MorphoSys AG

Anke Linnartz - IR Malte Peters - CDO Simon Moroney - CEO Jens Holstein - CFO Marlies Sproll - CSO

James Gordon - JPMorgan Jean Mannie - Kempen Mike Cooper - Trinity Delta Victoria English - MedNous

Good afternoon, good morning, and welcome to our 2016 year-end results conference call and webcast. My name is Anke Linna, Head of Corporate Communications and Investor Relations at MorphoSys.

With me on the call today is our complete management board, Simon Moroney, our CEO; Jens Holstein, our CFO; Marlies Sproll, our CSO; and our new CDO, as of March 1st, Malte Peters. Before we start, I would like to remind you that during this conference call we will present and discuss certain forward-looking statements concerning the development of MorphoSys core technology, the progress of its current research and development 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 speak only as of the date hereof.

In the presentation, Simon and Jen, will present to you revenue of the year 2016 and provide an outlook for 2017. We will cover our most advanced candidates in our pipeline, revenues and financial results for 2016 and provide financial and operational outlook.

After the presentation, we will be all available for your questions. You’ll find the slide deck which accompanies the presentation on our website.

I would now like to hand over to Simon Moroney.

Thank you, Anke and also from me a warm welcome to our financial results call for 2016. Before we get going, we’d like to take this opportunity to introduce our new Chief Development Officer, Malte Peters and give him the chance to introduce himself to you personally.

Thank you, Simon, good morning, good afternoon everybody. My name is Malte Peter, I started my position at MorphoSys as Chief Development Officer on March 1st.

So just a couple of days ago, you can imagine that I am in the process of becoming [indiscernible] with all of the data and I am looking forward to working with you in the future and interacting with you in our future calls and relationships. So with this I turn back to Simon.

Perfect, thanks Malte. 2016 was a very rewarding year for us.

In November, the first therapeutic antibody from our platform guselkumab was filed to market approval by our partner Janssen. We saw our product pipeline advanced to a record high of 114 programs in R&D at the year-end, making it one of the broadest portfolios in the biopharmaceutical industry.

We made significant progress with our own drug candidates in particular our proprietary antibodies MOR208 and MOR202 made promising advances in their respective indications. We took advantage of investor interest to strengthen our financial position and successfully completed the capital increase of EUR115 million.

Cash at year-end stood at EUR360 million and last but not least we fully achieved our financial guidance. Turning to our pipeline, across our pipeline we see many programs which have the potential to transform the treatment of the disease as they address.

As already stated, our pipeline comprised 114 programs at year-end, 29 of which were in clinical development. The golden bars on the chart that you see on slide seven refer to our proprietary programs.

6 of the 29 clinical programs or about 20% are from our proprietary development segments. We will start the review with a look into each of these.

First up MOR208, on slide eight. This is our Fc-enhanced CD19 antibody, the most advanced of our proprietary development programs.

We began three Phase 2 trials in 2016, investigating MOR208 in combination with other cancer drugs. We are currently focusing on two indications, namely relapsed refractory diffuse large B cell lymphoma or DLBCL and BTK inhibitor refractory and intolerant chronic lymphocytic leukemia, CLL and the CLL subtype small lymphocytic leukemia SLL.

And the trial known as L-MIND, we’re testing MOR208 in combination with the immunomodulatory agent lenalidomide in patients with relapsed refractory DLBCL. And the trial know as B-MIND, we compare MOR208 together with the chemotherapy bendamustine with rituximab plus bendamustine in relapsed refractory DLBCL.

The third trial we started last year, namely COSMOS, looks at MOR208 in combination with idelalisib in patients with CLL or SLL, after discontinuation of a BTK inhibitor therapy. DLBCL is the most common type of non-Hodgkin's lymphoma in adults comprising 30% to 40% of all NHL cases.

The disease is very aggressive and there is a high unmet medical need from novel treatments for suffers especially for those who relapsed or are refractory to current treatment options. Our focus is on those relapsed refractory patients who are ineligible for stem cell transplantation that's around half of that population.

One of the key findings from the clinical studies we've done so far is that in a number of patients MOR208 monotherapy could provide durable responses. Our goal is to build on these encouraging results take advantage of the acceptable safety profile we're seen from MOR208 and aim to increase both depth and duration of response on the combo studies.

