers or partners for our products
and technologies. Based on this fact and our extensive, long-
standing technological and product development expertise, we
have identified a number of growth opportunities to pursue in
the years to come.
Our technologies for developing and optimizing therapeutic an-
tibody candidates have distinct advantages that can lead to
higher success rates and shorter development times in the drug
development process. The transfer and application of our core
capabilities – even those outside of the field of antibodies –
opens up new opportunities for us as many classes of com-
pounds have similar molecular structures.
OPP OR T UNI T Y MANAGEMEN T SY S T EM
The opportunity management system is an important compo-
nent of our corporate management and is used to identify op-
portunities as early as possible and generate added value for
the Company.
Opportunity management is based on the following pillars:
• a routine discussion forum involving the Management Board
and selected members of the Senior Management Group;
• our business development activities;
• a technology scouting team and a compound scouting team;
T HE MANAGEMEN T BOARD’S EVALUAT ION OF T HE GROUP ’S
and
OVERAL L RISK SI T UAT ION
Our Management Board sees our overall risk as manageable
and trusts in the effectiveness of the risk management system
to keep up with changes in the environment and the needs of
the ongoing business. It is the Management Board’s view that
the Group’s continued existence is not jeopardized. This assess-
• an internal suggestion scheme and accompanying incentive
system for new scientific ideas
Committees discuss specific opportunities and decide what ac-
tion should be taken to exploit these opportunities. The meetings
and their outcomes are recorded in detail, and any subsequent
FINANCIAL STATEMENTS G roup Management Repor t
86
Risk and O ppor tunit y Repor t
action is reviewed and monitored. Our Business Development
Team takes part in numerous conferences and in the process
identifies different opportunities that can enhance our growth.
These opportunities are presented and evaluated by a commit-
tee using evaluation processes. The Technology Scouting Team
searches specifically for innovative technologies that can gen-
erate synergies with our technological infrastructure and iden-
tify new therapeutic molecules. The Compound Scouting Team
looks specifically for active ingredients that could complement
our proprietary pipeline or future sales. Outcomes are also dis-
cussed and evaluated in interdepartmental committees. A
proven process for evaluating opportunities gives MorphoSys a
qualitative and replicable evaluation.
Our key opportunities are described in Table 12* (qualitative
evaluation).
*C R O S S - R E F E R E N C E to page 88
GENERAL S TAT EMEN T ON OPP OR T UNI T IES
Increased life expectancy in industrialized countries and ris-
ing incomes and living standards in emerging countries are
expected to drive the demand for more innovative treatment
options and advanced technologies. Scientific and medical
progress has led to a better understanding of the biological pro-
cess of disease and paves the way for new therapeutic ap-
proaches. Innovative therapies, such as fully human antibodies,
have reached market maturity in recent years and have led to
the development of commercially successful medical products.
Therapeutic compounds based on proteins – also referred to as
“biologics” – are less subject to generic competition than chem-
ically produced molecules because the production of biological
compounds is far more complex. The sharp rise in both the de-
mand for antibodies and the interest in this class of drug candi-
dates can be seen by the acquisitions and significant licensing
agreements made over the past two to three years.
MARKE T OPP OR T UNI T IES
We believe our antibody platforms HuCAL, Ylanthia, Slonom-
ics, the HTH peptide technology, and the in-licensed lanthipep-
tide technology can all be used to develop products addressing
high unmet medical needs.
T HERAPEU T IC AN T IBODIES – PROPRIE TARY DEVEL OPMEN T
It is reasonable to assume that the pharmaceutical industry
will continue and even increase the level of in-licensing of new
drugs to refill its pipelines and replace key products and block-
busters that have lost patent protection. Our most advanced
compounds tafasitamab, MOR202 and otilimab place us in an
excellent position to capitalize on the needs of pharmaceutical
companies, as demonstrated by our partnerships with GSK
(otilimab) and I-Mab (MOR202 and MOR210).
We are enhancing our proprietary portfolio on an ongoing basis
and will continue to expand our proprietary portfolio by adding
clinical trials with our key drug candidates, for example, by
investigating new disease areas. We intend to augment our
portfolio with additional programs and, in doing so, take advan-
tage of existing and future opportunities for co-development or
partnerships. We will also continue to seek new opportunities
to in-license interesting drug candidates.
The drug candidate tafasitamab could give us the opportunity
for the first time to commercialize a drug ourselves.
T HERAPEU T IC AN T IBODIES – PAR T NERED DIS COVERY
By developing drugs with a number of partners, we have been
able to spread the inherent risks of drug development over a
broader spectrum. With 104 individual therapeutic antibodies
currently in partnered development programs, the opportuni-
ties for us to participating financially in the commercialization
of drugs are increasingly higher. After the first regulatory ap-
proval of Tremfya® by the U.S. FDA in mid-2017, it was then
granted regulatory approval in a number of other regions. Among
other countries, Tremfya® has been approved in Cana da, the Eu-
ropean Union, Brazil, Japan, Australia, South Korea and China
for the treatment of patients suffering from moderate to severe
plaque psoriasis, and in Japan for the treatment of psoriatic ar-
thritis and pustular and erythrodermic psoriasis. Janssen is
currently investigating Tremfya® in several phase 3 trials in
various forms of psoriasis and psoriatic arthritis. Janssen is
also investigating Tremfya® in phase 2 trials in Crohn’s dis-
ease, ulcerative colitis and hidradenitis suppurativa, as well as
in a phase 1 trial in familial adenomatous polyposis. In addi-
tion, Janssen announced the submission of a supplemental Bio-
logics License Application (sBLA) for Tremfya® to the U.S. FDA
in September 2019 for the treatment of psoriatic arthritis; in
October 2019, it submitted an application to the EMA for
Tremfya® in for the treatment of psoriatic arthritis.
T ECHNOL OGY DEVEL OPMEN T
We continue to invest in our existing and new technologies in
order to defend our technological leadership. An example of
this is our new antibody platform Ylanthia, which has a much
longer period of patent protection than its predecessor, HuCAL.
These types of technological advances can help us to expand
our list of partners and increase not only the speed but also the
success rate of our partnered and proprietary drug develop-
ment programs. New technology modules that enable the pro-
duction of antibodies against novel classes of target molecules
can also provide access to new disease areas in which anti-
body-based treatments are underrepresented.
In July 2019, we entered into an agreement with Vivoryon Thera-
peutics AG granting us an exclusive option to license Vivoryon’s
small molecule QPCTL inhibitors in the field of oncology, which
we are now investigating preclinically in combination with
tafasitamab, in particular, as well as with other antibodies. Tech-
nology development is carried out by a team of scientists whose
focus is to further develop our technologies. We not only do this
internally but also rely on external resources to enhance our own
activities.
Risk and O ppor tunit y Repor t
G roup Management Repor t
87
ACQUISI T ION OPP OR T UNI T IES
In the past, we have proven our ability to acquire compounds
and technologies that accelerate our growth. Potential acquisi-
tion candidates are also systematically presented, discussed
and evaluated during the routine meetings described above
between the Management Board and selected members of the
Senior Management Group. After these meetings, promising
candidates are reviewed in terms of their strategic synergies
and evaluated by internal specialist committees. Protocols are
completed on all candidates and evaluations are systematically
archived for follow-up and monitoring. A proprietary database
helps administer this information and keep it available.
F INANC IAL OPP OR T UNI T IES
Exchange rate and interest rate developments can positively or
negatively affect our financial results. Interest rate and finan-
cial market developments are continuously monitored to
promptly identify and take advantage of opportunities.
T A B L E 1 0
Summary of MorphoSys’ Key Short- and Medium-Term Risks
Proprietary Development segment
Patent-related risks
Marketing-related risks
Failure of one or more early-stage proprietary programs
Outside of the Proprietary Development segment
Risks related to quality standards
Patent-related risks
Risks from bank insolvencies
Proprietary Development segment
Risks related to regulatory approval process
Delay in the development of one or more proprietary clinical programs
Marketing-related risks
Risks related to strategic partnerships
Higher development costs
Patent-related risks
Outside of the Proprietary Development segment
Risks related to quality standards
Risk category
1-year assessment
External
••
Moderate
Strategic,
organizational
Operational
Compliance
Organizational
Financial
•
•
•
•
•
Low
Low
Low
Low
Low
Risk category
3-year assessment
Strategic
Strategic, operational
Financial, external
Strategic
Financial
External
•••
•••
••
••
••
•
Compliance
•
High
High
Moderate
Moderate
Moderate
Low
Low
LEG END
•
••
•••
••••
LOW RISK :
MODER ATE RISK :
HIG H RISK :
CATASTROPHIC RISK :
low probability of occurrence, low impact
moderate probability of occurrence, moderate impact
moderate probability of occurrence, moderate to strong impact
high probability of occurrence, severe impact
FINANCIAL STATEMENTS
G roup Management Repor t
88
T A B L E 11
Summary of MorphoSys’ Key Long-Term Risks1
Segment
Risk
Risk and O ppor tunit y Repor t
Proprietary Development
Failure to get approval or a significant delay in approval of our proprietary lead program
Proprietary Development
Failure to commercialize our proprietary lead program
Proprietary Development
Termination of earlier-stage proprietary programs
Partnered Discovery
Termination, delay or revenue shortfall from late-stage partnered programs
1 The long-term risks are all equally weighted.
T A B L E 12
Summary of MorphoSys’ Key Opportunities1
Segment
Opportunity
Proprietary Development
Potential partnering for tafasitamab2
Proprietary Development
Potential new clinical development of our proprietary programs
(tafasitamab as frontline treatment in DLBCL, MOR202 in autoimmune diseases)
Proprietary Development
Potential milestone payment related to out-licensed programs
Proprietary Development
Successful feasibility study with Vivoryon and development in several indications
1 The long-term opportunities are all equally weighted.
2 The assessment of opportunities is based on the evaluation of the opportunity management system in the reporting year. Due to the signing of a global collaboration and
license agreement with Incyte on January 13, 2020, this is no longer an opportunity for MorphoSys and therefore it will not be evaluated in the opportunity management system
any more.
Subsequent Events
G roup Management Repor t
89
Subsequent Events
A detailed description of the subsequent events can be found in
the Notes (section 8.5).
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
90
Statement on Corporate Governance,
Group Statement on Corporate
Governance and Corporate Governance
Report
The Statement on Corporate Governance and the Group State-
ment on Corporate Governance, as well as the Corporate Gover-
nance Report, are available on our website under Media and
Investors – Corporate Governance.
S TAT EMEN T ON CORP ORAT E GOVERNANCE PURSUAN T
T O SEC T ION 289F HGB AND GROUP S TAT EMEN T ON
CORP ORAT E GOVERNANCE PURSUAN T T O SEC T ION 315d
HGB F OR T HE 2019 F INANC IAL YEAR
In the Statement on Corporate Governance under Section 289f
HGB and the Group Statement on Corporate Governance pursu-
ant to Section 315d, the Management Board and the Supervi-
sory Board present information on the most essential compo-
nents of our corporate governance. The components include the
annual Declaration of Conformity pursuant to Section 161 of
the Stock Corporation Act (AktG), the relevant information on
corporate governance practices and other aspects of corporate
governance that include, above all, a description of the working
practices of the Management Board and Supervisory Board.
DECL AR ATION OF C ONFORMIT Y WITH THE GERMAN C ORP OR ATE
GOVERNANCE C ODE ( THE “C ODE ”) OF THE MANAGEMENT
BOARD AND SUPERVISORY BOARD OF MORPHOSYS AG
The Management Board and Supervisory Board of MorphoSys AG
declare the following pursuant to Section 161 of the German
Stock Corporation Act:
1. Since the last Declaration of Conformity on November 30,
2018, MorphoSys has complied with the recommendations of
the “Government Commission on the German Corporate Gover-
nance Code” in the version from February 7, 2017, with the
following exception:
There is no cap on the Management Board members’ remu-
neration, neither as a whole or with respect to the individual
variable remuneration components (see Item 4.2.3 (2) sen-
tence 6 of the Code). Based on the Supervisory Board’s exist-
ing limitations for the Management Board’s variable remuner-
ation components and their annual allocation, the Supervisory
Board does not believe that an additional cap is required.
2. MorphoSys will continue to comply with the recommenda-
tions of the “Government Commission on the German Corpo-
rate Governance Code” in the version dated February 7, 2017,
with the exceptions described under Item 1.
Planegg, November 29, 2019
MorphoSys AG
On behalf of the
Management Board:
On behalf of the
Supervisory Board:
Dr. Jean-Paul Kress
Chief Executive Officer
Dr. Marc Cluzel
Chair of the Supervisory Board
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
91
RELE VANT INFORMATION ON C ORP OR ATE GOVERNANCE
PR AC TICES
We ensure compliance with laws and rules of conduct through
the Group-wide enforcement of the following documents: the
Code of Conduct, the Compliance Management Handbook and
other internal guidelines.
Our Code of Conduct sets out the fundamental principles and
key policies and practices for business behavior. The Code is a
valuable tool for our employees and executives, particularly in
business, legal and ethical situations of conflict. The Code of
Conduct reinforces our transparent and sound management
principles and fosters the trust placed in us by the public, busi-
ness partners, employees and the financial markets. Compli-
ance with the Code of Conduct is carefully monitored. The
Group-wide implementation of the Code is overseen by the
Global Compliance Committee. The Code of Conduct itself is
routinely reviewed and updated, provided to all new employees
and can be downloaded in German or English from our website
under the section Media and Investors – Corporate Governance.
The Compliance Handbook describes our Compliance Manage-
ment Program (CMP) and is intended to ensure compliance
with all legal regulations and prescribe high ethical standards
that apply to both the management and all employees. The
Management Board has overall responsibility for the CMP and
is required to report regularly to the Audit Committee and the
Supervisory Board. In carrying out its compliance responsibili ty,
the Management Board has assigned the relevant tasks to vari-
ous offices at MorphoSys.
The Compliance Officer monitors our existing CMP and updates
it according to the decisions of the Management Board and
the Global Compliance Committee. The Compliance Officer is
the first point of contact for each employee for all compliance-
related issues.
The Global Compliance Committee consists of representatives
from different offices and meets quarterly. It supports the Com-
pliance Officer in the implementation and monitoring of the
CMP. The Global Compliance Committee is particularly respon-
sible for the identification and discussion of all compliance-
relevant issues and thus makes it possible for the Compliance
Officer and the other members of the Global Compliance Com-
mittee to periodically verify our compliance status and, if nec-
essary, update the CMP.
More information on our Compliance Management Program
can be found in the Corporate Governance Report.
C OMP OSITION OF THE MANAGEMENT BOARD AND
SUPERVISORY BOARD
M A N AG EM EN T B OA RD
The Management Board of MorphoSys AG consists of a Chief
Executive Officer and three other members. A schedule of re-
sponsibilities currently defines the different areas of responsi-
bility as follows:
• Dr. Jean-Paul Kress, Chief Executive Officer and Chairman of
the Management Board (since September 1, 2019): Strategy
and Planning, Compliance & Quality Assurance, Internal Au-
dit, Human Resources, Business Development & Portfolio
Management, Legal, Commercial Planning and Processes,
the coordination of individual areas of the Management
Board, and the representative of the Management Board for
communication with the Supervisory Board and the public;
• Dr. Simon Moroney, Chief Executive Officer (until August 31,
2019): Strategy and Planning, Compliance & Quality Assur-
ance, Internal Audit, Human Resources, Business Develop-
ment & Portfolio Management, Legal, Commercial Planning,
the coordination of individual areas of the Management
Board, and the representative of the Management Board for
communication with the Supervisory Board;
• Jens Holstein, Chief Financial Officer: Accounting & Taxes,
Controlling & Risk Management, Corporate Development &
M&A, IT, Technical Operations, Procurement & Logistics, Cor-
porate Communications & Investor Relations, and Environ-
mental Social Governance (ESG);
• Dr. Markus Enzelberger, Chief Scientific Officer: Development
Partnerships & Technology Development, Protein Chemistry,
Alliance Management, Intellectual Property and Lanthio
Pharma; and
• Dr. Malte Peters, Chief Development Officer: Preclinical Re-
search, Project Management, Clinical Development, Clinical
Operations, Drug Safety & Pharmacovigilance and Regula-
tory Affairs.
SU PERV ISO RY B OA RD
Our Supervisory Board consisted of six members until the An-
nual General Meeting 2019, which took place on May 22, 2019.
The 2019 Annual General Meeting resolved to increase the
number of Supervisory Board members to seven and elected
Sharon Curran as the seventh member. Therefore, as of June 14,
2019, the Supervisory Board of MorphoSys consisted of seven
members who oversee and advise the Management Board. In
addition, Krisja Vermeylen was re-elected as a member of the
Supervisory Board.
The current Supervisory Board consists of professionally quali-
fied members who represent our shareholders. The Chair of the
Supervisory Board, Dr. Marc Cluzel, coordinates the Board’s
activities, chairs the Supervisory Board meetings and rep-
resents the interests of the Supervisory Board externally. All
Supervisory Board members are independent, as defined in the
German Corporate Governance Code and the Nasdaq Listing
Rules, and have many years of experience in the biotechnology
and pharmaceutical industries. The Chair of the Supervisory
Board is not a former member of our Management Board. The
members of the Supervisory Board and its committees are indi-
vidually listed in the tables below.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
92
T A B L E 1 3
Composition of the Supervisory Board until Termination of the 2019 Annual General Meeting
Name
Position
Appointment
End of Term
Committee
Initial
Audit
Remuneration
and Nomination
Committee
Science and
Technology
Committee
Dr. Marc Cluzel
Chairman
Dr. Frank Morich
Deputy Chairman
Krisja Vermeylen
Member
Michael Brosnan
Member
Dr. George Golumbeski
Member
Wendy Johnson
Member
2012
2015
2017
2018
2018
2015
2021
2020
2019
2020
2020
2020
Independent financial expert
Chairperson
Member
T A B L E 14
Composition of the Supervisory Board since Termination of the 2019 Annual General Meeting
Name
Position
Appointment
End of Term
Committee
Initial
Audit
Remuneration
and Nomination
Committee
Science and
Technology
Committee
Dr. Marc Cluzel
Chairman
Dr. Frank Morich
Deputy Chairman
Krisja Vermeylen
Member
Michael Brosnan
Member
Dr. George Golumbeski
Member
Wendy Johnson
Sharon Curran1
Member
Member
2012
2015
2017
2018
2018
2015
2019
2021
2020
2021
2020
2020
2020
2021
Independent financial expert
Chairperson
Member
1 Member of the Supervisory Board since June 14, 2019.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
93
The Supervisory Board holds a minimum of two meetings each
calendar half-year and at least four meetings each full calendar
year. The Supervisory Board has supplemented the Articles of
Association with rules of procedure that apply to its duties. In
accordance with these rules, the Chairperson of the Supervi-
sory Board coordinates the activities of the Supervisory Board,
chairs the Supervisory Board meetings and represents the in-
terests of the Supervisory Board externally. The Supervisory
Board typically passes its resolutions in meetings, but resolu-
tions may also be passed outside of meetings in writing (also by
e-mail), by telephone or video conference.
The Supervisory Board has a quorum when at least two-thirds
of its members (including either the Chairperson or Deputy
Chairperson of the Supervisory Board) take part in the vote.
Resolutions of the Supervisory Board are generally passed with
a simple majority unless the law prescribes otherwise. In the
event of a tied vote, the Chairperson of the Supervisory Board’s
vote decides.
Protocols are completed for Supervisory Board meetings, and
resolutions passed outside of meetings are also documented. A
copy of the Supervisory Board’s protocol is made available to all
Supervisory Board members. The Supervisory Board conducts
an efficiency evaluation regularly in accordance with the recom-
mendation in Item 5.6 of the Code.
C OMP OSITION AND WORKING PR AC TICES OF THE MANAGEMENT
BOARD AND SUPERVISORY BOARD C OMMIT TEES
The Management Board has not formed any committees.
The Supervisory Board has three committees: the Audit Com-
mittee, the Remuneration and Nomination Committee, and the
Science and Technology Committee. The members of the three
committees formed by the Supervisory Board are profession-
ally qualified.
WORKING PR AC TICES OF THE MANAGEMENT BOARD AND
SUPERVISORY BOARD
To ensure good corporate governance, a guiding principle of the
cooperation between our Management Board and our Supervi-
sory Board is the open, comprehensive and regular communi-
cation of information. The dual board system prescribed by the
German Stock Corporation Act clearly differentiates between
the company’s management and its supervision. The responsi-
bility of both boards is clearly stipulated by the legislator and
the boards’ bylaws and Articles of Association. The boards
work closely together to make decisions and take actions for the
Company’s benefit. Their stated objective is to sustainably in-
crease the Company’s value.
Management Board members have their own area of responsi-
bility defined in the schedule of responsibilities and regularly
report to their Management Board colleagues. Cooperation
among Management Board members is governed by the bylaws.
The Supervisory Board approves both the schedule of responsi-
bilities and the bylaws. Management Board meetings are typi-
cally held weekly and chaired by the Chief Executive Officer.
During these meetings, resolutions are passed concerning
dealings and transactions that, under the bylaws, require the
approval of the entire Management Board. At least half of the
Management Board’s members must be present to pass a reso-
lution. Management Board resolutions are passed by a simple
majority and, in the event of a tied vote, the Chief Executive
Officer’s vote decides. For material events, each Management
Board or Supervisory Board member can call an extraordinary
meeting of the entire Management Board. Management Board
resolutions can also be passed outside of meetings by an agree-
ment made orally, by telephone or in writing (also by e-mail). A
written protocol is completed for each meeting of the full Man-
agement Board and submitted for approval to the full Manage-
ment Board, as well as for the signature of the Chief Executive
Officer, at the following meeting.
In addition to the regularly scheduled meetings, Management
Board strategy workshops are also held for developing the fu-
ture strategy and prioritizing the Group-wide strategic objec-
tives.
The Management Board promptly and comprehensively in-
forms the Supervisory Board in writing and at Supervisory
Board meetings about planning, business development, the
Group’s position, risk management and other compliance is-
sues. Extraordinary meetings of the Supervisory Board are
also called for material events. The Management Board involves
the Supervisory Board in the strategy, planning and all funda-
mental Company issues. The Management Board’s bylaws spec-
ify that material business transactions require the approval of
the Supervisory Board. Detailed information on the cooperation
of the Management Board and Supervisory Board and impor-
tant items of discussion during the 2019 financial year can be
found in the Report of the Supervisory Board.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
94
T A B L E 1 5
Participation of Supervisory Board Members
S U P E R V I S O R Y B O A R D M E E T I N G S
By phone
By phone
By phone
By phone
01/17/
2019
03/13/
2019
04/08/
2019
05/07/
2019
05/21/
2019
05/22/
2019
08/01/
2019
10/23/
2019
11/13/
2019
12/17/
2019
–
–
–
–
–
–
Name
Dr. Marc
Cluzel
Dr. Frank
Morich
Wendy
Johnson
Krisja
Vermeylen
Dr. George
Golumbeski
Michael
Brosnan
Sharon
Curran1
1 Member of the Supervisory Board since June 14, 2019.
M E E T I N G S O F T H E A U D I T C O M M I T T E E
Name
Wendy Johnson1
Krisja Vermeylen
Michael Brosnan
Sharon Curran2
1 Member of the Audit Committee until May 22, 2019.
2 Member of the Audit Committee since June 14, 2019.
By phone
03/12/2019
05/03/2019
08/01/2019
10/23/2019
12/17/2019
–
–
–
–
–
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
95
M E E T I N G S O F T H E R E M U N E R A T I O N A N D N O M I N A T I O N C O M M I T T E E
By phone
By phone
By phone
By phone
By phone
By phone
Name
01/14/2019
02/07/2019
03/07/2019
05/07/2019
07/09/2019
07/31/2019
10/17/2019
Dr. Marc Cluzel
Krisja Vermeylen
Dr. Frank Morich
M E E T I N G S O F T H E S C I E N C E A N D T E C H N O L O G Y C O M M I T T E E
By phone
Name
03/12/2019
05/06/2019
05/21/2019
08/01/2019
10/23/2019
12/17/2019
Wendy Johnson
Dr. Frank Morich
Dr. George Golumbeski
at t e n d e d i n p e r s o n
pa r t i c i pat e d b y p h o n e
AUDIT C OMMIT TEE
The main task of the Audit Committee is to support the Super-
visory Board in fulfilling its supervisory duties with respect to
the accuracy of the annual and consolidated financial state-
ments, the activities of the auditor and internal control func-
tions, such as risk management, compliance and internal audit-
ing. The Audit Committee submits a recommendation to the
Supervisory Board for the election at the Annual General Meet-
ing of an independent auditor. Until May 22, 2019, the members
of the Audit Committee were Michael Brosnan (Chair), Wendy
Johnson and Krisja Vermeylen. Sharon Curran has been the
seventh member of the Supervisory Board of MorphoSys since
June 14, 2019, and was appointed as a member of the Audit
Committee by resolution of the Supervisory Board on May 22,
2019, effective as of her entry into the Supervisory Board. Since
that date, the Audit Committee has consisted of Michael Bros-
nan (Chair), Sharon Curran and Krisja Vermeylen. Currently,
Michael Brosnan meets the prerequisite of an independent fi-
nancial expert.
REMUNER ATION AND NOMINATION C OMMIT TEE
The Remuneration and Nomination Committee is responsible
for preparing and reviewing the Management Board’s compen-
sation system annually before its final approval. When neces-
sary, the Committee searches for suitable candidates to appoint
to the Management Board and Supervisory Board and submits
appointment proposals to the Supervisory Board. The Commit-
tee also prepares the contracts made with Management Board
members. The members of the Remuneration and Nomination
Committee are Krisja Vermeylen (Chair), Dr. Marc Cluzel and
Dr. Frank Morich.
SCIENCE AND TECHNOLO GY C OMMIT TEE
The Science and Technology Committee advises the Supervi-
sory Board on matters concerning proprietary drug and tech-
nology development and prepares the relevant Supervisory
Board resolutions. The members of the Science and Technology
Committee are Dr. George Golumbeski (Chair), Dr. Frank
Morich and Wendy Johnson.
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
96
AD HO C DE AL C OMMIT TE E
In addition to the three existing committees, an Ad Hoc Deal
Committee was set up in October 2019 to act as an additional
body for the tafasitamab partnership talks, advise on agreement
terms, ensure an efficient negotiation process, and facilitate the
Supervisory Board’s involvement. The Ad Hoc Deal Committee
dissolved automatically in January 2020 upon the signing of
the global cooperation and licensing agreement with Incyte for
tafasitamab. The members of this Ad Hoc Deal Committee were
Dr. George Golumbeski and Wendy Johnson.
Pursuant to Section 5.4.1 (5) sentence 2 of the German Corpo-
rate Governance Code, the biographies of the members of the
Supervisory Board are published on our website under Com-
pany – Management – Supervisory Board.
Corporate Governance Report
At MorphoSys, responsible, sustainable and value-oriented cor-
porate governance is a high priority. Good corporate gover-
nance is an essential aspect of our corporate management and
forms the framework for the Group’s management and supervi-
sion, which includes the Group’s organization, commercial
principles and tools for its guidance and control.
The German Corporate Governance Code (“the Code”) provides
a standard for the transparent monitoring and management of
companies that strongly emphasizes shareholder interests. The
German Federal Ministry of Justice originally published the
Code in 2002; it was last amended on February 7, 2017 and
published in the German Federal Gazette on April 24, 2017. On
December 16, 2019, the Government Commission on the German
Corporate Governance Code adopted a new version of the Code
(“Code 2020”), which, however, only came into force after the
end of the reporting period in 2020. Until then, the version of
the Code dated February 7, 2017 continued to apply. The Code
contains recommendations and suggestions with regard to the
management and supervision of German companies listed on a
stock exchange. It is based on domestic and internationally rec-
ognized standards for good and responsible corporate gover-
nance. The Code aims to make the German system of corporate
governance transparent for investors. It contains recommenda-
tions and suggestions on corporate governance with regard to
shareholders and the Annual General Meeting, the Manage-
ment Board and Supervisory Board, transparency, accounting
and valuation principles, and auditing.
There is no obligation to comply with the recommendations and
suggestions of the Code. The German Stock Corporation Act only
requires the Management Boards and Supervisory Boards of
listed German companies to publish a declaration each year, (i)
either confirming that the company has complied with the recom-
mendations of the Code or (ii) listing the recommendations with
which the company has not complied and the reasons for the
deviation from the recommendations of the Code. In addition, a
listed company must also state in its annual declaration
whether it intends to comply with the recommendations or must
list the recommendations with which it does not intend to comply
with in the future. These declarations must be published per-
manently on the company’s website. If the company changes its
position on certain recommendations between two annual decla-
rations, it must disclose this fact and state the reasons for the
deviation from the recommendations. If suggestions from the
Code are not complied with, this does not have to be disclosed.
Many of the corporate governance principles contained in the
Code have been practiced at MorphoSys for many years. Our
corporate governance principles are detailed in the Statement
on Corporate Governance under Sections 289f and 315d HGB.
The statement also contains the annual Declaration of Confor-
mity, relevant information on corporate governance practices
and a description of the Management Board and Supervisory
Board’s working practices. Additional information can be found
in this Corporate Governance Report.
COMMUNIC AT ION WI T H T HE C API TAL MARKE T S
A key principle of corporate communication at MorphoSys is to
simultaneously and fully inform institutional investors, private
shareholders, financial analysts, employees and all other stake-
holders of the Company’s situation through regular, transpar-
ent and timely communication. Shareholders have immediate
access to the information provided to financial analysts and
similar recipients and can obtain this information in both Ger-
man and English. The Company is firmly committed to follow-
ing a fair information policy.
Regular meetings with analysts and investors in the context of
roadshows and individual meetings play a central role in inves-
tor relations at MorphoSys. Conference calls accompany publi-
cations of quarterly results and give analysts and investors an
immediate opportunity to ask questions about the Company’s
development. Company presentations for on-site events are
made available to those interested on the Company’s website,
as are visual and audio recordings of other important events.
Conference call transcripts are also made promptly available.
The Company’s website www.morphosys.com serves as a cen-
tral platform for current information on the Company and its
development. Financial reports, analyst meetings and confer-
ence presentations, as well as press releases and ad hoc state-
ments, are also available. The important regularly scheduled
publications and events (annual reports, interim reports, an-
nual general meetings and press and analyst conferences) are
published in the Company’s financial calendar well in advance.
ES TABL ISHMEN T OF SPEC IF IC TARGE T S F OR T HE
COMP OSI T ION OF T HE SUPERVIS ORY BOARD
The Supervisory Board should establish specific targets for its
composition and create a Supervisory Board competency and
knowledge profile so that (i) the Supervisory Board in its en-
tirety has the necessary knowledge, skills and professional
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
97
experience to properly perform its duties, (ii) the Company’s
international activities and potential conflicts of interest are
taken into consideration, (iii) a sufficient number of indepen-
dent Supervisory Board members is ensured, (iv) an age limit
and a regular limit on the length of service is specified for
members of the Supervisory Board, and (v) the aspect of diver-
sity is taken into account.
Significant and more than temporary conflicts of interest
should be avoided, especially when it involves work for major
competitors. It should be noted, however, that conflicts of inter-
est in certain cases cannot principally be excluded. Any poten-
tial conflicts of interest must be disclosed to the Chair of the
Supervisory Board and remedied appropriately. There are cur-
rently no conflicts of interest.
With these aspects in mind and in consideration of the Compa-
ny’s specific circumstances (Section 5.4.1 of the German Corpo-
rate Governance Code), the Supervisory Board defined the ob-
jectives with regard to its composition for the first time in
July 2015 and reviewed and updated these objectives on July 26,
2017. In submitting its proposals for the re-election of one Su-
pervisory Board member and the election of a new Supervisory
Board member at the 2019 Annual General Meeting, the Super-
visory Board has taken these objectives into account, while at
the same time endeavoring to pursue the goal of fulfilling the
overall profile of the Supervisory Board’s stated skills and ex-
perience, unless otherwise stated below. The Supervisory
Board intends to observe the targets set by it with regard to its
composition in future election proposals to the Annual General
Meeting unless otherwise stated below.
The objectives set by the Supervisory Board regarding its com-
position were implemented as follows:
APPROPRIATE REPRESENTATION OF WOMEN AND DIVERSIT Y
The Supervisory Board strongly believes that an appropriate
representation of women on the Supervisory Board should be at
least 33.33 %. Until May 22, 2019, the Supervisory Board had a
total of six members, two of whom were women, which corre-
sponded to representation of 33.33 %. Since June 14, 2019, the
Supervisory Board has had seven members, three of whom are
women, which corresponds to representation of 42.86 %.
The Supervisory Board also believes that having at least two
non-German members or at least two members with extensive
international experience provides a fair share of diversity given
our international orientation. The Supervisory Board currently
meets this quota, as six of the seven Supervisory Board mem-
bers are non-German and all of the Supervisory Board mem-
bers possess extensive international experience.
INDEPENDENCE
The Supervisory Board considers at least four independent
members to be an appropriate number of independent members
(Section 5.4.2 of the German Corporate Governance Code and
Nasdaq Listing Rules). Members of the Supervisory Board are
considered independent when they have no personal or busi-
ness relationship with MorphoSys, its management, a con-
trolling shareholder or an affiliate that can give rise to a mate-
rial and more than temporary conflict of interest. All seven
members of the Supervisory Board meet the criteria to be clas-
sified as independent. Therefore, the Supervisory Board cur-
rently meets the quota of four independent members.
AGE LIMIT
At the time of their appointment by the Annual General Meeting,
Supervisory Board members should not be older than 75 years.
The Supervisory Board may, however, decide to make an excep-
tion in specific cases. The age limit of 75 years is currently met
by the Supervisory Board members.
TERM OF APP OINTMENT
At the Annual General Meeting, the Supervisory Board intends
to propose an initial two-year period of office for Supervisory
Board members. Supervisory Board members should also be
allowed to be reappointed twice, each for an additional term of
three years; however, the Supervisory Board reserves the right
to resolve on exceptions in substantiated individual cases and
to propose to the Annual General Meeting that a Supervisory
Board member be reappointed for a fourth term of three years.
Since the time of setting this target, the maximum term of ap-
pointment for all elected Supervisory Board members has been
respected.
Sharon Curran was elected at the Annual General Meeting for
an initial term of two years. Krisja Vermeylen was also re-
elected for a two-year term of office.
SK IL L S AND EXPERIENCE PROF IL E F OR T HE SUPERVIS ORY
BOARD AS A WHOL E
In addition to defining specific targets, the Supervisory Board
should develop a profile of skills and experience for the entire
Supervisory Board (Section 5.4.1 of the German Corporate Gov-
ernance Code). On July 26, 2017, the Supervisory Board defined
the following profile of skills and experience for the entire Super-
visory Board, and the Supervisory Board intends to consider the
skills and experience profile for the entire Supervisory Board
in future election proposals to the Annual General Meeting:
PROFES SIONAL SKILL S AND E XPERIENCE
Supervisory Board members should possess the necessary pro-
fessional skills and experience to fulfill their duties as mem-
bers of the Supervisory Board of MorphoSys as an international
biotechnology company. All current Supervisory Board mem-
bers have the relevant experience in management positions in
the pharmaceutical and biotechnology industries and, there-
fore, meet this requirement.
In order to promote further cooperation between members of
the Supervisory Board, care should be taken in the selection of
candidates to ensure that the aspect of diversity in terms of
professional background, expertise, experience and personal-
ity is sufficiently taken into account.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
98
GENER AL KNOWLE DGE
All members of the Supervisory Board should have a general
knowledge of the industry in which we operate in order to
make sufficient and substantial contributions to Supervisory
Board meetings. All Supervisory Board members have the
necessary expertise in the pharmaceutical and biotechnology
industries based on their background and, therefore, meet this
requirement.
PROFES SIONAL E XPER TISE
• At least two members of the Supervisory Board must have
extensive experience in drug development.
• At least one Supervisory Board member must have expertise
in the areas of accounting or auditing (Section 100 [5] AktG).
• At least one member of the Supervisory Board must have ex-
perience in human resource issues, particularly with regard
to Management Board matters.
The targets above are currently met.
SUFFICIENT AVAIL ABILIT Y OF TIME
All members of the Supervisory Board must ensure that they
have sufficient time available to properly perform their Super-
visory Board duties. It must, therefore, be ensured that
• the Supervisory Board member is able to personally attend at
least four ordinary Supervisory Board meetings per year, as
well as the annual strategy meeting, for which a reasonable
amount of preparation time is required in each case;
• the Supervisory Board member is able to attend extraordi-
nary meetings of the Supervisory Board if necessary to deal
with specific topics;
• the Supervisory Board member is able to attend the Annual
General Meeting;
• the Supervisory Board member has sufficient time available
to review the annual and consolidated financial statements;
and
• the Supervisory Board member sets aside additional time to
prepare and participate in committee meetings, depending
on his/her possible membership in one or more of the current
three committees of the Supervisory Board.
WOMEN’S QUO TA F OR T HE SUPERVIS ORY BOARD,
MANAGEMEN T BOARD AND T HE T WO MANAGEMEN T
L EVEL S BEL OW T HE MANAGEMEN T BOARD
In July 2015, the Supervisory Board adopted a women’s quota
for the Supervisory Board for an initial period of two years. The
Supervisory Board reviewed this quota in July 2017 and made
the following amendments at that time:
“MorphoSys AG’s Supervisory Board has a total of six mem-
bers, two of whom are women. This places the current quota of
33.33 % for female members on the Company’s Supervisory
Board above the 30 % target. The Supervisory Board confirms
its decision regarding the quota for women on the Supervisory
Board, which was passed in July 2015, and intends to maintain
this ratio until June 30, 2022.”
The women’s quota for the Supervisory Board established in
2017 was continued to be complied with. Until May 22, 2019,
the Supervisory Board had a total of six members, two of whom
were women, which corresponded to a proportion of 33.33 %.
Since June 14, 2019, the Supervisory Board has had seven mem-
bers, three of whom are women, which corresponds to a propor-
tion of 42.86 %.
In July 2015, the Supervisory Board adopted the following
quota for women on the Management Board for an initial period
of two years. The Supervisory Board reviewed this quota in
July 2017 and updated it on that date as follows:
“The Management Board of MorphoSys AG has a total of five
members, including one woman. The current proportion of
women on the Company’s Management Board is therefore be-
low 30 % and amounts to 20 %. With reference to the decision on
the quota of women on the Management Board, which was
taken in July 2015, the Supervisory Board intends to achieve a
ratio of 25 % in the future, namely by June 30, 2022.”
This target is currently not met. The reason is the unplanned
departure of Dr. Marlies Sproll as a member of the Management
Board for personal reasons as of October 31, 2017 and the ap-
pointment of Dr. Markus Enzelberger as a new member of the
Management Board. Since October 31, 2017, the Management
Board had thus consisted of four male members (and since the
departure of Dr. Enzelberger at the end of February 2020 has
consisted of three male members), and the proportion of women
on the Management Board is therefore 0 %.
In July 2015, the Management Board adopted the following
quota for women in the first level of management below the
Management Board for an initial period of two years and re-
viewed and updated it in July 2017 as follows:
“At the time of the decision, the first management level below the
Management Board (the Senior Management Group) consisted
of 22 members, nine of whom were women. The current propor-
tion of women at this management level was 40.9 %, which was
above the 30 % target. The Management Board confirms its
July 2015 decision on the quota of women in the first level of
management below the Management Board and intends to con-
tinue to maintain a minimum ratio of 30 % until June 30, 2022.”
This target continues to be met.
In July 2015, the Management Board adopted a women’s quota
for the second level of management below the Management
Board initially for a period of two years and reviewed and up-
dated the quota in July 2017 as follows: “The second manage-
ment level below the Company’s Management Board (i.e. the
group of managers excluding the Senior Management Group) at
the time of the decision consisted of 40 members, 14 of whom
were women. This placed the quota of women in the second
management level below the Company’s Management Board at
35 % at the time of the resolution, which was above the 30 %
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
99
target. The Management Board confirms its July 2012 decision
on the quota of women in the second level of management be-
low the Management Board and intends to maintain a quota of
at least 30 % until June 30, 2022.”
This target continues to be met.
DIVERSI T Y CONCEP T
Diversity is firmly anchored in our corporate culture and that of
our Group companies. All dimensions of diversity enjoy equal
importance, be it age, gender, educational background and oc-
cupation, origin and religion, or sexual orientation and identity.
Our Management Board and Supervisory Board see it as their
task to further increase and beneficially utilize the various as-
pects of diversity, over and above setting targets for the propor-
tion of women on the Management Board, Supervisory Board
and in management positions.
We have not pursued our own diversity concept with regard to
the composition of the Management Board and Supervisory
Board until now. Nevertheless, the internal structuring and
further development of an open and integrative corporate cul-
ture play a key role in the daily work of the Management Board
and the Supervisory Board. The skills and experience profile
for the Supervisory Board as a whole also takes the aspect of
diversity into account.
Remuneration Report
The Remuneration Report presents the principles, structure
and amount of Management Board and Supervisory Board re-
muneration. The report complies with the legal provisions and
gives consideration to the recommendations of the German Cor-
porate Governance Code.
MANAGEMEN T BOARD REMUNERAT ION
The Management Board’s remuneration system is intended to
provide an incentive for performance-oriented and sustainable
corporate management. Therefore, the aggregate remuneration
of the Management Board members consists of different compo-
nents: fixed components, an annual cash bonus based on the
achievement of corporate targets (Short-Term Incentive – STI),
a variable remuneration component with long-term incentives
(Long-Term Incentive – LTI) and other remuneration compo-
nents. Variable remuneration components with long-term in-
centives consist of performance shares and stock options
granted within the scope of performance share plans and stock
options plans. In prior years, convertible bonds were also
granted to members of the Management Board within the scope
of a convertible bond program from the year 2013. Management
Board members also receive fringe benefits in the form of non-
cash benefits, mainly the use of a company car and the payment
of insurance premiums.
All remuneration packages are reviewed annually for their
scope and appropriateness by the Remuneration and Nomina-
tion Committee and compared to the results of an annual Man-
agement Board remuneration analysis. The amount of compen-
sation paid to Management Board members highly depends on
their individual areas of responsibility, the Company’s eco-
nomic situation and success and its business prospects versus
its competition. All decisions concerning adjustments to remu-
neration packages are made by the entire Supervisory Board.
The total remuneration package and the Management Board’s
index-linked pension scheme were comprehensively reviewed
in 2019 and adjusted by the Supervisory Board.
OVERVIE W
In the 2019 financial year, the total benefits granted to the
members of the Management Board (bearing in mind that Dr.
Simon Moroney left as Chair of Management Board at the end of
August 31, 2019, and Dr. Jean-Paul Kress became the new Chair
of the Management Board as of September 1, 2019) in accor-
dance with the provisions of the German Corporate Governance
Code amounted to € 11,308,876 (2018: € 6,904,508). Of the total
compensation granted for 2019, € 7,311,463 was cash compen-
sation and € 3,997,413, or 35 %, was personnel expenses from
share-based variable compensation with long-term incentive
(performance shares and stock options).
The total amount of benefits paid to the Management Board in
financial year 2019 was € 14,128,615 (2018: € 7,505,917). In ad-
dition to cash compensation of € 4,104,582 (2018: € 3,189,972)
paid in the financial year, this amount includes, above all, the
relevant value of the transfer of treasury shares from a perfor-
mance-based share plan under German tax law in the amount
of € 1,941,794 (2018: € 626,606). As convertible bonds were also
exercised in 2019 and 2018, the total amount for 2019 also in-
cluded benefits from the exercise of convertible bonds in the
amount of € 8,082,239 (2018: € 2,205,535).
As of April 15, 2019, a total of 19,815 treasury shares from the
2015 Performance Share Plan for the Management Board vested
as a result of the expiration of the vesting period for this LTI
plan. The beneficiaries had the option to call these shares
within a six-month period ending on October 14, 2019. This call
period was extended in the summer to December 31, 2019. All
transactions by members of the Management Board in connec-
tion with the trading of MorphoSys shares were reported as
required by law and published in the Corporate Governance
Report and on the Company’s website.
In accordance with the requirements of Item 4.2.5 (3) of the
Code, the information required by the Code on the remunera-
tion of the individual members of the Management Board is
presented in detail below.
Please note that the following tables in the Corporate Gover-
nance Report differ from the presentation of the remuneration
of the Management Board in the Notes to the Consolidated Fi-
nancial Statements (Note 7.4). This is due to the different pre-
sentation requirements under the German Corporate Gover-
nance Code and IFRS.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
100
T A B L E 1 6
Compensation of the Management Board in 2019 and 2018 (Disclosure in Accordance with the German Corporate Governance Code)
B E N E F I T S G R A N T E D T O T H E M A N A G E M E N T B O A R D
in €
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2019
2019
2019
2019
2019
2019
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Jens Holstein
Chief Financial Officer
Dr. Malte Peters
Chief Development Officer
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One -Year Variable Compensation2
One-Time Bonus3
Multi-Year Variable Compensation:
2018 Long-Term Incentive Program4 (Vesting Period 4 Years)
2019 Long-Term Incentive Program4 (Vesting Period 4 Years)
2018 Stock Option Plan4 (Vesting Period 4 Years)
2019 Stock Option Plan4 (Vesting Period 4 Years)
Total Variable Compensation
Service Cost
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
326,884
196,000
1,000,000
0
0
0
2,000,013
3,196,013
44,965
3,567,862
233,333
93,551
326,884
0
0
0
0
0
0
0
44,965
371,849
233,333
93,551
326,884
204,167
1,000,000
0
0
0
8,000,052
9,204,219
44,965
9,576,068
in €
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2019
2019
2019
2019
2019
2019
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney5
Chief Executive Officer
Resignation: August 31, 2019
Total
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One -Year Variable Compensation2
One-Time Bonus3
Multi-Year Variable Compensation:
2018 Long-Term Incentive Program4 (Vesting Period 4 Years)
2019 Long-Term Incentive Program4 (Vesting Period 4 Years)
2018 Stock Option Plan4 (Vesting Period 4 Years)
2019 Stock Option Plan4 (Vesting Period 4 Years)
Total Variable Compensation
Service Cost
Total Compensation
321,300
31,211
352,511
269,892
286,650
201,463
334,152
135,848
470,000
280,688
200,000
0
0
220,645
197,065
0
955,070
68,515
0
220,634
921,967
69,805
1,376,096
1,461,772
334,152
135,848
470,000
0
0
0
0
0
0
0
69,805
539,805
334,152
135,848
470,000
292,383
200,000
0
882,580
0
882,536
2,257,499
69,805
2,797,304
1 In 2019, fringe benefits for Dr. Simon Moroney and Dr. Markus Enzelberger include post-employment benefits granted.
2 The one-year variable compensation granted for the 2019 financial year represents the bonus accrual that will be paid in February 2020. The bonus granted for the 2018 financial
year was paid in February 2019.
3 The one-time bonus granted in 2019 will be paid out in cash in February 2020. In the year 2018, the one-time bonus was granted as an allocation of treasury shares.
