MorphoSys' (MPSYF) CEO Simon Moroney on Q2 2014 Results - Earnings Call Transcript

Jul.28.14 | About: MorphoSys AG (MPSYF)

MorphoSys AG (OTCPK:MPSYF) Q2 2014 Earnings Conference Call July 28, 2014 8:00 AM ET

Executives

Claudia Gutjahr-Löser – IR

Simon Moroney – CEO

Jens Holstein – CFO

Arndt Schottelius – Chief Development Officer

Analysts

Diana Na – JP Morgan

Steve Chesney – Goldman Sachs

Sarah Potter – Bank of America Merrill Lynch

Sachin Soni – Kempen & Co.

Mick Cooper – Edison Investment Research Limited

Victoria English – MedNous

Daniel Wendorff – Commerzbank

Igor Kim – Close Brothers Seydler

Operator

Ladies and gentlemen, welcome to the MorphoSys Quarterly Call on the Financial Results of Q2 2014. Please note that for the duration of the presentation, all participants will be in listen-only mode and the conference is being recorded (Operator instructions). Now, I would like to turn the conference over to Dr. Gutjahr-Löser. Please go ahead.

Claudia Gutjahr-Löser

Good afternoon and also good morning and welcome to our Q2 2014 conference call. I am Claudia Gutjahr-Löser, Head of Corporate Communications and Investor Relations of MorphoSys.

Before we start the presentation, I have to remind you that during the conference call, we will present and discuss certain forward-looking statements concerning the development of MorphoSys core technologies, the progress of its current research programs and the initiation of additional programs. Should actual conditions differ from the company’s assumptions actual results and actions may differ from those anticipated. You are therefore cautioned not to place undue reliance on such forward-looking statements which speaks only as of the date hereof.

With me today are Simon Moroney, our Chief Executive Officer, Arndt Schottelius our Chief Development Officer and Jens Holstein our Chief Financial Officer. Simon will start by giving you an operational overview of the first six months before Arndt will address the pipeline updates which we published in a second press release today. Before we open the call for your questions, Jens will review the financial results for the first six months of 2014. Afterwards, Simon, Arndt and Jens will be available to answer your questions on these topics.

I would now like to hand over to Simon Moroney.

Simon Moroney

Thank you, Claudia and also from me a warm welcome to the call. Q2 was a busy quarter for us and there is a lot to talk about today. The increased activity is most visible in the size of our pipeline which now comprises 92 antibodies in various stages of discovery and development. This is an increase of 9 compared to the end of Q1, six additional partnered programs and three additional proprietary programs. The 92 antibodies comprise two in phase 3 development, 11 in phase 2, seven in phase 1, 28 in pre-clinical development and 44 in the discovery stage.

As Arndt is with us to talk about our proprietary clinical portfolio, I will start this time with developments in our partnered pipeline. Let’s start with gantenerumab, our HuCAL amyloid-β antibody being developed by Roche for Alzheimer’s disease. As a reminder, gantenerumab is currently in three phase 3 trials in Prodromal, mid and genetically predisposed Alzheimer’s patients. We expect that the Prodromal study will be the first of these to read-out with the results expected in 2016.

Although there is no new data from gantenerumab at this time, Roche recently reported results from a phase 2 study of another anti- amyloid antibody crenezumab. Normally we would not comment on these results but as we feel that many questions on this topic, we feel it is important to make the following point. The results of the crenezumab phase 2 studies are encouraging because the data support the importance of testing potential disease modifying agents such as beta amyloid antibodies for Alzheimer’s disease early in the course of the disease. A more immediate significance for us is that we are now able to dislodge the royalties that we spent/earned on eventual sales of gantenerumab. These are on a tiered scale based on net sales of 5.5% to 7%.

I am sure I don’t need to remind you that Alzheimer’s disease represents a huge and growing unmet medical need and that an effective treatment would command a very sizable market. Today’s disclosure may be hopeful for those of you who wish to estimate how high the potential value of the gantenerumab program could be for MorphoSys.

Turning to the remainder of about our partnered pipeline. There were several developments during the quarter which I will run through briefly. First, our partner Novartis initiated a new phase 2 trial of Bimagrumab, a HuCAL antibody being developed in various muscle wasting conditions in patients following hip fracture surgery. Bimagrumab is currently in clinical trials in five different indications, one in phase 3 and four in phase 2.