Chronic lymphocytic leukemia is the most common form of leukemia in adults. Today patients are increasingly and fairly successfully being treated with BTK inhibitors.

However for those patients who do not respond or no longer respond to this treatment option are very limited and the prognosis is poor. This result in high unmet medical need for patient group after discontinuation of a prior BTK inhibitor therapy.

Data suggest that these patients’ team has continue to express CD19, which means that they could respond to an anti-CD19 therapy. Our goal here is to provide doctors with a regimen which significantly improve the prospects for these patients.

The next program I mentioned is our anti-CD38 antibody MOR202 for multiple myeloma. MOR202 shows the potential we would expect for an antibody in this exciting new target class.

At the ASH Conference in December last year we reported data from the ongoing Phase 1/2a study of MOR202 in relapsed refractory multiple myeloma patients. We've reached clinically meaningfully dose levels that start to allow us to compare MOR202 with competing programs.

Without going into the data here overall the picture that's emerging is that MOR202 has very encouraging efficacy at least comparable to other drugs in this class plus potentially best-in-class safety and convenience. Turning to MOR209 together with our partner Aptevo Therapeutics formally known as been out from Emergent in the US.

We're developing MOR209 also known as ES414 in a Phase 1 clinical study in patients suffering from metastatic castration resistant prostate cancer. MOR209 is an innovative by specific anti-PSMA/anti-CD3 antibody, based on Aptevo’s proprietary platform we’ve seen very promising preclinical data with the molecule.

Prostate cancer is the most commonly occurring cancer in men with approximately 900,000 new cases annually worldwide. Last year we adapted the study design together with Aptevo and the trial started enrolling patients under an amended dosing scheme in Q4 of 2016.

Turning to MOR106, in April last year we brought MOR106 into the clinic together with our co-development partner for this program Galapagos. MOR106 is an antibody from our Ylanthia platform and the first publicly known antibody in clinical development worldwide against IL-17C.

This target molecule is implicated in a number of inflammatory skin disorders and quite distinct from other members of the IL-17 cytokine family. Based on preclinical data we've generated together with Galapagos MOR106 could be developed in a number of indications.

We have encouraging preclinical data atopic dermatitis and have chosen this as the lead indication for the program. This is an area of major unmet need, which we expect to be transformed by biologic therapies in the way that other inflammatory indications have been in the last two decades.

Turning to MOR107 slide 10, just a few weeks ago we announced the start of the Phase 1 trial with MOR107 making it the sixth program from our proprietary development segment to enter clinical trials. MOR107 is a lenthipeptide based our subsidiary Lential Pharma's proprietary technology platform and the first lenthipeptide in our clinical pipeline.

MOR107 as the a selective agonist of the angiotemsen II receptor type 2 has shown promising preclinical data in a number of disease models and we're very excited to see this innovative agent being developed in the clinic. Turning to MOR103, MOR103 is an antibody that was discovered and clinically developed by MorphoSys into a proof of concept before we fully out-licensed it to GlaxoSmithKline in 2013.

GSK is developing the antibody and there is all related costs. MOR103 is directed against granulocyte-macrophage colony-stimulating factor or GM-CSF a central player in the emergency inflammatory diseases such as rheumatoid arthritis, a blockbuster market that is still growing dynamically.

In our view MOR103 has the potential to become first marketed anti-GMC as antibody. In 2016 GSK further advanced MOR103 in the clinic.

With the ongoing Phase 2b trial in rheumatoid arthritis GSK reported that a high attach [ph] hurdle was achieved. In addition GSK started two Phase 2a trials one in rheumatoid arthritis and one in hand osteoarthritis into 2016.

Turn now slide 11 to our Partner Discovery segment, which is nearing the point at which it becomes a royalty-based revenue generator for MorphoSys. Overall the Partnered Discovery segment continued to grow in number and also in maturity as programs move into later stage of their development.

We're extremely proud of all of our long standing collaborations which produced so many programs based on our technology. There are too many programs to speak about here, so I’ll highlight just a couple.