4 Stock-based compensation plans issued annually. The fair value was determined pursuant to the regulations of IFRS 2 “Share-based Payment.” For plans issued annually, the per-
sonnel expenses resulting from share-based payments are presented for the entire term at the time of issue.
5 Dr. Simon Moroney resigned from the Management Board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company, the
Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
402,235
46,725
448,960
337,877
358,857
201,463
197,065
0
0
1,095,262
111,233
1,655,455
542,074
32,654
574,728
455,343
483,616
307,529
300,770
0
0
1,547,258
158,788
2,280,774
418,324
44,090
462,414
351,392
500,000
220,645
0
0
220,634
1,292,671
114,224
1,869,309
372,154
1,114,906
1,487,060
328,859
0
0
0
336,791
336,772
1,002,422
107,263
2,596,745
418,324
44,090
462,414
114,224
576,638
372,154
1,114,906
1,487,060
328,859
328,859
107,263
1,923,182
0
0
0
0
0
0
0
0
0
0
0
0
418,324
44,090
462,414
366,034
500,000
882,580
0
0
882,536
2,631,150
114,224
3,207,788
372,154
1,114,906
1,487.060
328,859
0
0
0
1,347,164
1,347,088
3,023,111
107,263
4,617,434
397,800
30,613
428,413
334,152
354,900
201,463
197,065
0
0
1,087,580
76,190
1,592,183
1,663,409
141,203
1,804,612
1,397,264
1,484,023
911,918
891,965
0
0
4,685,170
414,726
6,904,508
413,712
32,892
446,604
347,518
500,000
220,645
0
0
220,634
1,288,797
77,787
1,813,188
1,771,675
1,421,287
3,192,962
1,504,457
2,200,000
998,726
0
0
2,998,687
7,701,870
414,044
413,712
32,892
446,604
77,787
524,391
413,712
32,892
446,604
361,998
500,000
882,580
0
0
882,536
2,627,114
77,787
3,151,505
0
0
0
0
0
0
0
0
0
0
0
0
1,771,675
1,421,287
3,192,962
328,859
328,859
414,044
1,771,675
1,421,287
3,192,962
1,553,441
2,200,000
3,994,904
0
0
11,994,748
19,743,093
414,044
11,308,876
3,935,865
23,350,099
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
101
T A B L E 1 6
Compensation of the Management Board in 2019 and 2018 (Disclosure in Accordance with the German Corporate Governance Code)
B E N E F I T S G R A N T E D T O T H E M A N A G E M E N T B O A R D
in €
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2019
2019
2019
2019
2019
2019
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Jens Holstein
Chief Financial Officer
Dr. Malte Peters
Chief Development Officer
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One -Year Variable Compensation2
One-Time Bonus3
Multi-Year Variable Compensation:
2018 Long-Term Incentive Program4 (Vesting Period 4 Years)
2019 Long-Term Incentive Program4 (Vesting Period 4 Years)
2018 Stock Option Plan4 (Vesting Period 4 Years)
2019 Stock Option Plan4 (Vesting Period 4 Years)
Total Variable Compensation
Service Cost
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
326,884
196,000
1,000,000
0
0
0
2,000,013
3,196,013
44,965
3,567,862
402,235
46,725
448,960
337,877
358,857
201,463
418,324
44,090
462,414
351,392
500,000
0
0
220,645
197,065
0
1,095,262
111,233
1,655,455
0
220,634
1,292,671
114,224
1,869,309
418,324
44,090
462,414
0
0
0
0
0
0
0
114,224
576,638
418,324
44,090
462,414
366,034
500,000
397,800
30,613
428,413
334,152
354,900
413,712
32,892
446,604
347,518
500,000
0
201,463
0
882,580
0
220,645
0
197,065
882,536
2,631,150
114,224
3,207,788
0
1,087,580
76,190
1,592,183
0
220,634
1,288,797
77,787
1,813,188
413,712
32,892
446,604
0
0
0
0
0
0
0
77,787
524,391
413,712
32,892
446,604
361,998
500,000
0
882,580
0
882,536
2,627,114
77,787
3,151,505
in €
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2018
2019
(Minimum)
(Maximum)
2019
2019
2019
2019
2019
2019
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney5
Chief Executive Officer
Resignation: August 31, 2019
Total
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One -Year Variable Compensation2
One-Time Bonus3
Multi-Year Variable Compensation:
2018 Long-Term Incentive Program4 (Vesting Period 4 Years)
2019 Long-Term Incentive Program4 (Vesting Period 4 Years)
2018 Stock Option Plan4 (Vesting Period 4 Years)
2019 Stock Option Plan4 (Vesting Period 4 Years)
Total Variable Compensation
Service Cost
Total Compensation
year was paid in February 2019.
321,300
31,211
352,511
269,892
286,650
201,463
197,065
0
0
955,070
68,515
334,152
135,848
470,000
280,688
200,000
0
0
220,645
220,634
921,967
69,805
1,376,096
1,461,772
69,805
539,805
1 In 2019, fringe benefits for Dr. Simon Moroney and Dr. Markus Enzelberger include post-employment benefits granted.
2 The one-year variable compensation granted for the 2019 financial year represents the bonus accrual that will be paid in February 2020. The bonus granted for the 2018 financial
3 The one-time bonus granted in 2019 will be paid out in cash in February 2020. In the year 2018, the one-time bonus was granted as an allocation of treasury shares.
4 Stock-based compensation plans issued annually. The fair value was determined pursuant to the regulations of IFRS 2 “Share-based Payment.” For plans issued annually, the per-
sonnel expenses resulting from share-based payments are presented for the entire term at the time of issue.
5 Dr. Simon Moroney resigned from the Management Board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company, the
Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
542,074
32,654
574,728
455,343
483,616
307,529
372,154
1,114,906
1,487,060
328,859
0
0
0
336,791
300,770
0
1,547,258
158,788
2,280,774
0
336,772
1,002,422
107,263
2,596,745
372,154
1,114,906
1,487,060
328,859
0
0
0
0
0
328,859
107,263
1,923,182
372,154
1,114,906
1,487.060
328,859
0
0
1,347,164
0
1,347,088
3,023,111
107,263
4,617,434
1,663,409
141,203
1,804,612
1,397,264
1,484,023
1,771,675
1,421,287
3,192,962
1,504,457
2,200,000
911,918
0
0
998,726
891,965
0
4,685,170
414,726
6,904,508
0
2,998,687
7,701,870
414,044
1,771,675
1,421,287
3,192,962
328,859
0
0
0
0
0
328,859
414,044
1,771,675
1,421,287
3,192,962
1,553,441
2,200,000
0
3,994,904
0
11,994,748
19,743,093
414,044
11,308,876
3,935,865
23,350,099
233,333
93,551
326,884
44,965
371,849
334,152
135,848
470,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
326,884
204,167
1,000,000
0
0
0
8,000,052
9,204,219
44,965
9,576,068
334,152
135,848
470,000
292,383
200,000
882,580
0
0
882,536
2,257,499
69,805
2,797,304
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
102
P A Y M E N T S D U R I N G T H E F I N A N C I A L Y E A R
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Jens Holstein
Chief Financial Officer
Dr. Malte Peters
Chief Development Officer
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney5, 6
Chief Executive Officer
Resignation: August 31, 2019
Total
in €
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
321,300
31,211
352,511
286,600
121,688
0
0
0
459,882
68,515
880,908
51,594
351,412
626,606
6,065,489
2,205,535
8,082,239
334,152
31,365
365,517
269,892
542,074
32,654
574,728
483,597
368,144
372,154
319,701
691,855
455,343
1,663,409
141,203
1,804,612
1,483,804
970,634
1,771,675
521,599
2,293,274
0
1,397,264
0
0
0
0
182,047
451,939
69,805
887,261
0
0
0
1,035,524
7,556,356
107,263
8,355,474
0
0
0
1,203,153
158,788
1,936,669
0
0
1,941,794
0
0
5,286,579
11,421,297
414,726
414,044
7,505,917
14,128,615
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One-Time Bonus in Shares
One -Year Variable Compensation2
Multi-Year Variable Compensation:
2013 Convertible Bonds Program3
(Vesting Period 4 Years)
2014 Convertible Bonds Program3
(Vesting Period 4 Years)
2015 Long-Term Incentive Program3
(Vesting Period 4 Years)
Other4
Total Variable Compensation
Service Cost
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
326,884
0
0
0
0
0
0
0
44,965
371,849
402,235
46,725
448,960
358,785
273,899
418,324
44,090
462,414
0
337,877
397,800
30,613
428,413
354,822
206,903
413,712
32,892
446,604
0
334,152
2,205,535
2,016,750
223,600
0
0
0
3,061,819
111,233
3,622,012
724,223
0
3,078,850
114,224
3,655,488
0
0
0
0
0
0
0
0
561,725
76,190
1,066,328
334,152
77,787
858,543
1 In 2019, fringe benefits for Dr. Simon Moroney include payments for post-employment benefits.
2 The one-year variable compensation presented here represents the bonus paid in the respective financial year for the previous financial year.
3 The date and value of the payments is the date and value applicable under German tax law. Therefore, this table shows the non-cash benefits arising in the respective financial
year from the difference between the exercise or conversion price and the stock market price at the time of exercising the convertible bonds or at the time of transfer of own
shares from a performance share plan.
4 No compensation recovery claims against the Management Board existed in 2019 or 2018.
5 Dr. Simon Moroney resigned from the Management Board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company, the
Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
6 In 2019, the figures presented for Dr. Simon Moroney do include remuneration from the exercise of convertible bonds and the transfer of treasury stock from a long-term incen-
tive program after his resignation as Chief Executive Officer. These were granted for his activities as a member of the Management Board in previous years.
FIXED REMUNER ATION AND FRINGE BE NE FITS
The non-performance-related remuneration of the Management
Board consists of fixed remuneration and additional fringe bene-
fits, which mainly include the use of company cars and health
subsidies or reimbursement of costs related to health, social
security and occupational disability insurance. The new CEO
Dr. Jean-Paul Kress, who assumed office as of September 1,
2019, received a one-time relocation allowance and reimburse-
ment of costs for tax advice and remuneration advice in connec-
tion with the conclusion of his service contract. In addition, he
receives an ongoing expense allowance for tax advice and
maintaining two households. The Chief Financial Officer, Jens
Holstein, also receives an expense allowance for maintaining
two households.
PENSION E XPENSES
The Company also provides payments to Management Board
members equal to a maximum of 10 % of the member’s fixed
annual salary and, in some cases, plus any payable taxes. This
compensation is intended for the members’ individual retire-
ment plans. Additionally, all Management Board members par-
ticipate in a pension plan in the form of a provident fund, which
was introduced in cooperation with Allianz Pensions-Manage-
ment e.V. The pension obligations of the provident fund will be
met by Allianz Pensions-Management e.V. These pension obli-
gations are not pension benefit plans.
P A Y M E N T S D U R I N G T H E F I N A N C I A L Y E A R
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Chief Financial Officer
Chief Development Officer
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney5, 6
Chief Executive Officer
Resignation: August 31, 2019
Total
in €
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
103
Fixed Compensation
Fringe Benefits1
Total Fixed Compensation
One-Time Bonus in Shares
One -Year Variable Compensation2
Multi-Year Variable Compensation:
2013 Convertible Bonds Program3
(Vesting Period 4 Years)
2014 Convertible Bonds Program3
(Vesting Period 4 Years)
2015 Long-Term Incentive Program3
(Vesting Period 4 Years)
Other4
Total Variable Compensation
Service Cost
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
326,884
402,235
46,725
448,960
358,785
273,899
418,324
44,090
462,414
337,877
397,800
30,613
428,413
354,822
206,903
413,712
32,892
446,604
334,152
0
0
0
0
0
0
0
44,965
371,849
0
0
0
724,223
3,078,850
114,224
3,655,488
2,205,535
2,016,750
223,600
0
0
3,061,819
111,233
3,622,012
0
0
0
0
0
0
0
0
0
561,725
76,190
1,066,328
334,152
77,787
858,543
1 In 2019, fringe benefits for Dr. Simon Moroney include payments for post-employment benefits.
2 The one-year variable compensation presented here represents the bonus paid in the respective financial year for the previous financial year.
3 The date and value of the payments is the date and value applicable under German tax law. Therefore, this table shows the non-cash benefits arising in the respective financial
year from the difference between the exercise or conversion price and the stock market price at the time of exercising the convertible bonds or at the time of transfer of own
shares from a performance share plan.
4 No compensation recovery claims against the Management Board existed in 2019 or 2018.
5 Dr. Simon Moroney resigned from the Management Board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company, the
Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
6 In 2019, the figures presented for Dr. Simon Moroney do include remuneration from the exercise of convertible bonds and the transfer of treasury stock from a long-term incen-
tive program after his resignation as Chief Executive Officer. These were granted for his activities as a member of the Management Board in previous years.
321,300
31,211
352,511
286,600
121,688
0
51,594
0
0
459,882
68,515
880,908
334,152
31,365
365,517
0
269,892
0
0
182,047
0
451,939
69,805
887,261
542,074
32,654
574,728
483,597
368,144
372,154
319,701
691,855
0
455,343
1,663,409
141,203
1,804,612
1,483,804
970,634
1,771,675
521,599
2,293,274
0
1,397,264
0
6,065,489
2,205,535
8,082,239
351,412
0
626,606
0
0
0
1,203,153
158,788
1,936,669
1,035,524
0
7,556,356
107,263
8,355,474
0
0
1,941,794
0
5,286,579
11,421,297
414,726
414,044
7,505,917
14,128,615
PERFORMANCE - BASE D C OMPE NSATION
(SHOR T-TERM INCENTIVE – STI)
Members of the Management Board each receive perfor-
mance-based compensation in the form of an annual bonus
payment of up to 70 % of the gross fixed salary with the full
achievement of the member’s targets. These bonus payments
are dependent on the achievement of corporate targets speci-
fied by the Supervisory Board at the start of each financial year.
They are typically based on targets such as the Company’s per-
formance and the progress of the partnered pipeline and the
Company’s proprietary pipeline. At the start of the year, the
Supervisory Board assesses the degree to which corporate
goals were achieved in the prior year and uses this information
to determine the bonus. The bonus may not exceed 125 % of the
target amount (corresponding to 87.5 % of the gross fixed sala ry).
Performance-based compensation may be reduced to zero when
targets are not achieved. The bonus for the 2019 financial year
will be paid in February 2020.
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
104
LONG -TERM INCENTIVE C OMPENSATION
(LONG -TERM INCENTIVE – LTI)
In 2011, MorphoSys introduced a long-term incentive compen-
sation plan (Performance Share Plan) for the Management
Board and members of the Senior Management Group. The Per-
formance Share Plan is based on the allocation of performance
shares linked to the achievement of predefined performance
targets over a four-year period. Depending on the degree of tar-
get achievement (as described in more detail below), the award
of performance shares is met by transferring treasury shares of
the Company.
The Supervisory Board decides each year on the number of per-
formance shares to be granted to the Management Board. On
April 1, 2019, the members of the Management Board (at that
time consisting of Dr. Simon Moroney, Jens Holstein, Dr. Malte
Peters, and Dr. Markus Enzelberger) were granted a total of
9,347 shares; each member of the Management Board was enti-
tled to a specific number of shares. For further details, please
refer to Note 7.3.6 and the explanations on stock repurchases in
the Corporate Governance Report.
At the time of allocation of shares for a given year, long-term
performance targets are set by the Supervisory Board. For the
2019 Performance Share Plan, the objectives were defined as
the absolute performance of the MorphoSys share price and the
relative performance of the MorphoSys share price compared to
a benchmark index; the benchmark index is comprised equally
of the Nasdaq Biotechnology Index and the TecDAX. The abso-
lute and relative share price performance is measured for each
of the four assessment periods (one year each) by comparing
the average share price of the last 30 trading days before the
start of the assessment period in question (April 1) with the
average share price of the last 30 trading days before the end of
the assessment period. Participants in the performance share
plan earn an entitlement to shares each year, which is valued
on the basis of the absolute share price development as well as
the relative share price development, i.e. a comparison of the
MorphoSys share price development with the benchmark in-
dex. Depending on the absolute and relative share price perfor-
mance during an assessment period, certain (absolute and rela-
tive) tiered levels of target achievement between 10 % and 300 %
can be achieved. Exceeding the target achievement level by
300 % does not grant entitlement to additional shares during
the relevant assessment period (upper limit). At the end of the
four-year term, an overall target achievement level should be
calculated based on the absolute and relative degrees of target
achievement achieved in each period. The average absolute and
relative degrees of target achievement are weighted at 50 %.
Overall target achievement is capped at 200 %.
The final number of performance shares allocated to the Perfor-
mance Share Plan participants is determined at the completion
of the program, which spans four years. This calculation incor-
porates the number of shares initially granted (“grants”) multi-
plied with the total level of target achievement, as well as a
“company factor” that is determined at the Supervisory Board’s
discretion. This company factor is a number between zero and
two that is set by the Supervisory Board based on the Compa-
ny’s situation. The company factor’s predefined default value is
one (1).
In 2017, MorphoSys also introduced a stock option plan as a
further instrument of long-term incentive compensation based
on the resolution of the Annual General Meeting on June 2,
2016 (Agenda Item 9). As of April 1, 2019, the Management
Board (at that time consisting of Dr. Simon Moroney, Jens Hol-
stein, Dr. Malte Peters and Dr. Markus Enzelberger) were
granted a total of 31,395 stock options; each member of the
Management Board received a specific number of stock options,
each of which entitles the Management Board member to re-
ceive up to two MorphoSys shares. On October 1, 2019, the new
CEO Dr. Jean-Paul Kress (CEO since September 1, 2019) was
granted stock options valued at € 1,500,000.00 and an additional
one-time, sign-on stock option package worth € 500,000.00 for a
total of 57,078 stock options. For further details, please refer to
Note 7.1 and the explanations on stock repurchases in the Cor-
porate Governance Report.
In accordance with the resolution of the Annual General Meet-
ing on June 2, 2016 (Agenda Item 9), the stock option plan’s
performance targets include the absolute price performance of
MorphoSys shares and the relative price performance of
MorphoSys shares compared to a benchmark index. The bench-
mark index consists of equal parts of the Nasdaq Biotechnology
Index and the TecDAX. Each performance target has a 50 %
weighting in the achievement of the overall target.
To determine the degree of target achievement for each perfor-
mance target, the four-year vesting period (until the first stock
options can be exercised) is subdivided into four equal periods
of one year each. An arithmetic mean is calculated based on the
degree of target achievement in each of the four years. This, in
turn, determines the final percentage of target achievement for
each performance target. The final percentage of target achieve-
ment for each of the two performance targets are then added
together and divided by two; the result being the overall level of
target achievement.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
105
For the performance target of absolute price performance, a
comparison is made between the average stock price of
MorphoSys shares for the preceding 30 trading days before the
beginning and end of each year in the four-year period. If the
MorphoSys share price increases, the degree of target achieve-
ment can reach up to 200 % calculated on a straight-line basis
for that particular year. Any further positive share price develop-
ment of MorphoSys shares will not lead to any further increase
in the performance target (cap).
For the performance target of relative price performance, the
development of MorphoSys’ share price measured by the aver-
age of the closing prices for the preceding 30 trading days be-
fore the beginning and end of each year in the four-year period
is compared with the development of the benchmark index,
measured by the average of the closing prices of the respective
benchmark index during the last 30 trading days before the
beginning and end of each year in the four-year period. Within
the benchmark index, the Nasdaq Biotech Index and the Tec-
DAX are each weighted at 50 % so that the percentage price de-
velopments of each index for the respective annual period are
added and divided by two. If MorphoSys shares outperform the
benchmark index, the degree of target achievement calculated
on a straight-line basis for the relevant period can reach up to
200 %. Any further positive share price development of
MorphoSys shares versus the benchmark index will not lead to
any further increase in the performance target (cap).
Stock options can only be exercised when the four-year (mini-
mum) vesting period prescribed by law has expired and the
specified minimum value for the degree of target achievement
of a performance target has been exceeded. The ultimate num-
ber of exercisable stock options is calculated by multiplying the
number of initially granted stock options (“grants”) by the total
level of target achievement and rounding up to the nearest
whole number. The resulting ultimate number of stock options
is limited to 200 % of the initially granted number of stock op-
tions. The stock options are settled in the form of Company
shares, with each stock option entitling the holder to one share
for the final number of stock options.
When the stock options are exercised, the exercise price must
be paid for each underlying share. The exercise price corre-
sponds to the average closing auction price of MorphoSys
shares in the 30 trading days prior to the day on which the
stock options were issued.
The terms of the stock option plan provide further details on
the granting and settlement of stock options, the issue of Com-
pany shares from Conditional Capital 2016-III and the adminis-
tration of the stock option plan. For more information, please
refer to the corresponding resolution of the Annual General
Meeting on June 2, 2016 (Agenda Item 9).
MISCELL ANEOUS
No loans or similar benefits were granted during the reporting
year to any member of the Management Board. The members of
the Management Board also did not receive any benefits from
third parties during the reporting year that were either prom-
ised or granted based on their position as members of the Man-
agement Board.
PAYMENTS UP ON TERMINATION OF MANAGEMENT C ONTR AC TS/
CHANGE OF C ONTROL
In the event of the premature termination of a Management
Board member’s service contract, payments, including fringe
benefits, are capped at 200 % of the annual gross fixed salary
and the annual bonus (severance cap), and no more than the
remaining term of the service contract is remunerated. If the
service contract is terminated for good cause for which the
Management Board member is responsible, the member will
not be entitled to any payments. The severance cap should be
calculated on the basis of the total compensation for the previ-
ous full financial year and, if applicable, as well as on the ex-
pected total compensation for the current financial year.
If the service contract of a member of the Management Board
ends by death, his or her spouse or life partner is entitled to the
fixed monthly salary for the month of death and the following
twelve months. In the event of a change of control, the members
of the Management Board may terminate their service con-
tracts for cause and demand payment of the fixed salary and
annual bonus still outstanding up to the end of the service con-
tract, but at least 200 % of the annual gross fixed salary and
annual bonus. Furthermore, in such a case, all stock options and
performance shares granted vest immediately and may be ex-
ercised after the statutory vesting periods or blackout periods
have expired. The following cases are considered to be changes
of control: (i) MorphoSys transfers all or substantially all of its
corporate assets to a non-affiliated company, (ii) MorphoSys
merges with a non-affiliated company, (iii) MorphoSys AG as a
controlled company becomes a party to an agreement pursuant
to Section 291 of the German Stock Corporation Act (AktG) or
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
106
MorphoSys is integrated in accordance with Section 319 of the
German Stock Corporation Act (AktG), or (iv) a shareholder or
third party directly or indirectly holds 30 % or more of the vot-
ing rights of MorphoSys, or at least 30 % of the voting rights are
attributed to the shareholder or third party.
Non-compete clauses have also been agreed with the members
of the Management Board for the period following their depar-
ture. In return, MorphoSys AG is required to make compensa-
tion payments for six months after termination of the service
contract. The compensation payment amounts to 100 % of the
fixed salary for the duration of the non-compete clause.
CHANGE IN THE C OMP OSITION OF THE MANAGEMENT BOARD
The following changes in the composition of the Management
Board occurred in the 2019 reporting year: The (former) Chair-
man of the Management Board of the Company, Dr. Simon
Moroney, resigned as member of the Management Board and
Chief Executive Officer of the Company at the end of August 31,
2019. By resolution of the Supervisory Board on June 24, 2019,
Dr. Jean-Paul Kress was appointed as the new Chief Executive
Officer for a term of three years, from September 1, 2019 to Au-
gust 31, 2022. In November 2019, Dr. Markus Enzelberger an-
nounced his resignation as a member of the Management Board
and the Chief Scientific Officer, effective February 29, 2020.
AGE LIMIT
Members of the Management Board should not be older than 67
years at the time of their appointment. The Supervisory Board
may, however, decide to make an exception to this rule in indi-
vidual cases. The Management Board is currently complying
with the age limit of 67 years.
SUPERVIS ORY BOARD REMUNERAT ION
The remuneration of Supervisory Board members is governed by
our Articles of Association and a corresponding Annual Gene ral
Meeting resolution on Supervisory Board remuneration. The
2019 Annual General Meeting resolved to increase the annual
basic remuneration of the Supervisory Board members. It was
also resolved that participation by telephone or video in a Su-
pervisory Board or committee meeting held by telephone or
video conference should not result in a 50 % reduction in the
attendance fee. Participation in physical meetings in which a
member of the Supervisory Board takes part by telephone or
video shall continue to lead to a 50 % reduction in the atten-
dance fee. In the 2019 financial year, Supervisory Board mem-
bers received fixed compensation, attendance fees and expense
allowances for their participation in Supervisory Board and
committee meetings. Each Supervisory Board member received
annual fixed compensation (€ 98,210 for chairpersons, € 58,926
for vice chairpersons and € 39,284 for all other members) for
their membership of the Supervisory Board. The chair receives
€ 4,000 for each Supervisory Board meeting chaired and the
other members receive € 2,000 for each Supervisory Board
meeting attended. For committee work, the committee chair
receives € 12,000 and other committee members each receive
€ 6,000. Committee members also receive € 1,200 for their par-
ticipation in a committee meeting. Supervisory Board members
residing outside of Europe who personally take part in a Super-
visory Board or committee meeting are entitled to a flat ex-
pense allowance of € 2,000 (plus any sales tax due) for addi-
tional travel time in addition to attendance fees and reimbursed
expenses.
Supervisory Board members are also reimbursed for travel ex-
penses and value-added taxes (VAT) on their compensation.
VOTE ON THE REMUNER ATION SYSTEM FOR THE MANAGEMENT
BOARD (“ SAY ON PAY ”)
The current remuneration system for the members of the Man-
agement Board is unchanged from the remuneration system
approved by the Annual General Meeting on May 19, 2011, with
a majority of over 91 %.
In the 2019 financial year, Supervisory Board members re-
ceived a total of € 633,597 (2018: € 525,428) excluding the re-
imbursement of travel expenses. This amount consists of fixed
compensation and attendance fees for participating in Supervi-
sory Board and committee meetings.
On January 1, 2020, the Act for the Implementation of the Se-
cond Shareholders’ Rights Directive (ARUG II) came into force.
According to the new regulations, the shareholders must re-
solve on a compensation system for the Management Board to
be submitted by the Supervisory Board for the first time at the
2021 Annual General Meeting. MorphoSys is therefore deliber-
ately refraining from presenting a compensation system for the
Management Board at its upcoming Annual General Meeting in
2020. The Supervisory Board intends to use the year 2020 to
develop a remuneration system for the Management Board.
We did not grant any loans to Supervisory Board members.
The table below details the Supervisory Board’s remuneration.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
107
T A B L E 17
Compensation of the Supervisory Board in 2019 and 2018
in €
Dr. Marc Cluzel
Dr. Frank Morich
Michael Brosnan
Sharon Curran2
Dr. George Golumbeski
Wendy Johnson
Krisja Vermeylen
Dr. Gerald Möller3
Klaus Kühn3
TOTAL
Fixed Compensation
Attendance Fees1
Total Compensation
2019
2018
2019
2018
2019
2018
104,210
70,926
51,284
27,791
51,284
47,618
57,284
–
–
76,742
61,004
28,961
–
28,961
46,160
49,916
36,558
17,326
44,400
33,600
34,000
11,600
31,600
35,600
32,400
–
–
32,400
23,200
18,600
–
25,200
37,400
24,400
11,800
6,800
148,610
104,526
85,284
39,391
82,884
83,218
89,684
–
–
109,142
84,204
47,561
–
54,161
83,560
74,316
48,358
24,126
410,397
345,628
223,200
179,800
633,597
525,428
1 The attendance fee contains expense allowances for the attendance at the Supervisory Board and the Committee meetings.
2 Sharon Curran joined the Supervisory Board of MorphoSys AG on June 14, 2019.
3 Dr. Gerald Möller and Klaus Kühn left the Supervisory Board of MorphoSys AG on May 17, 2018.
SHAREHOL DINGS OF MANAGEMEN T BOARD AND
SUPERVIS ORY BOARD MEMBERS
The members of the Management Board and the Supervisory
Board hold more than 1 % of the shares issued by the Company.
All shares, performance shares, stock options and convertible
bonds held by each member of the Management Board and the
Supervisory Board are listed below.
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
108
T A B L E 1 8
Directors’ Holdings
S H A R E S
MANAG EMENT BOARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
SUPERVISORY BOARD
Dr. Marc Cluzel
Dr. Frank Morich
Michael Brosnan
Sharon Curran3
Dr. George Golumbeski
Wendy Johnson
Krisja Vermeylen
TOTAL
S T O C K O P T I O N S
MANAG EMENT BOARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
01/01/2019
Additions
Sales
12/31/2019
–
17,017
12,818
1,676
483,709
515,220
500
1,000
0
–
0
500
350
2,350
0
39,808
0
1,837
0
41,645
250
0
0
0
0
0
0
250
0
37,308
9,505
1,837
0
48,650
0
0
0
0
0
0
0
0
0
19,517
3,313
1,676
-
24,506
750
1,000
0
0
0
500
350
2,600
01/01/2019
Additions
Forfeitures
Exercises
12/31/2019
–
14,673
14,673
11,742
22,395
63,483
57,078
6,936
6,936
6,936
10,587
88,473
0
0
0
0
0
0
0
0
0
0
0
0
57,078
21,609
21,609
18,678
–
118,974
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
109
C O N V E R T I B L E B O N D S
MANAG EMENT BOARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
P E R F O R M A N C E S H A R E S
MANAG EMENT BOARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
01/01/2019
Additions
Forfeitures
Exercises
12/31/2019
–
30,000
0
0
88,386
118,386
0
0
0
0
0
0
0
0
0
0
0
0
0
30,000
0
0
0
30,000
0
0
0
0
–
0
01/01/2019
Additions
Forfeitures
Allocations4
12/31/2019
-
17,936
5,132
7,031
27,050
57,149
0
2,065
2,065
2,065
3,152
9,347
0
0
0
0
0
0
0
7,308
0
1,837
0
9,145
0
12,693
7,197
7,259
-
27,149
1 Dr. Jean-Paul Kress joined the Management Board of MorphoSys AG effective September 1, 2019.
2 Dr. Simon Moroney left the Management Board of MorphoSys AG effective at the end of August 31, 2019. Changes in the number of shares after leaving the Management Board
are not shown.
3 Sharon Curran joined the Supervisory Board of MorphoSys AG on June 14, 2019.
4 Allocations are made as soon as the transfer of performance shares within the six-month exercise period after the end of the four-year waiting period has expired.
The members of our Supervisory Board do not hold stock op-
tions, convertible bonds or performance shares.
shares in accordance with the requirements set forth in the
relevant legal provisions (Article 19 [1a] of the Market Abuse
Regulation [MAR]).
MANAGERS’ T RANSAC T IONS
The members of the Management Board and the Supervisory
Board of MorphoSys AG, as well as persons closely associated
with them, are required to disclose trading in MorphoSys
During the reporting year, MorphoSys received notifications
pursuant to Article 19 (1a) MAR, which are shown in the table
below.
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
110
T A B L E 19
Managers Transactions 2019
Party Sub-
ject to the
Notification
Requirement
Function
Date of
Transaction
in 2019
Type of Transaction
Aggregated
Share Price
Aggregated
Volume
Place of
Transaction
Jens Holstein
Chief Financial
Officer
11/07/2019
Purchase
€ 95.71
€ 239,275.00
Xetra
Dr. Markus
Enzelberger
Chief Scientific
Officer
11/05/2019
Jens Holstein
Chief Financial
Officer
11/04/2019
Jens Holstein
Chief Financial
Officer
11/04/2019
Jens Holstein
Chief Financial
Officer
11/05/2019
Dr. Jean-Paul
Kress1
Chief Executive
Officer
10/07/2019
Disposal of shares (performance shares)
from an expiring long-term incentive program
as part of his remuneration as member of
the Management Board
Purchase of shares based on conversion of
convertible bonds as part of his remunera-
tion as member of the Managing Board
(Convertible Bonds Program 2013)
Disposal of shares resulting from the conver-
sion of convertible bonds from an expiring
program as part of his remuneration as mem-
ber of the Management Board
Disposal of shares (performance shares)
from an expiring long-term incentive program
as part of his remuneration as member of
the Management Board
Acceptance of 57,078 stock options to
subscribe for up to 2 shares each within
the compensation as a Management Board
member (Stock Option Program 2019)
€ 99.42
€ 182,626.55
Xetra
€ 31.88
€ 956,250.00
Outside a
trading venue
€ 99.70
€ 2,991,026.00
Xetra
€ 98.94
€ 723,053.40
Xetra
not numerable
not numerable
Outside a
trading venue
Dr. Marc
Cluzel
Member of the
Supervisory
Board
07/05/2019
Purchase
€ 91.31
€ 22,827.53
Xetra
Jens Holstein
Chief Financial
Officer
04/15/2019
Dr. Markus
Enzelberger
Chief Scientific
Officer
04/15/2019
Dr. Simon
Moroney2
Chief Executive
Officer
04/15/2019
Dr. Simon
Moroney2
Chief Executive
Officer
04/05/2019
Jens Holstein
Chief Financial
Officer
04/05/2019
Dr. Markus
Enzelberger
Chief Scientific
Officer
04/05/2019
Dr. Malte
Peters
Dr. Malte
Peters
Chief Develop-
ment Officer
Chief Develop-
ment Officer
04/05/2019
Allocation of 7,308 shares as part of his
remuneration as member of the Managing
Board (Long-Term Incentive Program 2015)
(issuer’s own shares)
Allocation of 1,837 shares as part of his
remuneration as member of the Managing
Board (Long-Term Incentive Program 2015)
(issuer's own shares)
Allocation of 10,670 shares as part of his
remuneration as member of the Managing
Board (Long-Term Incentive Program 2015)
(issuer’s own shares)
Acceptance of 10,587 stock options to
subscribe for up to 2 shares each within
the compensation as a Management Board
member (Stock Option Program 2019)
Acceptance of 6,936 stock options to
subscribe for up to 2 shares each within
the compensation as a Management Board
member (Stock Option Program 2019)
Acceptance of 6,936 stock options to
subscribe for up to 2 shares each within
the compensation as a Management Board
member (Stock Option Program 2019)
Acceptance of 6,936 stock options to
subscribe for up to 2 shares each within
the compensation as a Management Board
member (Stock Option Program 2019)
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
not numerable
Outside a
trading venue
Outside a
trading venue
Outside a
trading venue
Outside a
trading venue
Outside a
trading venue
Outside a
trading venue
Outside a
trading venue
01/15/2019
Disposal
€ 103.21
€ 980,978.20
Xetra
1 Dr. Jean-Paul Kress joined the Management Board of MorphoSys AG effective September 1, 2019.
2 Dr. Simon Moroney left the Management Board of MorphoSys AG effective at the end of August 31, 2019.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
111
Finally, various platforms in the area of Endpoint Detection &
Respond (EDR), Cloud Access Security Broker (CASB) and Mo-
bile Threat Defense (MTD) were evaluated in order to optimize
our cyber defense measures and expand our commercial capac-
ity. The integration of these new IT security tools started at the
end of 2019.
INFORMAT ION ON THE INTERNAL CONTROL AND RISK
MANAGEMENT SYSTEM WITH REGARD TO THE ACCOUNTING
PROCESS UNDER SECTION 289 (4) AND SECTION 315 (4) HGB
In the 2019 financial year, we completed a routine update of the
documentation for our existing internal control and risk man-
agement system, which helps us maintain adequate internal
control over financial reporting and ensures the availability of
key controls to report financial figures as precisely and accu-
rately as possible. We also expanded this system based on the
SOX regulations (Sarbanes-Oxley Act of 2002, Section 404).
COSO (Committee of Sponsoring Organizations of the Treadway
Commission) defines the corresponding COSO framework (“In-
ternal Control – Integrated Framework”). We use this frame-
work, which is the most commonly used framework for the in-
ternal control of financial reporting.
System constraints make it impossible to give absolute as-
surance that internal controls will always prevent or completely
detect all misrepresentations made in the context of financial
reporting. Internal controls can only provide reasonable as-
surance that financial reporting is reliable and verify that the
financial statements were prepared in accordance with the ap-
plicable IFRS standards endorsed by the European Union (EU)
for external purposes.
The consolidated financial statements are subjected to nu-
merous preparation, review and control processes so that they
can be reported promptly to the market and to shareholders. To
accomplish this, our executives have a coordinated plan for
which all internal and external resources are made available.
We also use a strict principle of double checking to ensure the
accuracy of the key financial ratios reported and the underly-
ing execution of all accounting processes. Numerous rules and
guidelines are also followed to ensure the strict separation of
the planning, posting and execution of financial transactions.
This functional separation of processes is ensured by all of our
operating IT systems we use through an appropriate assign-
ment of rights. External service providers regularly review the
implementation of and compliance with these guidelines and
the efficiency of the accounting processes.
AVOIDING CONF L IC T S OF IN T ERES T
The members of the Management Board and the Supervisory
Board are obligated to refrain from actions that could lead to
conflicts of interest with their responsibilities at MorphoSys AG.
Such transactions or secondary activities of the Management
Board must be disclosed to the Supervisory Board without de-
lay and require the Supervisory Board’s approval. The Supervi-
sory Board in turn must inform the Annual General Meeting of
any conflicts of interest that arise and disclose how they were
dealt with. No conflict of interest arose in the Supervisory
Board in the 2019 financial year.
SHARE REPURCHASES
By resolution of the Annual General Meeting on May 23, 2014,
MorphoSys was authorized, in accordance with Section 71 (1)
no. 8 of the German Stock Corporation Act (AktG), to repur-
chase treasury shares in an amount of up to 10 % of the existing
share capital up to and including April 30, 2019. This authoriza-
tion could be exercised in whole or in part, once or several
times, for the purposes specified in the authorization resolution
by the Company or by a third party on behalf of the Company.
It was at the discretion of the Management Board whether to
carry out the repurchases over the stock exchange, by means of
a public offer or by public tender for the submission of such an
offer.
MorphoSys did not repurchase any of its own shares in the re-
porting year under the authorization granted in 2014.
INF ORMAT ION T ECHNOL OGY
The implementation of SAP Business ByDesign as an integrated
ERP system was successfully completed on schedule at
MorphoSys AG on January 1, 2019. At the same time, we inte-
grated SAP Concur, a travel and expense management solution,
to replace our existing systems for managing absences and
business travel. SAP Business ByDesign and SAP Concur were
successfully rolled out at MorphoSys US Inc. in August 2019.
We also launched various projects to map future business pro-
cesses with SAP Business ByDesign and to introduce additional
systems with special functionalities for our commercial supply
chain.
IT security and compliance continued to be key topics in the
area of information technology during the past year. External
security experts checked the technical security controls to de-
tect potential weaknesses. Within the scope of special on-site
training and phishing simulations, employees learned about
their joint responsibility and essential contribution to IT secu-
rity in our company.
Our internal Computer Emergency Response Team (CERT) has
not detected any serious security incidents during the report-
ing year.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
112
13
Compliance
Management Program
(CMP)
Credo
Code of Conduct
reports,
if required, to
C O M P L I A N C E
O F F I C E R
reports to
C H A I R P E R S O N O F T H E
A U D I T C O M M I T T E E
C H I E F E X E C U T I V E
O F F I C E R
manages the interfaces between the
different components of the CMP
C O M P L I A N C E
R I S K M A N A G E M E N T
S U P E R V I S I O N
+
I M P R O V E M E N T S
C O M P L I A N C E
C O M M I T T E E
CMP
T R A I N I N G S
C O M P L I A N C E
D O C U M E N T S
W H I S T L E B L O W E R
S Y S T E M
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
113
Predicting future events is not the task of our internal control
and risk management system. Our risk management system
does, however, ensure that business risks are detected and as-
sessed early. The risks identified are eliminated or at least
brought to an acceptable level using appropriate corrective
measures. Special attention is given to risks that could jeopar-
dize the Company.
The Management Board ensures that risks are always dealt
with responsibly and keeps the Supervisory Board informed of
all existing risks and their development. Detailed information
on our risks and opportunities can be found in the section
“Risk and Opportunity Report.”
ACCOUN T ING AND EX T ERNAL AUDI T
We prepare our annual financial statements in accordance with
the provisions of the German Commercial Code (HGB) and the
Stock Corporation Act (AktG).
The consolidated financial statements are prepared in accor-
dance with International Financial Reporting Standards
(“IFRS”) and in compliance with the recommendations of the
International Financial Reporting Standards Interpretations
Committee (IFRS IC). We have applied all standards and inter-
pretations that were in force on December 31, 2019 and adopted
by the EU into European law. As of December 31, 2019, there
were no standards or interpretations with an impact on our con-
solidated financial statements as of December 31, 2019 and
2018 that had entered into force but had not yet been adopted
into European law. Therefore, our consolidated financial state-
ments comply with both the IFRS published by the Interna-
tional Accounting Standards Board (IASB) and the IFRS ad-
opted by the EU. In addition, our consolidated financial
statements take into account the supplementary provisions of
German commercial law that are to be applied in accordance
with Section 315e (1) of the German Commercial Code (HGB).
For the election of our auditor, the Audit Committee of the Su-
pervisory Board submits a nomination proposal to the Supervi-
sory Board. At the 2019 Annual General Meeting, Pricewater-
houseCoopers GmbH Wirtschaftsprüfungsgesellschaft was
appointed as auditor for the 2019 financial year. As proof of its
independence, the auditor submitted an Independence Declara-
tion to the Supervisory Board. The lead auditor of these consol-
idated financial statements was Stefano Mulas, who has audited
the consolidated financial statements since 2018.
COMPL IANCE MANAGEMEN T PROGRAM
The basic mechanisms of our Compliance Management Pro-
gram (CMP) are described in the section entitled “Sustainable
Corporate Governance.”
The identification and assessment of compliance risks are an
important part of the CMP and are incorporated into the CMP’s
overall strategic development. Our major compliance-relevant
risk areas are evaluated according to a systematic approach,
taking into account our current business strategy and priori-
ties. During the reporting year, we conducted a compliance risk
analysis that included anti-bribery and corruption risks. Risk
mitigation measures were introduced for the areas of action
identified. Under the CMP, employees are given the opportunity
to report suspected violations of the law within the MorphoSys
Group in a protected manner. In addition to the annual compli-
ance risk analysis, compliance monitoring was carried out for
the first time in the reporting year. In order to prevent compli-
ance violations, employees received periodic training on perti-
nent compliance topics.
In conjunction with the General Data Protection Regulation of
the EU (Regulation [EU] 2016/679 – “GDPR”) which came into
effect on May 25, 2018, we implemented various procedures
since 2018 to safeguard compliance with the GDPR.
›› S E E F I G U R E 13 – Compliance Management Program (CMP) (page 112)
IN T ERNAL AUDI T DEPAR T MEN T
Our Internal Audit Department is an essential element of the
Corporate Governance structure. The Internal Audit Depart-
ment assists us in accomplishing our objectives by prescribing
a systematic approach to evaluating and improving the effec-
tiveness of our risk management, internal control and other
corporate governance processes. The accounting and consult-
ing firm KPMG was appointed as co-sourcing partner for the
internal auditing process in 2019.
The Internal Audit Department executes a risk-based audit plan
that includes the requirements and recommendations of the
Management Board, as well as those of the Supervisory Board’s
Audit Committee.
Our Internal Audit Department reports regularly to the Man-
agement Board. The Head of Internal Audit and the Chief Exec-
utive Officer both report to the Supervisory Board’s Audit Com-
mittee twice a year or on an ad hoc basis when necessary.
PricewaterhouseCoopers GmbH has been our auditor since the
2011 financial year. Information on audit-related fees and all
other fees provided by PricewaterhouseCoopers GmbH to us
during the 2019 financial year can be found in Note 6.1.
Four audits were conducted successfully in the course of 2019.
Some areas requiring action were identified and corrective ac-
tion plans were agreed. The Internal Audit Department has
scheduled three audits for the year 2020.
FINANCIAL STATEMENTS G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
114
Disclosures under Section 289a (1),
Section 315a (1) HGB and Explanatory
Report of the Management Board
under Section 176 (1) Sentence 1 AktG
COMP OSI T ION OF COMMON S T OCK
On December 31, 2019, the Company’s common stock amounted
to € 31,957,958.00 and was divided into 31,957,958 no-par-
value bearer shares. With the exception of the 225,800 trea-
sury shares held by the Company, these bearer shares possess
voting rights, whereby each share grants one vote at the An-
nual General Meeting. The Company’s share capital recorded in
the commercial register as of December 31, 2019, amounted to
€ 31,839,572.00 and was divided into 31,839,572 no-par-value
bearer shares. This amount of share capital does not yet reflect
the increase in share capital and the number of shares resulting
from the exercise of 118,386 conversion rights from convertible
bonds in 2019. On January 20, 2020, the Supervisory Board of
the Company resolved to amend the wording of the Articles of
Association to reflect the higher share capital of € 31,957,958.00
and filed for its entry into the commercial register.
RES T RIC T IONS AF F EC T ING VO T ING RIGH T S AND
T HE T RANSF ER OF SHARES
Our Management Board is not aware of any restrictions that
may affect voting rights, the transfer of shares or any restric-
tions that may emerge from agreements between shareholders.
Voting rights restrictions may also arise from the provisions of
the German Stock Corporation Act (AktG), such as those under
Section 136 AktG, or the provisions for treasury stock under
Section 71b AktG.
SHAREHOL DINGS IN COMMON S T OCK EXCEEDING 10 %
OF VO T ING RIGH T S
We are not aware of nor have we been notified of any direct or
indirect interests in the Company’s common stock that exceed
10 % of the voting rights.
SHARES WI T H SPEC IAL RIGH T S CONF ERRING P OWERS
OF CON T ROL
Shares with special rights conferring powers of control do not
exist.
CON T ROL OVER VO T ING RIGH T S WI T H REGARD
T O EMPL O YEE OWNERSHIP OF C API TAL
Employees who hold shares in the Company exercise their vot-
ing rights directly in accordance with the statutory provisions
and the Articles of Association as do other shareholders.
APP OIN T MEN T AND DISMISSAL OF MANAGEMEN T
BOARD MEMBERS AND AMENDMEN T S T O T HE AR T ICL ES
OF ASS OC IAT ION
The number of Management Board members, their appointment
and dismissal and the nomination of the Chief Executive Officer
are determined by the Supervisory Board in accordance with
Section 6 of the Articles of Association and Section 84 AktG.
Our Management Board currently consists of the Chief Execu-
tive Officer and three other members. Management Board mem-
bers may be appointed for a maximum term of five years. Reap-
pointments or extensions in the term of office are allowed for a
maximum term of five years in each case. The Supervisory
Board may revoke the appointment of a Management Board
member or the nomination of a Chief Executive Officer for good
cause as defined under Section 84 (3) AktG. If a required mem-
ber of the Management Board is absent, one will be appointed
by the court in cases of urgency under Section 85 AktG.