Our partner Pfizer announced the initiation of a phase 1 combination trial of the HuCAL antibody PF–05082566 with Merck’s PD-1 inhibitor MK-3475. The Pfizer antibody is directed against the check-point target 4-1BB. This trial highlights the current excitement in the field of immune-oncology and particularly the increasing interest in combinations of checkpoint therapies. The Pfizer program is just one of several immune check-point programs we have with partners and for our own account.

Our partner OncoMed recently made two announcements on programs emerging from our collaboration. The first concerned their antibody program Vantictumab that has been placed on clinical hold. Secondly, Tarextumab, formerly OMP-59R5, has now officially started the phase 2 portion of an ongoing phase 1 two trial in pancreatic cancer.

In addition to the Pfizer and OncoMed programs that I have just mentioned, promising data was presented at ASCO and AACR on the following programs. Novartis’ HuCAL program LJM716 and Boehringer Ingelheim’s HuCAL program BI 836845. In all cases, the data sets presented support the further clinical development of these candidates.

Let’s turn now to our proprietary development segments which I will open before handing over to Arndt to talk about the programs in the clinic. In June, we announced the new alliance with Merck Serono. This is a distinct type of collaboration for us which, because of the level of our participation and the drugs to the developed, we include in our proprietary development segment. The collaboration is focused on the discovery and development of therapeutic antibody candidates against immune checkpoint targets, with the primary indication being oncology. We will use our Ylanthia platform to discover drug leads and we will have the option to co-fund development up to the conclusion of phase 3 clinical trials. Merck Serono was solely responsible for commercializing any resulting products.

What’s new about this type of deal is that our financial return could be substantially higher than in our traditional partnered business. In particular, we stand to receive milestone payments in the low triple digit million range should the product be approved in multiple indications in all major markets, and tiered royalty percentages from mid single digits to low double digits on net sales.

This is an exciting opportunity and exemplifies our strategy of using Ylanthia as currency to enter deals which strengthen our proprietary portfolio. The Merck Serono deal complements the deal with Temple University that we announced at the end of April which is focused more on target discovery. Related to this, we very recently announced that additional patent had been issued in the U.S. and China on the Ylanthia technology platform.

To complete my part of the presentation, we have a new program MOR106 in collaboration with Galapagos which has moved into formal preclinical development. Added to several new discovery programs with the focus on oncology and inflammation, this brings the total number of programs in our proprietary portfolio to 9.

With that, I will hand over to Arndt for the latest on our programs in the clinic.

Arndt Schottelius

Thank you, Simon and also from me a warm welcome to the call. As part of the update on our proprietary portfolio, my section of today’s call will focus on the clinical programs in order of their stage of development, namely MOR208, MOR103, and MOR202.

Let’s start with MOR208, our anti-CD19 antibody. As many of you know, MOR208 is currently being evaluated as a signal searching approach as monotherapy in phase 2 trials and NHL and B-ALL. Based on the encouraging monotherapy data we saw in the phase 2a trial in CLL, MOR208 is also being investigated in a phase 2 combination trial with lenalidomide in this indication. This particular study is an investigator sponsored trial led by John Byrd at Ohio State University. Related to this we recently announced that the FDA has granted orphan drug designation to MOR208 and that we've received a positive opinion from the EMA for an orphan medicinal product application in CLL for MOR208. This positive opinion from the EMA has now been confirmed by the European Commission which has granted orphan drug designation for MOR208 in CLL. These are important regulatory milestones for the advancement of the program.

MorphoSys has prioritized presenting first clinical data from the NHL trial at a major conference later this year earlier than previously anticipated. In the trial, four different sub-types of NHL namely follicular lymphoma, mantle cell lymphoma, diffuse large B cell lymphoma and other indolent NHL types are being investigated. The recruitment in B-ALL has recently somewhat behind original plans and for this reason we don't intend to present clinical data of this indication in 2014. Notwithstanding this enrolment is expected to be completed by the end of this year.