One of the highlights of 2016 was positive Phase 3 data and the subsequent regulatory filing of guselkumab, a potentially new stream of the psoriasis by our partner Janssen. The efficacy and safety data published in October by Janssen are compelling.

Latest Phase 3 data published by Janssen just last week at the AAD Conference in Orlando was also strong. Guselkumab showed significant superiority versus Humira adalimumab.

In addition guselkumab showed significant superiority to Stelara, ustekinumab, in patients with prior inadequate response there too. This impressive efficacy coupled with a convenient dosing scheme makes guselkumab look to us like an extremely promising new drug.

If approved this could be the first MorphoSys antibody to reach the market possibly as early as the end of this year. We were very pleased with Janssen also reported positive Phase 2 data for guselkumab in a second indication psoriatic arthritis.

According to Janssen, a substantially higher percentage of patients receiving guselkumab achieved the ACR-20 primary end point of the trial compared with patients receiving placebo. Janssen has already announced plans to start a Phase 3 program with guselkumab in this indication.

Another significant intervention our Partnered Discovery segment in 2016 was Bayer start of a pivotal Phase 2 study with the HuCAL based antibody drug conjugate Anetumab Ravtansine. This drug candidate targets mesothelin, one of the most promising solid cancer targets.

The lead indication is malignant plural mesothelioma, a rare cancer of the lung with high unmet medical need. Last year Bayer reported encouraging data from a Phase 1 trial highlighting the fact that some patients are still responding for more than two years after starting therapy, which is substantially longer than current response durations.

Bayer has underscored its commitment to the program by investing in clinical development in a number of other cancer types in which the target mesothelin is implicated. Overall our entire pipeline both partnered and proprietary showed terrific growth in the reporting year.

The total number of programs increased from 103 to 114 and the number of programs in the clinic rose from 25 to 29. We saw 11 new programs in discovery, four new INDs, two transitions from Phase 1 to Phase 2 and one program Anetumab Ravtansine entering a pivotal trial.

Our deep pipeline is a tremendous asset and will be an extremely lucrative value driver in the years to come. With that I'll hand over to Jens with this wrap-up with the financials.

Thank you, Simon. Ladies and gentlemen also from side a warm welcome to all of you and thank you for your interest in the company.

2016 was another very successful year for MorphoSys in which we again achieved our goals for the year. Group revenues came in at EUR49.7 million fully in line with our guidance with ranged from EUR47 million to EUR52 million.

Our proprietary R&D expenses amounted to EUR78.5 million and we're also well in line within the guided corridor of EUR76 million to EUR83 million. EBIT reached minus EUR59.9 million and came in at the upper end of our guidance of minus EUR58 to minus EUR68 million.

Please move on with me now on to the next slide that illustrate our P&L statement. As said before group revenues came in at EUR49.7 million in contrast to EUR106.2 million in 2015.

The difference comes from significant one-off effect in 2015 that resulted from the termination of the MOR202 co-development and co-promotional agreement with Celgene. The financial impact in 2015 of [indiscernible] was around EUR59 million.

Regular follower of MorphoSys are aware onetime effects from the past and are familiar with the resulting implications on our profit and loss statement. Therefore in the like-for-like comparison in other words by taking the mentioned onetime effect out of our 2015 numbers revenues in 2016 increased by approximately 5%.

Total operating expenses came in at EUR109.8 million exceeding last year’s number by 17%. The increase was planned and results from our intensified investment in our proprietary clinical compound.

Particularly, the start of three Phase 2 trials with our most advanced clinical compound MOR208 driven forward in 2016 in selective blood cancer indications resulted in an increase of the company’s R&D spending. Total R&D expenses rose by 22% to EUR95.7 million versus EUR78.7 million in 2015.

General and administrative expenses in turn decline by 7% to EUR14.1 million versus EUR16.1 million in 2015. Earnings before interest and taxes came in at minus EUR59.9 million compared to an operating profit of EUR17.2 million in 2015.

Again the EBIT in 2015 was positively impacted by the already mentioned onetime effect from Celgene. In 2016, the consolidated net results amounted to minus EUR60.4 million in contrast to a positive EUR14.9 million in 2015.