As a rule, the Articles of Association can only be amended by a
resolution of the Annual General Meeting in accordance with
Section 179 (1) sentence 1 AktG. Under Section 179 (2) sentence
2 AktG in conjunction with Section 20 of the Articles of Associa-
tion, our Annual General Meeting resolves amendments to the
Articles of Association generally through a simple majority of
the votes cast and a simple majority of the common stock repre-
sented. If the law stipulates a higher mandatory majority of
votes or capital, this shall be applied. Amendments to the Arti-
cles of Association that only affect their wording can be re-
solved by the Supervisory Board in accordance with Section
179 (1) sentence 2 AktG in conjunction with Section 12 (3) of
the Articles of Association.
P OWER OF T HE MANAGEMEN T BOARD T O ISSUE SHARES
The Management Board’s power to issue shares is granted un-
der Section 5 (5) through (6h) of the Company’s Articles of As-
sociation and the statutory provisions. The Supervisory Board
is authorized to amend the wording of the Articles of Associa-
tion in accordance with the scope of the capital increase from
conditional or authorized capital.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
115
1. Authorized Capital
In the event of an approved capital increase, the Manage-
ment Board is authorized with the Supervisory Board’s con-
sent to determine the further details of the capital increase
and its implementation.
a) Pursuant to Section 5 (5) of the Articles of Association, the
Management Board is authorized with the Supervisory
Board’s consent to increase the Company’s common stock
on one or more occasions by up to € 11,768,314.00 for cash
contributions and/or contributions in kind by issuing up
to 11,768,314 new, no-par-value bearer shares until and
including the date of April 30, 2023 (Authorized Capital
2018-I).
Shareholders are principally entitled to subscription
rights in the case of a capital increase. One or more credit
institutions may also subscribe to the shares with the ob-
ligation to offer the shares to shareholders for subscrip-
tion. With the Supervisory Board’s consent, the Manage-
ment Board is, however, authorized to exclude shareholder
subscription rights
aa) in the case of a capital increase for cash contribution,
to the extent necessary to avoid fractional shares; or
bb) in the case of a capital increase for contribution in
kind; or
cc) in the case of a capital increase for cash contribution
when the new shares are placed on a domestic and/or
foreign stock exchange in the context of a public of-
fering.
The total shares to be issued via a capital increase against
contribution in cash and/or in kind, excluding subscrip-
tion rights and based on the authorizations mentioned
above, shall not exceed 20 % of the common stock. The cal-
culation used is based on either the effective date of the
authorizations or the exercise of the authorizations, which-
ever amount is lower. The 20 % limit mentioned above shall
take into account (i) treasury shares sold excluding sub-
scription rights after the effective date of these authoriza-
tions (unless they service the entitlements of members of
the Management Board and/or employees under employee
participation programs), (ii) shares that are issued from
other authorized capital existing on the effective date of
these authorizations and excluding subscription rights
during the effective period of these authorizations, and
(iii) shares to be issued during the effective period of these
authorizations to service convertible bonds and/or bonds
with warrants whose basis for authorization exists on the
effective date of these authorizations provided that the
convertible bonds and/or bonds with warrants have been
issued with the exclusion of the subscription rights of
shareholders (unless they service the entitlements of
members of the Management Board and/or employees un-
der employee participation programs).
b) Pursuant to Section 5 (6) of the Articles of Association, the
Management Board is authorized with the Supervisory
Board’s consent to increase the common stock of the Com-
pany against contribution in cash once or several times by
a total of up to € 2,915,977.00 until and including April 30,
2022 by issuing up to 2,915,977 new no-par-value bearer
shares (Authorized Capital 2017-I).
Shareholders are principally entitled to subscription
rights in the case of a capital increase. One or more credit
institutions may also subscribe to the shares with the ob-
ligation to offer the shares to shareholders for subscrip-
tion. The Management Board is, however, authorized to
exclude shareholder subscription rights with the Supervi-
sory Board’s consent
aa) to the extent necessary to avoid fractional shares; or
bb) when the issue price of the new shares is not signifi-
cantly below the market price of shares of the same
class already listed and the total number of shares is-
sued against contribution in cash, excluding subscrip-
tion rights, during the term of this authorization does
not exceed 10 % of the common stock on the date this
authorization takes effect or at the time it is exercised,
in accordance with or in the respective application of
Section 186 (3) sentence 4 AktG.
The total number of shares to be issued via capital in-
creases against contribution in cash, excluding subscrip-
tion rights and based on the authorizations mentioned
above, shall not exceed 20 % of the common stock when
calculated based on the authorizations’ effective date or
exercise, whichever amount is lower. This 20 % limit shall
take into account (i) treasury shares sold with the exclu-
sion of subscription rights after the effective date of these
FINANCIAL STATEMENTS
G roup Management Repor t
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
116
authorizations (unless they service the entitlements of
members of the Management Board and/or employees un-
der employee participation programs); (ii) shares to be is-
sued with the exclusion of subscription rights during the
effective period of these authorizations from other autho-
rized capital existing on the effective date of these autho-
rizations or to be resolved by the same Annual General
Meeting resolving these authorizations; and (iii) shares to
be issued during the effective period of these authoriza-
tions to service bonds with conversion or warrant rights,
whose authorization basis exists on the effective date of
these authorizations, to the extent the bonds with conver-
sion or warrant rights were issued with the exclusion of
shareholders’ subscription rights (unless they service the
entitlements of members of the Management Board and/or
employees under employee participation programs).
c) Pursuant to Article 5 (6h) of the Articles of Association,
the Management Board is authorized with the consent of
the Supervisory Board to increase the share capital of the
Company on one or more occasions by a total of up to
€ 159,197.00 by issuing up to 159,197 new no-par-value
bearer shares for cash contributions and/or contributions
in kind until and including April 30, 2024 (Authorized
Capital 2019-I). The subscription right of shareholders is
excluded. The Authorized Capital 2019-I serves the deliv-
ery of shares of the Company to service Restricted Stock
Units (RSUs) granted under the Company’s Restricted
Stock Unit Program (RSUP) exclusively to executives and
employees (including directors and officers) of MorphoSys
US Inc. against contribution of the payment entitlements
that arose under the respective RSUs. The issue price of
the new shares must be at least € 1.00 and may be paid in
cash and/or in kind and especially by contributing claims
against the Company under the RSUP. The Management
Board is authorized with the consent of the Supervisory
Board to determine the further details of the capital in-
crease and its implementation; this also includes deter-
mining the entitlement of the new shares to dividends,
which, in deviation from Section 60 (2) of the German
Stock Corporation Act (AktG), may also be determined for
a financial year that has already ended.
2. Conditional Capital
a) Pursuant to Section 5 (6b) of the Articles of Association,
the Company’s common stock is conditionally increased
by up to € 5,307,536.00, divided into a maximum of
5,307,536 no-par-value bearer shares (Conditional Capital
2016-I). The conditional capital increase serves solely as a
means to grant new shares to the holders of conversion or
warrant rights, which will be issued by the company or
companies in which the Company has a direct or indirect
majority interest according to the authorizing resolution
of the Annual General Meeting on June 2, 2016, under
Agenda Item 7 letter a). The shares will be issued at the
respective conversion or exercise price to be determined
in accordance with the resolution above. The conditional
capital increase will only be carried out to the extent that
the holders of conversion or warrant rights exercise these
rights or fulfill conversion obligations under such bonds.
The shares will be entitled to dividends as of the begin-
ning of the previous financial year, provided they were
issued before the start of the Company’s Annual General
Meeting, or as of the beginning of the financial year in
which they were issued.
b) Pursuant to Section 5 (6e) of the Articles of Association,
the Company’s common stock is conditionally increased
by up to € 156,448.00 through the issue of up to 156,448
new no-par-value bearer shares of the Company (Condi-
tional Capital 2008-III). The conditional capital increase
will only be executed to the extent that holders of the con-
vertible bonds exercise their conversion rights for conver-
sion into ordinary shares of the Company. The new shares
participate in the Company’s profits from the beginning of
the financial year, for which there has been no resolution
on the appropriation of accumulated income at the time of
issuance.
On January 17, 2019, our Supervisory Board resolved to
adjust the conditional capital to reflect the issuance of new
shares in 2018 based on the exercise of 32,537 convertible
bonds. This results in a reduction of the Conditional Capi-
tal 2008-III from € 188,985 to € 156,448, which was en-
tered in the commercial register on February 2, 2019.
c) Pursuant to Section 5 (6g) of the Articles of Association,
the Company’s common stock is conditionally increased
by up to € 995,162.00 through the issue of up to 995,162
new no-par-value bearer shares of the Company (Condi-
tional Capital 2016-III). The conditional capital serves to
meet the obligations of subscription rights that have been
issued and exercised based on the authorization resolved
by the Annual General Meeting of June 2, 2016 under
Agenda Item 9 letter a). The conditional capital increase
will only be executed to the extent that holders of sub-
scription rights exercise their right to subscribe to shares
of the Company. The shares will be issued at the exercise
price set in each case as the issue amount in accordance
with Agenda Item 9 letter a) subparagraph (8) of the Annual
General Meeting’s resolution dated June 2, 2016; Section 9
(1) AktG remains unaffected. The new shares are entitled
to dividends for the first time for the financial year for
which there has been no resolution by the Annual General
Meeting on the appropriation of accumulated income.
Statement on C or por ate G over nance, G roup Statement on C or por ate G over nance and C or por ate G over nance Repor t
G roup Management Repor t
117
P OWER OF MANAGEMEN T BOARD T O REPURCHASE SHARES
The Management Board’s power to repurchase the Company’s
own shares is based on Section 71 AktG and by the authoriza-
tion of the Annual General Meeting of May 23, 2014 that ex-
pired on April 30, 2019.
The Company was until and including the date of April 30, 2019
authorized to repurchase its own shares in an amount of up to
10 % of the common stock existing at the time of the resolution
(or possibly a lower amount of common stock at the time of ex-
ercising this authorization) for any purpose permitted under
the statutory limits. The repurchase was allowed to take place
at the Management Board’s discretion on either the stock ex-
change, through a public offer or public invitation to submit a
bid. The authorization could not be used for the purpose of trad-
ing in the Company’s own shares. The intended use of treasury
stock acquired under this authorization may be found under
Agenda Item 9 of the Annual General Meeting of May 23, 2014.
These shares may be used as follows:
1. The shares may be redeemed without the redemption or its
execution requiring a further resolution of the Annual Gen-
eral Meeting.
2. The shares may be sold other than on the stock exchange or
shareholder offer if the shares are sold for cash at a price that
is not significantly below the market price of the Company’s
shares of the same class at the time of the sale.
3. The shares may be sold for contribution in kind, particularly
in conjunction with company mergers, acquisitions of com-
panies, parts of companies or interests in companies.
4. The shares may be used to fulfill subscription or conversion
rights resulting from the exercise of options and/or conver-
sion rights or conversion obligations for Company shares.
5. The shares may be offered or transferred to employees of the
Company and those of affiliated companies, members of the
Company’s management and those of affiliated companies
and/or used to meet commitments or obligations to purchase
Company shares that were or will be granted to employees of
the Company or those of affiliated companies, members of
the Company’s management or managers of affiliated compa-
nies. The shares may also be used to fulfill obligations or
rights to purchase Company shares that will be agreed with
the Company’s employees, members of the senior manage-
ment and affiliates in the context of employee participation
programs.
If shares are used for the purposes mentioned above, share-
holder subscription rights are excluded, other than in the case
of share redemptions.
MAT ERIAL AGREEMEN T S MADE BY T HE COMPANY T HAT
FAL L UNDER T HE CONDI T ION OF A CHANGE OF CON T ROL
AF T ER A TAKEOVER BID
The Company has not entered into any material agreements
that are subject to a change of control following a takeover bid.
COMPENSAT ION AGREEMEN T S CONCLUDED BY T HE
COMPANY WI T H MANAGEMEN T BOARD MEMBERS AND
EMPL O YEES IN T HE EVEN T OF A TAKEOVER BID
In accordance with the service contracts in force during the
reporting period, the members of the Management Board may
terminate their service contracts following a change of control
and demand the fixed salary and annual bonus still outstand-
ing until the end of the regular term of the service contract,
but at least 200 % of the annual gross fixed salary and annual
bonus. Furthermore, in case of a termination due to a change of
control, all granted stock options, performance shares and
other comparable direct or indirect interests in MorphoSys
with compensation character will vest immediately and may be
exercised after the statutory vesting periods and blackout peri-
ods have expired.
Following a change of control, some members of the Senior
Management Group may terminate their employment contracts
and demand a severance payment in the amount of one annual
gross fixed salary and the full contractual bonus for the
calendar year in which the termination is affected. A target
achievement rate of 100 % is applied. In such a case, all stock
options and performance shares granted will vest immediately
and may be exercised after the statutory vesting periods and
blackout periods have expired. The following cases are consid-
ered as a change of control: (i) MorphoSys transfers all or sub-
stantially all of its corporate assets to a non-affiliated company,
(ii) MorphoSys merges with a non-affiliated company, (iii)
MorphoSys AG as a controlled company becomes a party to an
agreement pursuant to Section 291 of the German Stock Cor-
poration Act (AktG) or MorphoSys is integrated in accordance
with Section 319 of the German Stock Corporation Act (AktG),
or (iv) a shareholder or third party directly or indirectly holds
30 % or more of the voting rights of MorphoSys, or at least 30 % of
the voting rights are attributed to the shareholder or third party.
FINANCIAL STATEMENTS F inancial Statements
118
C ontents
Financial
Statements
C ontents
F inancial Statements
119
S
T
N
E
M
E
T
A
T
S
L
A
I
C
N
A
N
I
F
120
121
122
124
126
n o t e s
128
128
149
152
157
165
168
182
186
Consolidated Statement of Profit or Loss (IFRS)
Consolidated Statement of Comprehensive Income (IFRS)
Consolidated Balance Sheet (IFRS)
Consolidated Statement of Changes in Stockholders’ Equity (IFRS)
Consolidated Statement of Cash Flows (IFRS)
General Information
Summary of Significant Accounting Policies
Segment Reporting
Notes to Profit or Loss
Notes to the Assets of the Balance Sheet
Notes to Equity and Liabilities of the Balance Sheet
Remuneration System for the Management Board
and Employees of the Group
Additional Notes
Responsibility Statement
F inancial Statements
120
C onsolidated Statement of Prof it or Loss (IFRS)
Consolidated Statement of Profit
or Loss (IFRS)
in €
Revenues
Operating Expenses
Cost of Sales
Research and Development
Selling
General and Administrative
Total Operating Expenses
Other Income
Other Expenses
Earnings before Interest and Taxes (EBIT)
Finance Income
Finance Expenses
Income from Reversals of Impairment Losses/(Impairment Losses)
on Financial Assets
Income Tax Benefit/(Expenses)
Consolidated Net Loss
Earnings per Share, basic and diluted
Shares Used in Computing Earnings per Share, basic and diluted
Note
2019
2018
2017
2.7.1, 4.1
71,755,303
76,442,505
66,790,840
2.7.2, 4.2.1
(12,085,198)
(1,796,629)
0
2.7.2, 4.2.2
(108,431,600)
(106,397,017)
(113,313,679)
2.7.2, 4.2.3
2.7.2, 4.2.4
(22,671,481)
(36,664,666)
(6,382,510)
(4,816,038)
(21,927,731)
(15,717,578)
2.7.3, 4.3
2.7.4, 4.3
2.7.5, 4.3
2.7.5, 4.3
2.3.1
2.7.4, 4.4
2.7.7, 4.5
2.7.7, 4.5
(179,852,945)
(136,503,887)
(133,847,295)
804,739
(626,678)
1,644,632
(689,343)
1,119,598
(1,670,792)
(107,919,581)
(59,106,093)
(67,607,649)
2,799,473
(2,272,369)
417,886
(753,588)
712,397
(1,894,852)
872,000
3,506,419
(1,035,000)
4,304,674
0
(1,036,365)
(103,014,058)
(56,172,121)
(69,826,469)
(3.26)
(1.79)
(2.41)
31,611,155
31,338,948
28,947,566
The Notes are an integral part of these consolidated financial statements.
C onsolidated Statement of C omprehensi ve Income (IFRS)
F inancial Statements
121
Consolidated Statement of
Comprehensive Income (IFRS)
in €
2019
2018
2017
Consolidated Net Loss
Items that will not be reclassified to Profit or Loss
(103,014,058)
(56,172,121)
(69,826,469)
Change in Fair Value of Shares through Other Comprehensive Income
(1,160,160)
(127,458)
Items that may be reclassified to Profit or Loss
Foreign Currency Translation Differences from Consolidation
75,332
(83,432)
Change in Unrealized Gains and Losses on Available-for-sale Financial Assets and Bonds
(Thereof € 0 for 2019, € 0 for 2018 and € 86,685 for 2017, respectively, Reclassifications
of realized Gains and Losses to Profit or Loss)
Change of Tax Effects presented in Other Comprehensive Income on Available-for-sale
Financial Assets and Bonds
Change in Unrealized Gains and Losses on Available-for-sale Financial Assets and Bonds,
Net of Tax Effects
Change in Unrealized Gains and Losses on Cash Flow Hedges
(Thereof € 0 for 2019, € 0 for 2018 and € 256,085 for 2017, respectively, Reclassifications
of realized Losses to Profit or Loss)
Change of Tax Effects presented in Other Comprehensive Income on Cash Flow Hedges
Change in Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax Effects
Other Comprehensive Income
Total Comprehensive Income
The Notes are an integral part of these consolidated financial statements.
0
0
54,170
63,659
117,829
(490,164)
130,751
(359,413)
(241,584)
0
0
0
0
0
0
0
0
0
0
0
0
(1,084,828)
(210,890)
(104,098,886)
(56,383,011)
(70,068,053)
F inancial Statements
122
C onsolidated B alance Sheet (IFRS)
Consolidated Balance Sheet
(IFRS)
in €
AS SE TS
Current Assets
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Income Tax Receivables
Other Receivables
Inventories, Net
Prepaid Expenses and Other Current Assets
Total Current Assets
Non-current Assets
Property, Plant and Equipment, Net
Right-of-Use Assets, Net
Patents, Net
Licenses, Net
In-process R&D Programs
Software, Net
Goodwill
Other Financial Assets at Amortized Cost, Net of Current Portion
Shares at Fair Value through Other Comprehensive Income
Prepaid Expenses and Other Assets, Net of Current Portion
Total Non-current Assets
TOTAL AS SE TS
The Notes are an integral part of these consolidated financial statements.
Note
12/31/2019
12/31/2018
2.8.1, 5.1
2.1.2, 5.2
2.1.2, 5.2
2.8.2, 5.3
2.8.2, 5.5
2.8.2, 5.4
2.8.3, 5.5
2.8.4, 5.5
44,314,050
20,454,949
207,735,195
15,081,702
145,817
1,613,254
288,212
45,459,836
44,581,264
268,922,724
17,732,933
161,048
147,449
245,161
14,059,627
11,654,880
303,692,806
388,905,295
2.8.5, 5.6
2.1.2, 2.8.6, 5.7
2.8.7, 5.8.1
2.8.7, 5.8.2
2.8.7, 5.8.3
2.8.7, 5.8.4
2.8.7, 5.8.5
2.1.2, 5.2
2.8.8, 5.9
2.8.9, 5.10
4,652,838
43,160,253
2,981,282
2,350,002
35,683,709
107,137
3,676,233
84,922,176
14,076,836
1,136,030
3,530,709
0
3,938,739
2,526,829
37,019,370
203,807
3,676,233
95,749,059
232,000
2,981,716
192,746,496
149,858,462
496,439,302
538,763,757
C onsolidated B alance Sheet (IFRS)
F inancial Statements
123
in €
Note
12/31/2019
12/31/2018
LIABILITIES AND STO CK HOLDERS' EQUIT Y
Current Liabilities
Accounts Payable and Accruals
Current Portion of Lease Liabilities
Tax Provisions
Other Provisions
Current Portion of Contract Liability
Convertible Bonds due to Related Parties
Total Current Liabilities
Non-current Liabilities
Lease Liabilities, Net of Current Portion
Other Provisions, Net of Current Portion
Contract Liability, Net of Current Portion
Convertible Bonds due to Related Parties
Deferred Tax Liability
Other Liabilities, Net of Current Portion
Total Non-current Liabilities
Total Liabilities
Stockholders’ Equity
Common Stock
Ordinary Shares Issued (31,957,958 and 31,839,572 for 2019 and 2018, respectively)
Ordinary Shares Outstanding (31,732,158 and 31,558,536 for 2019 and 2018, respectively)
Treasury Stock (225,800 and 281,036 shares for 2019 and 2018, respectively), at Cost
Additional Paid-in Capital
Other Comprehensive Income Reserve
Accumulated Deficit
Total Stockholders’ Equity
TOTAL LIABILITIES AND STO CK HOLDERS' EQUIT Y
The Notes are an integral part of these consolidated financial statements.
2.9.1, 6.1
2.1.2, 2.8.6, 5.7
2.9.2, 6.2
2.9.1, 6.2
2.9.3, 6.3
2.9.5
57,041,902
2,515,097
94,732
323,000
1,570,801
12,324
44,760,615
0
208,034
160,411
794,230
0
61,557,856
45,923,290
2.1.2, 2.8.6, 5.7
40,041,581
2.9.1, 6.2
2.9.4, 6.3
2.9.5
2.9.6, 4.4
2.9.7, 6.4
23,166
114,927
0
0
0
40,179,674
101,737,530
0
23,166
158,024
71,517
3,507,233
707,893
4,467,833
50,391,123
2.9.8, 6.5.1
31,957,958
31,839,572
2.9.8, 6.5.4
2.9.8, 6.5.5
2.9.8, 6.5.7
2.9.8, 6.5.8
(8,357,250)
628,176,568
(1,295,718)
(10,398,773)
619,908,453
(210,890)
(255,779,786)
(152,765,728)
394,701,772
488,372,634
496,439,302
538,763,757
F inancial Statements
124
C onsolidated Statement of Changes in Stockholder s ’ Equit y (IFRS)
Consolidated Statement of Changes
in Stockholders’ Equity (IFRS)
BAL ANCE AS OF JANUARY 1, 2017
29,159,770
29,159,770
396,010
(14,648,212)
428,361,175
136,101
(27,548,669)
415,460,165
Common Stock
Note
Shares
€
Treasury Stock
Shares
Additional
Paid-in Capital
Revaluation
Reserve
Other Compre-
hensive In-
come Reserve
Accumulated
Stockholders’
Deficit
Total
Equity
€
Compensation Related to the Grant of Stock Options, Convertible Bonds
and Performance Shares
Exercise of Convertible Bonds Issued to Related Parties
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Members of the Management Board
Reserves:
Change in Unrealized Gains and Losses on Available-for-sale Financial Assets
and Bonds, Net of Tax Effects
Change in Unrealized Gains on Cash Flow Hedges, Net of Tax Effects
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2017
Application of IFRS 9
Application of IFRS 15
BAL ANCE AS OF JANUARY 1, 2018
Capital Increase, Net of Issuance Cost of € 15,038,362
Compensation Related to the Grant of Stock Options and Performance Shares
Exercise of Convertible Bonds Issued to Related Parties
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Related Parties
Reserves:
Change in Fair Value of Shares through Other Comprehensive Income
Foreign Currency Losses from Consolidation
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2018
BAL ANCE AS OF JANUARY 1, 2019
Compensation Related to the Grant of Stock Options and Performance Shares
Exercise of Convertible Bonds Issued
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Related Parties
Reserves:
Change in Fair Value of Shares through Other Comprehensive Income
Foreign Currency Gains from Consolidation
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2019
The Notes are an integral part of these consolidated financial statements.
0
261,015
0
261,015
0
0
0
0
0
0
0
0
0
0
0
0
29,420,785
29,420,785
319,678
(11,826,981)
438,557,856
(97,375,138)
358,671,039
0
0
29,420,785
2,386,250
0
32,537
0
0
29,420,785
2,386,250
0
32,537
0
0
0
0
0
0
0
0
0
0
0
0
31,839,572
31,839,572
0
118,386
31,839,572
31,839,572
0
118,386
0
0
0
0
0
0
0
0
0
0
0
0
7.1, 7.3
7.2
7.3.1
5.9, 6.5.7
6.5.7
6.5.8
7.1, 7.3
7.2, 7.5
6.5.4, 7.3.2, 7.5
6.5.4, 7.3.8
5.9, 6.5.7
6.5.7
6.5.8
31,957,958
31,957,958
225,800
(8,357,250)
628,176,568
(1,295,718)
(255,779,786)
(61,871)
(14,461)
2,286,752
534,479
4,974,599
8,043,313
(2,286,752)
(534,479)
319,678
(11,826,981)
(17,219)
(21,423)
636,414
791,794
438,557,856
176,189,256
5,584,969
1,004,580
(636,414)
(791,794)
281,036
281,036
(10,398,773)
(10,398,773)
(52,328)
(2,908)
1,934,043
107,480
619,908,453
619,908,453
6,654,470
3,655,168
(1,934,043)
(107,480)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
117,829
(359,413)
(241,584)
(105,483)
105,483
(69,826,469)
(69,826,469)
(353,483)
1,135,014
(96,593,607)
(127,458)
(83,432)
(210,890)
(210,890)
(210,890)
(56,172,121)
(56,172,121)
(152,765,728)
(152,765,728)
(1,160,160)
75,332
(1,084,828)
(103,014,058)
(103,014,058)
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4,974,599
8,304,328
0
0
0
0
0
0
117,829
(359,413)
(69,826,469)
(70,068,053)
(248,000)
1,135,014
359,558,053
178,575,506
5,584,969
1,037,117
(127,458)
(83,432)
(56,172,121)
(56,383,011)
488,372,634
488,372,634
6,654,470
3,773,554
(1,160,160)
75,332
(103,014,058)
(104,098,886)
394,701,772
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
C onsolidated Statement of Changes in Stockholder s ’ Equit y (IFRS)
F inancial Statements
125
Treasury Stock
Shares
€
Additional
Paid-in Capital
€
Revaluation
Reserve
€
Other Compre-
hensive In-
come Reserve
€
Accumulated
Deficit
€
Total
Stockholders’
Equity
€
Consolidated Statement of Changes
in Stockholders’ Equity (IFRS)
Common Stock
Note
Shares
261,015
261,015
29,420,785
2,386,250
29,420,785
2,386,250
32,537
32,537
31,839,572
31,839,572
31,839,572
31,839,572
118,386
118,386
7.1, 7.3
7.2
7.3.1
5.9, 6.5.7
6.5.7
6.5.8
7.1, 7.3
7.2, 7.5
6.5.4, 7.3.2, 7.5
6.5.4, 7.3.8
5.9, 6.5.7
6.5.7
6.5.8
€
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Compensation Related to the Grant of Stock Options, Convertible Bonds
and Performance Shares
Exercise of Convertible Bonds Issued to Related Parties
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Members of the Management Board
Reserves:
Change in Unrealized Gains and Losses on Available-for-sale Financial Assets
and Bonds, Net of Tax Effects
Change in Unrealized Gains on Cash Flow Hedges, Net of Tax Effects
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2017
Application of IFRS 9
Application of IFRS 15
BAL ANCE AS OF JANUARY 1, 2018
Capital Increase, Net of Issuance Cost of € 15,038,362
Compensation Related to the Grant of Stock Options and Performance Shares
Exercise of Convertible Bonds Issued to Related Parties
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Related Parties
Reserves:
Change in Fair Value of Shares through Other Comprehensive Income
Foreign Currency Losses from Consolidation
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2018
BAL ANCE AS OF JANUARY 1, 2019
Compensation Related to the Grant of Stock Options and Performance Shares
Exercise of Convertible Bonds Issued
Transfer of Treasury Stock for Long-Term Incentive Program
Transfer of Treasury Stock to Related Parties
Reserves:
Change in Fair Value of Shares through Other Comprehensive Income
Foreign Currency Gains from Consolidation
Consolidated Net Loss
Total Comprehensive Income
BAL ANCE AS OF DECEMBER 31, 2019
The Notes are an integral part of these consolidated financial statements.
BAL ANCE AS OF JANUARY 1, 2017
29,159,770
29,159,770
396,010
(14,648,212)
428,361,175
136,101
0
0
(61,871)
(14,461)
0
0
2,286,752
534,479
4,974,599
8,043,313
(2,286,752)
(534,479)
0
0
0
0
0
0
0
0
0
0
0
0
29,420,785
29,420,785
319,678
(11,826,981)
438,557,856
0
0
0
0
319,678
(11,826,981)
0
0
0
(17,219)
(21,423)
0
0
0
0
0
0
0
636,414
791,794
0
0
0
0
281,036
281,036
(10,398,773)
(10,398,773)
0
0
(52,328)
(2,908)
0
0
0
0
0
0
1,934,043
107,480
0
0
0
0
0
0
438,557,856
176,189,256
5,584,969
1,004,580
(636,414)
(791,794)
0
0
0
0
619,908,453
619,908,453
6,654,470
3,655,168
(1,934,043)
(107,480)
0
0
0
0
31,957,958
31,957,958
225,800
(8,357,250)
628,176,568
0
0
0
0
117,829
(359,413)
0
(241,584)
(105,483)
105,483
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(127,458)
(83,432)
0
(210,890)
(210,890)
(210,890)
0
0
0
0
(1,160,160)
75,332
0
(1,084,828)
(27,548,669)
415,460,165
0
0
0
0
0
0
(69,826,469)
(69,826,469)
4,974,599
8,304,328
0
0
117,829
(359,413)
(69,826,469)
(70,068,053)
(97,375,138)
358,671,039
(353,483)
1,135,014
(96,593,607)
0
0
0
0
0
0
0
(56,172,121)
(56,172,121)
(152,765,728)
(152,765,728)
0
0
0
0
0
0
(103,014,058)
(103,014,058)
(248,000)
1,135,014
359,558,053
178,575,506
5,584,969
1,037,117
0
0
(127,458)
(83,432)
(56,172,121)
(56,383,011)
488,372,634
488,372,634
6,654,470
3,773,554
0
0
(1,160,160)
75,332
(103,014,058)
(104,098,886)
394,701,772
(1,295,718)
(255,779,786)
F inancial Statements
126
C onsolidated Statement of Cash Flows (IFRS)
Consolidated Statement of
Cash Flows (IFRS)
In €
OPER ATING AC TIVITIES:
Consolidated Net Loss
Adjustments to Reconcile Net Loss to Net Cash Provided by/
(Used in) Operating Activities:
Note
2019
2018
2017
(103,014,058)
(56,172,121)
(69,826,469)
Impairment of Assets
5.6, 5.8
2,317,489
24,033,479
9,863,582
Depreciation and Amortization of Tangible and Intangible Assets
and of Right-of-Use Assets
Net (Gain)/Loss of Financial Assets at Fair Value through
Profit or Loss
(2017: Available-for-sales Financial Assets)
Net (Gain)/Loss of Financial Assets at Amortized Cost
(Income) from Reversals of Impairment Losses/Impairment
Losses on Financial Assets
Proceeds from Derivative Financial Instruments
Net (Gain)/Loss on Derivative Financial Instruments
Net (Gain)/Loss on Sale of Property, Plant and Equipment
Non-cash Income from Recognition of previously unrecognized
Intangible Assets
Recognition of Contract Liability
(2017: Recognition of Deferred Revenue)
Share-based Payment
Income Tax (Benefit)/Expenses
Changes in Operating Assets and Liabilities:
Accounts Receivable
Prepaid Expenses and Other Assets, Tax Receivables and
Other Receivables
Accounts Payable and Accruals, Lease Liabilities, Tax Provisions
and Other Provisions
Other Liabilities
Contract Liability
(2017: Deferred Revenue)
Income Taxes Paid
Net Cash Provided by/(Used in) Operating Activities
5.6, 5.7, 5.8
6,245,162
3,750,259
4,028,948
5.2
5.2
2.3.1
5.4
5.4
5.9
6.3
4.2.5, 7
4.4
5.3
(752,257)
705,952
(872,000)
931,595
(1,261,618)
(21,408)
79,330
0
1,035,000
(488,201)
121,717
(24,093)
84,841
0
0
(589,134)
919,042
11,314
0
(350,000)
0
(5,335,977)
6,654,470
(3,506,419)
(1,993,763)
5,584,969
(4,304,674)
(19,595,746)
4,974,599
1,036,365
2,667,232
(6,610,625)
1,362,347
5.4, 5.5
(4,422,409)
545,816
1,807,670
6.1, 6.2
6.4
6.3
13,202,429
316,288
1,890,046
(2,718,825)
7,819,386
3,133,558
6,069,450
(62,560)
2,386,009
(33,837)
18,385,824
(1,861,982)
(80,138,639)
(33,269,514)
(38,445,855)
The Notes are an integral part of these consolidated financial statements.
C onsolidated Statement of Cash Flows (IFRS)
F inancial Statements
127
In €
INVESTING AC TIVITIES:
Purchase of Financial Assets at Fair Value through Profit or Loss
(2017: Available-for-sale Financial Assets)
Proceeds from Sales of Financial Assets at Fair Value through
Profit or Loss
(2017: Available-for-sale Financial Assets)
Proceeds from Sales of Bonds, Available-for-sale
Purchase of Other Financial Assets at Amortized Cost
(2017: Financial Assets Classified as Loans and Receivables)
Proceeds from Sales of Other Financial Assets at Amortized Cost
(2017: Financial Assets Classified as Loans and Receivables)
Purchase of Property, Plant and Equipment
Proceeds from Sales of Property, Plant and Equipment
Purchase of Intangible Assets
Purchase of Shares at Fair Value through Other
Comprehensive Income
Interest Received
Net Cash Provided by/(Used in) Investing Activities
FINANCING AC TIVITIES:
Proceeds of Share Issuance
Cost of Share Issuance
Proceeds in Connection with Convertible Bonds Granted
to Related Parties
Principal Elements of Lease Payments
Interest Paid
Net Cash Provided by/(Used in) Financing Activities
Effect of Exchange Rate Differences on Cash
Increase/(Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of the Period
Cash and Cash Equivalents at the End of the Period
Note
2019
2018
2017
(28,305,339)
(84,511,324)
(56,406,580)
53,159,814
126,388,925
0
0
33,231,500
6,500,000
(246,461,961)
(366,810,000)
(108,000,000)
318,720,000
(3,103,330)
20,469
(562,314)
(15,004,996)
90,156
149,980,211
(1,820,749)
28,444
(644,575)
(9,458)
136,124
78,552,499
(177,262,402)
170,498,593
(1,317,058)
84
(11,831,789)
0
257,752
32,932,502
0
0
193,613,868
(15,038,362)
0
(15,525)
3,714,361
(2,349,801)
(1,011,321)
353,239
87,115
(1,145,786)
45,459,836
44,314,050
1,020,849
8,189,345
0
(134,269)
179,462,086
(59,463)
(31,129,293)
76,589,129
45,459,836
0
0
8,173,820
0
2,660,467
73,928,661
76,589,129
5.6
5.8
5.9
7.2
5.7
5.7
The Notes are an integral part of these consolidated financial statements.
F inancial Statements
128
Notes
Notes
1 General Information
BUSINE SS AC T IVI T IE S AND T HE COMP ANY
MorphoSys AG (“the Company” or “MorphoSys”) develops and applies
technologies for generating therapeutic antibodies. The Company has
a proprietary portfolio of compounds and a pipeline of compounds
developed with partners from the pharmaceutical and biotechnology
industry. MorphoSys was founded as a German limited liability com-
pany in July 1992. In June 1998, MorphoSys became a German stock
corporation. In March 1999, the Company completed its initial public
offering on Germany’s “Neuer Markt”: the segment of the Deutsche
Börse at that time designated for high-growth companies. On Janu-
ary 15, 2003, MorphoSys AG was admitted to the Prime Standard seg-
ment of the Frankfurt Stock Exchange. On April 18, 2018, MorphoSys
completed an IPO on the Nasdaq Global Market through the issue of
American Depositary Shares (ADS). MorphoSys AG’s registered office
is located in Planegg (district of Munich), and the registered business
address is Semmelweisstrasse 7, 82152 Planegg, Germany. The Com-
pany is registered in the Commercial Register B of the District Court of
Munich under the number HRB 121023.
The consolidated financial statements as of December 31, 2019 and 2018,
as well as each of the years in the three-year period ended Decem-
ber 31, 2019, pertain to MorphoSys AG and its subsidiaries (collectively,
the “MorphoSys Group” or the “Group”).
In preparing the consolidated financial statements in accordance with
IFRS, the Management Board is required to make certain estimates
and assumptions, which have an effect on the amounts recognized in
the consolidated financial statements and the accompanying Notes.
The actual results may differ from these estimates. The estimates and
underlying assumptions are subject to continuous review. Any changes
in estimates are recognized in the period in which the changes are
made and in all relevant future periods.
The annual financial statements of the foreign Group companies are
prepared in their respective functional currencies and converted into
euros prior to their consolidation. The consolidated financial statements
were prepared in euros.
The annual financial statements are based on historical cost, with the
exception of the following assets and liabilities, which are recorded at
their respective fair values: derivative financial instruments and financ-
ial assets at fair value. All figures in this report have been rounded to
the nearest euro, thousand euros or million euros.
Unless stated otherwise, the accounting policies set out below have been
applied consistently to all periods presented in these consoli dated finan-
cial statements.
2 Summary of Significant Accounting
Policies
2.1 B ASI S OF AND CHANGE S IN ACCOUN T ING S TANDARD S
2 .1.1 B ASIS OF APPLICATION
These consolidated financial statements were prepared in accordance
with the International Financial Reporting Standards (“IFRS”), taking
into account the recommendations of the International Financial Report-
ing Standards Interpretations Committee (IFRS IC). We have applied all
standards and interpretations that were in force as of December 31,
2019 and adopted by the European Union (EU). As of December 31, 2019,
there were no standards or interpretations that affected our consoli-
dated financial statements for the years ended December 31, 2019, 2018
and 2017 that were in effect but not yet endorsed into European law. As
a result, our consolidated financial statements comply with both the
IFRSs published by the International Accounting Standards Board
(IASB) and those adopted by the EU. These consolidated financial state-
ments also take into account the supplementary provisions under com-
mercial law, which must be applied in accordance with Section 315e (1)
of the German Commercial Code (Handelsgesetzbuch – HGB). In accor-
dance with the regulations of the United States Securities and Exchange
Commission, the statement of profit or loss is presented for a compara-
tive period of three years. This extends beyond the comparative period
of two years in accordance with the requirements of IFRS as adopted
by the EU.
Notes
F inancial Statements
129
2 .1.2 C HANGES IN AC C OUNTING P OLICIES AND DISCLOSURES
The accounting principles applied generally correspond to the policies
used in the prior year.
N E W O R R E V I S ED STA N DA R DS A N D I N T ER P R E TAT I O N S A D O P T ED F O R
T H E FI RST T I M E I N T H E FI N A N C I A L Y E A R
Standard/Interpretation
IFRS 9 (A)
IFRS 16
IAS 19 (A)
IAS 28 (A)
IFRIC 23
(A) Amendments
Prepayment Features with Negative Compensation
Leases
Plan Amendment, Curtailment or Settlement
Long-term Interests in Associates and Joint Ventures
Uncertainty over Income Tax Treatments
Annual Improvements to IFRS Standards 2015 – 2017 Cycle
Mandatory
Application for
financial years
starting on
01/01/2019
01/01/2019
01/01/2019
01/01/2019
01/01/2019
01/01/2019
Adopted by the
European Union
Impact on
MorphoSys
yes
yes
yes
yes
yes
yes
none
yes
none
none
yes
none
I FRS 16 – L E AS ES
The Group has adopted the new standard on leases, IFRS 16, since Jan-
uary 1, 2019. In the 2018 financial year, leases were accounted for in
accordance with IAS 17 and the associated interpretations (IFRIC 4,
SIC 15, and SIC 27). Leases recognized as operating leases under
IAS 17 until December 31, 2018 were recognized as lease liabilities in
the Group upon the first-time adoption of IFRS 16. In accordance with
IAS 17, payments made under operating leases less incentives were
recognized in the statement of profit or loss on a straight-line basis
over the term of the lease.
IFRS 16 was applied for the first time as of January 1, 2019, using the
modified retrospective method. The Group has not retrospectively
adjusted comparative amounts for the 2018 financial year and, in accor-
dance with IFRS 16.C8 (b) (ii), recognized the right-of-use assets in the
amount of the lease liabilities on January 1, 2019. Exemptions in accor-
dance with IFRS 16.C9 (a) for low-value leases and IFRS 16.C10 for leases
previously classified as operating leases in accordance with IAS 17 have
been applied. Leases entered into prior to the transition date were not
reassessed to determine whether an agreement contains or is a lease at
the time of initial adoption but instead retains the assessment previ-
ously made under IAS 17.
The Group assesses whether an agreement constitutes or contains a
lease at the time of the agreement’s inception. The following categories
of leases have been identified where the transition to IFRS 16 as of
January 1, 2019 resulted in the recognition of leases previously recog-
nized as operating leases as leases under the new standard: buildings,
vehicles and technical equipment. For agreements concluded after Jan-
uary 1, 2019, the assessment of whether an agreement contains or is a
lease is made in accordance with IFRS 16. This is the case if the agree-
ment entitles the holder to control the use of an identified asset for a
specified period of time in return for the payment of a fee.
The lease liability was measured at its present value as of January 1,
2019. To determine the present value, the remaining lease payments
were discounted to January 1, 2019 using the lessee’s incremental
borrowing rate. The weighted-average interest rate was 2.17 % and
was based primarily on hypothetical bank loans granted for an asset
with a value and term comparable to the right-of-use assets.
F inancial Statements
130
Notes
Based on the operating lease obligations as of December 31, 2018, the
following reconciliation to the opening balance sheet value of the lease
obligations resulted as of January 1, 2019.
in 000’ €
Lease Liabilities
Operating Lease Commitments disclosed as of December 31, 2018
Commitments for Not Identifiable Assets
Leases of Low Value Assets, Expensed on a Straight-Line Basis
Other
Lease Liabilities, undiscounted, as of January 1, 2019
Adjustments as a Result of Different Assessment of Extension Options
Gross Lease Liabilities as of January 1, 2019
Discounting
Lease Liabilities as of January 1, 2019
thereof short-term
thereof long-term
22,530
(90)
(56)
28
22,412
26,855
49,267
(8,484)
40,783
2,026
38,757
For one building, extension options (twice five years after a minimum
lease period of ten years) were included in the determination of the lease
liability as of January 1, 2019, as it is sufficiently certain that these
options will be exercised. This assessment is based on the fact that
extensive conversion work has been carried out on this building to
meet the Group’s requirements. Consequently, there is only a limited
number of alternatives to the existing building.
As a result of the first-time adoption of IFRS 16 as of January 1, 2019,
right-of-use assets and lease liabilities of € 40.8 million were recognized
in the balance sheet. In addition, current prepaid expenses of € 0.4 mil-
lion and non-current prepaid expenses of € 2.1 million resulting from
rent paid in advance were reclassified to the capitalized right-of-use
assets as of January 1, 2019. Other current liabilities of € 0.1 million and
other non-current liabilities of € 0.7 million from deferred rent-free
periods were offset against the right-of-use assets as of January 1, 2019.
These reclassifications as of January 1, 2019 resulted in right-of-use
assets (€ 42.5 million) and lease liabilities (€ 40.8 million) in differing
amounts and, consequently, deferred tax liabilities of € 0.2 million.
IFRS 16 has a significant effect on the components of the consolidated
financial statements and the presentation of the net assets, financial
position and results of operations. With the increase in total assets, the
equity ratio has declined. The first-time adoption of IFRS 16 had no effect
on the amount of equity as of January 1, 2019 and no material impact on
the Group EBIT.
The Group determines whether to consider each uncertain tax treat-
ment separately or together with one or more other uncertain tax treat-
ments and uses the approach that better predicts the resolution of the
uncertainty.
The Group applies significant judgement in identifying uncertainties
over income tax treatments. Since the Group operates in a complex
multination environment, it assessed whether the interpretation had
an impact on the consolidated financial statements.
Upon adoption of the interpretation, the Group considered whether it
has any uncertain tax positions, particularly those relating to transfer
pricing.
N E W O R R E V I S ED STA N DA R DS A N D I N T ER P R E TAT I O N S N OT Y E T
M A N DATO R I LY A P P L I CA B L E
The following new or revised standards and interpretations that were
not yet mandatory in the reporting period or have not yet been adopted
by the European Union, have not been applied prematurely. The effects
on the consolidated financial statements of standards marked with “yes”
are considered probable and are currently being examined by the Group.
Only significant effects are described in more detail. The effects on the
consolidated financial statements of the extensions to IAS 1 and IAS 8
are not considered material and, therefore, not explained separately.
Standards with the comment “none” are not expected to have a material
impact on the consolidated financial statements.
I FR I C 23 – U N C ERTA I N T Y OV ER I N C O M E TA X T R E AT M EN T
The interpretation addresses the accounting for income taxes when tax
treatments involve uncertainty that affects the application of IAS 12
Income Taxes. It does not apply to taxes or levies outside the scope of
IAS 12, nor does it specifically include requirements relating to interest
and penalties associated with uncertain tax treatments. The interpre-
tation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately
• The assumptions an entity makes about the examination of tax treat-
ments by taxation authorities
• How an entity determines taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits and tax rates
• How an entity considers changes in facts and circumstances
Notes
Standard/Interpretation
IFRS 3 (A)
IFRS 9, IAS 39 and IFRS 7
IFRS 17
IAS 1 and IAS 8 (A)
Business Combinations
Interest Rate Benchmark Reform
Insurance Contracts
Definition of Material
Mandatory
Application for
financial years
starting on
01/01/2020
01/01/2020
01/01/2021
01/01/2020
Amendments to References to the Conceptual Framework
in IFRS Standards
01/01/2020
F inancial Statements
131
Adopted by the
European Union
Possible
Impact on
MorphoSys
no
yes
no
yes
yes
none
none
none
yes
none
(A) Amendments
2.2 CONS OL IDAT ION PRINC IPL E S
Intercompany balances and transactions and any unrealized gains
arising from intercompany transactions are eliminated when preparing
consolidated financial statements pursuant to IFRS 10.B86. Unrealized
losses are eliminated in the same manner as unrealized gains. Account-
ing policies have been applied consistently for all subsidiaries.
For all contracts and business transactions between Group entities, the
arm’s length principle was applied.
2 .2 .1 C ONSOLIDATE D C OMPANIES AND SC OPE OF C ONSOLIDATION
MorphoSys AG, as the ultimate parent company, is located in Planegg,
near Munich. MorphoSys AG has two wholly owned subsidiaries (collec-
tively referred to as the “MorphoSys Group” or the “Group”): MorphoSys
US Inc. (Boston, Massachusetts, USA) and Lanthio Pharma B.V. (Gron-
ingen, The Netherlands). Additionally, MorphoSys AG’s investment in
Lanthio Pharma B.V. indirectly gives it 100 % ownership in LanthioPep
B.V. (Groningen, The Netherlands).
The consolidated financial statements for the year ended December 31,
2019 were prepared and approved by the Management Board on
March 11, 2020 by means of a resolution. The Management Board
members are Dr. Jean-Paul Kress (Chief Executive Officer), Jens Hol-
stein (Chief Financial Officer) and Dr. Malte Peters (Chief Development
Officer).