Moving on to MOR103, our anti-inflammatory HuCAL antibody targeting GM-CSF which we had out-licensed to GlaxoSmithKline in 2013, following the successful completion of the phase 1b safety trial on multiple sclerosis earlier this year, responsible too further development of MOR2013 is now fully with GSK. With regard to the data from the phase 1b trial of MOR103 in MS, we are pleased to report today that an abstract covering the results of this trial has been accepted for oral presentation at the ACTRIMS-ECTRIMS meeting to take place in Boston in September.

Clinical development of MOR202 is ongoing with our partner Celgene and we are extremely pleased about the collaborative spirit of this partnership. Consistent with the views of many in this field, we believe that an anti-CD38 antibodies such as MOR202 will ultimately be used as combination therapy for the treatment of multiple myeloma. With this in mind, we are working closely with Celgene on preparing the combination studies that will follow the ongoing phase 1/2a study of MOR202.

The focus of future studies will be IMiD combinations in particular on combining MOR202 with pomalidomide which is the newest immunomodulatory drug that have received regulatory approval. As many of you know, IMiDs have been shown the ability to activate natural killer cells and thereby facilitate a better ADCC response, thus combining our antibody MOR202 with immunomodulatory drugs is an attractive development route.

In support of this study we have generated preclinical data showing synergy between MOR202 and pomalidomide and aim to present this data at a major conference before year-end. In the meantime we continue to round out the data package for MOR202 as monotherapy. Our goal here is to obtain a thorough understanding of the pharmacology of MOR202 and for this reason we have added two additional treatment arms as amendments to the ongoing phase 1/2 study of MOR202 in relapse refractory multiple myeloma patients. These study component at a weekly dosing schedule with and without dexamethasone to the almost completed trial of MOR202 alone dosed bi-weekly. The full details will be posted on clinicaltrials.gov shortly. Our purpose in expanding the phase 1/2a study is to complete the picture of MOR202 as monotherapy before the start of combination studies. As the now expanded phase 1/2a trial will not be completed until 2015, the companies do not plan to publish any clinical data this year.

That concludes my summary of the operational highlights of the quarter. I will now hand over to Jens for his presentation of the financial results.

Jens Holstein

Thank you, Arndt. Also from my end, a warm welcome to our Q2 2014 conference call. As in previous quarterly calls, I will start my report with a recap of the most financial figures for the first six months of 2014.

Total group revenues from continuing operations amounted to €30.5 million for the first six months of 2014, compared to €48.2 million in the same period of the previous year. The reasons for this decrease were one-time effects in the first half of 2013. In the first six months of 2013, we signed a license agreement with GlaxoSmithKline for MOR103 and, in addition, received a license payment from Bio-Rad in connection with the sale of MorphoSys’ business unit AbD Serotec.

Total operating expenses from continuing operations decreased to €30.1 million from €31.2 million in the first six months of 2013.

Expenses for research and development increased slightly and amounted to €23.4 million with personnel expenses and costs for external laboratory services being the biggest cost blocks.

Investments in proprietary product and technology development during the first six months amounted to €14.9 million as compared to €14.6 million in the previous year. We expect investments in proprietary R&D to increase further over the course of the year.

Selling, general and administrative expenses amounted to €6.7 million in the first six months of 2014, compared to €8.4 million in 2013, with the decrease driven by lower expenses for personnel and external services.

In the first six months of 2014, the EBIT from continuing operations decreased to €0.4 million in comparison to €17.3 million for the same period of the previous year. A net profit of €0.6 million was generated by our continuing operations in the first six months of 2014, compared to a net profit of €13 million in the first six months of 2013

Let’s now have a closer look at our two business segments. The partnered discovery segment generated revenues in the amount of €22.8 million in the first six months of 2014, compared to €27.9 million in the previous year. The segment’s revenues from funded research and licensing fees decreased by 21% to €21.4 million, a result of the one-off effect in connection with the sale of AbD Serotec in the first quarter of 2013.

Revenues from success-based payments increased to €1.4 million in the first six months of 2014, compared to €0.9 million in the previous year. Operating expenses in this segment decreased to €10.2 million.

The proprietary development segment achieved revenues of €7.7 million in the first six months of this year, compared to €20.3 million in the same period of 2013. This year’s revenues in the segment are derived from our co-development activities with Celgene in connection with MOR202. Operating expenses in this segment increased from €12.2 million in the first half of 2013 to €13.6 million this year.