This translate into a diluted net result per share of minus EUR2.27 in 2016 compared to positive EUR0.57 in 2015. Let’s move to page 15 of the presentation.

For the newcomers in this call our proprietary development segment - in our proprietary development segment we focus on the research and clinical development of our own drug candidates in the field of cancer inflammation. In 2016, this segment recorded revenues of EUR0.6 million.

For 2015 we reported EUR59.9 million including the onetime effect from Celgene. Proprietary R&D expenses plus expenses for our own technology development activities rose by 39% to EUR78.5 million.

As a consequence the segment EBIT came in at minus EUR77.6 million compared to plus EUR10.7 million in 2015. In the Partnered Discovery segment we apply our proprietary technology to discover new antibodies for third-parties benefiting from the partner development advancements for success based milestone payments and royalties.

In 2016, revenues were up 6% to EUR49.1 million from EUR46.3 million. The increase was mainly driven by milestone payments from partners such as Janssen and Novartis.

Segment revenues comprised EUR43.6 million in funded research and license fees, slightly above the prior year number of EUR42.3 million and EUR5.6 million in success based payments up versus the prior year by 40%. EBIT in the Partnered Discovery segment climbed by 52% to EUR31 million.

Mainly based on the increasing success based milestone payments for partners and lower costs incurred in the segment. Let’s move on to the balance sheet on slide 16.

As of December 31, 2016, we recorded total asset of EUR463.6 million. This represents an increase of EUR53.5 million compared to the end of the previous year.

At year-end 2016, we had a cash position of EUR359.5 million compared to EUR298.4 million as of December 31, 2015. Please remember that our total liquidity position as reported on the various positions in our balance sheet.

Cash and cash equivalents, available for sale financial asset, bonds available for sale as well as current and non-current financial asset classified as loans and receivables. To sum it up, our growing and maturing problems supported by very solid financial resources of close to EUR360 million at the end of 2016.

We strengthened our financial position by successful capital increase with gross proceeds of EUR115.4 million in 2016. Overall, our financial strengthen enables us to invest in the development of our own drug candidates to grow the company's value without losing sight of our prudent and efficient use of resources.

And now coming to the financial guidance for 2017 before I will pass the call on to Simon for the strategic and operational outlook. For the financial year 2017 we expect to generate group revenues in the range of EUR46 million to EUR51 million fairly comparable to the range of last year's guidance.

As pointed out in the past our guidance does not include any additional revenue from potential future collaborations and or licensing partnerships, no effect from potential in licensing or co-development deals for new development candidates. This is important to understand that partnering deals would very likely have a significant impact on our financial results.

As previously communicated we expect the collaboration with Novartis to terminate at the end of November 2017 in accordance with the contract. We do not anticipate that Novartis would exercise its option to extend the contract and this is also reflected in our guidance.

In turn, we cannot exclude that some collaborative work might be still performed going forward. Nonetheless we do not plan for such an event as the magnitude is unclear.

R&D expenses for proprietary drug development in 2017 are anticipated in a corridor of EUR85 million to EUR95 million. As a consequence we expect earnings before interests and taxes of minus EUR75 million to minus EUR85 million.

Finally I would like to end my session with the positive outlook for the years beyond 2017. Regarding revenues coming from royalties in the years to come we are especially on the back of the recently announced positive data on guselkumab very optimistic.

With anetumab breast cancer and a second partner compound could follow soon. We certainly need to give drug candidates like guselkumab and anetumab sometime to reach peak sales levels, but both compound have if approved blockbuster potential.

Royalties on those compounds should move our revenues to new levels going forward. In addition, our expectations on revenues generated by milestone payments as for example for MOR103 could be significant.

And our collaboration with LEO could also contribute high single-digit millions in the mid-term future. All this could potentially come on top of regular milestone payments, partnership deals on MorphoSys proprietary assets as well as proprietary technology deals.

Having said this we are confident in respect of our financial prospects in the years to come. And with this, I would like to end my part and I would like to hand over back to Simon.

Thank you, Jens. To conclude or summarize what operational progress you should expect from us throughout the year 2017.

Our top priority is our growing portfolio highly promising proprietary drug candidates some of which are nearing the decisive stage of clinical development. We’re delighted to have the financial and human resources to drive these programs forward at a critical stage in their development.