Dr. Markus Enzelberger resigned from the management board as of
February 29, 2020.
On March 11, 2020, the Management Board authorized the consolidated
financial statements for issue and passed it through to the Supervisory
Board for review and authorization.
2 .2 .2 C ONSOLIDATION ME THODS
The following Group subsidiaries are included in the scope of consoli-
dation, as shown in the table below.
Company
Lanthio Pharma B.V.
LanthioPep B.V.
MorphoSys US Inc.
Purchase of
Shares/
Establishment
Included in
Basis of
Consolidation
since
May 2015
May 2015
July 2018
05/07/2015
05/07/2015
07/02/2018
These subsidiaries are fully consolidated because they are either di-
rectly or indirectly wholly owned. MorphoSys controls these subsid-
iaries because it possesses full power over the investees. Additionally,
MorphoSys is subject to risk exposure and has rights to variable returns
from its involvement with the investees. MorphoSys also has unlimited
capacity to exert power over the investees to influence their returns.
The Group does not have any entities consolidated as joint ventures
using the equity method as defined by IFRS 11 “Joint Arrangements,”
nor does it exercise a controlling influence as defined by IAS 28 “In-
vestments in Associates and Joint Ventures.”
Assets and liabilities of fully consolidated domestic and international
entities are recognized using Group-wide uniform accounting and val-
uation methods. The consolidation methods applied have not changed
from the previous year.
Receivables, liabilities, expenses and income among consolidated enti-
ties are eliminated in the consolidated financial statements.
2 .2 .3 P RINCIPLES OF FORE IGN CURRE NCY TR ANSL ATION
IAS 21 “The Effects of Changes in Foreign Exchange Rates” governs
the accounting for transactions and balances denominated in foreign
currencies. Transactions denominated in foreign currencies are trans-
lated at the exchange rates prevailing on the date of the transaction.
Any resulting translation differences are recognized in the consolidated
statement of profit or loss. On the reporting date, assets and liabilities
are translated at the closing rate for the financial year. Any foreign ex-
change rate differences derived from these translations are recognized
in the consolidated statement of profit or loss. Other foreign currency
differences at the Group level are recognized in the item “Other Com-
prehensive Income Reserve” (stockholder’s equity).
F inancial Statements
132
Notes
2.3
F INANC IAL INS T RUMEN T S AND F INANC IAL RI SK
MANAGEMEN T
2 .3.1 C RE DIT RISK AND LIQUIDIT Y RISK
Financial instruments in which the Group may have a concentration of
credit and liquidity risk are mainly cash and cash equivalents, financial
assets at fair value, with changes recognized in profit or loss, other
financial assets at amortized cost, derivative financial instruments
and receivables. The Group’s cash and cash equivalents are mainly
denominated in euros. Financial assets at fair value, with changes
recognized in profit or loss and other financial assets at amortized cost
are high quality assets. Cash and cash equivalents, financial assets at
fair value, with changes recognized in profit or loss and other financial
assets at amortized cost are generally held at numerous reputable finan-
cial institutions in Germany. With respect to its positions, the Group
continuously monitors the financial institutions that are its counter-
parties to the financial instruments, as well as their creditworthiness,
and does not anticipate any risk of non-performance.
The changes in impairment losses for credit risks required to be recog-
nized under IFRS 9 (see Note 2.4*) in the statement of profit or loss for
the financial years 2019 and 2018 under the item impairment losses on
financial assets were as follows. Negative values represent additions
and positive values represent reversals of risk provisions. There were no
impairments in the 2019 financial year. The decline in this risk provision
compared with January 1, 2019 resulted from lower premiums for credit
default swaps of counterparties, which are used for the determination
of any impairment losses.
*C R O S S - R E F E R E N C E to page 140
in 000’ €
Stage 1
Stage 2
Stage 3
Stage 2
Stage 3
General Impairment Model
Simplified Impairment Model
Total
Balance as of January 1, 2018
Unused Amounts Reversed
Increase in Impairment Losses for
Credit Risks recognized in Profit or
Loss during the Year
Change between Impairment Stages
Amounts written off during the Year
as uncollectible
Balance as of December 31, 2018
Balance as of January 1, 2019
Unused Amounts Reversed
Increase in Impairment Losses for
Credit Risks recognized in Profit or
Loss during the Year
Change between Impairment Stages
Amounts written off during the Year
as uncollectible
Balance as of December 31, 2019
(136)
0
(570)
41
0
(665)
(665)
445
0
(79)
0
(299)
0
0
(465)
(41)
0
(506)
(506)
427
0
79
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(112)
112
(90)
0
0
(90)
(90)
90
(80)
0
0
(80)
0
0
0
0
0
0
0
0
0
0
0
0
(248)
112
(1,125)
0
0
(1,261)
(1,261)
962
(80)
0
0
(379)
Notes
F inancial Statements
133
The Group recognizes impairment losses for default risks for financial
assets as follows:
Gross Carrying
Amount
(in 000’ €)
Impairment
(in 000’ €)
Carrying
Amount
(in 000’ €)
Average Im-
pairment
Rate
44,314
0
44,314
0.0 %
293,958
15,162
(299)
(80)
293,659
15,082
0.1 %
0.5 %
Gross Carrying
Amount
(in 000’ €)
Impairment
(in 000’ €)
Carrying
Amount
(in 000’ €)
Average Im-
pairment
Rate
43,165
(16)
43,149
0.0 %
275,805
93,102
17,823
(649)
(506)
(90)
275,156
92,596
17,733
0.2 %
0.5 %
0.5 %
The table below shows the accounts receivables by region as of the
reporting date.
in €
12/31/2019
12/31/2018
Europe and Asia
USA and Canada
Other
Impairment
TOTAL
6,984,944
8,176,758
0
(80,000)
15,081,702
13,176,523
4,646,410
0
(90,000)
17,732,933
Balance Sheet Item as of
December 31, 2019
Internal Credit
Rating
Cash and Cash Equivalents
Other Financial Assets at
Amortized Cost
Accounts Receivable
low
low
low
Balance Sheet Item as of
December 31, 2018
Internal Credit
Rating
Cash and Cash Equivalents
Other Financial Assets at
Amortized Cost
Accounts Receivable
Basis for Rec-
ognition of Ex-
pected Credit
Loss Provision
Expected
Twelve-Month
Loss
Expected
Twelve-Month
Loss
Lifetime Expected
Credit Losses
Basis for Rec-
ognition of Ex-
pected Credit
Loss Provision
Expected
Twelve-Month
Loss
Expected
Twelve-Month
Loss
low
low
medium
Lifetime Expected
Credit Losses
Lifetime Expected
Credit Losses
low
The Group is also exposed to credit risk from debt instruments that
are measured at fair value in profit or loss. As of December 31, 2019,
the maximum credit risk corresponded to the carrying amounts of
these investments amounting to € 20.5 million (December 31, 2018:
€ 44.6 million).
One of the Group’s policies requires that all customers who wish to
transact business on credit undergo a credit assessment based on ex-
ternal ratings. Nevertheless, the Group’s revenue and accounts receiv-
able are still subject to credit risk from customer concentration. The
Group’s most significant single customer accounted for € 8.0 million of
accounts receivables as of December 31, 2019 (December 31, 2018:
€ 5.9 million) or 53 % of the Group’s total accounts receivable at the end
of 2019. The Group’s top three single customers individually accounted
for 45 %, 31 % and 13 % of the total revenue in 2019. On December 31,
2018, one customer had accounted for 33 % of the Group’s accounts
receivable. In 2018, the top three customers individually accounted for
65 %, 25 % and 5 % of the Group’s revenue. The top three customers had
individually accounted for 55 %, 25 % and 10 % of the Group’s revenue in
2017. The carrying amounts of financial assets represent the maximum
credit risk.
F inancial Statements
134
Notes
The following table shows the aging of accounts receivable as of the
reporting date. The loss rate for accounts receivable is valued at 0.5 %
as of December 31, 2019 (December 31, 2018: 0.5 %).
in €; due since
12/31/2019
0 – 30 days
12/31/2019
30 – 60 days
12/31/2019
60+ days
12/31/2019
Total
Accounts Receivable
Impairment
Accounts Receivable, Net of Allowance for Impairment
15,161,702
(80,000)
15,081,702
0
0
0
0
0
0
15,161,702
(80,000)
15,081,702
in €; due since
12/31/2018
0 – 30 days
12/31/2018
30 – 60 days
12/31/2018
60+ days
12/31/2018
Total
Accounts Receivable
Impairment
Accounts Receivable, Net of Allowance for Impairment
17,822,933
(90,000)
17,732,933
0
0
0
0
0
0
17,822,933
(90,000)
17,732,933
On December 31, 2019 and December 31, 2018, the Group’s exposure to
credit risk from derivative financial instruments was assessed as low.
The maximum credit risk (equal to the carrying amount) for rent depos-
its and other deposits on the reporting date amounted to € 1.0 million
(December 31, 2018: € 0.7 million).
The following table shows the maturities of accounts payable as of the
reporting date.
in €; due in
Trade Accounts Payable
Convertible Bonds due to Related Parties
in €; due in
Trade Accounts Payable
Convertible Bonds due to Related Parties
Financial assets and financial liabilities were not netted as of Decem-
ber 31, 2019. Currently, there is no legal right to offset amounts recog-
nized, to settle on a net basis, or to realize an asset and settle a liability
simultaneously. There were no financial instruments pledged as col-
lateral as of December 31, 2019. There was no netting potential as of
December 31, 2019 under the scope of the existing netting agreements.
12/31/2019
Between One
and Twelve
Months
10,655,014
12,324
12/31/2018
Between One
and Twelve
Months
7,215,127
71,517
12/31/2019
More than
12 Months
12/31/2019
Total
0
0
10,655,014
12,324
12/31/2018
More than
12 Months
12/31/2018
Total
0
0
7,215,127
71,517
Notes
F inancial Statements
135
2 .3.2 MA RKE T RISK
Market risk represents the risk that changes in market prices, such as
foreign exchange rates, interest rates or equity prices, will affect the
Group’s results of operations or the value of the financial instruments
held. The Group is exposed to both currency and interest rate risks.
C U R R EN CY R I S K
The consolidated financial statements are prepared in euros. Whereas
MorphoSys’s expenses are incurred largely in euros, a portion of the
revenue is dependent on the prevailing exchange rate of the US dollar.
Throughout the year, the Group monitors the necessity to hedge foreign
exchange rates to minimize currency risk and addresses this risk by
using derivative financial instruments.
Under the Group’s hedging policy, highly probable cash flows and
definite foreign currency receivables collectible within a twelve-month
period are tested to determine if they should be hedged. MorphoSys
had begun using foreign currency options and forwards to hedge its
foreign exchange risk against US dollar receivables in 2003. For deriva-
tives with a positive fair value, unrealized gains are recorded in other
receivables and for derivatives with a negative fair value, unrealized
losses are recorded in other liabilities.
As of December 31, 2019, there was one unsettled forward rate agree-
ment with a term of one month (December 31, 2018: nine unsettled
forward rate agreements; December 31, 2017: twelve unsettled forward
rate agreements). The unrealized gross gain from this agreement
amounted to € 0.4 million as of December 31, 2019, and was recorded in
the finance result (December 31, 2018: € 0.1 million unrealized gross
gain; December 31, 2017: € 0.3 million unrealized gross loss).
The table below shows the Group’s exposure to foreign currency risk
based on the items’ carrying amounts.
as of December 31, 2019; in €
Euro
US$
Other
Impairment
Total
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Restricted Cash (included in Other Current Assets)
Accounts Payable and Accruals
TOTAL
26,400,595
4,233,141
251,199,363
14,183,334
713,232
(52,126,110)
244,603,555
17,913,455
16,221,808
41,756,008
978,368
289,537
(4,910,130)
72,249,046
0
0
0
0
0
(5,662)
(5,662)
0
0
(298,000)
(80,000)
(1,000)
0
(379,000)
44,314,050
20,454,949
292,657,371
15,081,702
1,001,769
(57,041.902)
316,467,939
as of December 31, 2018; in €
Euro
US$
Other
Impairment
Total
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Restricted Cash (included in Other Current Assets)
Accounts Payable and Accruals
TOTAL
38,732,565
34,971,116
365,823,783
17,570,035
772,425
(43,638,268)
414,231,656
6,743,271
9,610,148
0
252,898
12,901
(1,122,347)
15,496,871
0
0
0
0
0
0
0
(16,000)
0
(1,152,000)
(90,000)
(3,000)
0
(1,261,000)
45,459,836
44,581,264
364,671,783
17,732,933
782,326
(44,760,615)
428,467,527
F inancial Statements
136
Notes
Different foreign exchange rates and their impact on assets and liabili-
ties were simulated in a sensitivity analysis to determine the effects on
profit or loss. A 10 % increase in the euro versus the US dollar as of
December 31, 2019, would have increased the consolidated net loss by
€ 6.7 million. A 10 % decline in the euro versus the US dollar would
have reduced the consolidated net loss by € 7.9 million.
A 10 % increase in the euro versus the US dollar as of December 31,
2018, would have increased the consolidated net loss by € 1.4 million.
A 10 % decline in the euro versus the US dollar would have reduced the
consolidated net loss by € 1.7 million.
A 10 % increase in the euro versus the US dollar as of December 31,
2017, would have increased the consolidated net loss by € 0.2 million.
A 10 % decline in the euro versus the US dollar would have reduced the
consolidated net loss by € 0.2 million.
I N T ER EST R AT E R I S K
The Group’s risk exposure to changes in interest rates mainly relates
to fixed-term deposits and corporate bonds. Changes in the general level
of interest rates may lead to an increase or decrease in the fair value of
these securities. The Group’s investment focus places the safety of an
investment ahead of its return. Interest rate risks are limited because
all securities can be liquidated within a maximum of two years and
due to the partially fixed interest rates during the term.
Different interest rates and their effects on existing investments with
variable interest rates were simulated in a detailed sensitivity analysis
in order to determine the effects on profit or loss. An increase of the
variable interest rate by 0.5 % would have reduced the consolidated net
loss by € 0.3 million as of December 31, 2019 (December 31, 2018:
€ 0.4 million; December 31, 2017: € 0.6 million). A decrease of the
variable interest rate by 0.5 % would have increased the consolidated
net loss by € 0.3 million as of December 31, 2019 (December 31, 2018:
€ 0.1 million; December 31, 2017: € 0.4 million). Changes in the inter-
est rate had no material impact on equity as of December 31, 2019 or
December 31, 2018.
The Group is not subject to significant interest rate risks from the liabil-
ities currently reported on the balance sheet.
2 .3.3 F AIR VALUE HIE R ARCHY AND ME ASURE ME NT ME THODS
The IFRS 13 “Fair Value Measurement” guidelines must always be
applied when measurement at fair value is required or permitted or
disclosures regarding measurement at fair value are required based
on another IAS/IFRS guideline. The fair value is the price that would
be achieved for the sale of an asset in an arm’s length transaction be-
tween independent market participants or the price to be paid for the
transfer of a liability (disposal or exit price). Accordingly, the fair value
of a liability reflects the default risk (i.e., own credit risk). Measure-
ment at fair value requires that the sale of the asset or the transfer of
the liability takes place on the principal market or, if no such principal
market is available, on the most advantageous market. The principal
market is the market a company has access to that has the highest
volume and level of activity.
Fair value is measured by using the same assumptions and taking into
account the same characteristics of the asset or liability as would an
independent market participant. Fair value is a market-based, not an
entity-specific measurement. The fair value of non-financial assets is
based on the best use of the asset by a market participant. For financial
instruments, the use of bid prices for assets and ask prices for liabilities
is permitted but not required if those prices best reflect the fair value
in the respective circumstances. For simplification, mean rates are
also permitted. Thus, IFRS 13 not only applies to financial assets but
all assets and liabilities.
MorphoSys applies the following hierarchy in determining and disclos-
ing the fair value of financial instruments:
Level 1:
Quoted (unadjusted) prices in active markets for identical
assets or liabilities to which the Company has access.
Inputs other than quoted prices included within Level 1
that are observable for assets or liabilities, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
Inputs for asset or liability that are not based on observable
market data (that is, unobservable inputs).
Level 2:
Level 3:
The carrying amounts of financial assets and liabilities, such as other
financial assets at amortized cost, as well as accounts receivable and
accounts payable, approximate their fair value because of their short-
term maturities.
Notes
F inancial Statements
137
H I ER A RC H Y L E V EL 1
The fair value of financial instruments traded in active markets is
based on the quoted market prices on the reporting date. A market is
considered active if quoted prices are available from an exchange,
dealer, broker, industry group, pricing service or regulatory body that is
easily and regularly accessible and prices reflect current and regularly
occurring market transactions at arm’s length conditions. For assets
held by the Group, the appropriate quoted market price is the buyer’s
bid price. These instruments fall under Hierarchy Level 1 (see Note 5.2*
and 5.9*).
*C R O S S - R E F E R E N C E to page 158 and page 164
H I ER A RC H Y L E V EL S 2 A N D 3
The fair value of financial instruments not traded in active markets
can be determined using valuation methods. In this case, fair value is
estimated using the results of a valuation method that makes maximum
use of market data and relies as little as possible on entity-specific in-
puts. If all significant inputs required for measuring fair value by using
valuation methods are observable, the instrument is allocated to Hierar-
chy Level 2. If significant inputs are not based on observable market
data, the instrument is allocated to Hierarchy Level 3.
Hierarchy Level 2 contains forward exchange contracts to hedge ex-
change rate fluctuations, term deposits and restricted cash. Future cash
flows for these forward exchange contracts are determined based on
forward exchange rate curves. The fair value of these instruments
corresponds to their discounted cash flows. The fair value of the term
deposits and restricted cash is determined by discounting the expected
cash flows at market interest rates.
Financial assets belonging to Hierarchy Level 3 are shown in Note 5.9.*
No financial liabilities were assigned to Hierarchy Level 3.
*C R O S S - R E F E R E N C E to page 164
There were no transfers from one fair value hierarchy level to another
in 2019 or 2018.
The table below shows the fair values of financial assets and liabilities
and the carrying amounts presented in the consolidated balance sheet.
F inancial Statements
138
Notes
December 31, 2019; in 000’ €
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Other Receivables
thereof Financial Assets
thereof Forward Exchange Contracts used for Hedging
Current Assets
Other Financial Assets at Amortized Cost, Net of Current Portion
Shares at Fair Value through Other Comprehensive Income
thereof Shares at Level 1
thereof Shares at Level 3
Prepaid Expenses and Other Assets, Net of Current Portion
thereof Non-Financial Assets
thereof Restricted Cash
Non-current Assets
TOTAL
Accounts Payable and Accruals
Current Portion of Lease Liabilities
Convertible Bonds - Liability Component
Current Liabilities
Lease Liabilities, Net of Current Portion
Non-current Liabilities
TOTAL
Note
5.1
5.2
5.2
5.3
5.4
5.2
5.9
5.10
6.1
5.7
5.7
Hierarchy
Level
Not classified
into a
Measurement
Category
Financial Assets
at Amortized
Cost
Financial Assets
Financial Assets
at Fair Value
at Fair Value
(Through Other
(Through Profit
Comprehensive
or Loss)
Income)
Financial
Liabilities at
Amortized Cost
Financial
Liabilities at
Total Carrying
Fair Value
Amount
Fair value
*
1
*
*
*
2
2
1
3
n/a
2
*
n/a
2
n/a
147
147
147
(2,515)
(40,042)
44,314
0
207,735
15,082
1,217
0
268,348
84,922
0
0
989
85,911
354,259
0
0
0
0
0
* Declaration waived in line with IFRS 7.29 (a). For these instruments the carrying amount is a reasonable approximation of fair value.
** Declaration waived in line with IFRS 7.29 (d) as disclosure is not required for lease liabilities.
December 31, 2018; in 000’ €
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Other Receivables
thereof Financial Assets
thereof Forward Exchange Contracts used for Hedging
Current Assets
Other Financial Assets at Amortized Cost, Net of Current Portion
Shares at Fair Value through Other Comprehensive Income
Prepaid Expenses and Other Assets, Net of Current Portion
thereof Non-Financial Assets
thereof Restricted Cash
Non-current Assets
TOTAL
Accounts Payable and Accruals
Current Liabilities
Convertible Bonds - Liability Component
Non-current Liabilities
TOTAL
Note
Hierarchy
Level
Not classified
into a
Measurement
Category
Financial Assets
at Amortized
Cost
Financial Assets
at Fair Value
(Through Profit
Financial Assets
at Fair Value
(Through Other
Comprehensive
Financial
Financial
Liabilities at
Liabilities at
Total Carrying
or Loss)
Income)
Amortized Cost
Fair Value
Amount
Fair value
5.1
5.2
5.2
5.3
5.4
5.2
5.9
5.10
6.1
*
1
*
*
*
2
2
3
n/a
2
*
2
45,460
0
268,923
17,733
81
0
332,197
95,749
0
711
96,460
428,657
0
0
0
0
0
2,271
2,271
2,271
* Declaration waived in line with IFRS 7.29 (a). For these instruments the carrying amount is a reasonable approximation of fair value.
20,455
396
20,851
20,851
44,581
66
44,647
44,647
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
13,690
387
14,077
14,077
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
232
232
232
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(57,042)
(12)
(57,054)
0
(57,054)
(44,761)
(44,761)
(72)
(72)
(44,833)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
44,314
20,455
207,735
15,082
1,613
1,217
396
289,199
84,922
14,077
13,690
387
1,136
147
989
100,135
389,334
(57,042)
(2,515)
(12)
(59,569)
(40,042)
(40,042)
(99,611)
45,460
44,581
268,923
17,733
147
81
66
376,844
95,749
232
2,982
2,271
711
98,963
475,807
(44,761)
(44,761)
(72)
(72)
(44,833)
20,455
*
*
*
*
396
84,922
13,690
387
n/a
989
*
**
(12)
**
44,581
*
*
*
*
66
95,749
232
n/a
701
*
(72)
December 31, 2019; in 000’ €
Note
Level
Category
Not classified
Hierarchy
Measurement
at Amortized
into a
Financial Assets
Financial Assets
at Fair Value
(Through Profit
or Loss)
Financial Assets
at Fair Value
(Through Other
Comprehensive
Income)
Financial
Liabilities at
Amortized Cost
Financial
Liabilities at
Fair Value
Total Carrying
Amount
Fair value
Notes
F inancial Statements
139
0
20,455
0
0
396
20,851
0
0
0
0
0
20,851
0
0
0
0
0
0
0
0
0
0
0
0
13,690
387
0
14,077
14,077
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(57,042)
(12)
(57,054)
0
(57,054)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
44,314
20,455
207,735
15,082
1,613
1,217
396
289,199
84,922
14,077
13,690
387
1,136
147
989
100,135
389,334
(57,042)
(2,515)
(12)
(59,569)
(40,042)
(40,042)
(99,611)
*
20,455
*
*
*
396
84,922
13,690
387
n/a
989
*
**
(12)
**
December 31, 2018; in 000’ €
Note
Level
Category
Cost
Not classified
Hierarchy
Measurement
at Amortized
into a
Financial Assets
Financial Assets
at Fair Value
(Through Profit
or Loss)
Financial Assets
at Fair Value
(Through Other
Comprehensive
Income)
Financial
Liabilities at
Amortized Cost
Financial
Liabilities at
Fair Value
Total Carrying
Amount
Fair value
0
44,581
0
0
66
44,647
0
0
0
0
44,647
0
0
0
0
0
0
0
0
0
0
0
0
232
0
232
232
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(44,761)
(44,761)
(72)
(72)
(44,833)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
45,460
44,581
268,923
17,733
147
81
66
376,844
95,749
232
2,982
2,271
711
98,963
475,807
(44,761)
(44,761)
(72)
(72)
(44,833)
*
44,581
*
*
*
66
95,749
232
n/a
701
*
(72)
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Other Receivables
thereof Financial Assets
Current Assets
thereof Forward Exchange Contracts used for Hedging
Other Financial Assets at Amortized Cost, Net of Current Portion
Shares at Fair Value through Other Comprehensive Income
thereof Shares at Level 1
thereof Shares at Level 3
thereof Non-Financial Assets
thereof Restricted Cash
Non-current Assets
TOTAL
Accounts Payable and Accruals
Current Portion of Lease Liabilities
Convertible Bonds - Liability Component
Current Liabilities
Lease Liabilities, Net of Current Portion
Non-current Liabilities
TOTAL
Prepaid Expenses and Other Assets, Net of Current Portion
5.10
* Declaration waived in line with IFRS 7.29 (a). For these instruments the carrying amount is a reasonable approximation of fair value.
** Declaration waived in line with IFRS 7.29 (d) as disclosure is not required for lease liabilities.
Cash and Cash Equivalents
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Accounts Receivable
Other Receivables
thereof Financial Assets
Current Assets
thereof Forward Exchange Contracts used for Hedging
Other Financial Assets at Amortized Cost, Net of Current Portion
Shares at Fair Value through Other Comprehensive Income
Prepaid Expenses and Other Assets, Net of Current Portion
thereof Non-Financial Assets
thereof Restricted Cash
Non-current Assets
TOTAL
Accounts Payable and Accruals
Current Liabilities
Convertible Bonds - Liability Component
Non-current Liabilities
TOTAL
* Declaration waived in line with IFRS 7.29 (a). For these instruments the carrying amount is a reasonable approximation of fair value.
5.1
5.2
5.2
5.3
5.4
5.2
5.9
6.1
5.7
5.7
5.1
5.2
5.2
5.3
5.4
5.2
5.9
5.10
6.1
n/a
2
n/a
*
2
n/a
*
1
*
*
*
2
2
1
3
*
1
*
*
*
2
2
3
*
2
147
147
147
(2,515)
(40,042)
n/a
2
2,271
2,271
2,271
Cost
44,314
207,735
15,082
1,217
268,348
84,922
989
85,911
354,259
45,460
0
268,923
17,733
81
0
0
332,197
95,749
711
96,460
428,657
0
0
0
0
0
0
0
0
0
0
0
0
0
0
F inancial Statements
140
Notes
2.4
IMP AIRMEN T
2 .4.1 F INANCIAL INSTRUME NTS
The Group assesses on a forward-looking basis the expected credit
losses associated with its debt instruments carried at amortized cost
(term deposits with fixed and variable interest rates and corporate
bonds). The impairment method applied depends on whether there has
been a significant increase in credit risk. If at the reporting date, the
credit risk of a financial instrument has not increased significantly
since initial recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to twelve-month expected
credit losses (Level 1). In case the credit risk of a financial instrument
has increased significantly since initial recognition, the Group mea-
sures impairment for that financial instrument at an amount equal to
the lifetime expected credit losses. The Group currently classifies an
increase in credit risk on debt instruments as significant when the
premium on a counterparty credit default swap has increased by 100
basis points since the initial recognition of the instrument (Level 2). If
there is an objective indication of impairment, the interest received
must also be adjusted so that as of that date the interest is accrued on the
basis of the net carrying amount (carrying amount less risk provisions)
of the financial instrument (Level 3).
Objective evidence of a financial instrument’s impairment may arise
from material financial difficulties of the issuer or the borrower, a breach
of contract such as a default or delay in interest or principal payments,
an increased likelihood of insolvency or other remediation process, or
from the disappearance of an active market for a financial asset due to
financial difficulties.
Financial instruments are derecognized when it can be reasonably ex-
pected that they will not be recovered and there is objective evidence
of this. Impairment of financial instruments is recognized under im-
pairment losses on financial assets.
2 .4.2 RECE IVABLES
In the case of accounts receivable, the Group applies the simplified
approach under IFRS 9, which requires expected lifetime losses to be
recognized from the initial recognition of the receivables (Level 2). In
the case of insufficient reason to expect recovery, the expected loss must
be calculated as the difference between the gross carrying amount and
the present value of the expected cash flows discounted at the original
effective interest rate (Level 3). An indicator that there is insufficient
reason to expect recovery includes a situation, among others, when
internal or external information indicates that the Group will not fully
receive the contractual amounts outstanding.
All accounts receivable were aggregated to measure the expected
credit losses, as they all share the same credit risk characteristics.
All accounts receivable are currently due from customers in the same
industry and are therefore exposed to the same credit risks. The im-
pairment is determined on the basis of the premium for an industry
credit default swap. In the event that accounts receivable cannot be
grouped together, they are measured individually.
Accounts receivable are derecognized when it can be reasonably ex-
pected that they will not be recovered. Impairment of accounts receiv-
able is recognized under other expenses. If in subsequent periods
amounts are received that were previously impaired, these amounts
are recognized in other income.
2 .4.3 N ON - FINANCIAL AS SE TS
The carrying amounts of the Group’s non-financial assets and invento-
ries are reviewed at each reporting date for any indication of impair-
ment. The non-financial asset’s recoverable amount and inventories’ net
realizable value is estimated if such indication exists. For goodwill and
intangible assets that have indefinite useful lives or are not yet available
for use, the recoverable amount is estimated at the same time each year,
or on an interim basis, if required. Impairment is recognized if the carry-
ing amount of an asset or the cash-generating unit (CGU) exceeds its
estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value-in-
use or its fair value less costs of disposal. In assessing value-in-use,
the estimated future pre-tax cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assess-
ments of the time value of money and the risks specific to the asset or
CGU. For the purposes of impairment testing, assets that cannot be
tested individually are grouped into the smallest group of assets that
generates cash flows from ongoing use that are largely independent of
the cash flows of other assets or CGUs. A ceiling test for the operating
segment must be carried out for goodwill impairment testing. CGUs
that have been allocated goodwill are aggregated so that the level at
which impairment testing is performed reflects the lowest level at
which goodwill is monitored for internal reporting purposes. Goodwill
acquired in a business combination may be allocated to groups of CGUs
that are expected to benefit from the combination’s synergies.
The Group’s corporate assets do not generate separate cash flows and
are utilized by more than one CGU. Corporate assets are allocated to
CGUs on a reasonable and consistent basis and are tested for impairment
as part of the impairment testing of the CGU that was allocated the cor-
porate asset.
Impairment losses are recognized in profit or loss. Goodwill impairment
cannot be reversed. For all other assets, the impairment recognized in
prior periods is assessed on each reporting date for any indications
that the losses decreased or no longer exist. Impairment is reversed
when there has been a change in the estimates used to determine the
recoverable amount. Impairment losses can only be reversed to the
extent that the asset’s carrying amount does not exceed the carrying
amount net of depreciation or amortization that would have been deter-
mined if an impairment had not been recognized.
Notes
F inancial Statements
141
2.5 AD DI T IONAL INF ORMAT ION
2 .5.1 K E Y ESTIMATES AND AS SUMP TIONS
Estimates and assumptions are continually evaluated and based on
historical experience and other factors, including the expectation of
future events that are believed to be realistic under the prevailing
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting-related estimates will, by definition, seldom
correspond to the actual results. The estimates and assumptions that
carry a significant risk of causing material adjustments to the carrying
amounts of assets and liabilities in the next financial year are addressed
below.
R E V EN U ES
Revenues from milestones, royalties and contracts with multiple perfor-
mance obligations are subject to assumptions regarding probabilities
of occurrence and individual selling prices within the scope of the
accounting and measurement principles explained in Note 2.7.1*.
*C R O S S - R E F E R E N C E to page 141
FI N A N C I A L AS S E TS
Impairment losses on financial assets in the form of debt instruments
and accounts receivable are based on assumptions about credit risk. The
Group exercises discretion in making these assumptions and in select-
ing the inputs to calculate the impairment based on past experience,
current market conditions and forward-looking estimates at the end of
each reporting period.
L E AS ES
In determining the lease term, all facts and circumstances are consid-
ered that create an economic incentive to exercise an extension option.
Extension options are only included in the lease term if the lease is
reasonably certain to be extended.
I N - P RO C ES S R&D P RO G R A M S A N D G O O DW I L L
The Group performs an annual review to determine whether in-process
R&D programs or goodwill is subject to impairment in accordance with
the accounting policies discussed in Note 2.4.3*. The recoverable
amounts from in-process R&D programs and cash-generating units have
been determined using value-in-use calculations and are subjected to
a sensitivity analysis. These calculations require the use of estimates
(see Notes 5.8.3* and 5.8.5*).
*C R O S S - R E F E R E N C E to page 140, page 163 and page 164
I N C O M E TA X ES
The Group is subject to income taxes in a number of tax jurisdictions.
Due to the increasing complexity of tax laws and the corresponding un-
certainty regarding the legal interpretation by the fiscal authorities, tax
calculations are generally subject to an elevated amount of uncertainty.
To the extent necessary, possible tax risks are taken into account in the
form of provisions.
Deferred tax assets on tax loss carryforwards are recognized based
on the expected business performance of the relevant Group entity.
For details on tax loss carryforwards and any recognized deferred tax
assets, please refer to Note 4.4*.
*C R O S S - R E F E R E N C E to page 154
2 .5.2 C APITAL MANAGE ME NT
The Management Board’s policy for capital management is to preserve a
strong and sustainable capital base in order to maintain the confidence
of investors, business partners, and the capital market and to support
future business development. As of December 31, 2019, the equity ratio
was 79.5 % (December 31, 2018: 90.6 %; see also the following over-
view). The Group does not currently have any financial liabilities.
The Management Board and employees can participate in the Group’s
performance through long-term, performance-related remuneration
components. These components consist of convertible bonds issued in
2013 and stock option plans (SOP) granted to the Management Board
and certain employees of MorphoSys AG in 2017, 2018 and 2019, in
accordance with the bonus system approved by the Annual General
Meeting. In addition, MorphoSys established a Long-Term Incentive
Plan (LTI Plan) for the Management Board and certain employees of
MorphoSys AG in 2015, 2016, 2017, 2018 and 2019. In 2019, MorphoSys
established long-term incentive programs (Long-Term Incentive Plan
– LTI Plan and Restricted Stock Unit Plan – RSU Plan) for the President
and certain employees of MorphoSys US Inc. These LTI Plans are based
on the performance-related issuance of shares (“performance shares”
and shares still to be created from authorized capital under the RSU
Plan), which are finally allocated upon achievement of specific pre-
defined performance criteria and after the expiration of the vesting
period (see Notes 7.3* and 7.4*). The Group did not make any changes
to its capital management during the year.
*C R O S S - R E F E R E N C E to page 172 and page 177
in 000’ €
12/31/2019
12/31/2018
Stockholders’ Equity
In % of Total Capital
Total Liabilities
In % of Total Capital
TOTAL CAPITAL
394,702
79.5 %
101,738
20.5 %
496,439
488,373
90.6 %
50,391
9.4 %
538,764
2.6 USE OF IN T ERE S T RAT E S F OR MEASUREMEN T
The Group uses interest rates to measure fair value. When calculating
share-based payments, MorphoSys uses the interest rate on four-year
German government bonds on the date the share-based payment was
granted.
2.7 ACCOUN T ING P OL IC IE S APPL IED T O L INE I T EMS
OF T HE S TAT EMEN T OF PROF I T OR L O SS
2 .7.1 R E VE NUES AND RE VE NUE REC O GNITION
As of January 1, 2018, the Group has adopted IFRS 15.
The IFRS 15 standard on revenues requires a five-stage approach:
• Identification of the contract
• Identification of performance obligations
• Determination of the transaction price
• Allocation of the transaction price
• Revenue recognition
The Group’s revenues typically include license fees, milestone pay-
ments, service fees, and royalties.
F inancial Statements
142
Notes
L I C EN S E FEES A N D M I L ESTO N E PAY M EN TS
The Group recognizes revenues from license fees for intellectual prop-
erty (IP) both at a point in time and over a period of time. The Group
must make an assessment as to whether such a license represents a
right-to-use the IP (at a point in time) or a right to access the IP (over
time). Revenue for a right-to-use license is recognized by the Group
when the licensee can use the IP and benefit from it and after the license
term begins, e.g., the Group has no further obligations in the context of
the out-licensing of a drug candidate or technology. A license is consid-
ered a right to access the intellectual property when the Group under-
takes activities during the license term that significantly affect the IP,
the customer is directly exposed to any positive or negative effects of
these activities, and these activities do not result in the transfer of a
good or service to the customer. Revenues from the right to access the
IP are recognized on a straight-line basis over the license term.
Milestone payments for research and development are contingent upon
the occurrence of a future event and represent variable consideration.
The Group’s management estimates at the contract’s inception that the
most likely amount for milestone payments is zero. The most likely
amount method of estimation is considered the most predictive for the
outcome since the outcome is binary; for example, achieving a specific
success in clinical development (or not). The Group includes milestone
payments in the total transaction price when the milestone is more
likely than not to be realized and it is highly unlikely that there will be
a material reversal of accumulated revenue in future periods.
Sales-based milestone payments included in contracts for IP licenses are
considered by the Group to be sales-based license fees because they are
solely determined by the sales of an approved drug. Accordingly, such
milestones are recognized as revenue once the sales of such drugs occur
or at a later point if the performance obligation has not been fulfilled.
S ERV I C E FEES
Service fees for the assignment of personnel to research and develop-
ment collaborations are recognized as revenues in the period the ser-
vices were provided. If a Group company acts as an agent, revenues are
recognized on a net basis.
ROYA LT I ES
Revenue recognition for royalties (income based on a percentage of
sales of a marketed product), is based on the same revenue recognition
principles that apply to sales-based milestones, as described above.
AG R EEM EN TS W I T H M U LT I P L E P ER F O R M A N C E O B L I G AT I O N S
A Group company may enter into agreements with multiple performance
obligations that include both licenses and services. In such cases, an
assessment must be made as to whether the license is distinct from the
services (or other performance obligations) provided under the same
agreement. The transaction price is allocated to separate performance
obligations based on the relative stand-alone selling price of the perfor-
mance obligations in the agreement. The Group company estimates
stand-alone selling prices for goods and services not sold separately on
the basis of comparable transactions with other customers. The residual
approach is the method used to estimate a stand-alone selling price when
the selling price for a good or service is highly variable or uncertain.
P R I N C I P L E - AG EN T R EL AT I O N S H I P S
In agreements involving two or more independent parties who contrib-
ute to the provision of a specific good or service to a customer, the Group
company assesses whether it has promised to provide the specific good
or service itself (the company acting as a principal) or to arrange for this
specific good or service to be provided by another party (the company
acting as an agent). Depending on the result of this assessment, the
Group company recognizes revenues on a gross (principal) or net (agent)
basis. A Group company is an agent and recognizes revenue on a net
basis if its obligation is to arrange for another party to provide goods
or services, i.e., the Group company does not control the specified good
or service before it is transferred to the customer. Indicators to assist a
company in determining whether it does not control the good or service
before it is provided to a customer and is therefore an agent, include,
but are not limited to, the following criteria:
• Another party is primarily responsible for fulfilling the contract.
• The company does not have inventory risk.
• The company does not have discretion in establishing the price.
No single indicator is determinative or weighted more heavily than other
indicators. However, some indicators may provide stronger evidence
than others, depending on the individual facts and circumstances. A
Group company’s control needs to be substantive; obtaining legal title
of a good or service only momentarily before it is transferred to the cus-
tomer does not necessarily indicate that a Group company is a principal.
Generally, an assessment as to whether a Group company is acting as
a principal or an agent in a transaction requires a considerable degree of
judgment.
Based on the relevant facts and circumstances, the assessment of an
agreement may lead to the conclusion that the counterparty is a coop-
eration partner or partner rather than a customer. Should that be the
case, the agreement would not fall within the scope of IFRS 15 because
the parties share equally in the risk of co-developing a drug and in the
future profits from the marketing of the approved drug.
R E V EN U E R EC O G N I T I O N T H RO U G H D EC EM B ER 31, 2017
The Group applied the revenue recognition principles under IAS 18
“Revenue” through December 31, 2017.
The Group’s revenues in 2017 included license fees, milestone payments
and service fees. Under IAS 18.9, revenues were measured at the fair
value of the consideration received or receivable. In accordance with
IAS 18.20b, revenues were recognized only to the extent that it was
sufficiently probable that the Company would receive the economic
benefits associated with the transaction.
L I C EN S E FEES A N D M I L ESTO N E PAY M EN TS
Revenues related to non-refundable fees for providing access to technol-
ogies, fees for the use of technologies and license fees were recognized
immediately and in full when all of the IAS 18.14 criteria were met and,
specifically, when the material risks and rewards of license ownership
were transferred to the customer and a Group company did not retain
any continuing managerial involvement or effective control. If these
criteria were not met, revenues were deferred on a straight-line basis
over the period of the agreement, unless a more appropriate method
Notes
F inancial Statements
143
of revenue recognition was available. The term of the agreement usually
corresponded to the contractually agreed term of the research project
or, in the case of contracts without an agreed term, the expected term of
the collaboration. Revenues from milestone payments were recognized
upon the achievement of certain contractual criteria.
S ERV I C E FEES
Service fees from research and development collaborations were rec-
ognized in the period the services were rendered.
Discounts that were likely to be granted and whose amount could be
reliably determined were recognized as a reduction in revenue at the
time of revenue recognition. The timing of the transfer of risks and
rewards varied depending on the terms of the sales contract. In accor-
dance with IAS 18.21 and 18.25, revenues from multiple-component
contracts were recognized by allocating the total consideration to the
separately identifiable components based on their respective fair values
and by applying IAS 18.20. The applicable revenue recognition criteria
were assessed separately for each component.
2 .7.2 O PE R ATING E XPE NSES
C OST O F SA L ES
Cost of sales is recognized as an expense in the period in which the
associated revenue accrues. This line item contains personnel expenses,
impairment on inventories, other operating expenses and costs for ex-
ternal services.
R ES E A RC H A N D D E V ELO P M EN T E X P EN S ES
Research costs are expensed in the period in which they occur. Devel-
opment costs are generally expensed as incurred in accordance with
IAS 38.5 and IAS 38.11 to 38.23. Development costs are recognized as an
intangible asset when the criteria of IAS 38.21 (probability of expected
future economic benefits, reliability of cost measurement) are met and
when the Group can provide proof in accordance with IAS 38.57.
This line item contains personnel expenses, consumable supplies,
other operating expenses, impairment charges, amortization and other
costs related to intangible assets (additional information can be found
under Note 5.8*), costs for external services, infrastructure costs and
depreciation.
*C R O S S - R E F E R E N C E to page 162
S EL L I N G E X P EN S ES
The item includes personnel expenses, consumable supplies, operating
costs, amortization of intangible assets (software; additional information
can be found under Note 5.8*), costs for external services, infrastructure
costs and depreciation.
*C R O S S - R E F E R E N C E to page 162
G EN ER A L A N D A D M I N I ST R AT I V E E X P EN S ES
The item includes personnel expenses, consumable supplies, operating
costs, amortization of intangible assets (software; additional information
can be found under Note 5.8*), costs for external services, infrastructure
costs and depreciation.
*C R O S S - R E F E R E N C E to page 162
P ERSO N N EL E X P EN S ES FRO M STO C K O P T I O N S
The Group applies the provisions of IFRS 2 “Share-based Payment,”
which oblige the Group to spread compensation expenses from the
estimated fair values of share-based payments on the reporting date
over the period in which the beneficiaries provide the services that
triggered the granting of the share-based payments.
IFRS 2 “Share-based Payment” requires the consideration of the effects
of share-based payments when the Group acquires goods or services in
exchange for shares or stock options (“settlement in equity instru-
ments”) or other assets that represent the value of a specific number of
shares or stock options (“cash settlement”). The most important effect of
IFRS 2 on the Group is the personnel expense resulting from the use of
an option pricing model for share-based incentives for the Management
Board and employees. Additional information on this topic can be found
in Notes 7.1*, 7.2*, 7.3*, 7.4* and 7.5*.
*C R O S S - R E F E R E N C E to page 168 – 177
O P ER AT I N G L E AS E PAY M EN TS
Until December 31, 2018, payments made within the scope of operating
leases were recognized according to IAS 18 in profit or loss on a straight-
line basis over the term of the lease. According to SIC-15, all incentive
agreements within the scope of operating leases are recognized as an
integral part of the net consideration agreed for the use of the leased
asset. The total amount of income from incentives is recognized as a
reduction in lease expenses on a straight-line basis over the term of
the lease.
The Group’s lease agreements were classified exclusively as operating
leases until December 31, 2018. The Group did not engage in any finance
lease arrangements.
2 .7.3 O THE R INC OME
In addition to currency gains from operating activities, other income con-
sists primarily of income originating from the Company’s own canteen.
G OV ER N M EN T G R A N TS
Non-repayable grants received from government agencies to fund
specific research and development projects are recognized in profit or
loss in the separate line item “other income” to the extent that the
related expenses have already occurred. Under the terms of the grants,
government agencies generally have the right to audit the use of the
funds granted to the Group.
The government grants are generally cost subsidies, and their recog-
nition through profit or loss is limited to the corresponding costs.
When the repayment of cost subsidies is linked to the success of the
development project, these cost subsidies are recognized as other liabil-
ities until success has been achieved. If the condition for repayment is
not met, then the grant is recognized under “other income”.
No payments were granted in the 2019, 2018 or 2017 financial years
that are required to be classified as investment subsidies.
F inancial Statements
144
Notes
2 .7.4 O THE R E XPE NSES
The line item “other expenses” consists mainly of currency losses from
the operating business.
2 .7.5 F INANCE INC OME AND FINANCE E XPE NSES
Gains and losses arising from changes in fair value, as well as interest
effects from the application of the effective interest method to financial
assets are recognized in profit or loss when incurred.
2 .7.6 I NC OME TA X E XPE NSES/BE NE FITS
Current income taxes are calculated based on the respective local
taxable income and local tax rules for the period. In addition, current
income taxes presented for the period include adjustments for uncer-
tain tax payments or tax refunds for periods not yet finally assessed,
excluding interest expenses and penalties on the underpayment of
taxes. In the event that amounts included in the tax return are con-
sidered unlikely to be accepted by the tax authorities (uncertain tax
positions), a provision for income taxes is recognized. The amount is
based on the best possible assessment of the tax payment expected.
Tax refund claims from uncertain tax positions are recognized when it
is probable that they can be realized.
Deferred tax assets or liabilities are calculated for temporary differ-
ences between the tax bases and the financial statement carrying
amounts, including differences from consolidation, unused tax loss
carry-forwards, and unused tax credits. Measurement is based on
enacted or substantively enacted tax rates and tax rules.
Changes in deferred tax assets and liabilities are generally recognized
through profit and loss in the consolidated statement of profit or loss,
except for changes recognized directly in equity. Deferred tax assets are
recognized only to the extent that it is likely that there will be future
taxable income to offset. Deferred tax assets are reduced by the amount
that the related tax benefit is no longer expected to be realized.
2 .7.7 E ARNING S PE R SHARE
The Group reports basic and diluted earnings per share in accordance
with IAS 33.41. Basic earnings per share are computed by dividing the
net profit or loss attributable to parent company shareholders by the
weighted-average number of ordinary shares outstanding for the report-
ing period. Diluted earnings per share are calculated in the same man-
ner with the exception that the net profit or loss attributable to parent
company shareholders and the weighted-average number of ordinary
shares outstanding are adjusted for any dilutive effects resulting from
stock options and convertible bonds granted to the Management Board
and employees.