On June 30, 2014, MorphoSys held liquid funds and marketable securities as well as other financial assets in the amount of €374.2 million, compared to €390.7 million on 31 December 2013. This decrease was significantly influenced by the repurchase of shares in connection with the company’s LTI program in the first quarter of this year.

Before we open the call for your questions, we would like to re-confirm our financial guidance for 2014.

We anticipate total group revenues between €58 million and €63 million and a negative EBIT of between minus €11 and minus €16 million. We estimate that investments in proprietary technology development will be in the range of €36 million to €41 million. We anticipate spending for proprietary product and technology development at the lower end of this range and consequently the EBIT at the upper end of the guidance range. That means, EBIT is expected to be at the minus €11 million level.

Ladies and gentlemen, that concludes my review for the first six months of 2014, and I’ll now hand back to Claudia for the Q&A session.

Claudia Gutjahr-Löser

Thank you very much. We are opening the call for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Diana Na from JP Morgan.

Diana Na – JP Morgan

Hi, thank you for taking my questions. I have four questions, please. First in terms of the MOR208’s data in NHL, could you confirm that we will be seeing data across all four subtypes of NGL at the end of the year? And will this data presentation be at the ASH conference? And secondly, with respect to the combination trial for MOR202 with pomalidomide, when can we expect enrolment to begin? And also, is there reason as to why pomalidomide was chosen as a combination partner as opposed to Revlimid or Velcade which are more widely used? And then thirdly, for the ongoing MOR202 trial, you’ve highlighted that additional cohorts were added into the trial. I am wondering if there is a reason as to why the monotherapy data couldn’t be published earlier ahead of the data from the new cohorts. And then lastly, for the MOR106 compound in development with Galapagos, would you perhaps be able to give us more color on the mechanism of action under this target and how long do you think it will take before the drug progresses into the clinical stage of development? Many thanks.

Simon Moroney

Diana, many thanks for that. It sounds like all four of those questions are actually for Arndt. So we’ll hand it over to him.

Arndt Schottelius

Yes, Diana, thanks very much. Let me try to remember all four and then we’ll get back. So your first question was about NHL and if we plan to show data on all sub-forms.

Diana Na – JP Morgan

Yes.

Arndt Schottelius

Yes, indeed we have gone through, as you know, this is a part 1 and part 2 trial and we want to give update by the end of the year and would address all subforms. We are not disclosing what – at this time what results we have seen in the different sub-forms, so there could of course be differences. That’s why we have the signal searching approach. But yes, all four will be addressed by the end of the year, and while we won’t be specific what conference, I mean you can probably – if you got assumption, where the most appropriate conference will be.

Your second question was about the choice of pomalidomide for 202, at first when would we expect for those – now earlier than anticipated, and of course to start, that could be around the end of the year. Why did we choose those with our partner Celgene? First of all, I don’t need to explain to you that Celgene is the leader in the field. Of course, has fought and long and hard how to position and differentiate this molecule that pom is kind of the logical combination partner to go for. It is the newest of the IMiDs that’s been shown of course to have like the other IMiDs as strong ADCC enhancing, they’re lot easy [ph], of course it is engulfed somewhat later lines of therapies that would provide for specific sub-population to look at 202 and positioning and differentiation potential.

Then your third question, I believe, was about we have expanded the current cohort by [indiscernible] already available data from the monotherapy part. Maybe just to explain again, what we have done is we see this as one trial. Indeed it has been one trial that has been amended where we have added additional trials to at weekly dosing, as well as dosing plus minus dex, and we would just prefer as we really look at the full pharmacological package, the potential of this molecule to present this as one package, this will happen in ’15 when we have fully enrolled this first part of the study, including dose enhanced components, with weekly plus minus dex.

And your fourth and final question was about mechanism of action and target of MOR106. I hope you understand that we, at this very early stage, we usually do not disclose mechanism of action and target but usually speaking generically when we move these molecules in preclinical development usually takes about two to three years until we start clinical development. Hope this addresses your questions.

Operator

The next question comes from the line of Steve Chesney from Goldman Sachs.