I'll look at each program in turn. First MOR208, in 2017 we aim to transition the B-MIND study into Phase 3.

The trial is in patients with relapsed refractory DLBCL who are ineligible for stem cell transplantation. There is currently no approved treatment for this patient population and the medical need is extremely high.

The transition into Phase 3 will occur on successful completion of the safety running path, which is currently ongoing. As a reminder, this is a head-to-head study of MOR208 plus bendamustine versus rituximab plus bendamustine in the comparative arm.

Rituximab plus bendamustine is one of the most widely used regimens in the relapsed refractory setting. The study has a PFS endpoint and a design that could support registration of MOR208.

As a pivotal trial it is of course blinded for us until the primary endpoint read out. So you shouldn't expect to hear any news until at least the interim analysis, which we expect in late 2018.

So end of next year. Overall we expect the primary endpoint read out in the first half of 2020.

This is the first pivotal trial in our proprietary portfolio and will mark another important step on our way to becoming a fully integrated bio pharmaceutical company. Also with MOR208 we expect to present first data from our ongoing L-MIND trial during the course of this year at an appropriate medical conference.

Again as a reminder this is the open label Phase 2 study in which we're investigating MOR208 in combination with lenalidomide in relapsed refractory DLBCL. The third trial with MOR208, COSMOS will continue during 2017.

From the ongoing open label arm comprising 208 plus idelalisib we expect to see the outcome of the safety run-in this year. We expect to add another arm to the study shortly combining MOR208 with the second CLL drug.

We also expect to see further dates during this year from our collaborator, John Byrd from Ohio State University, he’s also investigating MOR208 in the Phase 2 investigator initiative trial in CLL. And that data will be most likely presented at appropriate medical conferences during the year.

Turning to MOR202 we expect to complete the Phase 1/2a dose escalation trial in relapsed refractory multiple myeloma and to report data from all three cohorts MOR202 alone and in combinations with pomalidomide and with lenalidomide. We hope to give a comprehensive update at an appropriate medical conference around mid-year.

For MOR209 we expect our partner Aptevo to continue the ongoing Phase 1 trial of this bispecific antibody in metastatic castration resistant prostate cancer with the adapted dose regimen and we aim to provide an update on progress during the year. For MOR106 together with our partner Galapagos we will complete the current Phase 1 trial.

We expect to report data from the Phase 1 trial in the fourth quarter of this year, comprising both the healthy volunteer, single ascending dose trial and the multiple ascending dose study in atopic dermatitis patients. For lantipeptides MOR107 we expect to present top line data from the ongoing Phase 1 study in healthy volunteers in the second half of this year.

We’re excited about this innovative new target class in our clinical portfolio and we’re now evaluating the options for the next potential clinical development steps in patients. Finally, for MOR103 three Phase 2 trials are schedule to conclude this year according to our partner GSK.

Most advanced is a Phase 2b study with MOR103 in moderate to severe rheumatoid arthritis, which we expect to conclude late this year. We also expect completion of a smaller Phase 2a rheumatoid arthritis study, which has as its primary endpoint changes in biomarker data.

Also later this year we expect conclusion of a Phase 2a study of MOR103 in inflammatory hand osteoarthritis. Turning to our Partnered Discovery segment slide 20 and this segment results from up to 31 different clinical trials by our partners are due this year.

As always we have no control over what our partners communicate, but there will potentially be a lot of data relevant to our pipeline. Right now we’ll just highlight a couple of programs with expected news flow in 2017.

Guselkumab as we said could become the first therapeutic antibody based on MorphoSys HuCAL technology to receive market approval. We expect the FDA decision on Janssen’s BLA filing in the second half of this year.

Guselkumab is also being filed in Europe, but here we expect decision rather in 2018. In our opinion guselkumab looks the best of the new generation of biologics for psoriasis.

The efficacy, safety and specialty convenience look absolutely compelling in our view. Bayer’s program Anetumab Ravtansine is expected to report results in the second half of 2017 from the pivotal Phase 2 trial in mesothelioma.