In 2019, 2018 and 2017, diluted earnings per share equaled basic earn-
ings per share. The effect of 57,035 potentially dilutive shares in 2019
(2018: 120,214 dilutive shares; 2017: 87,904 dilutive shares) resulting
from stock options and convertible bonds granted to the Management
Board, the Senior Management Group and employees of the Company
who are not members of the Senior Management Group, has been ex-
cluded from the diluted earnings per share as it would result in a decline
in the loss per share and should, therefore, not be treated as dilutive.
Deferred tax assets are offset against deferred tax liabilities when the
taxes are levied by the same taxation authority and the entity has a
legally enforceable right to offset current tax assets against current
tax liabilities.
The 115,684 stock options still unvested as of December 31, 2019 are not
included in the calculation of potentially dilutive shares, as they were
anti-dilutive for the 2019 financial year. These shares may potentially
have a dilutive effect in the future.
Assessments as to the recoverability of deferred tax assets require the
use of judgment regarding assumptions related to estimated future
taxable profits. This includes the character and amounts of taxable
future profits, the periods in which those profits are expected to occur,
and the availability of tax planning opportunities. The Group recog-
nizes a write-down of deferred tax assets when it is unlikely that a
corresponding amount of future taxable profit will be available against
which the deductible temporary differences, tax loss carry forwards
and tax credits can be utilized.
The analysis and forecasting required in this process are performed for
individual jurisdictions by qualified local tax and financial profession-
als. Given the potential significance surrounding the underlying esti-
mates and assumptions, group-wide policies and procedures have been
designed to ensure consistency and reliability around the recoverability
assessment process. Forecast operating results are based upon approved
business plans, which are themselves subject to a well- defined process
of control. As a matter of policy, especially strong evidence supporting
the recognition of deferred tax assets is required if an entity has suffered
a loss in either the current or the preceding period.
2.8 ACCOUN T ING P OL IC IE S APPL IED T O BAL ANCE SHEE T
ASSE T S
2 .8.1 LIQUIDIT Y
C L AS S I FI CAT I O N
The Group classifies its financial assets (debt instruments) in the mea-
surement categories of those subsequently measured at fair value (either
through other comprehensive income or profit or loss) and those mea-
sured at amortized cost. The classification depends on the Company’s
business model with respect to the management of the financial assets
and the contractual cash flows. For assets measured at fair value, gains
and losses are recognized either in other comprehensive income or in
profit or loss. The Group only reclassifies debt instruments when the
business model for managing such assets changes.
The Group defines all cash held at banks and on hand, as well as all
short-term deposits with a maturity of three months or less as of the
purchase date, as cash and cash equivalents. The Group invests the
majority of its cash and cash equivalents at several major financial in-
stitutions including, Commerzbank, UniCredit, BayernLB, LBBW, BNP
Paribas, Deutsche Bank, Sparkasse, Rabobank, Banque Européenne du
Crédit Mutuel and Bank of America Merrill Lynch.
Notes
F inancial Statements
145
Guarantees granted for rent deposits and obligations from convertible
bonds issued to employees are recorded as restricted cash under “other
assets” because they are not available for use in the Group’s operations.
R EC O G N I T I O N A N D D ER EC O G N I T I O N
A purchase or sale of financial assets in a manner that is customary for
the market is recognized as of the trade date, which is the date on which
the Group commits to buying or selling the asset. Financial assets are
derecognized when the claims to receive cash flows from the financial
assets expire or have been transferred, and the Group has transferred
substantially all the risks and rewards of ownership.
M E AS U R EM EN T
Upon initial recognition, the Group measures a financial asset at fair
value and – when the financial asset is not subsequently measured at
fair value in profit or loss – plus transaction costs directly attributable
to the acquisition of that asset. Transaction costs of financial assets
measured at fair value through profit or loss are recognized as expenses
in profit or loss.
The subsequent measurement of debt instruments depends on the
Group’s business model for managing the asset and the asset’s cash
flow characteristics. The Group classifies its debt instruments in one of
the following measurement categories described below.
Assets that are held in order to collect the contractual cash flows and for
which these cash flows represent interest and principal payments only
are measured at amortized cost. Interest income from these financial
assets is recognized in finance income using the effective interest
method. Gains and losses upon derecognition are recognized directly
in profit or loss and recorded in the finance result. Impairment losses
are recognized as a separate line item in profit or loss.
Assets that are held to collect the contractual cash flows and to sell
the financial assets and where the cash flows represent principal and
interest payments only are measured at fair value through other com-
prehensive income. Changes in the carrying amounts are recognized
in other comprehensive income, with the exception of impairment
losses, income from impairment reversals, interest income and foreign
currency gains and losses, which are recognized in profit or loss. Upon
the derecognition of the financial asset, the cumulative gain or loss
previously recognized in other comprehensive income is reclassified
from equity to profit or loss and is recorded in the finance result. Interest
income from these financial assets is reported in finance income using
the effective interest method. Foreign exchange gains and losses are
shown under other income/expenses, and impairment losses are in-
cluded in a separate line item in profit or loss.
Assets that do not meet the criteria of the categories “at amortized cost”
or “at fair value through other comprehensive income” are allocated to
the category “at fair value through profit or loss.” Gains and losses on
debt instruments that are subsequently measured at fair value through
profit or loss are recognized on a net basis in the finance result in the
period in which they occur.
D ER I VAT I V ES
The Group uses derivatives to hedge its foreign exchange risk and cash
flows. The use of derivatives is subject to a Group policy approved by
the Management Board, which sets out a written guideline on the use
of derivatives. According to the Group’s hedging policy, only highly
probable future cash flows and clearly identifiable receivables that can
be collected within a twelve-month period are hedged.
Derivatives are initially recognized at fair value at the time of the con-
clusion of a derivative transaction and subsequently measured at fair
value at the end of each reporting period. Changes in the fair value of a
derivative instrument that is not accounted for as a hedging relationship
are recognized directly in profit or loss in the finance result.
MorphoSys has not applied hedge accounting in the financial years
2019 and 2018.
2 .8.2 A C C OUNTS RECE IVABLE , INC OME TA X RECE IVABLES AND
OTHE R RECE IVABLES
Accounts receivable are measured at amortized cost less any impair-
ment using the simplified impairment model (see Notes 2.3.1*, 2.4.2*
and 5.3*).
*C R O S S - R E F E R E N C E to page 132, page 140 and page 159
Income tax receivables mainly include receivables due from tax author-
ities in the context of capital gain taxes withheld.
Other non-derivative financial instruments are measured at amortized
cost using the effective interest method.
2 .8.3 INVE NTORIES
Inventories are measured at the lower value of production or acquisi-
tion cost and net realizable value under the first-in, first-out method.
Acquisition costs comprise all purchase costs, including those incurred
in bringing the inventories into operating condition, and take into
account purchase price reductions, such as bonuses and discounts.
Net realizable value is the estimated selling price less the estimated
expenses necessary for completion and sale. Inventories are divided
into the categories of raw materials and supplies.
In addition, inventory comprises manufacturing costs for the fermen-
tation runs of antibody material (tafasitamab) that is required for the
approval process in the United States. If successfully approved, the
material may be used later for commercialization. Commercialization
is regarded as a sale in the ordinary course of business in accordance
with IAS 2, hence the material is accounted for as inventory. According
to the Group’s accounting policies, these quantities qualify as inven-
tory. Before tafasitamab has received market approval, this inventory
is valued at a net realizable value of zero. The resulting impairment is
accounted for in cost of sales.
F inancial Statements
146
Notes
2 .8.4 P RE PAID E XPE NSES AND OTHE R CURRE NT AS SE TS
Prepaid expenses include expenses resulting from an outflow of liquid
assets prior to the reporting date that are only recognized as expenses
in the subsequent financial year. Such expenses usually involve main-
tenance contracts, sublicenses and upfront payments for external lab-
oratory services not yet performed. Other current assets primarily
consist of receivables from tax authorities from input tax surpluses,
combination compounds and receivables from upfront payments. This
item is recognized at nominal value.
2 .8.5 PR OPE R T Y, PL ANT AND EQUIPME NT
Property, plant and equipment is recorded at historical cost less accu-
mulated depreciation (see Note 5.6*) and any impairment losses (see
Note 2.4.*). Historical cost includes expenditures directly related to the
purchase at the time of the acquisition. Replacement purchases, build-
ing alterations and improvements are capitalized, whereas repair and
maintenance expenses are recognized as expenses as they are incurred.
Property, plant and equipment is depreciated on a straight-line basis
over its estimated useful life (see table below). Leasehold improvements
are depreciated on a straight-line basis over either the asset’s estimated
useful life or the remaining term of the lease – whichever is shorter.
*C R O S S - R E F E R E N C E to page 160 and page 140
Asset Class
Computer Hardware
Low-value Laboratory and Office
Equipment
Permanent Improvements to
Property/Buildings
Office Equipment
Laboratory Equipment
Useful Life
3 years
Immediately
10 years
8 years
4 years
Depreciation
Rates
33 %
100 %
10 %
13 %
25 %
The residual values and useful lives of assets are reviewed at the end
of each reporting period and adjusted when necessary.
Borrowing costs that can be directly attributed to the acquisition,
construction or production of a qualifying asset are not included in the
acquisition or production costs because the Group’s operating business
is funded with equity.
Right-of-use assets are measured at cost, which is calculated as the lease
liability plus lease payments made at or before the date on which the
asset is made available for use, less lease incentives received, initial
direct costs and dismantling obligations. Subsequent measurement of
right-of-use assets is at cost. The right-of-use assets are amortized on
a straight-line basis over either the useful life or the term of the lease
agreement – whichever is shorter.
The lease liability is the present value of the fixed and variable lease
payments that are paid during the term of the lease less any lease
incentives receivable. The discounting is carried out based on the
implied interest rate underlying the lease contract if the rate can be
determined. If not, discounting is carried out based on the lessee’s
incremental borrowing rate, i.e., the interest rate a lessee would need
to pay to borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of similar value and condition to the
right-of-use asset in a similar economic environment.
In subsequent measurement, the carrying amount of the lease liability
is increased to reflect the interest expense on the lease liability and
reduced to reflect the lease payments made. Each lease installment is
separated into a repayment portion and a financing expense portion.
Finance expenses are recognized in profit or loss over the term of the
lease.
The group is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments
based on an index or rate take effect, the lease liability is reassessed
and adjusted against the right-of-use asset.
As of January 1, 2019, the rental expenses recognized in the statement
of profit or loss up to and including the 2018 financial year were replaced
by depreciation and amortization of assets and interest expenses from
the compounding of lease liabilities. This means that the related costs
are recorded in various items of the statement of profit or loss and
differ in their total amount compared to the application of IAS 17. As a
result of the interest expenses recorded under financial expenses in
the statement of profit or loss, there is a material effect on Group EBIT
in the financial year compared with the application of IAS 17. In ac-
cordance with IAS 17, interest expenses were part of rental expenses
and were recorded under operating expenses in the statement of profit
or loss.
2 .8.6 LE ASES
As of January 1, 2019, the Group applies IFRS 16, the new standard on
leases, using the modified retrospective method (see Note 2.1.2*).
*C R O S S - R E F E R E N C E to page 129
The payments for the redemption of lease liabilities and the payments
attributable to the interest portion of the lease liabilities are allocated
to cash flow from financing activities.
For lessees, IFRS 16 introduces an uniform approach to the recognition
of leases, according to which assets for the right-of-use assets of the
leased assets and liabilities for the payment obligations entered into
are required to be recognized in the balance sheet for all leases. At the
time a leased asset becomes available for the Group’s use, a right-of-use
asset and corresponding lease liability are recognized in the balance
sheet.
For low-value leases and short-term leases (terms of less than twelve
months), mainly technical equipment, use is made of the simplified
application under IFRS 16. Accordingly, no right-of-use assets or lease
liabilities are recognized, instead the lease payments are recognized as
an expense over the term of the lease.
Notes
F inancial Statements
147
To examine the necessity of an impairment of a right-of-use asset, the
Group applies IAS 36 and recognizes impairment losses in accordance
with the principles described in section 2.4.3*.
*C R O S S - R E F E R E N C E to page 140
2 .8.7 I NTANGIBLE AS SE TS
Purchased intangible assets are capitalized at acquisition cost and
exclusively amortized on a straight-line basis over their useful lives.
Internally generated intangible assets are recognized to the degree the
recognition criteria set out in IAS 38 are met.
Development costs are capitalized as intangible assets when the capital-
ization criteria described in IAS 38 have been met, namely, clear specifi-
cation of the product or procedure, technical feasibility, intention of com-
pletion, use, commercialization, coverage of development costs through
future free cash flows, reliable determination of these free cash flows
and availability of sufficient resources for completion of development
and sale. Amortization of intangible assets is recorded in research and
development expenses.
Expenses to be classified as research expenses are allocated to research
and development expenses as defined by IAS 38.
Subsequent expenditures for capitalized intangible assets are capital-
ized only when they substantially increase the future economic benefit
of the specific asset to which they relate. All other expenditures are
expensed as incurred.
PAT EN TS
Patents obtained by the Group are recorded at acquisition cost less
accumulated amortization (see below) and any impairment (see Note
2.4.3*). Patent costs are amortized on a straight-line basis over the lower
of the estimated useful life of the patent (ten years) or the remaining
patent term. Amortization starts when the patent is issued. Technology
identified in the purchase price allocation for the acquisition of Sloning
BioTechnology GmbH is recorded at the fair value at the time of acqui-
sition, less accumulated amortization (useful life of ten years).
*C R O S S - R E F E R E N C E to page 140
L I C EN S E R I G H TS
The Group has acquired license rights from third parties by making
upfront license payments, paying annual fees to maintain the license
and paying fees for sublicenses. The Group amortizes upfront license
payments on a straight-line basis over the estimated useful life of the
acquired license (eight to ten years). The amortization period and
method are reviewed at the end of each financial year in accordance
with IAS 38.104. Annual fees to maintain a license are amortized over
the term of each annual agreement. Sublicense fees are amortized on a
straight-line basis over the term of the contract or the estimated useful
life of the collaboration for contracts without a set duration.
I N - P RO C ES S R&D P RO G R A M S
This line item contains capitalized payments from the in-licensing of
compounds for the Proprietary Development segment, as well as mile-
stone payments for these compounds subsequently paid as milestones
were achieved. Additionally, this line item also includes compounds and
antibody programs resulting from acquisitions. The assets are recorded
at acquisition cost and are not yet available for use and therefore not
subject to scheduled amortization. Given that the Group applies the
cost accumulation approach, milestones in the near future are not
accounted for. The assets are tested for impairment annually or in case
of triggering events, as required by IAS 36.
SO F T WA R E
Software is recorded at acquisition cost less accumulated amortization
(see below), and any impairment (see Note 2.4.3*). Amortization is rec-
ognized in profit or loss on a straight-line basis over the estimated
useful life of three to five years. Software is amortized from the date
the software is operational.
*C R O S S - R E F E R E N C E to page 140
G O O DW I L L
Goodwill is recognized for expected synergies from business combina-
tions and the skills of the acquired workforce. Goodwill is tested annu-
ally for impairment as required by IAS 36 (see Note 5.8.5*).
*C R O S S - R E F E R E N C E to page 164
Intangible Asset Class
Useful Life
Patents
License Rights
In-process R&D Programs
Software
Goodwill
10 years
8 ‒ 10 years
Not yet amor-
tized, Impair-
ment Only
3 - 5 years
Impairment Only
Amortization
Rates
10 %
13 % – 10 %
-
33 % – 20 %
-
2 .8.8 S HARES AT FAIR VALUE , WITH CHANGES REC O GNIZE D IN
OTHE R C OMPRE HE NSIVE INC OME
The investments in adivo GmbH and Vivoryon Therapeutics AG are
accounted for as equity financial instruments at fair value. Changes in
fair value are recognized in other comprehensive income. This was
irrevocably determined when the investments were first recognized.
These investments are strategic financial investments, and the Group
considers this classification to be more meaningful. If one of the in-
vestment is derecognized, no subsequent reclassification of gains or
losses to profit or loss will occur. Dividends from these investments are
recognized in profit or loss when there is a justified right to receive
payment.
F inancial Statements
148
Notes
2 .8.9 P RE PAID E XPE NSES AND OTHE R AS SE TS , NE T OF CURRE NT
P OR TION
The non-current portion of expenses incurred prior to the reporting date
but recognized in subsequent financial years is recorded in prepaid ex-
penses. This line item contains maintenance contracts and sublicenses.
This line item also includes other non-current assets recognized at fair
value. Other non-current assets consist mainly of restricted cash, such
as rent deposits.
2.9 ACCOUN T ING P OL IC IE S APPL IED T O EQUI T Y AND
L IABIL I T Y I T EMS OF T HE BAL ANCE SHEE T
2 .9.1 A C C OUNTS PAYABLE , OTHE R LIABILITIES AND OTHE R
PROVISIONS
Accounts payable and other liabilities are initially recognized at fair
value and subsequently at amortized cost using the effective interest
method. Liabilities with a term of more than one year are discounted to
their net present value. Liabilities that are uncertain in their timing or
amount are recorded as provisions.
IAS 37 requires the recognition of provisions for obligations to third
parties arising from past events. Furthermore, provisions are only rec-
ognized for legal or factual obligations to third parties if the event’s
occurrence is more likely than not. Provisions are recognized in the
amount required to settle the respective obligation and discounted to
the reporting date when the interest effect is material. The amount
required to meet the obligation also includes expected price and cost
increases. The interest portion of the addition to provisions is recorded
in the finance result. The measurement of provisions is based on past
experience and considers the circumstances in existence on the re-
porting date.
The Group has entered into various research and development contracts
with research institutions and other companies. These agreements are
generally cancelable, and related costs are recorded as research and
development expenses as incurred. The Group recognizes provisions
for estimated ongoing research costs that have been incurred. When
evaluating the appropriateness of the deferred expenses, the Group
analyzes the progress of the studies, including the phase and completion
of events, invoices received and contractually agreed costs. Significant
judgments and estimates are made in determining the deferred bal-
ances at the end of any reporting period. Actual results may differ from
the Group’s estimates. The Group’s historical accrual estimates have not
been materially different from the actual costs.
2 .9.2 T A X PROVISIONS
Tax liabilities are recognized and measured at their nominal value. Tax
liabilities contain obligations from current taxes, excluding deferred
taxes. Provisions for trade taxes, corporate taxes and similar taxes on
income are determined based on the taxable income of the consolidated
entities less any prepayments made.
2 .9.3 C URRE NT P OR TION OF C ONTR AC T LIABILITIES
Upfront payments from customers for services to be rendered by the
Group and revenue that must be recognized over a period of time in
accordance with IFRS 15.35 are deferred and measured at the nominal
amount of cash received. The corresponding rendering of services and
revenue recognition is expected to occur within a twelve-month period
following the reporting date.
2 .9.4 C ONTR AC T LIABILITIES , NE T OF CURRE NT P OR TION
This line item includes the non-current portion of deferred customers
upfront payments and revenue that must be recognized over a period of
time in accordance with IFRS 15.35. Contractual liabilities are measured
at the nominal amount of cash received.
2 .9.5 C ONVE R TIBLE BOND OBLIGATIONS TO RE L ATE D PAR TIES
The Group has issued convertible bonds to the Group’s Management
Board and employees. In accordance with IAS 32.28, the equity compo-
nent of a convertible bond must be recorded separately under additional
paid-in capital. The equity component is determined by deducting the
separately determined amount of the liability component from the fair
value of the convertible bond. The effect of the equity component on
profit or loss is recognized in personnel expenses from stock options,
whereas the effect on profit or loss from the liability component is recog-
nized as interest expense. The Group applies the provisions of IFRS 2
“Share-based Payment” to all convertible bonds granted to the Man-
agement Board and the Group’s employees.
2 .9.6 D E FE RRE D TA XES
The recognition and measurement of deferred taxes are based on the
provisions of IAS 12. Deferred tax assets and liabilities are calculated
using the liability method, which is commonly used internationally.
Under this method, taxes expected to be paid or recovered in subse-
quent financial years are based on the applicable tax rate at the time of
recognition.
Deferred tax assets and liabilities are recorded separately in the balance
sheet and take into account the future tax effect resulting from tempo-
rary differences between carrying amounts in the balance sheet for
assets and liabilities and tax loss carryforwards.
Deferred tax assets are offset against deferred tax liabilities when the
taxes are levied by the same taxation authority and the entity has a
legally enforceable right to offset current tax assets against current
tax liabilities. In accordance with IAS 12, deferred tax assets and liabili-
ties may not be discounted.
2 .9.7 O THE R LIABILITIES
The line item “other liabilities” consisted until December 31, 2018 of a
deferred amount related to rent-free periods as agreed. The corre-
sponding reversal of these liabilities over the minimum rent period is
calculated based on the effective interest method. Other liabilities are
discounted at an interest rate equivalent to the rent period due to their
long-term maturities. Further information on the treatment of this
position as of January 1, 2019 can be found in Notes 2.1.2*.
*C R O S S - R E F E R E N C E to page 129
Notes
F inancial Statements
149
2 .9.8 ST O CKHOLDE RS ’ EQUIT Y
C O M M O N STO C K
Ordinary shares are classified as stockholders’ equity. Incremental costs
directly attributable to the issue of ordinary shares and stock options are
recognized as a deduction from stockholders’ equity.
T R E AS U RY STO C K
Repurchases of the Company’s own shares at prices quoted on an ex-
change or at market value are recorded in this line item as a deduction
from common stock.
When common stock recorded as stockholders’ equity is repurchased,
the amount of consideration paid, including directly attributable costs,
is recognized as a deduction from stockholders’ equity net of taxes and
classified as treasury shares. When treasury shares are subsequently
sold or reissued, the proceeds are recognized as an increase in stock-
holders’ equity, and any difference between the proceeds from the
transaction and the initial acquisition costs is recognized in additional
paid-in capital.
The allocation of treasury shares to beneficiaries under Long-Term In-
centive plans (in this case: performance shares) is reflected in this line
item based on the set number of shares to be allocated after the expira-
tion of the four-year vesting period (quantity structure) and multiplied
by the weighted-average purchase price of the treasury shares (value
structure). The adjustment is carried out directly in equity through a
reduction in the line item “treasury stock”, which is a deduction from
common stock, while simultaneously reducing additional paid-in capi-
tal. Further information can be found in Notes 7.3.1* and 7.3.2*.
*C R O S S - R E F E R E N C E to page 172
A D D I T I O N A L PA I D - I N CA P I TA L
Additional paid-in capital mainly consists of personnel expenses result-
ing from the grant of stock options, convertible bonds and performance
shares and the proceeds from newly created shares in excess of their
nominal value.
OT H ER C O M P R EH EN S I V E I N C O M E R ES ERV E
The line item “other comprehensive income reserve” includes changes
in the fair value of equity instruments that are recognized in other
comprehensive income and currency exchange differences that are not
recognized in profit or loss.
AC C U M U L AT ED I N C O M E/D EFI C I T
The “accumulated income/deficit” line item consists of the Group’s accu-
mulated consolidated net profits/losses. A separate measurement of this
item is not made.
3
Segment Reporting
MorphoSys Group applies IFRS 8 “Operating Segments”. An operating
segment is defined as a unit of an entity that engages in business activ-
ities from which it can earn revenues and incur expenses and whose
operating results are regularly reviewed by the entity’s chief operating
decision-maker, the Management Board, and for which discrete financial
information is available.
Segment information is provided for the Group’s operating segments
based on the Group’s management and internal reporting structures.
The segment results and segment assets include items that can be
either directly attributed to the individual segment or allocated to the
segments on a reasonable basis.
The Management Board evaluates a segment’s economic success using
selected key figures so that all relevant income and expenses are in-
cluded. EBIT, which the Company defines as earnings before finance
income, finance expenses, income from impairment reversals/expenses
from impairment losses on financial assets and income taxes, is the
key benchmark for measuring and evaluating the operating results.
Refer to the table in Note 3.3* for a reconciliation of EBIT to net income
as well as to the table in Note 4.3* for a breakdown of finance income
and expenses. Other key internal reporting figures include revenues,
operating expenses, segment results and the liquidity position. The
Group consists of the operating segments described below.
*C R O S S - R E F E R E N C E to page 150 and page 154
3.1 PR OPRIE TARY DEVEL OPMEN T
The segment comprises all activities related to the proprietary develop-
ment of therapeutic antibodies and peptides. Currently, this segment’s
activities comprise a total of twelve antibodies and peptides, with tafa-
sitamab representing the Company’s most advanced proprietary clinical
program. Also included are the antibody MOR202, which was partially
out-licensed to I-Mab Biopharma and MOR106, which had been co-
developed with Galapagos and was out-licensed to Novartis in July 2018.
Also included is the proprietary program otilimab, which was out-
licensed to GlaxoSmithKline (GSK) in 2013. The partially or completely
out-licensed programs have been part of the Proprietary Development
segment since the beginning of their development and will therefore
continue to be reported in this segment. MorphoSys is also pursuing
other early-stage proprietary development and co-development pro-
grams. These include the clinical program MOR107 (formerly LP2),
which originated from the acquisition of Lanthio Pharma B.V. This
program was evaluated in a phase 1 study in healthy volunteers and is
currently undergoing preclinical studies for oncology indications. One
other program is in preclinical development and a further six pro-
grams are in drug discovery. The Proprietary Development segment
also manages the development of proprietary technologies.
3.2 P AR T NERED DI S COVERY
MorphoSys possesses a technology for generating therapeutics based on
human antibodies. The Group markets this technology commercially
through its partnerships with numerous pharmaceutical and biotech-
nology companies. The Partnered Discovery segment encompasses all
operating activities relating to these commercial agreements.
F inancial Statements
150
Notes
3.3 C RO SS -SEGMEN T INF ORMAT ION
The information on segment assets is based on the assets’ respective
locations.
For the Twelve-month Period Ended
December 31 (in 000’ €)
External Revenues
Operating Expenses
SEG MENT RESULT
Other Income
Other Expenses
SEG MENT EB IT
Finance Income
Finance Expenses
Income from Reversals of Impairment Losses/
(Impairment Losses) on Financial Assets
E ARNINGS BEFORE TA XES
Income Tax Benefit/(Expenses)
NE T LOS S
Current Assets
Non-current Assets
TOTAL SEG MENT AS SE TS
Current Liabilities
Non-current Liabilities
Stockholders’ Equity
TOTAL SEG MENT LIAB ILITIES
AND EQUIT Y
Capital Expenditure
Depreciation and Amortization
Proprietary Development
Partnered Discovery
Unallocated
Group
2019
2018
2017
2019
2018
2017
2019
2018
2017
2019
2018
2017
34,286
(143,459)
(109,173)
125
(19)
(109,067)
53,610
(107,019)
(53,409)
159
0
(53,250)
17,635
– 99,106
– 81,471
157
0
– 81,314
37,469
(10,671)
26,798
0
0
26,798
12,155
72,928
85,083
36,176
27,775
0
63,951
2,830
1,718
15,842
42,041
57,883
32,167
3,291
0
35,458
1,319
1,903
8,802
60,658
69,460
33,008
7,072
0
40,080
12,344
1,555
11,078
11,851
22,929
2,877
5,771
0
8,648
625
1,385
22,832
(9,516)
13,316
0
0
13,316
7,114
6,288
13,402
1,471
158
0
1,629
879
1,429
49,156
(18,906)
30,250
0
0
30,250
18,054
8,490
26,544
4,083
1,045
0
5,128
602
2,075
0
(25,723)
(25,723)
680
(608)
0
(19,969)
(19,969)
1,486
(689)
0
(15,835)
(15,835)
963
(1,671)
(16,543)
(25,651)
(19,172)
(107,920)
(59,106)
71,755
(179,853)
(108,098)
805
(627)
2,799
(2,272)
872
(106,521)
3,506
(103,015)
303,693
192,746
496,439
61,558
40,179
394,702
76,442
(136,504)
(60,062)
1,645
(689)
418
(754)
(1,035)
(60,477)
4,305
(56,172)
388,905
149,859
538,764
45,923
4,468
488,373
66,791
(133,847)
(67,056)
1,120
(1,671)
(67,607)
712
(1,895)
0
(68,790)
(1,036)
(69,826)
340,681
74,717
415,398
47,701
9,026
358,671
415,398
13,150
4,030
280,460
107,967
388,427
22,505
6,633
394,702
365,949
101,530
467,479
12,285
1,019
488,373
313,825
5,569
319,394
10,610
909
358,671
423,840
501,677
370,190
496,439
538,764
207
355
268
418
204
400
3,662
3,458
2,466
3,750
The segment result is defined as the segment’s revenue, less the seg-
ment’s operating expenses. The unallocated operating expenses of
€ 25.7 million (2018: € 20.0 million; 2017: € 15.8 million) included
primarily expenses for central administrative functions that are not
allocated to one of the two segments. Finance income, finance expense
and income tax are also not allocated to the segments as they are
managed on a Group basis. Unallocated segment assets and liabilities
have the same background as unallocated operating expenses. In the
2019 financial year, impairments totaling € 1.6 million were recognized
in the Proprietary Development segment on property, plant and equip-
ment es well as intangible assets (2018: impairments of € 19.2 million in
the Proprietary Development segment; 2017: impairments of € 9.9 mil-
lion in the Proprietary Development segment).
€ 49.5 million of the Group’s total revenues came from the largest cus-
tomer, € 19.0 million from the second largest customer and € 3.9 million
from the third largest customer. The largest and third largest custom-
ers were allocated to the Proprietary Development segment and the
second largest customer to the Partnered Discovery segment. In 2017,
the largest customer accounted for € 36.9 million of the Group’s total
revenue, the second largest € 16.8 million and the third largest
€ 6.7 million. The largest and third largest customers were allocated to
the Partnered Discovery segment, and the second largest customer to
the Proprietary Development segment.
The following overview shows the Group’s regional distribution of
revenue:
The Group’s key customers are allocated to both the Proprietary Devel-
opment and the Partnered Discovery segments. As of December 31,
2019, the single most important customer represented accounts receiv-
able with a carrying amount of € 8.0 million (December 31, 2018:
€ 5.9 million). The largest customer for the Group accounted for reve-
nues in 2019 of € 32.3 million, the second largest for € 22.0 million and
the third largest for € 9.4 million. The largest customer was allocated
to the Partnered Discovery segment and the second largest and third
largest customers to the Proprietary Development segment. In 2018,
in 000’ €
Germany
Europe and
Asia
USA and
Canada
TOTAL
2019
145
2018
309
2017
851
39,322
56,784
57,229
32,288
71,755
19,350
76,443
8,711
66,791
3.3 CRO SS -SEGMEN T INF ORMAT ION
The information on segment assets is based on the assets’ respective
locations.
For the Twelve-month Period Ended
December 31 (in 000’ €)
External Revenues
Operating Expenses
SEG MENT RESULT
Other Income
Other Expenses
SEG MENT EB IT
Finance Income
Finance Expenses
Income from Reversals of Impairment Losses/
(Impairment Losses) on Financial Assets
E ARNIN GS BEFORE TA XES
Income Tax Benefit/(Expenses)
NE T LOS S
Current Assets
Non-current Assets
TOTAL SEG MENT AS SE TS
Current Liabilities
Non-current Liabilities
Stockholders’ Equity
TOTAL SEG MENT LIAB ILITIES
AND EQUIT Y
Capital Expenditure
Depreciation and Amortization
34,286
(143,459)
(109,173)
125
(19)
53,610
(107,019)
(53,409)
159
0
17,635
– 99,106
– 81,471
157
0
37,469
(10,671)
26,798
0
0
22,832
(9,516)
13,316
0
0
49,156
(18,906)
30,250
0
0
(109,067)
(53,250)
– 81,314
26,798
13,316
30,250
12,155
72,928
85,083
36,176
27,775
0
63,951
2,830
1,718
15,842
42,041
57,883
32,167
3,291
0
35,458
1,319
1,903
8,802
60,658
69,460
33,008
7,072
0
40,080
12,344
1,555
11,078
11,851
22,929
2,877
5,771
0
8,648
625
1,385
7,114
6,288
13,402
1,471
158
0
1,629
879
1,429
18,054
8,490
26,544
4,083
1,045
0
5,128
602
2,075
The segment result is defined as the segment’s revenue, less the seg-
ment’s operating expenses. The unallocated operating expenses of
€ 25.7 million (2018: € 20.0 million; 2017: € 15.8 million) included
primarily expenses for central administrative functions that are not
allocated to one of the two segments. Finance income, finance expense
and income tax are also not allocated to the segments as they are
managed on a Group basis. Unallocated segment assets and liabilities
have the same background as unallocated operating expenses. In the
2019 financial year, impairments totaling € 1.6 million were recognized
in the Proprietary Development segment on property, plant and equip-
ment es well as intangible assets (2018: impairments of € 19.2 million in
the Proprietary Development segment; 2017: impairments of € 9.9 mil-
lion in the Proprietary Development segment).
The Group’s key customers are allocated to both the Proprietary Devel-
opment and the Partnered Discovery segments. As of December 31,
2019, the single most important customer represented accounts receiv-
able with a carrying amount of € 8.0 million (December 31, 2018:
€ 5.9 million). The largest customer for the Group accounted for reve-
nues in 2019 of € 32.3 million, the second largest for € 22.0 million and
the third largest for € 9.4 million. The largest customer was allocated
to the Partnered Discovery segment and the second largest and third
largest customers to the Proprietary Development segment. In 2018,
Notes
F inancial Statements
151
Proprietary Development
Partnered Discovery
Unallocated
Group
2019
2018
2017
2019
2018
2017
2019
2018
2017
2019
2018
2017
0
(25,723)
(25,723)
680
(608)
(25,651)
0
(19,969)
(19,969)
1,486
(689)
(19,172)
0
(15,835)
(15,835)
963
(1,671)
(16,543)
280,460
107,967
388,427
22,505
6,633
394,702
423,840
207
355
365,949
101,530
467,479
12,285
1,019
488,373
501,677
268
418
313,825
5,569
319,394
10,610
909
358,671
370,190
204
400
71,755
(179,853)
(108,098)
805
(627)
(107,920)
2,799
(2,272)
872
(106,521)
3,506
(103,015)
303,693
192,746
496,439
61,558
40,179
394,702
496,439
3,662
3,458
76,442
(136,504)
(60,062)
1,645
(689)
(59,106)
418
(754)
(1,035)
(60,477)
4,305
(56,172)
388,905
149,859
538,764
45,923
4,468
488,373
538,764
2,466
3,750
66,791
(133,847)
(67,056)
1,120
(1,671)
(67,607)
712
(1,895)
0
(68,790)
(1,036)
(69,826)
340,681
74,717
415,398
47,701
9,026
358,671
415,398
13,150
4,030
The following overview shows the timing of the satisfaction of perfor-
mance obligations.
Proprietary
Development
Partnered
Discovery
in 000’ €
2019
2018
2019
2018
At a Point in Time thereof performance obligations
fulfilled in previous periods:in Proprietar Develop-
ment € 29.1 million in 2019 and € 0 in 2018 and
in Partnered Discovery € 32.9 million in 2019 and
€ 19.0 million in 2018
Over Time
TOTAL
34,286
0
34,286
53,610
0
53,610
36,984
485
37,469
22,268
564
22,832
A total of € 175.8 million (December 31, 2018: € 136.1 million)
€ 12.5 million (December 31, 2018: € 13.7 million) and € 4.4 million of
the Group’s non-current assets, excluding deferred tax assets, are
located in Germany, the Netherlands and the USA, respectively. There
were no non-current assets in the USA as of December 31, 2018. Of the
Group’s investments, € 2.3 million (December 31, 2018: € 2.4 million)
were made in Germany, € 1.3 million (December 31, 2018: € 0) in the
USA and less than € 0.1 million (December 31, 2018: € 0.1 million) in
the Netherlands. In accordance with internal definitions, investments
solely include additions to property, plant and equipment and intangible
assets not related to leases and business combinations.
F inancial Statements
152
Notes
4 Notes to Profit or Loss
4 .1 REVENUE S
In 2019, revenues consisted of milestone payments and royalties totaling
€ 62.3 million (2018: € 19.3 million; 2017: € 7.3 million). Of this amount,
€ 29.1 million was generated in the Proprietary Development segment
and € 33.2 million in the Partnered Discovery segment. In 2018 and
2017 the revenues from milestone payments and royalties were entirely
generated by the Partnered Discovery segment.
Revenues from license fees (excluding milestone payments and royal-
ties) amounted to € 0.3 million in 2019 (2018: € 51.2 million; 2017:
€ 37.5 million) and originated entirely from the Partnered Discovery
segment. In 2018, revenues from license fees (excluding milestone
payments and royalties) from the Proprietary Development segment
amounted to € 50.6 million and € 0.6 million originated from the
Partnered Discovery segment (2017: € 16.8 million and € 20.7 million,
respectively).
Revenues from service fees totaled € 9.2 million (2018: € 5.9 million;
2017: € 22.0 million) in the reporting year with € 5.2 million of this
amount attributable to the Proprietary Development segment (2018:
€ 3.0 million; 2017: € 0.8 million). Revenues from service fees of
€ 4.0 million were attributable to the Partnered Discovery segment
(2018: € 2.9 million; 2017: € 21.2 million). Substantially all service fee
revenues relate to revenue on a gross basis (principal).
Of the total revenues generated in 2019, a total of € 62.0 million were
recognized from performance obligations that were fulfilled in previous
periods and concern milestone payments and royalties (2018: € 19.0 mil-
lion; 2017: € 7.8 million).
4 .2 O PERAT ING EXPENSE S
4.2 .1 C OST OF SALES
Cost of sales consists of the following:
in 000’ €
Personnel Expenses
Impairment on Inventories
Other Operating Expenses
External Services
Other
TOTAL
2019
3,233
8,685
18
49
100
12,085
2018
1,797
0
0
0
0
1,797
2017
0
0
0
0
0
0
4.2 .2 RESE ARCH AND DE VE LOPME NT E XPE NSES
Research and development expenses consist of the following:
in 000’ €
2019
2018
2017
Personnel Expenses
Consumable Supplies
Other Operating Expenses
Impairment, Amortization and Other Costs of Intangible Assets
External Services
Depreciation and Other Costs for Infrastructure
TOTAL
30,131
2,874
3,142
5,631
60,710
5,944
108,432
25,288
2,310
2,761
22,760
47,889
5,389
106,397
28,482
2,588
2,757
13,503
61,119
4,865
113,314
Notes
4.2 .3 SE LLING E XPE NSES
Selling expenses consist of the following:
in 000’ €
Personnel Expenses
Consumable Supplies
Other Operating Expenses
Amortization of Intangible Assets
External Services
Depreciation and Other Costs for Infrastructure
TOTAL
F inancial Statements
153
2019
6,967
14
1,158
11
14,150
371
22,671
2018
2,536
3
538
25
2,953
328
6,383
2017
1,771
1
386
0
2,658
0
4,816
4.2 .4 GE NE R AL AND ADMINISTR ATIVE E XPE NSES
General and administrative expenses consist of the following:
in 000’ €
2019
2018
2017
Personnel Expenses
Consumable Supplies
Other Operating Expenses
Amortization of Intangible Assets
External Services
Depreciation and Other Costs for Infrastructure
TOTAL
4.2 .5 PE RSONNE L E XPE NSES
Personnel expenses consist of the following:
in 000’ €
Wages and Salaries
Social Security Contributions
Share-based Payment Expense
Temporary Staff (External)
Other
TOTAL
23,382
389
1,875
39
9,241
1,739
36,665
15,016
15
1,012
97
4,475
1,313
21,928
11,797
33
714
112
2,224
838
15,718
2019
2018
2017
43,476
5,686
6,654
2,633
5,264
63,713
30,349
4,341
5,585
1,241
3,121
44,637
28,196
4,542
4,975
881
3,456
42,050
In the years 2019, 2018 and 2017, other personnel expenses consisted
mainly of costs for personnel support and personnel development.
The average number of employees in the 2019 financial year was 374
(2018: 327; 2017: 344). Of the 426 employees on December 31, 2019
(December 31, 2018: 329; December 31, 2017: 326), 300 were active in
research and development (December 31, 2018: 246; December 31,
2017: 253), 40 in sales (December 31, 2018: 21; December 31, 2017: 14),
and 86 were engaged in general and administrative functions (De-
cember 31, 2018: 62 employees; December 31, 2017: 59 employees). As
of December 31, 2019, there were 249 employees in the Proprietary
Development segment and 61 employees in the Partnered Discovery
segment while 116 employees were not allocated to a specific segment
(December 31, 2018: 209 in the Proprietary Development segment,
49 employees in the Partnered Discovery segment and 71 employees
were unallocated; December 31, 2017: 161 in the Proprietary Develop-
ment segment, 105 employees in the Partnered Discovery segment
and 60 employees were unallocated). Costs for defined-contribution
plans amounted to € 0.7 million in 2019 (2018: € 0.7 million; 2017:
€ 0.6 million).
Notes
2017
485
157
0
76
402
1,120
(844)
(827)
(1,671)
441
35
236
712
(1,360)
(120)
(374)
0
0
(41)
(1,895)
2018
677
153
350
0
465
1,645
(457)
(232)
(689)
322
5
91
418
(444)
(85)
(53)
0
(126)
(46)
(754)
2018
2017
(202)
(978)
(127)
(126)
0
0
(1,433)
(919)
0
0
0
(190)
(164)
(1,273)
2019
233
98
0
0
474
805
(413)
(214)
(627)
1,476
980
343
2,799
(214)
(299)
(796)
(932)
0
(31)
(2,273)
2019
2,063
299
(1,160)
0
0
0
1,202
F inancial Statements
154
4 .3 O T HER INCOME AND EXPENSE S, F INANCE INCOME AND
F INANCE EXPENSE S
in 000’ €
Gain on Foreign Exchange
Grant Income
Gain from recognition of previously unrecognized intangible assets
Reversal of Impairment for Accounts Receivable Previously Deemed Impaired
Miscellaneous Income
Other Income
Loss on Foreign Exchange
Miscellaneous Expenses
Other Expenses
Gain on Derivatives
Gain on Financial Assets at Fair Value through Profit or Loss
(2017: Gain on Available-for-sale Financial Assets and Bonds)
Interest Income on Other Financial Assets at Amortized Cost
Finance Income
Loss on Derivatives
Loss on Financial Assets at Fair Value through Profit or Loss
(2017: Loss on Available-for-sale Financial Assets and Bonds)
Interest Expenses for Other Financial Assets at Amortized Cost
Interest Expenses on Lease Liabilities
Interest Expenses for Financial Liabilites at Amortized Cost
Bank Fees
Finance Expenses
The following net gains or losses resulted from financial instruments
in the fiscal year:
in 000’ €
Financial Assets at Fair Value through Profit or Loss
Other Financial Assets at Amortized Cost
Shares at Fair Value through Other Comprehensive Income
Financial Liabilities at Amortized Cost
Available-for-sale Financial Assets
Financial Assets classified as Loans and Receivables
TOTAL
Net gains or losses mainly comprised gains and losses from currency
hedging, interest income and expenses, as well as valuation effects from
changes in fair value.
I NCOME TAX EXPENSE S/ BENEF I T S
4 .4
MorphoSys AG is subject to corporate taxes, the solidarity surcharge
and trade taxes. The Company’s corporate tax rate in the reporting year
remained unchanged (15.0 %) as did the solidarity surcharge (5.5 %)
and the effective trade tax rate (10.85 %).
MorphoSys US Inc. is subject to Federal Corporate Income Tax of 21 %
and the State Income Tax in Boston, Massachusetts of 8 %.
Notes
F inancial Statements
155
The Dutch entities Lanthio Pharma B.V. and LanthioPep B.V. are subject
to an income tax rate of 25 % on annual income exceeding € 200,000;
annual income below € 200,000 is subject to a tax rate of 19 %. Depend-
ing on certain conditions, the Dutch “Innovation Box” may be applicable.
This “Innovation Box” provides for a special tax regulation under which
all income to be allocated to qualifying intellectual property is subject
to an effective Dutch corporate income tax rate of previously 5 %, and
now 7 % since January 1, 2018.
In the Netherlands the reduction of corporate income tax from 25 % to
21.7% on an annual income exceeding € 200.00 was decided in 2019
and will be effective from 2021. The corresponding deferred taxes
were therefore revalued. Deferred taxes expected to reverse in 2020
were measured at the effective tax rate of 25 % applicable at that time.
For fiscal years after December 31, 2020, the Group has applied the new
tax rate of 21.7 %. In addition, 70 % of income was considered taxable
under the “Innovation Box”, resulting in a weighted tax rate of 11.41 %.
in 000’ €
Current Tax IncomeBenefit/(Expense) (Thereof Regarding Prior Years: € 0; 2018: k€ 1; 2017: k€ 171)
Deferred Tax Benefit/(Expenses)
Total Income Tax Benefit/(Expenses)
The deferred tax benefit in 2019 resulted mainly from the Dutch entities
Lanthio Pharma B.V. and LanthioPep B.V. with the mentioned change in
the applicable tax rate. This effect from change in tax rates were recog-
nized in the statement of profit or loss with an amount of € 1.8 million
tax benefit, as they did not affect any items that had previously been
recognized directly in equity. A tax benefit of € 1.4 million is recognized
from deferred taxes on loss carryforwards previously not recognized.
The following table reconciles the expected income tax expense to the
actual income tax expense as presented in the consolidated financial
statements. The combined income tax rate of 26.675 % in the 2019 finan-
cial year (2018: 26.675 %; 2017: 26.675 %) was applied to profit before
taxes to calculate the statutory income tax expense. This rate consisted
of corporate income tax of 15.0 %, a solidarity surcharge of 5.5 % on the
corporate tax and an average trade tax of 10.85 % applicable to the Group.
2019
(1)
3,507
3,506
2018
1
4,304
4,305
2017
(534)
(502)
(1,036)
in 000’ €
2019
2018
2017
Earnings Before Income Taxes
Expected Tax Rate
Expected Income Tax
Tax Effects Resulting from:
Share-based Payment
Permanent Differences
Non-Tax-Deductible Items
Differences in Profit or Loss-Neutral Adjustments
Non-Recognition of Deferred Tax Assets on Temporary Differences
Non-Recognition of Deferred Tax Assets on Current Year Tax Losses
Tax Rate Differences to Local Tax Rates
Effect of Tax Rate Changes
Prior Year Taxes
Other Effects
Actual Income Tax
(106,520)
26,675 %
28,414
(387)
(101)
(151)
(310)
0
(24,285)
(1,461)
1,789
0
(2)
3,506
(60,477)
26,675 %
16,132
(363)
0
(126)
3,716
(349)
(14,497)
(268)
0
1
59
4,305
(68,790)
26,675 %
18,350
(290)
0
(134)
37
3,256
(22,007)
(71)
0
(171)
(6)
(1,036)
F inancial Statements
156
Notes
As of December 31, 2019, due to losses that are expected to be incurred
as a result of continued substantial investment in proprietary product
development and related business development of the MorphoSys Group,
no deferred tax assets in the amount of € 76.0 million (December 31,
2018: € 51.0 million) were recognized for tax loss carryforwards.