Steve Chesney – Goldman Sachs

Several questions please. First on MOR202 and the dexamethasone combination, I am unclear on why you are choosing to start this combination now. Is it in response to infusion reactions observed in the monotherapy arm, or is it an effort to boost the monotherapy efficacy? Secondly, I am a little bit clear on the combination study timelines. As Arndt just outlined, I understand pomalidomide combo might start before the end of this year. But with some of the PK work still left to be done, which regimen i.e. will it be weekly or bi-weekly, and will be it in combination with dexamethasone or without? And then finally for MOR202 on daratumumab, recently they have announced that they will move into a front-line multiple myeloma trial. Wondering what your and Celgene’s plans are in order to catch up? And then if I may, a question on crenezumab. Given the variability of the response that we saw for the various exposures whether it be via IV or subcutaneous in the AVI [ph] trial, I am wondering how confident you are on the dosage for SCarlet RoAD and then on top of that, I am wondering if you have any visibility on the regimen from Marguerite RoAD?

Arndt Schottelius

Steve, this is Arndt. I will take the first three questions, and then crenezumab, hand over to Simon. Thanks for those questions. So the reason for dex – adding these dex cohorts, one, we really wanted to learn the full potential pharmacological of the molecule in monotherapy. As you know, in all of the combo treatments, dexamethasone is used as a backbone. That’s why it’s added now, not because of infusion reactions, it’s added now to lay the basis for these future combo studies where it will be included. You asked again the timelines for those IMiD cohorts to start, I would say around the end of the year. It looks like we of course are exploring the weekly, so it could be – and this is probably likely we would go for the weekly regimen for those IMiD cohorts.

Then your third question was about the data study that has now started in the front-line multiple myeloma, and would we able to catch up? I would just refer to the Celgene call recently, we feel very confident with Celgene, our partner, it’s somebody in the community out there will find, it has to bring this to approval quickly. We are very confident that Celgene is able to – and the answer is yes. I think we believe, Celgene believes, we can catch up, there are multiple ways to do that, find fast approval pathways, not necessarily always going this front-line path, and I have mentioned that there is a focus going on pomalidomide which I think will provide ways to differentiate and position this molecule. It’s important that there are many different sub-populations that can be investigated and it will be also Celgene’s plan to find those gaps and close all. So I hope that addresses your two questions.

Simon Moroney

And Steve, we’ll give Arndt a breather and I will take the question on crenezumab. In terms of the response – and this is simply going off the data that we’ve all seen from AAAC [ph] a couple of weeks ago. The differences in response we saw in the subcutaneous and intravenous studies, and I think the doses mentioned there were 300 mg SC, and about 1200 mg, if I remember correctly, IV. And of course, I guess we have to allow for the bio-availability of the subcutaneous dose. And Roche made a point of describing these two doses as high dose and low dose. So I think one shouldn’t over-interpret the means of administration, it was really just two different dosing levels, and clearly the effects that they did, which was in the mild sub-group was achieved with the higher dose, which is probably I guess roughly what you would expect.

In terms of the regimen for Marguerite RoAD, what’s on clinicaltrials.gov is that it’s a subcutaneous administration once every four weeks, and patients who are on treatment for 100 weeks are basically two years, and at this stage, the actual dosing level has not been disclosed as far as we are aware.

Operator

The next question comes from the line of Sarah Potter from Bank of America.

Sarah Potter – Bank of America Merrill Lynch

Just two please. Firstly on bimagrumab, I wondered if you could update any more color on why the trial in mechanically ventilated patients was abandoned, why it was your [case to the hip] fracture study, if there is any read [ph] we can take from that into the ongoing study, or even as a chance of there to be more studies in there in different patient populations? And then secondly, on MOR103, I can see that you’ve announced the MS data will be presented at ACTRIMS, I wondered if you could just provide an update on the rheumatoid arthritis, I think you’ve previously said phase 2, if that was possible in 2014, and is this still on the cards?

Simon Moroney

Yes, thanks, Sarah. Let me take the bimagrumab question and then Arndt will talk about 103. Unfortunately there is really nothing that we can tell you about bimagrumab. We can’t give you an answer on why the mechanically ventilated study was discontinued. We’re obviously happy that an additional indication has been added. Obviously it’s a product targeting muscle wasting diseases in general. It’s probably not surprising that there may potentially be additional indications as well but at this stage we have no information regarding what other studies could be added, at what time. But as soon as we learn anything that we can make you aware of, we will certainly communicate that. I think as usual as this, simply to track clinicaltrials.gov is probably the first portal for core [ph] information on any of these studies.

Arndt Schottelius

And Sarah, in terms of 103 in MS, yes, we’re really happy obviously that was a successful trial. It shows, I think, there is sufficient large interest in the community, MS community for new mechanisms of action and have this there as an oral presentation.

In terms of your specific questions to timelines for RA, yes, that is still the plan. Of course GSK can comment in more detail but this is the information that we have and nothing has changed to that extent that we do expect the RA 2b trial to start by the end of ’14.

Operator

(Operator Instructions) The next question comes from the line of Sachin Soni from Kempen & Co.

Sachin Soni – Kempen & Co.

My first question is regarding Alzheimer’s. I am a little bit surprised by the newfound enthusiasm from MorphoSys side, I know, I am an investor in Roche shares, it’s there. But could you please help me understand why would you think it would work in a prodromal phase when the size has moved towards touching the subjects and subjective cognitive decline. And initially the plan was this antibody would be additive to a BACE inhibitor which Roche was doing, and it’s not working any more the BACE inhibitors on that. So how do you see it going forward? I mean removing AVI product alone [ph] even if it works, is really going to do a clinical benefit or not? That’s one. And the other one is regarding MOR202. Is there a particular reason to just not reveal monotherapy data when you should have data from 32 subjects by now given the timeline you set to begin with? Thanks.

Simon Moroney

Thanks, Sachin. Let me start with the Alzheimer’s question, if I understood it correctly. I mean this is perhaps kind of a question that is addressed to Roche. But let me have a stab at it anyway. So what I in my understanding I believe that a BACE inhibitor was intended to be a combo therapy for antibody such as gantenerumab. As you know, until now gantenerumab has only been tested clinically as monotherapy, and while there has been speculation that anti-amyloid antibodies could be used in combinations, to my – to the best understanding that I have is necessarily a pre-requisite or another requirement. The thinking behind the approach of going into early and earlier stage patient is that you essentially clear plot before it has the chance to become toxic at levels that can become toxic. And hence the reasons why Roche actually already in 2011 started this SCarlet RoAD study in the Prodromal patient population, and we think that actually the picture that’s emerging more and more is consistent with the view that – if you are going to be effective in treating Alzheimer’s you need to go into the early as patient population possible, we saw hints of that in the Solo study of Lily. We have seen hints of that now in the crenezumab study. So we think that everything is pointing in the direction that suggests that actually gantenerumab is being developed in exactly the right way, and we hope that – obviously we hope that the SCarlet RoAD Prodromal study will be successful. And we also know this Roche that in additional mild study, Marguerite RoAD which all to our mind adds up to the same message which is you need to go into an earlier stage patient population if you’re going to have an effect, and the mechanism we hope – the effective mechanism is clearance of plaque at the earliest stage possible before it can really have a toxic effect.

Arndt Schottelius

And Sachin, this is Arndt. I will take your two questions. Thank you for that. So as I explained a little bit earlier, we have now added – expanded the trial, at a weekly dosing, and plus minus dex. So you might remember we have started with a pure monotherapy study also without dex, and the purpose here really is to get the full picture of the pharmacology. We would like to share that full picture with you, we believe that the weekly dosing regimen is the best dosing regimen. We think that adding dex now provides the basis for the later plan. It is in combos, because it will be part of that. So the real reason is we would like to show you the full story when we have it, and we will share that when this part of the monotherapy study, including this, when of course it’s fully enrolled.

Operator

We have a follow-up question from the line of Steve Chesney from Goldman Sachs.

Steve Chesney – Goldman Sachs

I just wanted to touch quickly on Guselkumab. I know it wasn’t the subject of the update today. But Janssen has recently initiated a trial that’s looking at certain HLA leols [ph] and patients from a variety of psoriasis clinical trials. Is that, to you knowledge, a gating factor for the initiation of Guselkumab phase 3? And what is the timeline for the beginning of that trial?

Simon Moroney

Steve, to the best of my knowledge, that is not a gating on the start of the phase 3. At a time when they released the phase 2b data, they indicated that they would take Guselkumab into phase 3. We are optimistic that, that can be this year still, before the end of the year. But we don’t have official confirmation on that.

Operator

The next question comes from the line of Mick Cooper from Edison.