In Germany, due to uncertain forecasts, a deferred tax asset can only be
capitalized to the extent sufficient deferred tax liabilities from tempo-
rary differences exist. Due to the history of losses and the current uncer-
tainties regarding the realization of planned taxable income, corre-
sponding deferred tax assets of € 6.3 million were not recognized.
in 000' €
Tax Losses from Prior Years
Tax Losses from Current Year
Expiry of Tax Losses in 2019
Total Tax Losses as of December 31, 2019
Expected Deferred Tax Assets on Total Tax Losses
Write-Down of on Deferred Tax Assets on Total Tax Losses
Deferred Tax Assets on Tax Losses as of December 31, 2019
Deferred tax assets and deferred tax liabilities consist of the following.
in 000’s €, as of December 31
Leases
Intangible Assets
Receivables and Other Assets
Other Provisions
Other Liabilities
Tax Losses
Offsetting
TOTAL
in 000’s €, as of December 31
Leases
Intangible Assets
Receivables and Other Assets
Other Provisions
Other Liabilities
Tax Losses
TOTAL
Unlimited
Carry-
Forward of
Tax Losses
177,317
118,100
0
295,417
77,607
75,115
2,492
Limited
Carry-
Forward of
Tax Losses;
Expiry 2020
to 2025
17,478
2,961
(4)
20,435
2,322
981
1,351
Total
194,795
121,061
(4)
315,852
79,939
76,096
3,843
Deferred Tax
Asset 2019
Deferred Tax
Asset 2018
Deferred Tax
Liability 2019
Deferred Tax
Liability 2018
1
8,138
0
0
0
3,873
(11,982)
0
0
0
319
278
213
0
(810)
0
448
1,351
55
9,778
350
0
(11,982)
0
0
4,317
0
0
0
0
(810)
3,507
Changes in Deferred Taxes in 2019
Recognized in Profit or Loss
Income/(Expense)
Recognized in Other
Comprehensive Income
(447)
11,103
(373)
(10,056)
(563)
3,843
3,507
0
0
0
0
0
0
0
Notes
F inancial Statements
157
As of December 31, 2019, temporary differences amounted to € 0.6 mil-
lion (December 31, 2018: € 1.0 million) in connection with investments
in subsidiaries (“outside basis differences”) for which no deferred tax
liabilities were recognized (2018: no deferred tax assets).
5 Notes to the Assets of the Balance
Sheet
5.1 C ASH AND C ASH EQUIVAL EN T S
4 .5 E ARNINGS PER SHARE
Earnings per share are calculated by dividing the 2019 consolidated
net loss of € 103,014,058 (2018: consolidated net loss of € 56,172,121;
2017: consolidated net loss of € 69,826,469) by the weighted-average
number of ordinary shares outstanding during the respective year
(2019: 31,611,155; 2018: 31,338,948; 2017: 28,947,566).
The table below shows the calculation of the weighted-average number
of ordinary shares.
SHARES IS SUED ON JANUARY 1
31,839,572
29,420,785
2019
2018
in 000’ €
12/31/2019
12/31/2018
Bank Balances and Cash in Hand
Impairment
Cash and Cash Equivalents
44,314
0
44,314
45,476
(16)
45,460
The presentation of the development of the expected twelve-month loss
for cash and cash equivalents to be recognized under IFRS 9 can be
found in Note 2.3.1*.
*C R O S S - R E F E R E N C E to page 132
Effect of Treasury Shares Held
on January 1
Effect of Share Issuance
Effect of Transfer of Treasury Stock/
Shares Issued in January
Effect of Transfer of Treasury Stock/
Shares Issued in February
Effect of Transfer of Treasury Stock/
Shares Issued in March
Effect of Transfer of Treasury Stock/
Shares Issued in April
Effect of Transfer of Treasury Stock/
Shares Issued in May
Effect of Transfer of Treasury Stock/
Shares Issued in June
Effect of Transfer of Treasury Stock/
Shares Issued in July
Effect of Transfer of Treasury Stock/
Shares Issued in August
Effect of Transfer of Treasury Stock/
Shares Issued in September
Effect of Transfer of Treasury Stock/
Shares Issued in October
Effect of Transfer of Treasury Stock/
Shares Issued in November
Effect of Transfer of Treasury Stock/
Shares Issued in December
(281,036)
0
(319,678)
2,208,146
247
230
208
10,500
5,789
296
588
278
0
0
1,863
4,128
756
1,874
1,533
17,754
25,122
2,818
331
7,702
73
76
85
63
WEIG HTED - AVER AG E NUMBER OF
SHARES OF C OMMON STO CK
31,611,155
31,338,948
In 2019, 2018 and 2017, diluted earnings per share equaled basic earn-
ings per share. The effect of 115,684 potentially dilutive shares in 2019
(2018: 52,930 dilutive shares; 2017: 87,904 dilutive shares) resulting
from stock options granted to the Management Board, the Senior Man-
agement Group and employees of the company who are not members of
the Senior Management Group, has been excluded from the diluted
earnings per share because it would result in a decrease in the loss per
share and is therefore not to be treated as dilutive.
F inancial Statements
Notes
158
5.2
F INANC IAL ASSE T S AT FAIR VAL UE , WI T H CHANGE S
RECO GNI ZED IN PROF I T OR L O SS AND O T HER F INANC IAL
ASSE T S AT AMOR T I ZED CO S T S
in 000’ €
DECEMBER 31, 2019
Money Market Funds
TOTAL
DECEMBER 31, 2018
Money Market Funds
TOTAL
Maturity
Cost
Gains
Losses
Market Value
Gross Unrealized
daily
20,330
daily
44,718
125
0
0
(137)
20,455
20,455
44,581
44,581
Since January 1, 2018, realized and unrealized gains and losses on
money market funds held or sold were recognized in the finance result
in profit or loss in accordance with IFRS 9. The sale of financial assets
resulted in a net gain of € 0.4 million in 2019 (2018: net losses of less
than € 0.1 million). In 2017, in accordance with IAS 39, the Group recog-
nized a net gain of less than € 0.1 million in profit or loss resulting from
the sale of financial assets previously recognized in equity.
in 000’ €
DECEMBER 31, 2019
Term Deposits, Current Portion
Corporate Bonds
Term Deposits, Net of Current Portion
TOTAL
DECEMBER 31, 2018
Term Deposits, Current Portion
Commercial Papers
Term Deposits, Net of Current Portion
TOTAL
Maturity
Cost
Unrealized
Interest Gain
Impairment
Carrying
amount
4 – 12 Months
207,846
More than
12 Months
More than
12 Months
4 – 12 Months
4 – 12 Months
More than
12 Months
10,000
75,000
219,720
50,000
96,090
90
1
18
2
0
12
(201)
207,735
0
(97)
(744)
(55)
(353)
10,001
74,921
292,657
218,978
49,945
95,749
364,672
As of December 31, 2019, these assets mainly consisted of term deposits
with fixed or variable interest rates, as well as corporate bonds with
fixed interest.
Interest income from financial assets “at amortized cost” amounted to
€ 0.1 million in 2019 (2018: € 0.1 million in interest income from finan-
cial assets “at amortized cost”; 2017: € 0.2 million in interest income
from “loans and receivables”) and were recognized in the finance result.
The risk associated with these financial instruments results primarily
from bank credit risks. The presentation of the development of the ex-
pected twelve-month loss that is to be recognized under IFRS 9 and the
lifetime expected credit loss for term deposits and corporate bonds can
be found in Note 2.3.1*.
*C R O S S - R E F E R E N C E to page 132
Further information on the accounting for financial assets is provided
in Note 2.8.1*.
*C R O S S - R E F E R E N C E to page 144
Notes
F inancial Statements
159
5.3 ACCOUN T S RECEIVABL E
All accounts receivable are non-interest bearing, and generally have
payment terms of between 30 and 45 days. As of December 31, 2019
and December 31, 2018, accounts receivable included unbilled receiv-
ables amounting to € 13.4 million and € 14.1 million, respectively.
Unbilled receivables decreased mainly due to royalty payments not yet
received and unbilled services associated with the transfer of projects
to customers.
The presentation of the development of the risk provisions to be recog-
nized in accordance with IFRS 9 in the 2019 and 2018 financial years
for accounts receivable using the simplified impairment model can be
found in Note 2.3.1*.
*C R O S S - R E F E R E N C E to page 132
5.4 O T HER RECEIVABL E S
Other receivables as of December 31, 2019, mainly consisted of receiv-
ables from unrealized gross gains on forward rate agreements in the
amount of € 0.4 million (December 31, 2018: € 0.1 million unrealized
gross gain). The forward rate agreements were classified as financial
assets at fair value through profit or loss in accordance with IFRS 9.
As of December 31, 2019 and December 31, 2018, there were no impair-
ments recognized on other receivables.
5.5
I NCOME TAX RECEIVABL E S, INVEN T ORIE S, PREP AID
EXPENSE S AND O T HER CURREN T ASSE T S
As of December 31, 2019 income tax receivables amounted to € 0.1 mil-
lion (December 31, 2018: € 0.2 million) and consisted of receivables
from capital gain taxes withheld and income taxes for prior years.
Inventories amounting to € 0.3 million as of December 31, 2019 (De-
cember 31, 2018: € 0.2 million) were stored at the Planegg location and
consisted of raw materials and supplies. In addition to raw materials
and supplies, inventory as of December 31, 2019, also comprised man-
ufacturing costs for the fermentation runs of antibody material (tafasi-
tamab) that is required for the approval process in the United States. If
successfully approved, the material may be used later for commercial-
ization. Commercialization is regarded as a sale in the ordinary course
of business in accordance with IAS 2, hence the material is accounted
for as inventory. According to the Group’s accounting policies, these
quantities qualify as inventory. For the time being, this inventory is
valued at a net realizable value of zero because tafasitamab has not yet
received market approval. The resulting expenses in the amount of
€ 8.7 million was accounted for in cost of sales.
As of December 31, 2019, prepaid expenses and other current assets
mainly consisted of combination compounds in the amount of € 4.8 mil-
lion (December 31, 2018: € 5.4 million), receivables due from tax au-
thorities from input tax surplus of € 3.5 million (December 31, 2018:
€ 2.7 million), upfront fees for external laboratory services of € 0.7 mil-
lion (December 31, 2018: € 1.9 million), upfront fees for sublicenses of
€ 0.5 million (December 31, 2018: € 0.4 million) and other prepayments
amounting to € 4.6 million (December 31, 2018: € 1.3 million). An im-
pairment of € 0.3 million was recognized on combination compounds
in 2019 (December 31, 2018: € 4.8 million).
F inancial Statements
160
5.6 PR OPER T Y, PL AN T AND EQUIPMEN T
in 000’ €
Cost
JANUARY 1, 2019
Additions
Disposals
DECEMBER 31, 2019
Accumulated Depreciation and Impairment
JANUARY 1, 2019
Depreciation Charge for the Year
Impairment
Disposals
DECEMBER 31, 2019
Carrying Amount
JANUARY 1, 2019
DECEMBER 31, 2019
Cost
JANUARY 1, 2018
Additions
Disposals
DECEMBER 31, 2018
Accumulated Depreciation and Impairment
JANUARY 1, 2018
Depreciation Charge for the Year
Disposals
DECEMBER 31, 2018
Carrying Amount
JANUARY 1, 2018
DECEMBER 31, 2018
No borrowing costs were capitalized during the reporting period, and
there were neither restrictions on the retention of title nor property,
plant and equipment pledged as security for liabilities. There were no
material contractual commitments for the purchase of property, plant
and equipment as of the reporting date.
Depreciation is contained in the following line items of profit or loss.
in 000’ €
Research and Development
Research and Development (Impairment)
Selling
General and Administrative
TOTAL
Notes
Total
18,597
3,099
(920)
20,776
15,066
1,966
10
(919)
16,123
3,531
4,653
19,836
1,821
(3,060)
18,597
16,310
1,812
(3,056)
15,066
3,526
3,531
2017
1,672
0
0
297
1,969
Office and
Laboratory
Equipment
Furniture and
Fixtures
17,658
1,647
(919)
18,386
14,758
1,805
10
(919)
15,654
2,900
2,732
17,335
1,780
(1,457)
17,658
14,490
1,723
(1,455)
14,758
2,845
2,900
2019
1,478
10
92
396
1,976
939
1,452
(1)
2,390
308
161
0
0
469
631
1,921
2,501
41
(1,603)
939
1,820
89
(1,601)
308
681
631
2018
1,398
0
87
327
1,812
Notes
F inancial Statements
161
L EASE S
5.7
The development of the right-of-use assets and lease liabilities in the
2019 financial year is shown below.
Right-of-Use Assets
Lease Liabilities
in 000’ €
Balance as of January 1, 2019
Additions
Depreciation of Right-of-Use Assets
Interest Expenses on Lease Liabilities
Lease Payments
Balance as of December 31, 2019
Building
42,094
3,009
(2,517)
0
0
42,586
Cars
244
138
(144)
0
0
238
Technical
Equipment
168
312
(144)
0
0
336
Total
42,506
3,459
(2,805)
0
0
43,160
In the 2019 financial year, IFRS 16 had the following effects on the
statement of profit or loss:
in 000’ €
Depreciation of Right-of-Use Assets
Interest Expenses on Lease Liabilities
Expenses for Short Term Leases
Expenses for Leases of Low Value Assets
TOTAL
The maturity analysis of the lease liabilities as of December 31, 2019 is
as follows.
40,783
4,122
0
932
(3,280)
42,557
2019
(2,805)
(932)
0
(41)
(3,778)
December 31, 2019; in 000’ €
Contractual Maturities of Financial Liabilities
Up to
One Year
Between
One and
Five Years
More than
Five Years
Total
Contractual
Cash Flows
Carrying Amount
Liabilities
Lease Liabilities
3,515
13,460
33,883
50,858
42,557
The Group has entered into an additional lease for office space in Boston
in January 2020. The minimum lease term of six and a half years results
in a contractually agreed cash outflow of US$ 5.6 million (€ 5.0 million).
The rental conditions for leases are negotiated individually and include
different terms. Leases are generally concluded for fixed periods but
may include extension options. Such contractual conditions offer the
Group the greatest possible operational flexibility. In determining the
term of the lease, all facts and circumstances are taken into account
that provide an economic incentive to exercise extension options. If
extension options are exercised with sufficient certainty, they are
taken into account when determining the term of the contract. The
leases contain fixed and variable lease payments linked to an index.
The Group has entered into a lease for a building in Boston and moved
into the office on September 19, 2019, the commencement date accord-
ing to IFRS 16. The minimum lease term of seven years results in a
contractually agreed cash outflow of US$ 5.0 million (€ 4.4 million).
The contract contains an extension option for five years and a lease
incentive of US$ 0.7 million (€ 0.7 million).
F inancial Statements
162
5.8
I N TANGIBL E ASSE T S
Notes
in 000’ €
Patents
Licenses
In-process R&D
Programs
Software
Goodwill
Total
Cost
JANUARY 1, 2019
Additions
DECEMBER 31, 2019
Accumulated Amortization
and Impairment
JANUARY 1, 2019
Amortization Charge for the Year
Impairment
December 31, 2019
Carrying Amount
JANUARY 1, 2019
DECEMBER 31, 2019
Cost
JANUARY 1, 2018
Additions
Disposals
DECEMBER 31, 2018
Accumulated Amortization
and Impairment
JANUARY 1, 2018
Amortization Charge for the Year
Impairment
Disposals
DECEMBER 31, 2018
Carrying Amount
JANUARY 1, 2018
DECEMBER 31, 2018
17,585
449
18,034
13,646
1,209
198
15,053
3,939
2,981
16,995
590
0
17,585
12,326
1,320
0
0
13,646
4,669
3,939
23,896
0
23,896
21,369
72
105
21,546
2,527
2,350
23,896
0
0
23,896
20,897
112
360
0
21,369
2,999
2,527
52,159
0
52,159
15,140
0
1,335
16,475
37,019
35,684
52,159
0
0
52,159
0
0
15,140
0
15,140
52,159
37,019
5,644
114
5,758
5,440
211
0
5,651
204
107
5,853
55
(264)
5,644
5,198
506
0
(264)
5,440
655
204
11,041
0
11,041
7,365
0
0
7,365
3,676
3,676
11,041
0
0
11,041
3,676
0
3,689
0
7,365
7,365
3,676
110,325
563
110,888
62,960
1,492
303
64,755
47,365
44,798
109,944
645
(264)
110,325
42,097
1,938
19,189
(264)
62,960
67,847
47,365
In the 2019 financial year, € 0.3 million of impairment losses were
recognized on patents and licenses. In the 2018 financial year,
€ 0.4 million of impairment losses were recognized on licenses. In
the 2017 financial year, € 0.1 million of impairment losses were recog-
nized on patents and licenses.
As of December 31, 2019, in-process research and development pro-
grams were subject to an impairment test as required by IAS 36. This
test indicated a need for impairment. Further details on the impair-
ment of in-process research and development programs can be found
in Note 5.8.3*.
*C R O S S - R E F E R E N C E to page 163
The carrying amount of intangible assets pledged as security was
€ 11.7 million and relates to a government grant in the amount of
€ 1.5 million.
Notes
F inancial Statements
163
Amortization was included in the following line items of profit or loss.
in 000’ €
Research and Development
Research and Development (Impairment)
Selling
General and Administrative
TOTAL
2019
2018
2017
1,444
1,639
11
37
3,131
1,822
19,189
25
91
21,127
1,958
9,864
0
103
11,925
5.8.1 P ATE NTS
In the 2019 financial year, the carrying amount of patents declined by
€ 0.9 million from € 3.9 million to € 3.0 million. This decline resulted
from additions amounting to € 0.4 million for patent applications,
particularly for proprietary programs and technologies, which were
offset by straight-line amortization of € 1.2 million and impairments of
€ 0.2 million.
5.8.2 LI CE NSES
In the 2019 financial year, the carrying amount of licenses declined by
€ 0.2 million from € 2.5 million to € 2.3 million as a result of scheduled
amortization and impairment..
5.8.3 I N - PRO CES S R&D PRO GR AMS
The carrying amount of in-process R&D programs decreased by
€ 1.3 million to € 35.7 million in 2019. This decline was due to an
impairment in the amount of € 1.3 million (see information on the
Lanthio Group).
As of December 31, 2019, this balance sheet item included capitalized
payments from the in-licensing of a compound for the Proprietary Devel-
opment segment, as well as milestone payments made for this compound
at a later date. A compound obtained through an acquisition was also
included.
TA FAS I TA M A B
As an intangible asset with indefinite useful life (no foreseeable limit
to the period over which this compound is expected to generate cash
flows) and a carrying amount of € 23.9 million, tafasitamab was subject
to an annual impairment test on September 30, 2019, as required by
IAS 36. The recoverable amount of the tafasitamab cash-generating
unit was determined on the basis of value-in-use calculations, which
concluded that the recoverable amount of the cash-generating unit ex-
ceeded its carrying amount. The cash flow forecasts took into account
expected cash inflows from the potential commercialization of tafasi-
tamab, the cash outflows for anticipated research and development, and
the costs for tafasitamab’s commercialization. The cash flow forecasts
are based on the period of patent protection for tafasitamab. For this
reason, a planning horizon of approximately 20 years is considered ap-
propriate for the value-in-use calculation. The values of the underlying
assumptions were determined using both internal (past experience)
and external sources of information (market information). Based on the
updated cash flow forecast, the value-in-use was determined as follows:
A beta factor of 1.2 (2018: 1.2) and WACC before taxes of 10.1 % (2018:
10.0 %). A detailed sensitivity analysis was performed for the dis-
count rate. A sensitivity analysis for changes in the cash flows was
not performed since the cash flows from research and development and
the commercialization of the compound have already been probability-
adjusted in the value-in-use calculations so as to reflect the probabilities
of success in phases of clinical trials. The analysis did not reveal any
need for impairment. The values ascribed to the assumptions corre-
spond to the Management Board’s forecasts for future development and
are based on internal planning scenarios, as well as external sources
of information. No indicators of impairment were identified on Decem-
ber 31, 2019.
L A N T H I O G RO U P
On September 30, 2019, an intangible asset not yet available for use
(MOR107) from the Lanthio Group acquisition was subject to an annual
impairment test. The cash flow forecasts included planned cash in-
flows from the potential sale of compounds based on lanthipeptides
expected to achieve market approval. These cash inflows were offset by
expected operating expenses for compound development and clinical
trials as well as sales and administrative expenses. The duration and
likelihood of individual stages of the study were also taken into consid-
eration. Cash flow forecasts are based on a period of 30 years as the
Management Board believes that after the successful approval of com-
pounds, the drugs that follow can generate free cash flows within that
period of time. The recoverable amount resulting from the adjusted
cash flow forecast of the cash-generating unit Lanthio Group, which is
part of the Proprietary Development segment, was determined on the
basis of value-in-use calculations. The value-in-use amounted to
€ 12.1 million, which was below the carrying amount of the cash-gen-
erating unit, resulting in an impairment of € 1.3 million for in-process
R&D programs. After impairment, the carrying amount of in-process
R&D programs amounted to € 11.7 million. The values of the underlying
assumptions were determined using both internal (past experience)
and external sources of information (market information). On the basis
of the updated cash flow forecast, the value-in-use was determined as
follows: A beta factor of 1.2 (2018: 1.2) and WACC before taxes of 11.3 %
(2018: 11.5 %). A detailed sensitivity analysis was performed with regard
to the discount rate. A sensitivity analysis for changes in the cash flows
has not been performed since the cash flows had already been proba-
bility-adjusted in the value-in-use calculations so as to reflect the prob-
abilities of success in phases of clinical trials. This analysis did not
reveal the need for any additional impairment. The values ascribed to
the assumptions correspond to the Management Board’s forecasts for
future development and are based on internal planning scenarios as
well as external sources of information.
No indicators for additional impairments were identified as of Decem-
ber 31, 2019.
F inancial Statements
164
Notes
5.9
I NVE S T MEN T S AT FAIR VAL UE , WI T H CHANGE S
RECO GNI ZED IN O T HER COMPREHENSIVE INCOME
This item concerns investments in adivo GmbH, Martinsried, Germany,
and Vivoryon Therapeutics AG, Halle (Saale), Germany.
In July 2018, MorphoSys AG acquired a 19.9 % stake in adivo GmbH in
the context of start-up financing. MorphoSys made a cash contribution
of € 9,458 and a contribution in kind of € 350,000. The contribution in
kind comprised the adivo brand and a license for a fully synthetic
canine-based antibody library. The fair value as of December 31, 2019
was € 0.4 million (December 31, 2018: € 0.2 million).
In July 2019, MorphoSys and Vivoryon Therapeutics AG announced an
agreement under which MorphoSys received an exclusive license option
for Vivoryon’s small molecule QPCTL inhibitors in the field of oncology.
In return, MorphoSys took a minority stake in Vivoryon as part of a
capital increase planned for the end of 2019. This capital increase was
executed on October 24, 2019 through the issue of a total of 7,674,106
ordinary bearer shares. The increase was recorded in the commercial
register on October 25, 2019. MorphoSys acquired a 13.4 % stake in
Vivoryon through the subscription of 2,673,796 ordinary bearer shares
valued at € 15.0 million. As of December 31, 2019, the fair value of the
investment was valued at € 13.7 million.
5.8.4 SOF T WARE
In the 2019 financial year, additions to this balance sheet item totaled
€ 0.1 million. The carrying amount decreased by € 0.1 million from
€ 0.2 million in 2018 to € 0.1 million in 2019. Additions were offset by
amortization of € 0.2 million.
5.8.5 G O ODWILL
The annual goodwill impairment test was performed on Septem-
ber 30, 2019.
S LO N O M I C S T EC H N O LO GY
As of September 30, 2019, goodwill of € 3.7 million from the 2010 acqui-
sition of Sloning BioTechnology GmbH was subject to an impairment
test as required by IAS 36. The recoverable amount of the cash-generat-
ing unit Slonomics technology, which is part of the Partnered Discovery
segment, was determined on the basis of value-in-use calculations. The
calculation showed that the value-in-use was higher than the carrying
amount of the cash-generating unit. The cash flow forecasts took into
account future free cash flows from the contribution of the Slonomics
technology to partnered programs. The cash flow forecasts are based on
a period of ten years because the Management Board believes that
commercialization through licensing agreements, milestone payments,
and royalties is only feasible by means of medium- to long-term con-
tracts. For this reason, a planning horizon of ten years is considered
appropriate for the value-in-use calculation. The cash flow forecasts
are largely based on the assumption that the Slonomics technology is
very beneficial for customers. The values of the underlying assumptions
were determined using both internal (past experience) and external
sources of information (market information). Based on the updated ten-
year cash flow forecast, the value-in-use was determined as follows: A
beta factor of 1.2 (2018: 1.2), WACC before taxes of 9.4 % (2018: 9.6 %) and
a perpetual growth rate of 1 % (2018: 1 %). A detailed sensitivity analysis
was performed for the growth rate and the discount rate for calculating
value-in-use. The sensitivity analysis took into account the change in
one assumption, with the remaining assumptions remaining unchanged
from the original calculation. A sensitivity analysis for changes in the
cash flows has not been performed since the cash flows have already
been probability-adjusted in the value- in-use calculations so as to reflect
the probabilities of success in phases of clinical trials. This analysis did
not reveal any need for impairment. The values ascribed to the as-
sumptions correspond to the Management Board’s forecasts for future
development and are based on internal planning scenarios as well as
external sources of information.
No indicators for impairment were identified as of December 31, 2019.
Notes
F inancial Statements
165
Currency
Stake in %
Equity in
Domestic
Currency
Profit / Loss for
the Year in Do-
mestic Currency
adivo GmbH, Martinsried, Germany
Vivoryon Therapeutics AG, Haale (Saale), Germany
€
€
19.9
13.4
120,581
1,542,624
(276,947)
(7,703,473)
In the financial years 2019 and 2018, neither dividends from the in-
vestments were recognized in profit or loss nor were reclassifications
of gains or losses within equity made.
Vivoryon Therapeutics AG is listed on an active market, so the fair
value of this investment is determined by means of the stock market
price on a reporting date. No observable market data is available for the
determination of the fair value of the investment in adivo GmbH. The
change in the investment in adivo GmbH is shown below.
The Group classified certain line items in other assets as “restricted
cash” that are not available for use in the Group’s operations (see Notes
2.8.1* and 5.1*). As of December 31, 2019, the Group held non-current
restricted cash in the amount of € 0.8 million for issued rent deposits
(December 31, 2018: € 0.7 million) and of less than € 0.1 million for
convertible bonds granted to employees (December 31, 2018: € 0.1 mil-
lion). As of December 31, 2019, € 0.2 million were deposited as collat-
eral by MorphoSys US Inc.
*C R O S S - R E F E R E N C E to page 144 and page 157
in 000’ €
Opening Balance
Additions
Disposals
Through Other Comprehensive
Income
Through Profit or Loss
Closing Balance
2019
2018
This line item consists of the following:
232
0
0
155
0
387
0
359
0
(127)
0
232
in 000’ €
12/31/2019
12/31/2018
Prepaid Expenses, Net of Current
Portion
Other Current Assets
TOTAL
134
1,002
1,136
2,199
783
2,982
The significant unobservable input parameters used in the measure-
ment of the investment in adivo GmbH were corporate planning assump-
tions, the probability-weighted estimate of cash flows and the discount
rate. From the information currently available, a material change in
corporate planning is not considered likely and therefore the cash flow
forecasts used are considered suitable for determining the fair value. A
change in the pre-tax WACC of +/–1.0 % would cause a € 0.1 million
lower or € 0.1 million higher amount of equity. A sensitivity analysis for
changes in cash flows was not performed because the cash flows have
already been probability-adjusted in the fair value calculation to reflect
the probabilities of success in the various stages of development. There
are no significant relationships between the significant unobservable
input parameters.
5.10 P REP AID EXPENSE S AND O T HER ASSE T S,
NE T OF CURREN T P OR T ION
This balance sheet item included the non-current portion of prepaid
expenses and other assets. The decline in prepaid expenses mainly
resulted from the offset as of January 1, 2019, of prepaid rent for the
premises in Semmelweisstrasse 7 in Planegg against the right-of-use
asset due to the application of IFRS 16. Further information can be found
in Notes 2.1.2*.
*C R O S S - R E F E R E N C E to page 129
6 Notes to Equity and Liabilities
of the Balance Sheet
6.1 ACCOUN T S P AYABL E AND ACCRUAL S
Accounts payable and licenses payable were non-interest-bearing
and, under normal circumstances, have payment terms of no more than
30 days.
Accounts payable are listed in the table below.
in 000’ €
12/31/2019
12/31/2018
Trade Accounts Payable
Licenses Payable
Accruals
Other Liabilities
TOTAL
10,655
357
44,971
1,059
57,042
7,215
184
36,530
832
44,761
Accruals mainly included provisions for external laboratory services
in the amount of € 24.4 million (December 31, 2018: € 26.2 million),
accrued personnel expenses from payments to employees and manage-
ment in the amount of € 14.0 million (December 31, 2018: € 5.1 mil-
lion), provisions for outstanding invoices in the amount of € 5.6 million
(December 31, 2018: € 2.8 million), legal fees of € 0.3 million (Decem-
ber 31, 2018: € 1.5 million), audit fees and other related costs of
€ 0.7 million (December 31, 2018: € 0.5 million) and license payments
of € 0.1 million (December 31, 2018: € 0.1 million).
F inancial Statements
166
Notes
At the Company’s Annual General Meeting in May 2019, the Pricewater-
houseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC GmbH),
Munich, was appointed as the auditor. The Supervisory Board engaged
PwC GmbH to audit the financial statements.
In the 2019 financial year, PwC GmbH received total fees from MorphoSys
of € 1,191,435, including fees for audit services for non-audit projects of
€ 872,785 and fees for other assurance services in connection with a
comfort letter of € 318,650. PwC GmbH did not provide tax advisory
services and other services in 2019.
T AX PROVI SIONS AND O T HER PROVI SIONS
6.2
As of December 31, 2019, the Group recorded tax provisions and other
provisions of € 0.4 million (2018: € 0.4 million).
Tax provisions mainly consisted of income tax expenses and other
provisions included primarily expenses for personnel recruitment.
As of December 31, 2019, tax provisions and other provisions were
uncertain in their amount and were expected to be utilized in 2020.
The table below shows the development of tax provisions and current
and non-current other provisions in the 2019 financial year.
in 000’ €
Tax Provisions
Other Provisions
TOTAL
01/01/2019
Additions
Utilized
Released
12/31/2019
208
184
392
0
1,074
1,074
113
714
827
0
198
198
95
346
441
6.3 CON T RAC T L IABIL I T IE S
Contract liabilities related to transaction prices paid by customers that
were allocated to unfulfilled performance obligations as of December 31,
2019. It is expected that current contract liabilities will be realized in
the 2020 financial year and non-current contract liabilities mainly in
the 2021 financial year. The changes in this item are set out below.
6.4 O T HER L IABIL I T IE S
As of December 31, 2018, other liabilities exclusively consisted of the
accrued amount related to the rent-free period for the building located
at Semmelweisstrasse 7, Planegg, as agreed in the lease contract. This
item was released over the contractually agreed minimum rent period.
in 000’ €
2019
2018
As of December 31, 2018, the current portion amounting to € 0.1 million
of this liability was included in the item accounts payable and accruals.
As of January 1, 2019, both positions were offset against the right-of-
use asset due to the application of IFRS 16. Further information can be
found in Notes 2.1.2*.
*C R O S S - R E F E R E N C E to page 129
OPENING BAL ANCE BEFORE
APPLICATION OF IFRS 15
Application of IFRS 15
OPENING BAL ANCE AF TER
APPLICATION OF IFRS 15
Prepayments Received in the
Fiscal Year
Revenues Recognized in the
Reporting Period that was included
in the Contract Liability at the
Beginning of the Period
Revenues Recognized for Received
Prepayments and Services
Performed in the Fiscal Year
CLOSIN G BAL ANCE
thereof short-term
thereof long-term
–
–
952
6,070
1,695
(1,135)
560
2,386
(794)
(306)
(4,542)
1,686
1,571
115
(1,688)
952
794
158
Notes
F inancial Statements
167
6.5 S T O CKHOL DERS’ EQUI T Y
6.5.1 C OMMON STO CK
As of December 31, 2019, the Company’s common stock, including
treasury shares, amounted to € 31,957,958, representing an increase of
€ 118,386 compared to the level of € 31,839,572 as of December 31,
2018. Each share of common stock grants one vote. Common stock
increased by € 118,386 or 118,386 shares as a result of the exercise of
118,386 convertible bonds granted to the Management Board and for-
mer employees. The weighted-average exercise price of the exercised
convertible bonds was € 31.88.
6.5.2 A UTHORIZE D CAPITAL
Compared to December 31, 2018, the number of authorized ordinary
shares increased from 14,684,291 to 14,843,488. At the Annual General
Meeting on May 22, 2019, new Authorized Capital 2019-I in the amount
of € 159,197 was created. Under the Authorized Capital 2019-I, the Man-
agement Board was authorized, with the consent of the Supervisory
Board, to increase the Company’s share capital on one or more occasions
by a total of up to €159,197 by issuing up to 159,197 new no-par- value
bearer shares until and including the date of April 30, 2024.
Pursuant to the Company’s articles of association, the shareholders
may authorize the Management Board to increase the share capital
with the consent of the Supervisory Board within a period of five years
by issuing shares for a specific total amount referred to as authorized
capital (Genehmigtes Kapital), which is a concept under German law
that enables the company to issue shares without going through the
process of obtaining an additional shareholders’ resolution. The aggre-
gate nominal amount of the authorized capital created by the share-
holders may not exceed half of the share capital existing at the time of
registration of the authorized capital in the commercial register.
6.5.3 C ONDITIONAL CAPITAL
The number of ordinary shares of conditional capital compared to De-
cember 31, 2018 decreased from 6,459,146 to 6,340,760 shares due to
the exercise of 118,386 conversion rights in 2019. The reduction in ordi-
nary shares of conditional capital through the exercise of 118,386 con-
version rights was recorded in the commercial register in January 2020.
The shareholders may resolve to amend or create conditional capital
(Bedingtes Kapital). However, they may do so only to issue conversion
or subscription rights to holders of convertible bonds, in preparation
for a merger with another company or to issue subscription rights to
employees and members of the Management Board of the Company or of
an affiliated company by way of a consent or authorization resolution.
According to German law, the aggregate nominal amount of the condi-
tional capital created at the shareholders’ meeting may not exceed half
of the share capital existing at the time of the shareholders’ meeting
adopting such resolution. The aggregate nominal amount of the condi-
tional capital created for the purpose of granting subscription rights to
employees and members of the management of our Company or of an
affiliated company may not exceed 10 % of the share capital existing at
the time of the shareholders’ meeting adopting such resolution.
6.5.4 T RE ASURY STO CK
In the years 2019 and 2018, the Group did not repurchase any of its own
shares. The composition and development of this line item are listed in
the following table.
As of 12/31/2010
Purchase in 2011
As of 12/31/2011
Purchase in 2012
As of 12/31/2012
Purchase in 2013
As of 12/31/2013
Purchase in 2014
As of 12/31/2014
Purchase in 2015
Transfer in 2015
As of 12/31/2015
Purchase in 2016
Transfer in 2016
As of 12/31/2016
Transfer in 2017
As of 12/31/2017
Transfer in 2018
As of 12/31/2018
Transfer in 2019
As of 12/31/2019
Number of
Shares
79,896
84,019
163,915
91,500
255,415
84,475
339,890
111,000
450,890
88,670
(104,890)
434,670
52,295
(90,955)
396,010
(76,332)
319,678
(38,642)
281,036
(55,236)
225,800
Value
9,774
1,747,067
1,756,841
1,837,552
3,594,393
2,823,625
6,418,018
7,833,944
14,251,962
5,392,931
(3,816,947)
15,827,946
2,181,963
(3,361,697)
14,648,212
(2,821,231)
11,826,981
(1,428,208)
10,398,773
(2,041,523)
8,357,250
As of December 31, 2019, the Company held 225,800 shares of treasury
stock valued at € 8,357,250, representing a decline of € 2,041,523 com-
pared to December 31, 2018 (281,036 shares; € 10,398,773). The reason
for this decline was the transfer of 52,328 shares of treasury stock to
the Management Board and Senior Management Group from the 2015
Long-Term Incentive Plan (LTI Plan) in the amount of € 1,934,043. The
vesting period for this LTI program expired on April 1, 2019, and the
beneficiaries had or have the option within eight months to receive a
total of 52,328 shares.
In addition, 2,908 shares of treasury stock valued at €107,480 were
transferred to related parties. As a result, the number of MorphoSys
shares owned by the Company as of December 31, 2019, was 225,800
(December 31, 2018: 281,036). The repurchased shares may be used for
all of the purposes named in the authorization granted by the Annual
General Meeting on May 23, 2014, particularly for existing and future
employee stock option programs and/or to finance acquisitions. The
shares may also be redeemed.
6.5.5 A DDITIONAL PAID - IN CAPITAL
On December 31, 2019, additional paid-in capital amounted to
€ 628,176,568 (December 31, 2018: € 619,908,453). The total increase of
€ 8,268,115 resulted mainly from the allocation of personnel expenses
resulting from share-based payments in the amount of € 6,654,470, as
well as the exercise of convertible bonds in the amount of € 3,655,168.
There was an offsetting effect from the reclassification of shares of
treasury stock related to the allocation of shares under the 2015 perfor-
mance-based share plan in the amount of € 1,934,043 and the allocation
of shares of treasury stock to related parties in the amount of € 107,480.
F inancial Statements
168
Notes
6.5.6 R E VALUATION RESE RVE
Since January 1, 2018, this equity line item is no longer reported due to
the adoption of the new standard for financial instruments IFRS 9.
6.5.7 O THE R C OMPRE HE NSIVE INC OME RESE RVE
Reporting the line item “other comprehensive income reserve” began
as of January 1, 2018. As of December 31, 2019, this reserve contains
changes in the fair value of equity instruments recognized directly in
equity in the amount of € -1,160,160 (December 31, 2018: € -127.458) as
well as currency gains from consolidation in the amount of € 75,332
(December 31, 2018: currency losses of € -83,432). The currency gains
and losses from consolidation include exchange rate differences from
the revaluation of the financial statements of Group companies in for-
eign currencies and the differences between the exchange rates used
in the balance sheet and profit or loss.
6.5.8 A C CUMUL ATE D DE FICIT
The consolidated net loss for the year of € 103,014,058 is reported under
“accumulated deficit”. As a result, the accumulated deficit increased
from € 152,765,728 in the year 2018 to € 255,779,786 in 2019.
7 Remuneration System for the
Management Board and Employees
of the Group
7.1
S T O CK OP T ION PL ANS
7.1.1 2 017 STO CK OP TION PL AN
On April 1, 2017, MorphoSys established a stock option plan (SOP) for
the Management Board, the Senior Management Group and selected
employees of the Company who are not members of the Senior Manage-
ment Group (beneficiaries). In accordance with IFRS 2, the program is
considered an equity-settled share-based payment and is accounted for
accordingly. The grant date was April 1, 2017, and the vesting period/
performance period is four years. Each stock option grants up to two
subscription rights to shares in the Company. The subscription rights
vest each year by 25 % within the four-year vesting period, provided that
the performance criteria specified for the respective period have been
100 % fulfilled. The number of subscription rights vested per year is
calculated based on the key performance criteria of the absolute and
relative MorphoSys share price performance compared to the Nasdaq
Biotech Index and the TecDAX Index. The program’s performance cri-
teria can be met annually up to a maximum of 200 %. If the share price
development falls short of the program’s performance parameters, the
target achievement for that year is 0 %.
The exercise price, derived from the average market price of the Com-
pany’s shares in the XETRA closing auction on the Frankfurt Stock
Exchange from the 30 trading days prior to the issue of the stock op-
tions, is € 55.52.
MorphoSys reserves the right to settle the exercise of stock options
through newly created shares from Conditional Capital 2016-III, the is-
suance of treasury shares or in cash. The exercise period is three years
after the end of the four-year vesting period/performance period, which
is March 31, 2024.
If a member of the Management Board loses his or her position at
MorphoSys Group through termination (or the Management Board
member terminates the service contract), resignation, death, injury,
disability or the attainment of retirement age (receipt of a standard
retirement pension, early-retirement pension or disability pension, as
long as the requirements for the disability pension entitlement are
met) or under other circumstances subject to the Supervisory Board’s
discretion, the Management Board member (or the member’s heirs) is
entitled to a precise daily pro rata amount of subscription rights.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB), all unexercised stock options will be forfeited
without any entitlement to compensation.
If a change of control occurs during the four-year vesting period, the
stock options will become fully vested. In this case, however, the right
to exercise the stock options arises only at the end of the four-year
vesting period.
As of April 1, 2017, a total of 81,157 stock options had been granted to the
beneficiaries, of which 40,319 had been granted to the Management
Board (further details can be found in the “Stock Options” table in Note
7.5* “Related Parties”), 37,660 to the Senior Management Group and
3,178 to selected Company employees who do not belong to the Senior
Management Group. The original number of stock options granted was
based on 100 % target achievement. Based on the achievement of per-
formance criteria to date, the target achievement is expected to be
130.9 %. For performance criteria that have not yet been met, 100 % target
achievement is assumed. Under this assumption, the total number of
subscription rights to be exercised, i.e., the total number of shares to be
issued at the end of the four-year vesting period/performance period
would currently increase to 95,222 shares. The fair value of the stock
options on the grant date (April 1, 2017) was € 21.41 per stock option.
In the period from the grant date to December 31, 2019, seven benefi-
ciaries left MorphoSys, resulting in the forfeiture of 8,398 stock op-
tions. For the calculation of personnel expenses resulting from share-
based payment under the 2017 Stock Option Plan, the assumption is that
two beneficiaries would leave the Company during the four-year period.
This assumption was updated since 2018.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses from stock options under the Group’s 2017
SOP amounted to € 252,393 (2018: € 436,154).
7.1.2 2 018 STO CK OP TION PL AN
On April 1, 2018, MorphoSys established a stock option plan (SOP) for
the Management Board, the Senior Management Group and selected
Company employees who are not members of the Senior Management
Group (beneficiaries). In accordance with IFRS 2, the program is con-
sidered an equity-settled share-based payment and is accounted for
accordingly. The grant date was April 1, 2018, and the vesting period/
performance period is four years. Each stock option grants up to two
subscription rights to shares in the Company. The subscription rights
vest each year by 25 % within the four-year vesting period, provided
that the performance criteria specified for the respective period have
been 100 % fulfilled. The number of subscription rights vested per year
is calculated based on the key performance criteria of the absolute and
relative MorphoSys share price performance compared to the Nasdaq
Biotech Index and the TecDAX Index. The program’s performance cri-
teria can be met annually up to a maximum of 200 %. If the share price
development falls short of the program’s performance parameters, the
target achievement for that year is 0 %.
Notes
F inancial Statements
169
The exercise price, derived from the average market price of the Com-
pany’s shares in the XETRA closing auction on the Frankfurt Stock
Exchange from the 30 trading days prior to the issue of the stock op-
tions, is € 81.04.
MorphoSys reserves the right to settle the exercise of stock options
using either newly created shares from Conditional Capital 2016-III,
issuing treasury shares or in cash should the exercise from Conditional
Capital 2016-III not be possible. The exercise period is three years after
the end of the four-year vesting period/performance period, which is
March 31, 2025.
If a member of the Management Board loses his or her position at
MorphoSys Group prior to the end of the four-year vesting period/perfor-
mance period, the Management Board member (or the member’s heirs)
is entitled to a precise daily pro rata amount of subscription rights.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB), all unexercised stock options will be forfeited
without any entitlement to compensation.
If a cumulative absence of more than 90 days occurs during the four-
year vesting period/performance period, the beneficiary is entitled to a
precise daily pro rata amount of subscription rights. Absence is defined
as either a continued period of lost work time due to illness or inactivity
of a beneficiary or employment relationship without continued pay.
If a change of control occurs during the four-year vesting period, the
stock options will become fully vested. In this case, however, the right
to exercise the stock options arises only at the end of the four-year
vesting period.
As of April 1, 2018, a total of 67,778 stock options had been granted to
beneficiaries, of which 29,312 had been granted to the Management
Board (further details can be found in the “Stock Options” table in Note
7.5* “Related Parties”), 34,276 to the Senior Management Group and
4,190 to selected Company employees who do not belong to the Senior
Management Group. The stated number of stock options granted is based
on 100 % target achievement. Based on the achievement of performance
criteria to date, the target achievement is expected to be 105.9 %. For
performance criteria that have not yet been met, 100 % target achieve-
ment is assumed. Under this assumption, the total number of subscrip-
tion rights to be exercised, i.e., the total number of shares to be issued
at the end of the four-year holding period/performance period would
currently increase to 68,341 shares. The fair value of the stock options
on the grant date (April 1, 2018) was € 30.43 per stock option. In the
period from the grant date to December 31, 2019, four beneficiaries left
MorphoSys, resulting in the forfeiture of 2,443 stock options. For the
calculation of personnel expenses resulting from share-based pay-
ment under the 2018 Stock Option Plan, the assumption is that four
beneficiaries would leave the Company during the four-year period.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses from stock options under the Group’s 2018
SOP amounted to € 704,954 (2018: € 925,635).
7.1.3 2 019 STO CK OP TION PL AN
On April 1, 2019, MorphoSys established a stock option plan (SOP) for
the Management Board, the Senior Management Group and selected
employees of the Company who are not members of the Senior Manage-
ment Group (beneficiaries). In accordance with IFRS 2, the program is
considered an equity-settled share-based payment and is accounted for
accordingly. The grant date was April 1, 2019, and the vesting period/
performance period is four years. Each stock option grants up to two
subscription rights to shares in the Company. The subscription rights
vest each year by 25 % within the four-year vesting period, provided
that the performance criteria specified for the respective period have
been 100 % fulfilled. The number of subscription rights vested per year
is calculated based on the key performance criteria of the absolute and
relative MorphoSys share price performance compared to the Nasdaq
Biotech Index and the TecDAX Index. The program’s performance cri-
teria can be met annually up to a maximum of 200 %. If the share price
development falls short of the program’s performance parameters, the
target achievement for that year is 0 %.
The exercise price, derived from the average market price of the Com-
pany’s shares in the XETRA closing auction on the Frankfurt Stock
Exchange from the 30 trading days prior to the issue of the stock op-
tions, is € 87.86.
MorphoSys reserves the right to settle the exercise of stock options
using either newly created shares from Conditional Capital 2016-III,
issuing treasury shares or in cash should the exercise from Conditional
Capital 2016-III not be possible. The exercise period is three years after
the end of the four-year vesting period/performance period, which is
March 31, 2026.
If a member of the Management Board loses his or her position at
MorphoSys Group prior to the end of the four-year vesting period/
performance period, the Management Board member (or the member’s
heirs) is entitled to a precise daily pro rata amount of subscription rights.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB), all unexercised stock options will be forfeited
without any entitlement to compensation.
If a cumulative absence of more than 90 days occurs during the four-
year vesting period/performance period, the beneficiary is entitled to a
precise daily pro rata amount of subscription rights. Absence is defined
as either a continued period of lost work time due to illness or inactivity
of a beneficiary or employment relationship without continued pay.