Mick Cooper – Edison Investment Research Limited

Just one quick question from me. What kind of data should we expect – to be presented at ACTRIMS on MOR2013?

Arndt Schottelius

Yeah, Mick, let me take the question, it’s Arndt. So you might recall that phase 1b was a safety study. So primary endpoint is safety, the exploratory later – actually exploratory activity, so what you should expect is a safety readout from a safety study.

Mick Cooper – Edison Investment Research Limited

That’s, given that is a oral presentation, should we expect to get more?

Arndt Schottelius

I think the best is really to expect the – the safety data, I think one has to maybe just explain the oral presentation which of course we are really pleased. But I think it’s very understandable that there is great interest as I said before, I mean of course, this is also kind of a busy field. But with really novel mechanism of action that has not been explored [indiscernible] in MS. So anything – any work let this substantially to get started to lay the foundation, the ground work, I think, is of specific interest.

Operator

The next question comes from the line of Victoria English from MedNous.

Victoria English – MedNous

Simon, thank you for taking the question. In your opening remarks, you mentioned that you’ve got 44 discovery compounds at the moment. Are we seeing any flow-through yet from your agreement with Temple? And if no, do you expect, could be seeing some impact of this Temple agreement any time in the next 12 months?

Simon Moroney

Yeah, thanks Victoria. That 44 doesn’t yet include any Temple program. This is just of a too soon. The installation of the technology is just taking place. They’re really just getting going. But we would hope that interesting targets would flow out of the collaboration, on what time scale it’s difficult to say at this point.

Operator

The next question comes from the line of Daniel Wendorff from Commerzbank.

Daniel Wendorff – Commerzbank

Thanks for taking my questions. Two if I may. And one question on MOR103. And maybe I didn’t quite catch that at the beginning during the presentation, but has GSK already made a decision whereby to continue the allotment of the program in MS beyond the phase 1? And second question on MOR208, and can you update me again on what kind of data you would present during 2014?

Arndt Schottelius

Yes, Daniel, thanks for the questions, Arndt. So the first question related to MS, do we have any information from GSK? That’s something we cannot share with you. You would need to ask GSK and if they are [ph] hence, they haven’t spoken about that publicly. So I think it’s appropriate that you would pose that question to them. There is -- clearly they are moving ahead with RA and I would suggest maybe just asking that to them directly.

Then 208, you asked about what kind of data can we expect? So again just as a reminder, this is a phase 2 study. What will be presented of the phase 2, the different sub-forms of NHL, these four sub-forms that we talked about and as I said previously, we will share data of those sub-forms which of course could be different. But we will speak about the first part of that studies in those different sub-forms that we have concluded.

Operator

The next question comes from the line of Igor Kim from Close Brothers Seydler.

Igor Kim – Close Brothers Seydler

I have just one short question regarding your growth on gantenerumab, you said that – I appreciate that you specified the range, just the question is – what does it depend on, whether it’s going to be at the lower end of the guidance 5.5% or upper end, 7%?

Simon Moroney

Igor, thanks for the question. It’s a tiered structure that’s common in the industry which basically means that it’s linked to product sales. So if product sales reach X, then the lower royalty rate is applicable, if product sales reach Y, then a medium royalty rate is applicable and if product sales reach Z, then a higher royalty rate is applicable.

Operator

Thank you. We have no further questions coming through. So I will now hand back over to Dr. Simon Moroney to wrap up today’s call.

Simon Moroney

To complete the call, I’d just like to remind you of the key take home messages. Our therapeutic antibody pipeline is bigger and more advanced than ever before. The sheer size of this pipeline means that news flow is increasing and the medical and commercial prospects of certain programs are becoming clearer, as exemplified by the disclosure of the royalty rates in our relationship with Roche around gantenerumab.

In addition, we continue to advance our proprietary portfolio with clinical data from two of our programs to be presented before the end of this year. And finally, our development of Ylanthia is paying off as we utilize this technology as currency to build value into our proprietary product portfolio over the longer term.

Claudia Gutjahr-Löser

That concludes our call. If you would like to follow up with us directly, we are in the office for the remainder of the day. Thank you for your participation on the call and goodbye.

Operator

Ladies and gentlemen, the conference has now concluded. And you may disconnect your telephone. Thank you for joining in. Have a pleasant day. Good bye.

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