If a change of control occurs during the four-year vesting period, the
stock options will become fully vested. In this case, however, the right
to exercise the stock options arises only at the end of the four-year
vesting period.
As of April 1, 2019, a total of 76,482 stock options had been granted to
beneficiaries, of which 31,395 had been granted to the Management
Board (further details can be found in the “Stock Options” table in Note
7.5* “Related Parties”), 38,005 to the Senior Management Group and
7,082 to selected Company employees who do not belong to the Senior
Management Group. The stated number of stock options granted is based
on 100 % target achievement. The fair value of the stock options on the
grant date was € 31.81 per stock option. In the period from the grant date
to December 31, 2019, one beneficiary had left MorphoSys, resulting in
F inancial Statements
170
Notes
the forfeiture of 267 stock options. For the calculation of personnel
expenses resulting from share-based payment under the 2019 Stock
Option Plan, the assumption is that four beneficiaries would leave the
Company during the four-year period.
*C R O S S - R E F E R E N C E to page 177
On October 1, 2019, MorphoSys established a further stock option plan
(SOP) for one member of the Management Board. The terms and condi-
tions were identical to those of the program established on April 1,
2019. A total of 57,078 stock options were granted. The exercise price is
€ 106.16. The fair value of the stock options on the grant date was
€ 35.04 per stock option.
In 2019, personnel expenses from stock options under the Group’s 2019
SOP amounted to € 1,718,087.
The fair value of the stock options from the 2017, 2018 and 2019 stock
option plans was determined using a Monte Carlo simulation. The
expected volatility is based on the development of the share volatility
of the last four years. Furthermore, the calculation of fair value equally
considered the performance criteria of the absolute and relative per-
formance of MorphoSys shares compared to the development of the
Nasdaq Biotech Index and the TecDAX Index. The parameters of each
program are listed in the table below.
Share Price on Grant Date in €
Exercise Price in €
Expected Volatility of the MorphoSys share in %
Expected Volatility of the Nasdaq Biotech Index in %
Expected Volatility of the TecDAX Index in %
Performance Term of Program in Years
Dividend Yield in %
Risk-free Interest Rate in %
2013 CONVER T IBL E B OND PRO GRAM
7.2
On April 1, 2013, MorphoSys AG granted the Management Board and
members of the Senior Management Group (beneficiaries) convertible
bonds with a total nominal value of € 225,000, divided into 449,999
no-par-value bearer bonds with equal rights from “Conditional Capital
2008-III”. The beneficiaries have the right to convert the bonds into
Company shares. Each convertible bond can be exchanged for one of
the Company’s no-par-value bearer shares equal to the proportional
amount of common stock, which currently stands at € 1. Exercise of the
convertible bonds is subject to several conditions, such as the achieve-
ment of performance targets, the expiration of vesting periods, the ex-
ercisability of the conversion rights, the existence of an employment or
service contract that is not under notice and the commencement of the
exercise period.
April 2017
Stock Option
Plan
April 2018
Stock Option
Plan
April 2019
Stock Option
Plan
October 2019
Stock Option
Plan
55.07
55.52
37.49
25.07
16.94
4.0
n/a
81.05
81.04
35.95
25.10
17.73
4.0
n/a
85.00
87.86
37.76
18.61
26.46
4.0
n/a
98.10
106.16
38.02
18.17
24.82
4.0
n/a
between
0.03 and 0.23
between
between
between
0.02 and 0.15
0.02 and 0.13
0.0 and 0.02
The conversion price amounted to € 31.88 and was derived from the
Company’s share price in the XETRA closing auction of the Frankfurt
Stock Exchange on the trading day preceding the issue of the convert-
ible bonds. The exercise of the conversion rights is admissible since, on
at least one trading day during the lifetime of the convertible bonds,
the share price of the Company has risen to more than 120 % of the
price in the XETRA closing auction of the Frankfurt Stock Exchange on
the trading day preceding the issue of the convertible bonds.
Notes
F inancial Statements
171
The table below shows the development of the convertible bond pro-
grams for Group employees in the 2019, 2018 and 2017 financial years.
Convertible
Bonds
Weighted-
average
Price (€)
OU TSTANDING ON
JANUARY 1, 2017
Granted
Exercised
Forfeited
Expired
OU TSTANDING ON
DECEMBER 31, 2017
OU TSTANDING ON
JANUARY 1, 2018
Granted
Exercised
Forfeited
Expired
OU TSTANDING ON
DECEMBER 31, 2018
OU TSTANDING ON
JANUARY 1, 2019
Granted
Exercised
Forfeited
Expired
OU TSTANDING ON
DECEMBER 31, 2019
436,585
0
0
(261,015)
0
175,570
175,570
0
(32,537)
0
0
143,033
143,033
0
(118,386)
0
0
24,647
31.88
0.00
0.00
31.88
0.00
31.88
31.88
0.00
31.88
0.00
0.00
31.88
31.88
0.00
31.88
0.00
0.00
31.88
From the grant date until December 31, 2019, one beneficiary left
MorphoSys and, therefore, 13,414 convertible bonds were forfeited. As
of December 31, 2019, the number of vested convertible bonds totaled
24,647 shares (December 31, 2018: 143,033 shares; December 31, 2017:
175,570 shares).
The following overview includes the weighted-average exercise price
as well as information on the contract duration of significant groups of
convertible bonds as of December 31, 2019.
Range of Exercise Prices
€ 25.00 – € 40.00
Number
Outstanding
Remaining
Contractual
Life
(in Years)
Weighted-
average
Exercise
Price (€)
Number
Exercisable
Weighted-
average
Exercise
Price (€)
24,647
24,647
0.25
0.25
31.88
31.88
24,647
24,647
31.88
31.88
The Group recognized personnel expenses resulting from convertible
bonds on a straight-line basis in accordance with IFRS 2 and IAS 32.28.
The equity component of the convertible bonds is presented separately
under additional paid-in capital. The corresponding amount was recog-
nized as personnel expenses from convertible bonds. Compensation
expenses related to convertible bonds amounted to € 0 in 2019, € 0 in
2018 and € 287,601 in 2017.
F inancial Statements
172
Notes
7.3
L ONG -T ERM INCEN T IVE PRO GRAMS
7.3.1 2 014 LONG -TE RM INCE NTIVE PL AN
On April 1, 2014, MorphoSys established a Long-Term Incentive Plan
(LTI Plan) for the Management Board and the Senior Management
Group (beneficiaries). The vesting period of this plan expired on April 1,
2018. In accordance with IFRS 2, this program is considered a share-
based payment program with settlement in equity instruments and is
accounted for accordingly. The LTI Plan is a performance-related share
plan and is paid out in ordinary shares (performance shares) of
MorphoSys AG if predefined key performance criteria are achieved.
The key performance criteria are based on the absolute MorphoSys
share price performance and the relative MorphoSys share price perfor-
mance compared to the Nasdaq Biotechnology Index and the TecDAX
Index. These criteria are approved annually by the Supervisory Board.
The fulfillment of these criteria was set at 200 % for one year, 54 % for one
year and 0 % for two years. The Supervisory Board set the “company
factor” at 1.0, meaning the number of performance shares to be allocated
was scaled by a factor of 1.0. Based on these terms and the company
factor, a total of 17,219 performance shares of MorphoSys AG was
transferred to beneficiaries until October 10, 2018 after the expiration
of the four-year vesting period. The Management Board received 6,969
performance shares (for further information, see the tables entitled
“Shares” and “Performance Shares” in Note 7.5* “Related Parties”), the
Senior Management Group received 8,216 performance shares and
former members of the Management Board and Senior Management
Group, who have since left the Company, received 2,034 performance
shares.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses resulting from performance shares under
the Group’s 2014 LTI Plan amounted to € 0 (2018: € 6,388; 2017: € 55,759).
7.3.2 2 015 LONG -TE RM INCE NTIVE PL AN
On April 1, 2015, MorphoSys established a Long-Term Incentive Plan
(LTI Plan) for the Management Board and the Senior Management Group
(beneficiaries). The vesting period for this LTI Plan expired on April 1,
2019. The program is considered an equity-settled share-based pay-
ment in accordance with IFRS 2 and is accounted for accordingly. The
LTI Plan is a performance-related share plan and will be paid out in
ordinary shares (performance shares) of MorphoSys AG if predefined
key performance criteria are achieved. These criteria are evaluated an-
nually by the Supervisory Board. The performance criteria are based on
a mathematical comparison of the absolute and relative performance of
the MorphoSys share price against the Nasdaq Biotech Index and the
TecDAX Index. Achievement of these criteria was set at 100 % for one
year, 94 % for one year and 200 % for two years. In addition, the Super-
visory Board set a “company factor” as “1”, which determines the num-
ber of performance shares to be issued. Based on these conditions and
the set factor, 52,328 performance shares of MorphoSys AG were
transferred to the beneficiaries after the four-year vesting period in
the period ending December 31, 2019. In August 2019, the original six-
month transfer period for the performance shares was extended from
October 14, 2019 to December 31, 2019, which had no impact on the fair
value of the performance shares and the period over which compen-
sation expense is recognized. The Management Board received 19,815
performance shares (for further details, see the tables entitled “Shares”
and “Performance shares” in Note 7.5* “Related parties”), the Senior
Management Group received 18,798 performance shares. A total of
13,715 performance shares were granted to former members of the
Management Board and the Senior Management Group who have since
left the Company.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses resulting from performance shares under
the Group’s 2015 LTI Plan amounted to € 6,714 (2018: € 109,511; 2017:
€ 201,608).
7.3.3 2 016 LONG -TE RM INCE NTIVE PL AN
On April 1, 2016, MorphoSys established a Long-Term Incentive Plan
(LTI Plan) for the Management Board and the Senior Management Group
(beneficiaries). In accordance with IFRS 2, this program is considered a
share-based payment program with settlement in equity instruments
and is accounted for accordingly. The LTI Plan is a performance-related
share plan and will be paid out in ordinary shares (performance shares)
of MorphoSys AG if predefined key performance criteria are achieved.
These criteria are evaluated annually by the Supervisory Board. The
grant date was April 1, 2016, and the vesting/performance period is
four years. If the predefined key performance criteria for the respective
period are fully met, 25 % of the performance shares become vested in
each year of the four-year vesting period. The number of performance
shares vested per year is calculated based on the key performance
criteria of the absolute and relative MorphoSys share price performance
compared to the Nasdaq Biotech Index and the TecDAX Index. The
number of performance shares vested each year will be reduced or
increased to the extent that the performance criteria of the respective
year have been achieved between only 50 % and 99.9 % (<100 %) or the
achievement of the performance criteria has exceeded 100 % (maxi-
mum 200 %). If in one year the performance criteria are met by less
than 50 %, no performance shares will become vested in that year. In
any case, the maximum payout at the end of the four-year period is
limited by a factor determined by the Group, which generally amounts
to 1. However, in justified cases, the Supervisory Board may set this
factor freely between 0 and 2, for example, if the level of payment is
regarded as unreasonable in view of the general development of the
Company. The right to receive a specific allocation of performance
shares under the LTI Plan, however, occurs only at the end of the four-
year vesting/performance period.
At the end of the four-year waiting period, there is a six-month exercise
period during which the Company can transfer the performance shares
to the beneficiaries. The beneficiaries are free to choose the award date
within this exercise period.
If the number of repurchased shares is not sufficient to service the LTI
Plan, MorphoSys reserves the right to pay a specific amount of the LTI
Plan in cash in the amount of the performance shares at the end of the
vesting period, provided the cash amount does not exceed 200 % of the
fair value of the performance shares on the grant date.
Notes
F inancial Statements
173
If a member of the Management Board loses his or her position at
MorphoSys Group due to termination (or if the Management Board
member terminates the service contract), resignation, death, injury,
disability, by reaching retirement age (receipt of a standard retirement
pension, early-retirement pension or disability pension, as long as the
requirements for the disability pension entitlement are met) or under
other circumstances subject to the Supervisory Board’s discretion, the
Management Board member (or the member’s heirs) is entitled to a
precise daily pro rata amount of performance shares.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB) and/or as defined by Section 84 (3) of the
German Stock Corporation Act (AktG), the beneficiary will not be enti-
tled to performance shares.
If a change of control occurs during the four-year vesting period, all
performance shares will become fully vested. In this case, the right to
receive a specific allocation of performance shares under the LTI Plan
occurs only at the end of the four-year vesting period.
A total of 68,143 treasury shares were allocated to beneficiaries on
April 1, 2016, with 35,681 performance shares allocated to the Man-
agement Board (for further details see the tables entitled “Performance
Shares” in Note 7.5* “Related parties”) and 32,462 performance shares
to the Senior Management Group. The original number of performance
shares allocated was based on the 100 % target achievement of the per-
formance criteria and a company factor of 1. Based on the achievement
of performance criteria to date, the overall achievement of the target is
expected to be 148.5 %. For performance criteria that have not yet been
met, 100 % target achievement is assumed. Under this assumption, the
total number of performance shares to be allocated at the end of the
four-year vesting period/performance period would currently increase
to 84,290 shares. The fair value of the performance shares on the grant
date (April 1, 2016) was € 46.86 per share. No dividends were included
in the determination of the fair value of the performance shares because
the Group does not intend to distribute any dividends in the foreseeable
future. From the grant date until December 31, 2019, nine beneficiaries
left MorphoSys, and therefore 10,998 performance shares were forfeited.
For the calculation of the personnel expenses from share- based payment
under the 2016 LTI Plan, it was initially assumed that one beneficiary
would leave the Company during the four-year period. This assumption
was updated in 2018.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses resulting from performance shares under
the Group’s 2016 LTI Plan amounted to € 141,473 (2018: € 330,727;
2017: € 663,624).
7.3.4 2 017 LONG -TE RM INCE NTIVE PL AN
On April 1, 2017, MorphoSys established another Long-Term Incentive
Plan (LTI Plan) for the Management Board, the Senior Management
Group and selected employees of the Company who are not members of
the Senior Management Group (beneficiaries). In accordance with
IFRS 2, this program is considered a share-based payment program
with settlement in equity instruments and is accounted for accordingly.
The LTI Plan is a performance-related share plan and will be paid out in
ordinary shares (performance shares) of MorphoSys AG if predefined
key performance criteria are achieved. The grant date was April 1, 2017,
and the vesting/performance period is four years. If the predefined
performance criteria for the respective period are fully met, 25 % of the
performance shares become vested in each year of the four-year vest-
ing period. The number of performance shares vested per year is calcu-
lated based on the key performance criteria of the absolute and relative
MorphoSys share price performance compared to the Nasdaq Biotech
Index and the TecDAX Index. The performance criteria can be met annu-
ally up to a maximum of 300 % and up to 200 % for the entire four-year
period. If the specified performance criteria are met by less than 0 % in
one year, no shares will be earned for that year (entitlement). In any
case, the maximum payout at the end of the four-year period is limited
by a factor determined by the Group, which generally amounts to 1. How-
ever, in justified cases, the Supervisory Board may set this factor freely
between 0 and 2, for example, if the level of payment is regarded as
unreasonable in view of the Company’s general development. The right
to receive a specific allocation of performance shares under the LTI Plan,
however, occurs only at the end of the four-year vesting/performance
period.
At the end of the four-year waiting period, there is a six-month exercise
period during which the Company can transfer the performance
shares to the beneficiaries. The beneficiaries are free to choose the
award date within this exercise period.
If the number of repurchased shares is not sufficient for servicing the
LTI Plan, MorphoSys reserves the right to pay a specific amount of the
LTI Plan in cash in the amount of the performance shares at the end of
the vesting period, provided the cash amount does not exceed 200 % of
the fair value of the performance shares on the grant date.
If a member of the Management Board loses his or her position at
MorphoSys Group because of termination (or if the Management Board
member terminates the service contract), resignation, death, injury,
disability, by reaching retirement age (receipt of a standard retirement
pension, early-retirement pension or disability pension, as long as the
requirements for the disability pension entitlement are met) or under
other circumstances subject to the Supervisory Board’s discretion, the
Management Board member (or the member’s heirs) is entitled to per-
formance shares determined on a precise daily pro rata basis.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB) and/or as defined by Section 84 (3) of the
German Stock Corporation Act (AktG), the beneficiary will not be enti-
tled to performance shares.
If a change of control occurs during the four-year vesting period, all
performance shares will become fully vested. In this case, the right to
receive a specific allocation of performance shares under the LTI Plan
occurs only at the end of the four-year vesting period.
F inancial Statements
174
Notes
A total of 31,549 treasury shares were allocated to beneficiaries on
April 1, 2017, with 15,675 performance shares allocated to the Manage-
ment Board (for further details see the table entitled “Performance
Shares” in Note 7.5* “Related Parties”), 14,640 performance shares
allocated to the Senior Management Group and 1,234 performance
shares allocated to selected employees of the Company who are not
members of the Senior Management Group. The original number of
performance shares allocated was based on the 100 % target achieve-
ment of the performance criteria and a company factor of 1. Based on the
achievement of performance criteria to date, the overall achievement of
the target is expected to be 155 %. For performance criteria that have
not yet been met, 100 % target achievement is assumed. Under this as-
sumption, the total number of performance shares to be allocated at the
end of the four-year vesting period/performance period would currently
increase to 48,832 shares. The fair value of the performance shares on
the grant date (April 1, 2017) was € 70.52 per share. From the grant
date until December 31, 2019, eight beneficiaries left MorphoSys, and
therefore 1,711 performance shares were forfeited. For the calculation
of the personnel expenses from share-based payment under the 2017
LTI Plan, the assumption is that two beneficiaries would leave the Com-
pany during the four-year period. This assumption was updated in 2018.
*C R O S S - R E F E R E N C E to page 177
In 2019, personnel expenses resulting from performance shares under
the Group’s 2017 LTI Plan amounted to € 323,165 (2018: € 558,446;
2017: € 1,026,037).
7.3.5 2 018 LONG -TE RM INCE NTIVE PL AN
On April 1, 2018, MorphoSys established another Long-Term Incentive
Plan (LTI Plan) for the Management Board, the Senior Management
Group and selected employees of the Company who are not members of
the Senior Management Group (beneficiaries). In accordance with
IFRS 2, this program is considered a share-based payment program
with settlement in equity instruments and is accounted for accord-
ingly. The LTI Plan is a performance-related share plan and will be
paid out in ordinary shares (performance shares) of MorphoSys AG if
predefined key performance criteria are achieved. The grant date was
April 1, 2018, and the vesting/performance period is four years. If the
predefined performance criteria for the respective period are 100 %
met, 25 % of the performance shares become vested in each year of the
four-year vesting period. The number of performance shares vested
per year is calculated based on the key performance criteria of the ab-
solute and relative MorphoSys share price performance compared to
the Nasdaq Biotech Index and the TecDAX Index. The performance
criteria can be met annually up to a maximum of 300 % and up to 200 %
for the entire four-year period. If the specified performance criteria are
met by less than 0 % in one year, no shares will be earned for that year
(entitlement). In any case, the maximum payout at the end of the four-
year period is limited by a factor determined by the Group, which gen-
erally amounts to 1. However, in justified cases, the Supervisory Board
may set this factor freely between 0 and 2, for example, if the level of
payment is regarded as unreasonable in view of the general develop-
ment of the Company. The right to receive a specific allocation of per-
formance shares under the LTI Plan, however, occurs only at the end of
the four-year vesting/performance period.
At the end of the four-year waiting period, there is a six-month exercise
period during which the Company can transfer the performance shares
to the beneficiaries. The beneficiaries are free to choose the award date
within this exercise period.
If the number of repurchased shares is not sufficient for servicing the
LTI Plan, MorphoSys reserves the right to pay a specific amount of the
LTI Plan in cash in the amount of the performance shares at the end of
the vesting period, provided the cash amount does not exceed 200 % of
the fair value of the performance shares on the grant date.
If a member of the Management Board loses his or her position at
MorphoSys Group before the end of the vesting/performance period,
the Management Board member (or the member’s heirs) is entitled to
performance shares determined on a precise daily pro rata basis.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB) and/or as defined by Section 84 (3) of the
German Stock Corporation Act (AktG), the beneficiary will not be enti-
tled to performance shares.
If a cumulative absence of more than 90 days occurs during the four-
year vesting period/performance period, the beneficiary is entitled to a
precise daily pro rata amount of performance shares. Absence is defined
as either a continued period of lost work time due to illness or inactivity
of a beneficiary or employment relationship without continued pay.
If a change of control occurs during the four-year vesting period, all
performance shares will become fully vested. In this case, the right to
receive a specific allocation of performance shares under the LTI Plan
occurs only at the end of the four-year vesting period.
As of April 1, 2018, a total of 20,357 treasury shares were allocated to
beneficiaries with 8,804 performance shares allocated to the Manage-
ment Board, 10,291 performance shares allocated to the Senior Man-
agement Group and 1,262 to performance shares allocated to selected
employees of the Company who are not members of the Senior Manage-
ment Group. The original number of performance shares allocated was
based on the 100 % target achievement of the performance criteria and
a company factor of 1. Based on the achievement of performance criteria
to date, the overall achievement of the target is expected to be 105 %. For
performance criteria that have not yet been met, 100 % target achieve-
ment is assumed. Under this assumption, the total number of perfor-
mance shares to be allocated at the end of the four-year vesting period/
performance period would currently increase to 21,163 shares. The fair
value of the performance shares on the grant date (April 1, 2018) was
€ 103.58 per share. From the grant date until December 31, 2019, four
beneficiaries left MorphoSys, resulting in the forfeiture of 703 perfor-
mance shares. For the calculation of personnel expenses from share-
based payment under the 2018 LTI Plan, the assumption is that four
beneficiaries would leave the Company during the four-year period.
Notes
F inancial Statements
175
If a change of control occurs during the four-year vesting period, all
performance shares will become fully vested. In this case, the right to
receive a specific allocation of performance shares under the LTI Plan
occurs only at the end of the four-year vesting period.
As of April 1, 2019, a total of 22,763 treasury shares were allocated to
beneficiaries with 9,347 performance shares allocated to the Manage-
ment Board, 11,306 performance shares allocated to the Senior Man-
agement Group and 2,110 to performance shares allocated to selected
employees of the Company who are not members of the Senior Manage-
ment Group. The stated number of shares allocated is based on the 100 %
target achievement of the performance criteria and a company factor of
1. The fair value of the performance shares on the grant date was
€ 106.85 per share. From the grant date until December 31, 2019, one
beneficiary left MorphoSys resulting in the forfeiture of 137 perfor-
mance shares. For the calculation of personnel expenses from share-
based payment under the 2019 LTI Plan, the assumption is that four
beneficiaries would leave the Company during the four-year period.
In 2019, personnel expenses resulting from performance shares under
the Group’s 2019 LTI Plan amounted to € 1,294,974.
In 2019, personnel expenses resulting from performance shares under
the Group’s 2018 LTI Plan amounted to € 720,764 (2018: € 946,346).
7.3.6 2 019 LONG -TE RM INCE NTIVE PL AN
On April 1, 2019, MorphoSys established another Long-Term Incentive
Plan (LTI Plan) for the Management Board, the Senior Management
Group and selected employees of the Company who are not members of
the Senior Management Group (beneficiaries). In accordance with
IFRS 2, this program is considered a share-based payment program
with settlement in equity instruments and is accounted for accordingly.
The LTI Plan is a performance-related share plan and will be paid out in
ordinary shares (performance shares) of MorphoSys AG if predefined
key performance criteria are achieved. The grant date was April 1, 2019,
and the vesting/performance period is four years. If the predefined
performance criteria for the respective period are 100 % met, 25 % of
the performance shares become vested in each year of the four-year
vesting period. The number of performance shares vested per year is
calculated based on the key performance criteria of the absolute and
relative MorphoSys share price performance compared to the Nasdaq
Biotech Index and the TecDAX Index. The performance criteria can be
met annually up to a maximum of 300 % and up to 200 % for the entire
four-year period. If the specified performance criteria are met by less
than 0 % in one year, no shares will be earned for that year (entitlement).
In any case, the maximum payout at the end of the four-year period is
limited by a factor determined by the Group, which generally amounts
to 1. However, in justified cases, the Supervisory Board may set this
factor freely between 0 and 2, for example, if the level of payment is
regarded as unreasonable in view of the general development of the
Company. The right to receive a specific allocation of performance
shares under the LTI Plan, however, occurs only at the end of the four-
year vesting/performance period. At the end of the four-year vesting
period, there is a six-month exercise period during which the Company
can transfer the performance shares to the beneficiaries.
If the number of repurchased shares is not sufficient for servicing the
LTI Plan, MorphoSys reserves the right to pay a specific amount of the
LTI Plan in cash in the amount of the performance shares at the end of
the vesting period, provided the cash amount does not exceed 200 % of
the fair value of the performance shares on the grant date.
If a member of the Management Board loses his or her position at
MorphoSys Group before the end of the vesting/performance period,
the Management Board member (or the member’s heirs) is entitled to
performance shares determined on a precise daily pro rata basis.
If a member of the Management Board loses his or her position at
MorphoSys Group for good reason as defined by Section 626 (2) of the
German Civil Code (BGB) and/or as defined by Section 84 (3) of the
German Stock Corporation Act (AktG), the beneficiary will not be enti-
tled to performance shares.
If a cumulative absence of more than 90 days occurs during the four-
year vesting period/performance period, the beneficiary is entitled to a
precise daily pro rata amount of performance shares. Absence is defined
as either a continued period of lost work time due to illness or inactivity
of a beneficiary or employment relationship without continued pay.
F inancial Statements
176
Notes
The fair value of the performance shares from the Long-Term Incentive
Plans 2015 until 2019 has been determined using a Monte Carlo simu-
lation. The expected volatility is based on the development of the share
volatility of the last four years. Furthermore, the calculation of fair value
equally considered the performance criteria of the absolute and rela-
tive performance of MorphoSys shares compared to the development of
the Nasdaq Biotech Index and the TecDAX Index. The parameters of
each program are listed in the table below.
Share Price on Grant Date in €
Exercise Price in €
Expected Volatility of the MorphoSys share in %
Expected Volatility of the Nasdaq Biotech Index in %
Expected Volatility of the TecDAX Index in %
Performance Term of Program in Years
Dividend Yield in %
Risk-free Interest Rate in %
7.3.7 M ORPHOSYS US INC . – 2019 LONG -TE RM INCE NTIVE
PRO GR AM
On April 1, 2019, MorphoSys established a Long-Term Incentive Plan
(LTI Plan) for the President and selected employees of MorphoSys US Inc.
(beneficiaries). In accordance with IFRS 2, this program is considered a
share-based payment program with settlement in equity instruments
and is accounted for accordingly. The LTI Plan is a performance-related
share plan and will be paid out in ordinary shares (performance shares)
of MorphoSys AG if predefined key performance criteria are achieved.
The plan has a term of four years and comprises four one-year perfor-
mance periods. If the predefined performance criteria for the respective
period are fully met, 25 % of the performance shares become vested in
each year. The number of shares vested per year is calculated based on
key performance criteria of MorphoSys US Inc. during the annual per-
formance period. The performance criteria can be met up to a maximum
of 125 % per year. If less than 0 % of the defined performance criteria
are met in any one year, no shares will be vested for that year. After the
end of each one-year performance period, there is a six-month period
during which the performance shares can be transferred from the
Company to the beneficiaries.
If the number of repurchased shares is not sufficient for servicing the
LTI Plan, MorphoSys reserves the right to pay a specific amount of the
LTI Plan in cash in the amount of the performance shares at the end of
the vesting period, provided the cash amount does not exceed 200 % of
the average market price of one share of the Company in the XETRA
closing auction on the Frankfurt Stock Exchange during the 30 trading
days preceding the grant of the performance shares.
April 2016 Long-
Term Incentive
Program
April 2017 Long-
Term Incentive
Program
April 2018 Long-
Term Incentive
Program
April 2019 Long-
Term Incentive
Program
43.28
n/a
34.64
23.39
17.01
4.0
n/a
0.05
55.07
n/a
37.49
25.07
16.94
4.0
n/a
81.05
n/a
35.95
25.1
17.73
4.0
n/a
85.00
n/a
37.76
18.61
26.46
4.0
n/a
between
0.03 and 0.23
between
between
0.02 and 0.15
0.02 and 0.13
If a beneficiary loses his or her position or ends his or her employment at
MorphoSys US Inc. before the end of the performance period, the ben-
eficiary will be entitled to performance shares determined on a precise
daily pro rata basis for performance periods that have ended or started.
As of April 1, 2019, a total of 14,283 treasury shares has been allocated
to US beneficiaries, of which 5,065 treasury share were granted to the
President and 9,218 to selected employees of MorphoSys US Inc. The
stated number of shares allocated is based on 100 % target achievement.
The fair value of the performance shares on December 31, 2019 was
€ 126.80 per share. From April 1 to December 31, 2019, one US benefi-
ciary had left MorphoSys US Inc. resulting in the forfeiture of 1,815
performance shares. For the calculation of personnel expenses resulting
from share- based payment under the 2019 LTI Plan, the assumption is
that one beneficiary would leave the Company during the four-year
period.
In 2019, personnel expenses resulting from performance shares under
the MorphoSys US Inc.’s 2019 LTI Plan amounted to € 1,076,158.
Notes
F inancial Statements
177
As of October 1, 2019, 14,990 “Restricted Shares” were granted to US
beneficiaries. The stated number of shares granted is based on 100 %
target achievement. The fair value of the performance shares as of
October 1, 2019 was € 98.10 per share. From October 1, 2019 to De-
cember 31, 2019, no US beneficiary had left MorphoSys US Inc. and
therefore no restricted shares were forfeited. For the calculation of
personnel expenses resulting from share-based payment under the
2019 LTI Plan, the assumption is that one beneficiary would leave the
Company during the four-year period.
In 2019, personnel expenses resulting from performance shares under
the MorphoSys US Inc.’s 2019 RSUP amounted to € 296,415.
7.5 R EL AT ED P AR T IE S
Related parties that can be influenced by the Group or can have a signif-
icant influence on the Group can be divided into subsidiaries, members
of the Supervisory Board, members of management in key positions and
other related entities.
The Group engages in business relationships with members of the
Management Board and Supervisory Board as related parties respon-
sible for the planning, management and monitoring of the Group. In
addition to cash compensation, the Group has granted the Management
Board convertible bonds and performance shares. The tables below show
the shares, stock options, convertible bonds and performance shares
held by the members of the Management Board and Supervisory Board,
as well as the changes in their ownership during the 2019 financial year.
7.3.8 S HARE PL AN
On September 10, 2018, MorphoSys established a share plan for one
employee of MorphoSys US Inc. In accordance with IFRS 2, this pro-
gram was considered a share-based payment program with settlement
in equity instruments (treasury shares of MorphoSys AG). The grant
date was September 25, 2018. The fair value at the grant date was
€ 91.90 per share and the vesting period was one year. The total number
of shares granted was calculated by dividing the total plan value of
US$ 370,000 by the average XETRA share price on the Frankfurt Stock
Exchange over the 30 trading days prior to the start date of the program
(€ 102.95). As a result, the share plan thus comprised a maximum of
3,104 shares. With the end of the vesting period in 2019, all 3,104
shares were transferred to the beneficiary.
7.4 M ORPHO S Y S US INC . – RE S T RIC T ED S T O CK UNI T PL AN
( RSUP )
On October 1, 2019, MorphoSys established a Long-Term Incentive Plan
(LTI Plan) for selected employees of MorphoSys US Inc. (beneficiaries).
According to IFRS 2, the program is considered a share-based payment
program with settlement in equity instruments and is accounted for
accordingly. The LTI Plan is a Restricted Stock Unit Plan (RSUP) and is
paid out in shares of MorphoSys AG that are to be created from autho-
rized capital provided predefined performance criteria have been ful-
filled. The term of the plan is three years and includes three one-year
performance periods. If the predefined performance criteria for the
respective period are fully met, 33.3 % of the performance shares be-
come vested in each year. The number of performance shares vested per
year is calculated based on the key performance criteria of MorphoSys
US Inc. and the MorphoSys share price performance during the annual
performance period. The performance criteria can be met up to a max-
imum of 125 % per year. If less than 0 % of the defined performance
criteria are met in any one year, no shares will be vested for that year.
At the end of the total three-year performance period, the correspond-
ing number of shares eventually vested is calculated, and the shares
created from authorized capital are transferred from the Company to
the beneficiaries.
MorphoSys reserves the right to pay a specific amount of the LTI Plan
in cash at the end of the performance period, equal to the value of the
performance shares granted.
If a beneficiary loses his or her position or terminates his or her employ-
ment with MorphoSys US Inc. prior to the end of a one-year performance
period, the beneficiary loses his or her entitlement to a pro rata number
of performance shares in the relevant one-year performance period and
for future performance periods. The beneficiary retains the entitlements
from previously completed one-year performance periods.
F inancial Statements
178
SHARE S
MANAG EMENT B OARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
SUPERVISORY B OARD
Dr. Marc Cluzel
Dr. Frank Morich
Michael Brosnan
Sharon Curran3
Dr. George Golumbeski
Wendy Johnson
Krisja Vermeylen
TOTAL
S T O C K OP T IONS
MANAG EMENT B OARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
CONVER T IBL E B OND S
MANAG EMENT B OARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
PERF ORMANC E SHARE S
MANAG EMENT B OARD
Dr. Jean-Paul Kress1
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Dr. Simon Moroney2
TOTAL
Notes
01/01/2019
Additions
Sales
12/31/2019
–
17,017
12,818
1,676
483,709
515,220
500
1,000
0
–
0
500
350
2,350
0
39,808
0
1,837
0
41,645
250
0
0
0
0
0
0
250
0
37,308
9,505
1,837
0
48,650
0
0
0
0
0
0
0
0
0
19,517
3,313
1,676
–
24,506
750
1,000
0
0
0
500
350
2,600
01/01/2019
Additions
Forfeitures
Exercises
12/31/2019
–
14,673
14,673
11,742
22,395
63,483
57,078
6,936
6,936
6,936
10,587
88,473
0
0
0
0
0
0
0
0
0
0
0
0
57,078
21,609
21,609
18,678
–
118,974
01/01/2019
Additions
Forfeitures
Exercises
12/31/2019
–
30,000
0
0
88,386
118,386
0
0
0
0
0
0
0
0
0
0
0
0
0
30,000
0
0
0
30,000
0
0
0
0
–
0
01/01/2019
Additions
Forfeitures
Allocations4
12/31/2019
–
17,936
5,132
7,031
27,050
57,149
0
2,065
2,065
2,065
3,152
9,347
0
0
0
0
0
0
0
7,308
0
1,837
0
9,145
0
12,693
7,197
7,259
–
27,149
1 Dr. Jean-Paul Kress has joined the Management Board of MorphoSys AG on September 1, 2019.
2 Dr. Simon Moroney resigned from the management board and his function as Chief Executive Officer as of August 31, 2019. Changes in the number of shares after resignation
from the Management Board of MorphoSys AG are not presented in the tables.
3 Sharon Curran has joined the Supervisory Board of MorphoSys AG on June 14, 2019.
4 Allocations are made as soon as performance shares are transferred within the six-month exercise period after the end of the four-year waiting period.
Notes
F inancial Statements
179
The Supervisory Board of MorphoSys AG does not hold any stock op-
tions, convertible bonds or performance shares.
The remuneration system for the Management Board is intended to
encourage sustainable, results-oriented corporate governance. The
Management Board’s total remuneration consists of several components,
including fixed compensation, an annual cash bonus that is dependent
upon the achievement of corporate targets (short-term incentives –
STI), variable compensation components with long-term incentives (LTI)
and other remuneration components. Variable remuneration compo-
nents with long-term incentive consist of Long-Term Incentive plans
(LTI Plan) from previous years and the current year, a convertible bond
program from 2013 and stock option plans from the prior and current
years. The members of the Management Board additionally receive
fringe benefits in the form of benefits in kind, essentially consisting of a
company car and insurance premiums. All total remuneration packages
are reviewed annually by the Remuneration and Nomination Committee
and compared to an annual Management Board remuneration analysis
to check the scope and appropriateness of the remuneration packages.
The amount of remuneration paid to members of the Management Board
is based largely on the duties of the respective Management Board
member, the financial situation and the performance and business out-
look for the Company versus its competition. All resolutions on adjust-
ments to the overall remuneration packages are passed by the plenum
of the Supervisory Board. The Management Board’s total remuneration
package and the index-linked pension contracts were thoroughly re-
viewed and then adjusted by the Supervisory Board in 2019.
If a Management Board member’s service contract terminates due to
death, the member’s spouse or life partner is entitled to the fixed
monthly salary for the month of death and the 12 months thereafter. In
the event of a change of control, Management Board members are enti-
tled to exercise their extraordinary right to terminate their service
contracts and receive any outstanding fixed salary and the annual
bonus for the remainder of the agreed contract period, but at least
200 % of the annual gross fixed salary and the annual bonus. Moreover,
in such a case, all stock options and performance shares granted will
become vested immediately and can be exercised after the expiration
of the statutory vesting periods. A change of control has occurred when
(i) MorphoSys transfers assets or a substantial portion of its assets to
unaffiliated third parties, (ii) MorphoSys merges with an unaffiliated
company, (iii) an agreement pursuant to Section 291 AktG is entered
into with MorphoSys as a dependent company, MorphoSys is integrated
under Section 319 AktG or (iv) a shareholder or third party holds 30 %
or more of MorphoSys’s voting rights.
Whereas the management report presents the remuneration of the Man-
agement Board and Supervisory Boards as members in key management
positions in accordance with the provisions of the German Corporate
Governance Code, the following tables show the expense- based view
in accordance with IAS 24.
F inancial Statements
180
Notes
MANAGEMEN T B OARD REMUNERAT ION F OR T HE Y EARS 2019 AND 2018 ( IA S 24) :
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Jens Holstein
Chief Financial Officer
Dr. Malte Peters
Chief Development Officer
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney2
Chief Executive Officer
Resignation: August 31, 2019
Total
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
Fixed Compensation
Fringe Benefits
One -Year Variable Compensation
One-Time Bonus
Total Short-Term Employee Benefits
(IAS 24.17 (a))
Service Cost
Total Benefit Expenses - Post-
Employment Benefits (IAS 24.17 (b))
Termination Benefits
Total Termination Benefits
(IAS 24.17 (d))
One-Time Bonus in Shares
Multi-Year Variable Compensation1:
2014 Long-Term Incentive Program
(Vesting Period 4 Years)
2015 Long-Term Incentive Program
(Vesting Period 4 Years)
2016 Long-Term Incentive Program
(Vesting Period 4 Years)
2017 Long-Term Incentive Program
(Vesting Period 4 Years)
2018 Long-Term Incentive Program
(Vesting Period 4 Years)
2019 Long-Term Incentive Program
(Vesting Period 4 Years)
2017 Stock Option Plan
(Vesting Period 4 Years)
2018 Stock Option Plan
(Vesting Period 4 Years)
2019 Stock Option Plan
(Vesting Period 4 Years)
Total Share-Based Payment
(IAS 24.17 (e))
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
196,000
1,000,000
1,522,884
44,965
44,965
0
0
0
0
0
0
0
0
0
0
0
422,919
422,919
1,990,768
402,235
46,725
337,877
0
786,837
111,233
111,233
0
0
358,857
994
18,257
56,632
68,437
91,595
0
53,441
89,593
0
418,324
44,090
351,392
500,000
1,313,806
114,224
114,224
0
0
0
0
1,180
22,320
34,457
66,087
97,952
26,906
64,642
97,978
397,800
30,613
334,152
0
762,565
76,190
76,190
0
0
354,900
0
0
0
68,437
91,595
0
53,441
89,593
0
413,712
32,892
347,518
500,000
1,294,122
77,787
77,787
0
0
0
0
0
0
34,457
66,087
97,952
26,906
64,642
97,978
737,806
1,635,876
411,522
1,839,552
657,966
1,496,721
388,022
1,759,931
1 The fair value was determined pursuant to the regulations of IFRS 2 „share-based payment“. This table shows the pro-rata share of personnel expenses resulting from
share-based payment for the respective financial year. Further details can be found in Sections 7.1*, 7.2* and 7.3*.
2 Dr. Simon Moroney resigned from the management board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company,
the Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
*C R O S S - R E F E R E N C E to page 168, page 170 and page 172
286,650
483,616
1,484,023
372,154
28,304
328,859
0
729,317
107,263
107,263
1,086,602
1,086,602
0
0
1,771,675
230,202
1,504,457
2,200,000
5,706,334
414,044
414,044
1,191,085
1,191,085
0
0
321,300
31,211
269,892
622,403
68,515
68,515
0
0
0
0
0
0
0
0
334,152
31,365
280,688
200,000
846,205
69,805
69,805
104,483
104,483
0
0
0
0
542,074
32,654
455,343
1,030,071
158,788
158,788
1,452
26,657
86,435
0
0
0
0
0
1,723
44,914
2,903
36,266
143,067
58,586
105,222
23,301
104,449
74,654
346,545
166,869
91,595
74,512
140,040
167,489
414,825
374,175
123,292
336,791
655,987
18,199
81,566
58,298
270,633
130,309
72,888
136,980
163,791
405,759
365,963
123,284
435,476
1,455,969
336,772
1,061,195
2,250,054
1,175,784
3,098,966
3,112,212
6,728,814
1,078,931
2,833,723
10,145,186
82,185
89,593
655,245
1,346,163
1,663,409
141,203
1,397,264
3,201,876
414,726
414,726
2,446
0
0
0
0
0
MANAGEMEN T B OARD REMUNERAT ION F OR T HE Y EARS 2019 AND 2018 ( IA S 24) :
Dr. Jean-Paul Kress
Chief Executive Officer
Appointment: September 1, 2019
Chief Financial Officer
Chief Development Officer
Jens Holstein
Dr. Malte Peters
Dr. Markus Enzelberger
Chief Scientific Officer
Dr. Simon Moroney2
Chief Executive Officer
Resignation: August 31, 2019
Total
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
Notes
F inancial Statements
181
Fixed Compensation
Fringe Benefits
One -Year Variable Compensation
One-Time Bonus
Total Short-Term Employee Benefits
(IAS 24.17 (a))
Service Cost
Total Benefit Expenses - Post-
Employment Benefits (IAS 24.17 (b))
Termination Benefits
Total Termination Benefits
(IAS 24.17 (d))
One-Time Bonus in Shares
Multi-Year Variable Compensation1:
2014 Long-Term Incentive Program
(Vesting Period 4 Years)
2015 Long-Term Incentive Program
(Vesting Period 4 Years)
2016 Long-Term Incentive Program
(Vesting Period 4 Years)
2017 Long-Term Incentive Program
(Vesting Period 4 Years)
2018 Long-Term Incentive Program
(Vesting Period 4 Years)
2019 Long-Term Incentive Program
(Vesting Period 4 Years)
2017 Stock Option Plan
(Vesting Period 4 Years)
2018 Stock Option Plan
(Vesting Period 4 Years)
2019 Stock Option Plan
(Vesting Period 4 Years)
Total Share-Based Payment
(IAS 24.17 (e))
Total Compensation
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
233,333
93,551
196,000
1,000,000
1,522,884
44,965
402,235
46,725
337,877
418,324
44,090
351,392
500,000
397,800
30,613
334,152
413,712
32,892
347,518
500,000
786,837
111,233
1,313,806
114,224
762,565
76,190
1,294,122
77,787
44,965
111,233
114,224
76,190
77,787
358,857
354,900
0
0
0
0
0
994
18,257
56,632
68,437
91,595
53,441
89,593
0
0
0
0
1,180
22,320
34,457
66,087
97,952
26,906
64,642
97,978
0
0
0
0
0
0
0
0
68,437
91,595
53,441
89,593
0
0
0
0
0
0
34,457
66,087
97,952
26,906
64,642
97,978
0
0
0
0
0
0
0
0
0
0
0
422,919
422,919
1,990,768
1 The fair value was determined pursuant to the regulations of IFRS 2 „share-based payment“. This table shows the pro-rata share of personnel expenses resulting from
share-based payment for the respective financial year. Further details can be found in Sections 7.1*, 7.2* and 7.3*.
2 Dr. Simon Moroney resigned from the management board and his function as Chief Executive Officer as of August 31, 2019. Due to his many years of service for the Company,
the Supervisory Board decided that Dr. Simon Moroney will be entitled not only to a pro-rated share but to the entire long-term share-based compensation components granted
(stock options and performance shares) – provided that all other conditions of the plans are fulfilled.
*C R O S S - R E F E R E N C E to page 168, page 170 and page 172
321,300
31,211
269,892
0
622,403
68,515
68,515
0
0
286,650
0
0
0
334,152
31,365
280,688
200,000
846,205
69,805
69,805
104,483
104,483
0
0
0
0
542,074
32,654
455,343
0
1,030,071
158,788
158,788
0
0
483,616
1,452
26,657
86,435
372,154
28,304
328,859
0
729,317
107,263
107,263
1,086,602
1,086,602
0
1,663,409
141,203
1,397,264
0
3,201,876
414,726
414,726
0
0
1,484,023
1,771,675
230,202
1,504,457
2,200,000
5,706,334
414,044
414,044
1,191,085
1,191,085
0
0
2,446
0
1,723
44,914
2,903
36,266
143,067
58,586
105,222
23,301
104,449
74,654
346,545
166,869
91,595
74,512
140,040
167,489
414,825
374,175
0
123,292
0
336,791
0
655,987
82,185
89,593
18,199
81,566
58,298
270,633
130,309
72,888
136,980
163,791
405,759
365,963
0
123,284
0
336,772
0
1,078,931
737,806
1,635,876
411,522
1,839,552
657,966
1,496,721
388,022
1,759,931
655,245
1,346,163
435,476
1,455,969
1,061,195
2,250,054
1,175,784
3,098,966
3,112,212
6,728,814
2,833,723
10,145,186
F inancial Statements
182
Notes
In the years 2019 and 2018, there were no other long-term benefits in
accordance with IAS 24.17 (c) accruing to the Management Board or
Supervisory Board. No benefits upon termination of service in accor-
dance with IAS 24.17 (d) were accrued for the Supervisory Board in the
years 2019 and 2018.
On October 1, 2019, the new CEO Dr. Jean-Paul Kress (CEO since Sep-
tember 1, 2019) was granted stock options valued at € 1,500,000.00 and
an additional one-time, sign-on stock option package worth € 500,000.00
for a total of 57,078 stock options.
In 2019, the total remuneration for the Supervisory Board, excluding
reimbursed travel costs, amounted to € 633,597 (2018: € 525,428).
SUPERVI S OR Y B OARD REMUNERAT ION F OR T HE Y EARS 2019 AND 2018:
Fixed Compensation
Attendance Fees1
Total Compensation
in €
2019
2018
2019
2018
2019
2018
Dr. Marc Cluzel
Dr. Frank Morich
Michael Brosnan
Sharon Curran2
Dr. George Golumbeski
Wendy Johnson
Krisja Vermeylen
Dr. Gerald Möller3
Klaus Kühn3
TOTAL
104,210
70,926
51,284
27,791
51,284
47,618
57,284
–
–
410,397
76,742
61,004
28,961
–
28,961
46,160
49,916
36,558
17,326
345,628
44,400
33,600
34,000
11,600
31,600
35,600
32,400
–
–
223,200
32,400
23,200
18,600
–
25,200
37,400
24,400
11,800
6,800
179,800
148,610
104,526
85,284
39,391
82,884
83,218
89,684
–
–
633,597
109,142
84,204
47,561
–
54,161
83,560
74,316
48,358
24,126
525,428
1 The attendance fee contains expense allowances for the attendance at the Supervisory Board and the Committee meetings.
2 Sharon Curran has joined the Supervisory Board of MorphoSys AG on June 14, 2019.
3 Dr. Gerald Möller and Klaus Kühn have left the Supervisory Board of MorphoSys AG on May 17, 2018.
No other agreements currently exist with present or former members
of the Supervisory Board.
8
Additional Notes
As of December 31, 2019, the Senior Management Group held 100,832
stock options (December 31, 2018: 72,604 stock options), 11,233 con-
vertible bonds (December 31, 2018: 11,233 convertible bonds) and
63,786 performance shares (December 31, 2018: 83,660 performance
shares), granted by the Company. On December 31, 2019, the President
of MorphoSys US Inc. held 5,065 performance shares (December 31,
2018: 0 performance shares) granted to him by the Company.
In 2019, a new stock option plan and a new performance share program
were issued to the Senior Management Group (see Notes 7.1.3* and
7.3.6*), as well as a new performance share program to the President of
MorphoSys US Inc. (see Note 7.3.7*).
*C R O S S - R E F E R E N C E to page 169, page 175 and page 176
On April 1, 2019, the Senior Management Group was allocated 18,798
shares under the 2015 LTI Plan and had the option to receive these
shares within eight months. As of December 31, 2019, the Senior Man-
agement Group exercised the option for 18,798 shares.
8.1 O BL IGAT IONS ARI SING F ROM L EASE S AND O T HER
CON T RAC T S
The future minimum payments under non-terminable leases of low
value assets, contracts for insurances and other services as of Decem-
ber 31, 2019 are shown in the table below.
in 000’ €
Up to One Year
Between One
and Five Years
More than
Five Years
TOTAL
Leases of Low
Value Assets
59
41
0
100
Other
1,235
297
0
1,532
Total
1,294
338
0
1,632
Notes
F inancial Statements
183
Additionally, the future payments shown in the table below may become
due for outsourced studies after December 31, 2019. These amounts
could be shifted or substantially lower due to changes in the study
timeline or premature study termination.
in million €
Up to One Year
Between One and Five Years
More than Five Years
TOTAL
Total
2019
64.4
100.3
0.0
164.7
8.2 CON T INGEN T ASSE T S/CON T INGEN T L IABIL I T IE S
Contingent liabilities are potential obligations from past events that
exist only when the occurrence of one or more uncertain future events
– beyond the Company’s control – is confirmed. Current obligations
can represent a contingent liability if it is not probable enough that an
outflow of resources justifies the recognition of a provision. Moreover,
it is not possible to make a sufficiently reliable estimate of the sum of
obligations.
The Management Board is unaware of any proceedings that may result
in a significant obligation for the Group or lead to a material adverse ef-
fect on the Group’s net assets, financial position or results of operations.
If certain milestones are achieved in the Proprietary Development
segment (for example, submitting an investigational new drug (IND)
application for specific target molecules), this may trigger milestone
payments to licensors of up to an aggregate of US$ 287 million related
to regulatory events or the achievement of sales targets. The next mile-
stone payments of US$ 37.5 million are anticipated to occur in the next
12 months.
Milestone payments to MorphoSys may be triggered by the achieve-
ment of specific milestones by one of our partners (submitting an in-
vestigational new drug (IND) application for specific target molecules
or the transfer of technology, among others) in the Partnered Discovery
segment. As the timing and achievement of such milestones are uncer-
tain, further details cannot be published.
Obligations may arise from enforcing the Company’s patent rights ver-
sus third parties. It is also conceivable that competitors may challenge
the patents of MorphoSys Group or MorphoSys may also come to the
conclusion that MorphoSys’s patents or patent families have been in-
fringed upon by competitors. This could prompt MorphoSys to take legal
action against competitors or lead competitors to file counterclaims
against MorphoSys. Currently, there are no specific indications such
obligations have arisen.
On January 31, 2019, MorphoSys announced that it had resolved its
dispute with Janssen Biotech and Genmab A/S. The parties agreed to
drop their counterclaims in connection with the litigation. MorphoSys
withdrew its claims of alleged patent infringement against Janssen
Biotech and Genmab A/S and agreed not to appeal against the court
order of January 25, 2019. Janssen and Genmab withdrew their coun-
terclaims against MorphoSys.
8.3 CO RP ORAT E G OVERNANCE
The Group has submitted the Declaration of Conformity with the recom-
mendations of the Government Commission on the German Corporate
Governance Code for the 2018 financial year under Section 161 of the
German Stock Corporation Act (AktG). This declaration was published
on the Group’s website (www.morphosys.com) on November 29, 2019
and made permanently available to the public.
8.4 R E SEARCH AND DEVEL OPMEN T AGREEMEN T S
The Group has entered numerous research and development agreements
as part of its proprietary research and development activities and its
partnered research strategy. The following information describes the
agreements that have a material effect on the Group and the develop-
ments under the research and development agreements in the 2019
financial year.
8.4.1 P ROPRIE TARY DE VE LOPME NT SEGME NT
In the Proprietary Development segment, partnerships are entered into
as part of the Group’s strategy to develop proprietary drugs in its core
areas of oncology and inflammatory diseases. Partnerships currently
exist with (in alphabetical order) Galapagos, GlaxoSmithKline, I-Mab
Biopharma, Immatics Biotechnologies, MD Anderson Cancer Center,
Novartis and Xencor.
In November 2008, MorphoSys and Galapagos announced a long-term
drug discovery and co-development cooperation aimed at exploring
novel mechanisms for the treatment of inflammatory diseases and devel-
oping antibody therapies against these diseases. The agreement covers
all activities ranging from the probing of target molecules to the com-
pletion of clinical trials for novel therapeutic antibodies. After demon-
strating clinical efficacy in humans, the programs may be out- licensed
to partners for further development, approval and commercialization.
Both MorphoSys and Galapagos contributed their core technologies and
expertise to this alliance. Along with the use of its adeno virus-based
platform to explore new target molecules for the development of anti-
bodies, Galapagos provided access to already identified target molecules
that are associated with bone and joint diseases. MorphoSys provided
access to its antibody technologies used to generate fully human anti-
bodies directed against these target molecules. Under the terms of the
agreement, Galapagos and MorphoSys will share the research and
development costs. In July 2014, the collaboration advanced into the
preclinical development of MOR106, an antibody from MorphoSys’
next- generation library Ylanthia directed against a novel Galapagos
target molecule.
On July 19, 2018, MorphoSys announced an exclusive global agreement
between MorphoSys and Galapagos with Novartis Pharma AG for the
development and commercialization of MOR106. Under the agreement,
the companies will work together to significantly expand the existing
development plan for MOR106. Novartis exclusively holds all rights to
the product’s commercialization resulting from the agreement. With
the signing of the agreement, all future research, development, manu-
facturing and commercialization costs for MOR106 will be borne by
Novartis. As part of this agreement, Novartis will explore the potential
of MOR106 in other indications beyond atopic dermatitis. In addition to
receiving financing from Novartis for the current and future develop-
ment of the MOR106 program, MorphoSys and Galapagos jointly received
a payment of € 95 million. Of this amount, MorphoSys recognized its 50 %
F inancial Statements
184
Notes
share of that amount – € 47.5 million – as revenue in 2018. MorphoSys
and Galapagos will continue to jointly receive significant milestone
payments of up to approximately US$ 1 billion (based on the current
euro-dollar exchange rate at the time the agreement was signed) when
specific development, regulatory, commercial and revenue milestones
are met. MorphoSys and Galapagos also stand to jointly receive tiered
royalties ranging from a low 10 % to a low 20 % of net sales. According
to their 2008 agreement, MorphoSys and Galapagos will share equally
in all payments (50/50). In October 2019, MorphoSys, Galapagos and
Novartis announced a stop in the clinical development of MOR106 in
atopic dermatitis. The decision was based on the results of a benefit-
based interim analysis of the IGUANA phase 2 study. The three parties
are currently evaluating the future strategy for MOR106.
In June 2013, MorphoSys announced it had entered into a global agree-
ment with GlaxoSmithKline (GSK) for the development and commer-
cialization of otilimab. Otilimab is MorphoSys’s proprietary HuCAL
antibody against the GM-CSF target molecule. Under the agreement,
GSK assumes responsibility for the compound’s entire development
and commercialization. MorphoSys has already received a payment of
€ 22.5 million under this agreement and, next to tiered double-digit
royalties on net sales, is still eligible to receive additional payments
from GSK of up to € 423 million, depending on the achievement of cer-
tain developmental stages, as well as regulatory, commercial and reve-
nue-related milestones. GSK is clinically investigating otilimab in
rheumatoid arthritis and, in July 2019, started a phase 3 development
program in this indication. The treatment of the first patients in this
program triggered a milestone payment of € 22.0 million to MorphoSys.
In 2017, MorphoSys announced it had signed an exclusive regional
licensing agreement with I-Mab Biopharma to develop and commer-
cialize MOR202 in China, Taiwan, Hong Kong and Macao. MOR202 is
MorphoSys’s proprietary antibody targeting CD38. MorphoSys is cur-
rently evaluating MOR202 in Europe in a phase 1/2 study in multiple
myeloma and in a phase 1/2 study in an inflammatory autoimmune
disease of the kidneys. Under the terms of the agreement, I-Mab Bio-
pharma has the exclusive right for the later development and commer-
cialization of MOR202 in the agreed regions. MorphoSys received a
payment of US$ 20.0 million and is also entitled to receive additional
success-based clinical and commercial milestone payments from
I-Mab of up to roughly US$ 100 million. In addition, MorphoSys will be
entitled to receive double-digit, staggered royalties on net revenue of
MOR202 in the agreed regions. I-Mab is evaluating MOR202/TJ202 in
a pivotal phase 2 trial initiated in March 2019 as a third-line therapy in
r/r multiple myeloma and in a phase 3 trial in combination with lena-
lidomide as a second-line therapy in multiple myeloma initiated in
April 2019.
In 2018, MorphoSys announced the completion of an exclusive strategic
development collaboration and regional licensing agreement with I-Mab
Biopharma for the MOR210 antibody. MOR210 is a preclinical antibody
candidate developed by MorphoSys against C5aR with the potential for
development in immuno-oncology. I-Mab has exclusive rights to develop
and market MOR210 in China, Hong Kong, Macao, Taiwan and South
Korea, while MorphoSys retains the rights for the rest of the world.
Under the terms of the agreement, I-Mab will exercise the exclusive
rights to develop and market MOR210 in its contracted territories. With
the support of MorphoSys, I-Mab will undertake and fund all global
development activities, including clinical trials in China and the United
States, to clinical proof of concept in cancer medicine. MorphoSys
received a payment of US$ 3.5 million and is further eligible to receive
performance-related clinical and sales-based milestone payments of
up to US$ 101.5 million. MorphoSys recognized the payment of US$
3.5 million (€ 3.1 million) as revenue in 2018. In addition, MorphoSys
will receive tiered royalties in the mid-single-digit percentage range of
net sales on the contracted territory of I-Mab. In return for conducting a
successful clinical proof of concept trial, I-Mab is entitled to low-single-
digit royalties on net sales of MOR210 outside the I-Mab territory, as
well as staggered shares of proceeds from the further out-licensing of
MOR210.
In August 2015, MorphoSys announced a strategic alliance with the
German company Immatics Biotechnologies GmbH in the field of im-
muno-oncology. The alliance was formed to develop novel antibody-
based therapies against a variety of cancer antigens that are recognized
by T cells. The alliance agreement gives MorphoSys access to several
of Immatics’s proprietary tumor-associated peptides (TUMAPs) and, in
return, Immatics receives the right to develop MorphoSys’s Ylanthia
antibodies against several TUMAPs. The companies will pay each other
milestone payments and royalties on commercialized products based
on the companies’ development progress.
In June 2014, MorphoSys and Merck KGaA announced an agreement to
identify and develop therapeutic antibodies against target molecules of
the class of immune checkpoints. Under this agreement, both MorphoSys
and Merck Serono, the biopharmaceutical division of Merck, intended
to co-develop therapies for triggering the immune system to attack
tumors. In April 2019, Merck announced that the joint development
and license agreement would be terminated in the second quarter of
2019. As a result, the active collaboration was terminated in 2019 and
the respective rights reverted to the partners.
In May 2016, MorphoSys and the MD Anderson Cancer Center from the
University of Texas announced a long-term strategic alliance. Within the
scope of this alliance, MorphoSys is applying its Ylanthia technology
platform and, together, they are working to identify, validate and develop
novel anti-cancer antibodies through to clinical proof of concept by
researching targets in a variety of oncology indications. MD Anderson
in cooperation with MorphoSys will conduct early clinical studies of
therapeutic antibody candidates, after which MorphoSys has the op-
tion to continue developing selected antibodies for its own proprietary
pipeline.
In June 2010, MorphoSys AG and the US-based biopharmaceutical com-
pany Xencor Inc. signed an exclusive global licensing and cooperation
agreement under which MorphoSys receives exclusive global licensing
rights to tafasitamab the antibody for the treatment of cancer and other
indications. The companies jointly conducted a phase 1/2a trial in the
U.S. in patients with chronic lymphocytic leukemia. MorphoSys is
solely responsible for further clinical development after the successful
completion of the phase 1 clinical trial. Upon signing the license and
cooperation agreement, Xencor received a payment of US$ 13.0 mil-
lion (approx. € 10.5 million) from MorphoSys, which was capitalized
under in-process R&D programs. Xencor is entitled to development,
regulatory and commercially-related milestone payments as well as
tiered royalties on product sales.
Notes
F inancial Statements
185
8.4.2 P AR TNE RE D DISC OVE RY SEGME NT
Through its commercial partnerships in the Partnered Discovery seg-
ment, MorphoSys receives various types of payments that are spread
over the duration of the agreements or recognized in full as revenue as
predefined targets and milestones are reached. These payments include
payments upon signature, annual license fees in exchange for access
to MorphoSys’s technologies and payments for funded research to be
performed by MorphoSys on behalf of the partner. MorphoSys is also
entitled to development-related milestone payments and royalties on
product sales for specific antibody programs.
Prior to the 2019 financial year, active collaborations with a number
of partners had already ended. However, drug development programs
initiated in the active phase are designed so that they can be continued
by the partner and, therefore, still result in performance-based pay-
ments for the achievement of the defined milestones.
Partnerships in the Partnered Discovery segment that ended before
the beginning of 2019 but where drug development programs were still
being pursued include (in alphabetical order): Bayer AG, Boehringer
Ingelheim, Fibron Ltd. (transfer of contract from Prochon Biotech Ltd.),
Janssen Biotech, Novartis, OncoMed Pharmaceuticals (fully acquired
in April 2019 by Mereo BioPharma Group), Pfizer and Roche.
Partnerships that were still active in 2019 include (in alphabetical order):
GeneFrontier Corporation/Kaneka, Sosei Heptares and LEO Pharma.
In MorphoSys’s strategic alliance with LEO Pharma, which has been in
place since 2016, the two companies are working together to discover
and develop antibody-based therapies for dermatology. This alliance
was expanded in 2018 to include peptide-derived therapeutics with the
goal of identifying novel, peptide-derived drugs for treating diseases
with a high unmet medical need. This expansion represents a valuable
addition to the development pipelines of both companies.
The Group’s alliance with Novartis AG for the research and develop-
ment of biopharmaceuticals came to an end in November 2017. The com-
panies’ collaboration began in 2004 and led to the creation of several
ongoing therapeutic antibody programs against a number of diseases.
MorphoSys receives performance-based milestones contingent upon
the successful clinical development and regulatory approval of several
products. In addition to these payments, MorphoSys is also entitled to
royalties on any future product sales.
8.5 S UBSEQUEN T EVEN T S
On January 13, 2020, we and Incyte announced that both companies
entered into a collaboration and license agreement to further develop
and commercialize MorphoSys’ proprietary anti-CD19 antibody tafasi-
tamab globally. Under the terms of the agreement, we will receive an
upfront payment of US$ 750 million. In addition, Incyte has made an
equity investment into MorphoSys of US$ 150 million in new American
Depositary Shares (ADS) of MorphoSys at a premium to the share price
at signing of the agreement. Depending on the achievement of certain
developmental, regulatory and commercial milestones, we will be eli-
gible to receive milestone payments amounting to up to US$ 1.1 billion.
We will also receive tiered royalties on ex-U.S. net sales of tafasitamab
in a mid-teens to mid-twenties percentage range. In the U.S., MorphoSys
and Incyte will co-commercialize tafasitamab, with MorphoSys lead-
ing the commercialization strategy and recording all revenues from
sales of tafasitamab. Incyte and MorphoSys will be jointly responsible
for commercialization activities in the U.S. and will share profits and
losses on a 50:50 basis. Outside the U.S., Incyte will have exclusive
commercialization rights, and will lead the commercialization strategy
and record all revenues from sales of tafasitamab, paying MorphoSys
royalties on ex-U.S. net sales. Furthermore, the companies will share
development costs associated with global and U.S.-specific trials at a
rate of 55% (Incyte) and 45 % (MorphoSys); Incyte will cover 100% of the
future development costs for trials that are specific to ex-U.S.countries.
We have agreed to develop tafasitamab broadly in relapsed/refractory
diffuse large B cell lymphoma (r/r DLBCL), frontline DLBCL and in
other indications beyond DLBCL, such as follicular lymphoma (FL),
marginal zone lymphoma (MZL) and chronic lymphocytic leukemia
(CLL). Incyte will be responsible for initiating a combination study of
its PI3K delta inhibitor parsaclisib and tafasitamab in relapsed or
refractory B cell malignancies. Incyte will also be responsible for
leading any potential pivotal studies in CLL and for a phase 3 trial in
r/r FL/MZL. We will continue to be responsible for our ongoing clinical
studies with tafasitamab in non-Hodgkin’s lymphoma (NHL), CLL,
r/r DLBCL and frontline DLBCL. We, together with Incyte, will share
responsibility for initiating further global clinical trials. Incyte intends
to pursue development in other territories, such as Japan and China.
The agreement between MorphoSys and Incyte, including the equity
investment, was subject to clearance by the U.S. antitrust authorities
under the Hart-Scott-Rodino Act as well as by the German and Austrian
antitrust authorities. The agreement has received antitrust clearance
on or before March 2, 2020, and became effective on March 3, 2020.
The agreement becoming effective triggered the US$ 750 million
upfront payment by Incyte to MorphoSys, as well as Incyte’s equity
investment into MorphoSys of US$ 150 million in new American De-
positary Shares (ADS) within the defined timelines.
On February 4, 2020 we announced the initiation of an expanded access
program (EAP) in the U.S. for tafasitamab. The EAP may provide access
to tafasitamab for use in patients with relapsed or refractory diffuse
large B-cell lymphoma (r/r DLBCL) in combination with lenalidomide.
According to the U.S. FDA, expanded access programs - sometimes
called "compassionate use" - provide a pathway for a patient to receive
an investigational medicine for a serious disease or condition. They are
often made available when there are no comparable or satisfactory alter-
native therapies to treat the disease or condition; patient enrollment in
clinical trials is not possible; potential patient benefit justifies the poten-
tial risk of treatment and providing the investigational medicine will
not interfere with investigational trials that could support the medi-
cine's marketing approval for the treatment indication. To qualify for
the tafasitamab EAP, patients with r/r DLBCL need to meet the EAP
inclusion/exclusion criteria that are aligned with the MorphoSys'
L-MIND study. Treatment of DLBCL patients in the EAP is recommended
with tafasitamab in combination with lenalidomide according to the
treatment schedule in L-MIND. The EAP will be available for a limited
time while the U.S. FDA reviews MorphoSys' Biologics License Applica-
tion (BLA) for tafasitamab. Requests for expanded access to tafasitamab
must be made by a U.S. licensed, treating physician. The tafasitamab
EAP will be administered by Clinigen Healthcare Ltd.
On March 2, 2020, we announced that the U.S. Food and Drug Admin-
istration (FDA) accepted filing of MorphoSys’ Biologics License Appli-
cation (BLA) and granted priority review for tafasitamab, under review
in combination with lenalidomide for the treatment of relapsed or re-
fractory diffuse large B cell lymphoma (r/r DLBCL).The FDA has set a
Prescription Drug User Fee Act (PDUFA) goal date of August 30, 2020.
The FDA has informed MorphoSys that they are not currently planning
to hold an advisory committee meeting to discuss the application.
F inancial Statements
186
Notes
On March 4, 2020, MorphoSys announced that its Management Board,
with the approval of the Supervisory Board, has resolved to increase
the share capital of MorphoSys AG by issuing 907,441 new ordinary
shares from the authorized capital 2017-I, excluding pre-emptive
rights of existing shareholders, to implement the purchase of 3,629,764
American Depositary Shares (ADSs) by Incyte. Each ADS will represent
1/4 of a MorphoSys ordinary share. The new ordinary shares underlying
the ADSs represent 2.84 % of the registered share capital of MorphoSys
prior to the consummation of the capital increase. Incyte’s purchase of
ADSs in the aggregate amount of US$ 150 million is part of the consid-
eration due under its collaboration and licensing agreement with
MorphoSys for the further development and commercialization of
MorphoSys’ investigational compound tafasitamab; the agreement has
become effective upon receiving antitrust clearance. Incyte will pur-
chase the 3,629,764 new ADSs at a price of $ 41.32 per ADS, including
a premium of 20 percent on the volume-weighted average price of
ADSs thirty days prior to execution of the collaboration and licensing
agreement. Incyte has agreed, subject to limited exceptions, not to sell
or otherwise transfer any of the new ADSs, which will represent 2.76 %
of the registered share capital of MorphoSys following the capital in-
crease, for an 18-month period.
Responsibility Statement
To the best of our knowledge, and in accordance with the applicable
reporting principles, the consolidated financial statements give a true
and fair view of the Group’s net assets, financial position and results of
operations, and the group management report provides a fair review
of the development and performance of the business and the position of
the Group, together with a description of the principal opportunities
and risks associated with the Group’s expected development.
Planegg, March 11, 2020
Dr. Jean-Paul Kress
Chief Executive Officer
Jens Holstein
Chief Financial Officer
Dr. Malte Peters
Chief Development Officer
Independent Auditor ’s Repor t
Additional Infor mation
187
Independent Auditor’s Report
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of the
group management report.
BASIS F OR T HE AUDI T OPINIONS
We conducted our audit of the consolidated financial statements
and of the group management report in accordance with § 317
HGB and the EU Audit Regulation (No. 537/2014, referred to
subsequently as “EU Audit Regulation”) in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
tute of Public Auditors in Germany] (IDW). Our responsibilities
under those requirements and principles are further described
in the “Auditor’s Responsibilities for the Audit of the Consoli-
dated Financial Statements and of the Group Management Re-
port“ section of our auditor’s report. We are independent of the
group entities in accordance with the requirements of Euro-
pean law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in accordance
with Article 10 (2) point (f) of the EU Audit Regulation, we de-
clare that we have not provided non-audit services prohibited
under Article 5 (1) of the EU Audit Regulation. We believe that
the audit evidence we have obtained is sufficient and appropri-
ate to provide a basis for our audit opinions on the consolidated
financial statements and on the group management report.
KEY AUDI T MAT T ERS IN T HE AUDI T OF T HE CONSOL IDAT ED
F INANC IAL S TAT EMEN T S
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 2019. These matters were addressed in the context
of our audit of the consolidated financial statements as a whole,
and in forming our audit opinion thereon; we do not provide a
separate audit opinion on these matters.
To MorphoSys AG, Planegg
Report on the Audit of the Consolidated
Financial Statements and of the Group
Management Report
AUDI T OPINIONS
We have audited the consolidated financial statements of
MorphoSys AG, Planegg, and its subsidiaries (the Group), which
comprise the consolidated balance sheet as at December 31,
2019, and the consolidated statement of comprehensive income,
consolidated statement of profit or loss, consolidated statement
of changes in stockholders' equity and consolidated cash flow
statement for the financial year from January 1 to December 31,
2019, and notes to the consolidated financial statements, includ-
ing a summary of significant accounting policies. In addition,
we have audited the group management report of MorphoSys AG
for the financial year from January 1, to December 31, 2019. In
accordance with the German legal requirements, we have not
audited the content of those parts of the group management
report listed in the “Other Information” section of our auditor’s
report.
In our opinion, on the basis of the knowledge obtained in the
audit,
• the accompanying consolidated financial statements comply,
in all material respects, with the IFRSs, as adopted by the EU,
and the additional requirements of German commercial law
pursuant to § [Article] 315e Abs. [paragraph] 1 HGB [Handels-
gesetzbuch: German Commercial Code] and, in compliance
with these requirements, give a true and fair view of the
assets, liabilities, and financial position of the Group as at
December 31, 2019, and of its financial performance for the
financial year from January 1 to December 31, 2019, and
• the accompanying group management report as a whole pro-
vides an appropriate view of the Group’s position. In all mate-
rial respects, this group management report is consistent with
the consolidated financial statements, complies with German
legal requirements and appropriately presents the opportuni-
ties and risks of future development. Our audit opinion on the
group management report does not cover the content of those
parts of the group management report listed in the “Other
Information” section of our auditor’s report.
Additional Infor mation
188
Independent Auditor ’s Repor t
In our view, the matter of most significance in our audit was as
follows:
1. Impairment Assessment of Intangible Asset MOR107 not yet
available for use
Our presentation of this key audit matter has been structured
as follows:
1) Matter and issue
2) Audit approach and findings
3) Reference to further information
Hereinafter we present the key audit matter:
1. Impairment Assessment of Intangible Asset MOR107 not
yet available for use
1) In the consolidated financial statements of the Company,
the carrying value of the intangible asset related to the
compound MOR107 reported under the “In-Process R&D
Programs” balance sheet item was € 11.7 million as of
December 31, 2019, as a result of an impairment loss of
€ 1.3 million recorded during the financial year 2019. The
asset which originated from the acquisition of the Lanthio
Group is not yet available for use and is therefore not yet
amortized. For intangible assets that are not yet available
for use, the recoverable amount is estimated at the same
time each year, or on an interim basis, if required. Impair-
ment is recognized if the carrying amount of the cash-
generating unit (CGU) exceeds its estimated recoverable
amount. The recoverable amount of a CGU is the greater of
its value-in-use or its fair value less costs of disposal. In
assessing value-in-use, the estimated future pre-tax cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the CGU.
The result of this valuation depends to a large extent on
the assessment of future cash inflows by the executive
directors as well as the discount rate used and is therefore
subject to considerable uncertainty. Against this back-
ground and due to the significant judgment by the execu-
tive directors when developing its estimate of the recover-
able amount for the asset, this matter was of particular
significance for our audit.
2) Our audit procedures included testing the effectiveness of
controls relating to the Company’s impairment assess-
ment process of the intangible assets not yet available for
use, including controls over the review of the significant
assumptions used to estimate the recoverable amount of
this CGU. Our procedures also included, among others,
testing management’s process for determining the recov-
erable amount of the intangible asset not yet available for
use, testing the completeness, accuracy, and relevance of
underlying data used in the model, and evaluating the
reasonableness of significant assumptions used by the
executive directors, including the forecasted cash flows,
the probability of successful product development, the dis-
count rate, and the expected growth rate. Evaluating the
reasonableness of the executive directors’ assumptions
involved evaluating key market-related assumptions (in-
cluding the growth rate, the discount rate and the proba-
bilities of successful product development) used in the
model to ensure consistency with external data. The dis-
count rate was evaluated by using professionals with spe-
cialized skill and knowledge. Overall, the measurement
parameters and assumptions used by the executive direc-
tors are in line with our expectations.
3) The Company's disclosures pertaining to the intangible
asset not yet available for use related to the compound
MOR107 are contained in sections 2.4.3 and 5.8.3 of the
notes to the consolidated financial statements.
O T HER INF ORMAT ION
The executive directors are responsible for the other informa-
tion. The other information comprises the following non-audited
parts of the group management report, which we obtained prior
to the date of our auditor’s report:
• the statement on corporate governance pursuant to § 289f
and § 315d HGB included in section "Group Statement on Cor-
porate Governance" of the group management report
• the corporate governance report pursuant to No. 3.10 of the
German Corporate Governance Code (except for the remunera-
tion report)
The annual report is expected to be made available to us after
the date of the auditor’s report.
Our audit opinions on the consolidated financial statements and
on the group management report do not cover the other infor-
mation, and consequently we do not express an audit opinion or
any other form of assurance conclusion thereon.
Independent Auditor ’s Repor t
Additional Infor mation
189
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
• is materially inconsistent with the consolidated financial
statements, with the group management report or our knowl-
edge obtained in the audit, or
• otherwise appears to be materially misstated.
RESPONSIBILITIES OF THE EXECUTIVE DIREC TORS AND THE
SUPERVISORY BOARD FOR THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE GROUP MANAGEMENT REPORT
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all mate-
rial respects, with IFRSs as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
§ 315e Abs. 1 HGB and that the consolidated financial state-
ments, in compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position, and finan-
cial performance of the Group. In addition the executive direc-
tors are responsible for such internal control as they have deter-
mined necessary to enable the preparation of consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the execu-
tive directors are responsible for assessing the Group’s ability
to continue as a going concern. They also have the responsibility
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations, or there
is no realistic alternative but to do so.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a whole,
provides an appropriate view of the Group’s position and is, in
all material respects, consistent with the consolidated finan-
cial statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future
development. In addition, the executive directors are respon-
sible for such arrangements and measures (systems) as they
have considered necessary to enable the preparation of a group
management report that is in accordance with the applicable
German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group manage-
ment report.
The supervisory board is responsible for overseeing the Group’s
financial reporting process for the preparation of the consoli-
dated financial statements and of the group management report.
AUDI T OR’S RESP ONSIBIL I T IES F OR T HE AUDI T OF T HE
CONS OL IDAT ED F INANC IAL S TAT EMEN T S AND OF T HE
GROUP MANAGEMEN T REP OR T
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides
an appropriate view of the Group’s position and, in all material
respects, is consistent with the consolidated financial state-
ments and the knowledge obtained in the audit, complies with
the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to
issue an auditor’s report that includes our audit opinions on the
consolidated financial statements and on the group manage-
ment report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with § 317
HGB and the EU Audit Regulation and in compliance with Ger-
man Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer (IDW)
will always detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if, individ-
ually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this group manage-
ment report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
consolidated financial statements and of the group manage-
ment report, whether due to fraud or error, design and per-
form audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our audit opinions. The risk of not detecting a mate-
rial misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
Additional Infor mation
190
Independent Auditor ’s Repor t
• Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of arrange-
ments and measures (systems) relevant to the audit of the
group management report in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an audit opinion on the effectiveness
of these systems.
• Evaluate the appropriateness of accounting policies used by
the executive directors and the reasonableness of estimates
made by the executive directors and related disclosures.
• Conclude on the appropriateness of the executive directors’
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are re-
quired to draw attention in the auditor’s report to the related
disclosures in the consolidated financial statements and in
the group management report or, if such disclosures are in-
adequate, to modify our respective audit opinions. Our con-
clusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or condi-
tions may cause the Group to cease to be able to continue as a
going concern.
• Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSs as ad-
opted by the EU and the additional requirements of German
commercial law pursuant to § 315e Abs. 1 HGB.
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the consoli-
dated financial statements and on the group management re-
port. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible
for our audit opinions.
• Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity
with German law, and the view of the Group’s position it
provides.
• Perform audit procedures on the prospective information pre-
sented by the executive directors in the group management
report. On the basis of sufficient appropriate audit evidence
we evaluate, in particular, the significant assumptions used
by the executive directors as a basis for the prospective infor-
mation, and evaluate the proper derivation of the prospective
information from these assumptions. We do not express a
separate audit opinion on the prospective information and on
the assumptions used as a basis. There is a substantial un-
avoidable risk that future events will differ materially from
the prospective information.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships
and other matters that may reasonably be thought to bear on
our independence, and where applicable, the related safeguards.
From the matters communicated with those charged with gover-
nance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or reg-
ulation precludes public disclosure about the matter.
Other Legal and Regulatory
Requirements
F UR T HER INF ORMAT ION PURSUAN T T O AR T ICL E 10
OF T HE EU AUDI T REGUL AT ION
We were elected as group auditor by the annual general meet-
ing on May 22, 2019. We were engaged by the supervisory
board on July 3, 2019. We have been the group auditor of the
MorphoSys AG, Planegg, without interruption since the finan-
cial year 2011.
We declare that the audit opinions expressed in this auditor’s
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).
Independent Auditor ’s Repor t
Additional Infor mation
191
German Public Auditor Responsible
for the Engagement
The German Public Auditor responsible for the engagement is
Holger Lutz.
Munich, March 11, 2020
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
(signed Stefano Mulas)
Wirtschaftsprüfer
(German Public Auditor)
(signed Holger Lutz)
Wirtschaftsprüfer
(German Public Auditor)
Additional Infor mation
192
Glossary
G lossar y
A
C
D
AD – Atopic dermatitis; Chronic autoimmune disease
of the skin; formerly also called neurodermatitis
C5a – Part of the immune system; involved in growth
of certain cancers
DLBCL – Diffuse large B cell lymphoma, a subform
of ›› NHL
AE – Adverse event
C5aR – Receptor for C5a
DoR – duration of response
Amyloid beta – Protein produced by the body that
can be deposited in the brain and is associated with
the development of Alzheimer’s disease
CD19 – Potential therapeutic target for immunotherapy
CD38 – Potential therapeutic target for immunotherapy
E
Antibody library – A collection of genes that
encode corresponding human antibodies
CD47 – Potential therapeutic target for immunotherapy
Antigen – Foreign substance stimulating antibody
production; binding partner of antibody
ASCT – Autologous stem cell transplantation; Treat-
ment with stem cells from a patients own body for the
treatment of lymphomas
B
Clinical trial – Clinical trials allow safety and effi-
cacy data to be collected for new drugs or devices;
depending on the type of product and the stage of its
development, investigators enroll healthy volunteers
and/or patients into small pilot studies initially, fol-
lowed by larger-scale studies in patients
CLL – Chronic lymphocytic leukemia; most common
type of cancer of the blood and bone marrow, affect-
ing the B cells
CMC – Chemistry, manufacturing and controls
EAP – Expanded Access Program; Program to allow
making an investigational drug available to patients
prior to approval under exceptional and very specific
circumstances
EASI – Exczema area and severity Index; Value for
measuring the severity of atopic dermatitis
EMA – European Medicines Agency
ES – Event-free survival
B cells – White blood cells, part of the immune
system, capable of generation antibodies
CMO – Contract manufacturing organization
F
BLA – Biologics License Application; request to the
FDA for permission to introduce, or deliver for intro-
duction, a biologic product into interstate commerce
COSMOS – CLL patients assessed for ORR / Safety in
MOR208 Study
FDA – Food and Drug Administration; US federal
agency for the supervision of food and drugs
CR – Complete response
B-MIND – Study to evaluate Bendamustine-MOR208
IN DLBCL
CRO – Contract research organization
Biosimilars – Term used to describe officially
approved new versions of innovator biopharmaceu-
tical products, following patent expiration
BTKI – Bruton’s tyrosine kinase inhibitor, a key kinase
of the B cell receptor signaling pathway that plays a
significant role in the proliferation, differentiation
and survival of B cells
Crohn’s Disease – Chronic inflammatory bowel
disease
CTO – Contract testing organization
G lossar y
Additional Infor mation
193
G
L
O
Lanthipeptides – Novel class of therapeutics
with high target selectivity and improved drug-like
properties
ORR – Overall response rate
OS – Overall survival
L-MIND – Study to evaluate Lenalidomide-MOR208
IN DLBCL
Otilimab – formerly MOR103/GSK3196165
M
MAA – Marketing Authorization Application; appli-
cation seeking permission to bring a medicinal prod-
uct to the market in Europe
Market capitalization – Value of a com pany’s
outstanding shares, as measured by shares times
current price
P
PDUFA – Prescription Drug User Fee Act; law allow-
ing the FDA to collect fees from drug manufacturers
to fund the new drug approval process with the FDA
being required to meet certain performance bench-
marks, primarily related to the speed of the new drug
review process.
PFS – Progression-free survival
MRD – Minimal Residual Disease; minimal amount
of residual tumor cells
PsA – Psoriatic arthritis Chronic joint inflammation
that occures in connection with psoriasis
MM – Multiple Myeloma; Type of cancer that devel-
ops in a subset of white blood cells called plasma
cells formed in the bone marrow
Psoriasis – A chronic, non-contagious autoimmune
disease which affects the skin and joints
N
Q
NHL – Non-Hodgkin lymphoma; diverse group of
blood cancers that include any kind of lymphoma
except Hodgkin lymphoma
QPCTL – glutaminyl peptide cyclotransferase-like
enzymes
GCP – Good clinical practice; an inter national ethi-
cal and scientific quality standard for designing,
conduct ing, recording and reporting trials that in-
volve the par ticipation of human subjects
GDP – Good distribution practice; guidelines on
quality standards for distribution practice of phar-
maceutical products
GLP – Good laboratory practice; a formal framework
for the implementation of safety tests on chemical
products
GM-CSF – Granulocyte-macrophage colony-stimu-
lating factor; underlying target molecule of MOR103
program
GMP – Good manufacturing practice; term for the
control and management of manufacturing and
quality control testing of pharmaceutical products
and medical devices
H
HTH – Helix-Turn-Helix; specific structure and fold-
ing of a peptide which confer stability
HuCAL – Human Combinatorial Antibody Library;
pro prietary antibody library enabling rapid genera-
tion of specific human antibodies for all applications
I
IFRS – International Financial Reporting Stan-
dards; accounting standards issued by the IASB and
adopted by the EU
IND – Investigational New Drug; application for
permission to test a new drug candidate on humans,
i.e. in clinical studies
Additional Infor mation
194
Glossary
G lossar y
R
T
r/r – relapsed/refractory
Tafasitamab – MOR208, formerly XmAb5574
R-CHOP – Rituximab, Cyclophosphamid, Doxorubi-
cin, Vincristin and Prednison; Combination treat-
ment with rituximab and combination chemotherapy
as standard first-line treatment of ›› DLBCL
Rheumatoid arthritis – Inflammatory disease of
the joints; abbreviation: RA
Royalties – Percentage share of ownership of the
rev enue generated by drug products
S
Target – Target molecule for therapeutic interven-
tion, e.g. on the surface of diseased cells
T cells – An abbreviation for T-lymphocytes; a
sub type of white blood cells that together with
B-lympho cytes are responsible for the body’s im-
mune defense
U
UC – Ulcerative Colitis; chronic inflammatory bowel
disease; Crohn’s disease
SD KPI – Sustainable Development Key Performance
Indicators; sustainability indicators in corporate
management
Y
SIRP alpha - Signal-regulatory protein alpha; regula-
tory membrane glycoprotein expressed mainly by my-
eloid cells
Ylanthia – The novel next-generation antibody
platform of MorphoSys
SLL – Small lymphocytic lymphoma
Slonomics – DNA engineering and protein library
gene ration platform acquired by MorphoSys in 2010
SOP system – SOP – Standard operating procedure
SOX – Sarbanes-Oxley Act of 2002
List of F igures and Tables
Additional Infor mation
195
List of Figures and Tables
Figures
01 Performance of the MorphoSys Share in 2019
02 Performance of the MorphoSys Share 2015 – 2019
03 Quality Management System at MorphoSys
04 Occupational Safety at MorphoSys
05 Active Clinical Studies with MorphoSys Antibodies
06 Revenues of the MorphoSys Group by Segment
07 Total Headcount of the MorphoSys Group
Tables
01 Key Data for the MorphoSys Share
02 Analyst Recommendations
03 Development of Key Financial Performance Indicators
04 Sustainable Development Key Performance Indicators
(SD KPIs) at MorphoSys
05 Multi-Year Overview – Statement of Profit or Loss
06 Multi-Year Overview – Financial Situation
07 Multi-Year Overview – Balance Sheet Structure
08 Contractual Obligations
09 Comparison of Actual Business Results Versus Forecasts
10 Summary of MorphoSys’ Key Short- and
Medium-Term Risks
37
37
41
43
52
52
59
36
38
49
50
68
71
72
73
74
87
08 Employees by Gender
60
09 Revenues by Region
63
10 Revenues Proprietary Development and Partnered Discovery 63
11 Selected R&D Expenses
65
12 Risk and Opportunity Management System at MorphoSys
83
13 Compliance Management Program (CMP)
112
11 Summary of MorphoSys’ Key Long-Term Risks
12 Summary of MorphoSys’ Key Opportunities
13 Composition of the Supervisory Board until Termination
of the 2019 Annual General Meeting
88
88
92
14 Composition of the Supervisory Board since Termination
of the 2019 Annual General Meeting
92
15 Participation of Supervisory Board Members
94
16 Compensation of the Management Board in 2019 and 2018 100
17 Compensation of the Supervisory Board in 2019 and 2018 107
18 Directors’ Holdings
108
19 Managers Transactions in 2019
110
Additional Infor mation
196
Imprint
MorphoSys AG
Semmelweisstrasse 7
82152 Planegg
Germany
Phone: +49-89-89927-0
Fax:
Email: info@morphosys.com
www.morphosys.com
+49-89-89927-222
Corporate Communications and
Investor Relations
Phone: +49-89-89927-404
Fax:
Email:
+49-89-89927-5404
investors@morphosys.com
Impr int
This financial report is also published
in German and is available for download
on our website.
For better readability, the masculine form has
been used in this report equally to all genders.
HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®,
CysDisplay®, RapMAT®, arYla®, Ylanthia®, 100 billion
high potentials®, Slonomics®, Lanthio Pharma®,
LanthioPep® and ENFORCER™ are trademarks of
the MorphoSys Group.
Tremfya® is a trademark of Janssen Biotech, Inc.
XmAb® is a trademark of Xencor Inc.
Concept and Design
3st kommunikation GmbH, Mainz
Photography/Picture Credits
Andreas Pohlmann, Munich
Bryce Vickmark, Boston
Getty Images
Translation
Klusmann Communications, Niedernhausen
Editorial Office
Götz Translations and Proofreading GmbH,
Hamburg
Typesetting and Lithography
Knecht GmbH, Ockenheim
Printer
Woeste Druck + Verlag GmbH & Co. KG,
Essen-Kettwig
Copy Deadline
March 11, 2020
(except financial statements)
Key Figures (IFRS)
MorphoSys Group (in million €, if not stated otherwise)
12/31/19
12/31/18
12/31/17
12/31/16
12/31/15
12/31/14
12/31/13
12/31/12
12/31/11
12/31/10
RESULTS1
Revenues
Cost of Sales
R&D Expenses
Selling Expenses2
G&A Expenses
Personnel Expenses (Excluding
Stock-Based Compensation)
Capital Expenditure
Depreciation of Tangible Assets
Amortization of Intangible Assets
EBIT
Net Profit/(Loss)
Net Profit/(Loss) from
Discontinued Operations
BAL ANCE SHEE T
Total Assets
Cash and Financial Assets
Intangible Assets
Total Liabilities
Stockholders’ Equity
Equity Ratio (in %)
MORPHOSYS SHARE
71.8
12.1
108.4
22.7
36.7
57.1
3.7
2.0
1.5
(107.9)
(103.0)
76.4
1.8
106.4
6.4
21.9
39.2
2.5
1.8
1.9
(59.1)
(56.2)
66.8
0.0
113.3
4.8
15.7
37.1
13.1
2.0
2.1
(67.6)
(69.8)
49.7
0.0
94.0
2.4
13.4
33.7
2.9
1.8
2.0
(59.9)
(60.4)
106.2
0.0
78.7
0
15.1
32.4
8.8
1.5
1.9
17.2
14.9
64.0
0.0
56.0
0
14.1
26.7
20.5
1.4
2.7
(5.9)
(3.0)
78.0
0.0
49.2
0
18.8
51.9
0.0
37.7
0
12.1
82.1
0.0
55.9
0
14.9
27.4
24.1
27.7
5.6
1.5
3.3
9.9
13.3
1.8
1.7
3.5
2.5
1.9
–
–
–
–
–
–
6.0
(0.4)
496.4
357.4
44.8
101.7
394.7
80 %
538.8
454.7
47.4
50.4
488.4
91 %
415.4
312.2
67.8
56.7
359.0
86 %
463.6
359.5
67.9
48.1
415.5
90 %
400.1
298.4
79.6
37.3
362.7
91 %
426.5
352.8
46.0
77.7
348.8
82 %
447.7
390.7
35.1
95.5
352.1
79 %
224.3
135.7
35.0
22.3
202.0
90 %
87.0
7.3
46.9
0
23.2
29.6
13.8
2.1
4.0
13.1
9.2
–
209.8
108.4
69.2
23.9
185.9
89 %
2.9
1.7
3.8
9.8
8.2
0.0
228.4
134.4
66.0
31.3
197.1
86 %
Number of Shares Issued
31,957,958
31,839,572
29,420,785
29,159,770 26,537,682 26,456,834 26,220,882 23,358,228 23,112,167 22,890,252
Group Earnings/(Loss) per Share,
Basic and Diluted (in €)
Dividend (in €)
Share Price (in €)
PERSONNEL DATA
(3.26)
(1.79)
(2.41)
(2.28)
–
–
–
–
0.57
–
(0.12)
–
126.80
88.95
76.58
48.75
57.65
76.63
0.54
–
55.85
0.08
–
29.30
0.36
–
17.53
0.40
–
18.53
Total Group Employees (Number3)
426
329
326
345
365
329
299
421
446
464
1 Due to the agreement between Bio-Rad and MorphoSys, signed in December 2012, to acquire substantially
all of the AbD Serotec segment, for the years 2013, 2012 and 2011, revenues, income and expenses in
connection with the transaction are shown in the line item “Net Profit/(Loss) from Discontinued Operations.”
All other line items consist of amounts from continuing operations.
2 In 2018, selling expenses were presented for the first time. In order to provide comparative information for
the previous year, the figures for 2017 and 2016 have been adjusted accordingly.
3 2010 to 2012 including employees from the discontinued operations of AbD Serotec.
Financial Calendar 2020
March 18
p u b l i c at i o n o f 2 0 1 9
y e a r - e n d r e s u lt s
May 27
2 0 2 0 a n n ua l g e n e r a l
m e e t i n g i n p l a n e g g
May 6
publication of first quarter
interim statement 2 0 2 0
August 5
p u b l i c at i o n o f 2 0 2 0
h a l f - y e a r r e p o r t
November 11
publication of third quarter
interim statement 2 0 2 0
9
1
0
2
t
r
o
p
e
R
l
a
u
n
n
A
MorphoSys AG
Semmelweisstrasse 7
82152 Planegg
Germany
Phone: +49-89-89927-0
Fax: +49-89-89927-222
www.morphosys.com