Bayer has publicly announced the recruitment into the trial shows enormous interest and the favorable results could support a regulatory filing of the compound next year for a potential market introduction in 2019. Given the high medical need in mesothelioma and the number of indications in which the compound had shown potential we believe that it’s fair to say that this is another blockbuster candidate in our partnered pipeline.

Last Monday we’ve published that our partner Roche has decided to initiate a pivotal Phase 3 program for gantenerumab and patients with prodromal to mild Alzheimer’s disease. Roche expects to initiate two new Phase 3 trials later this year.

The start of these trials shows Roche’s ongoing commitment in Alzheimer’s disease and specifically to the amyloid hypothesis. Utomilumab the Anti-41BB antibody generated in now collaboration with Pfizer showed evidence of immune response in the Phase 1b study in combination with the anti-PD1 antibody pembrolizumab.

To fully exploit the immune oncological potential of utomilumab Pfizer has recently started a two component study i.e. Phase 1 directly followed by Phase 3 testing their anti-PDL-1 antibody avelumab in combination with various agents including utomilumab in DLBCL.

As always we don’t issue guidance on expected deal flow, but I would like to give you a flavor of where our business development efforts lie. First and foremost, we are focused on securing the future of MOR202.

As already mentioned, the clinical data that we have - that was seen suggests significant potential in multiple myeloma. Increasing evidence from a number of sources suggest that anti CD38 antibodies may also have potential in other indications, including solid tumors, as well as some autoimmune diseases.

The opportunity for MOR202 is potentially enormous and we want to do everything possible to ensure that MOR202 is developed as broadly as possible. We feel that this is best done by partnering with further development of MOR202 and we feel that the data package we have, gives us a good chance to enter an appropriate partnership.

This is one of the most important projects currently ongoing at MorphoSys. Last year, we entered a strategic antibody discovery deal with LEO Pharma, we will continue to explore opportunities to collaborate with other companies at early stages of drug development, where our technology base and expertise can be put to work.

Deals of this type serve as sources of revenue, as well as providing for additional pipeline growth. To conclude, slide 21.

We are looking forward to a great year for MorphoSys. We hope to see the first approval for product is guselkumab based on our technology.

This is across the best possible validation for a technology platform. We expect guselkumab to be only the first of a flow of products that could receive market approval in the years to come.

The growing body of clinical data suggests that within our pipeline are a number of products that have substantial potential. This year will also mark the beginning of our transitions to a company whose P&L statement will increasingly be based on revenues from products.

We expect programs from our Partnered Discovery segments, such as guselkumab to form a growing revenue base in the years to come. This revenue will support investments in our proprietary programs and help us execute our plan to build MorphoSys into a commercial product based biopharmaceutical company.

Increasing visibility are on the potential of our pipeline as a growing revenue source, upcoming inflection points for our lead proprietary oncology programs. Entering decisive stages of clinical development, plus the financial strength to invest at the level required to maximize returns, mean that we are well positioned to build substantial value in the years ahead.

So we are now ready to start our Q&A session. First of all thank you Simon and thank you Jen for your presentation and please register for a first question.

Hello, thanks for taking my questions. A couple of pipeline questions on MOR202 please.

One would be I think you mentioned convenience being advantage for the product, but then I have also seen what J&J said about doing a subcu version of [indiscernible] with a five minute infusion time. Would you still see there being an angle to have a convenience advantage versus that or would that make it more challenging to have a convenience benefit?

The second question on 202 was assuming you find a partner, when is the earliest that Phase 3 could start, is there any other thing you need doing, or is it just ready to go power from having a partner. And then I think you mentioned solid tumors are autoimmune for the class, just do you any preclinical data or anything like that that is encouraging for activity?

And then I just one follow-up financial question, which was on partnered R&D, can you give any comment about how big that might be this year, did that taper off with the Novartis collaboration ending at the end of November or similar level to previous year’s, how big should we think that might be?

Thanks, James. So let me start with the MOR202 questions and then handover to Jens for the R&D question.

As you pointed out we’re aware of the plans that Janssen has in order to overcome the challenge that they have with the administration of the current intervenes administration. We need to see what actually they sit where they finish up at.

We're at - as you know we're at two hours without infusion currently and that's something that we haven't even tried to optimize. So that’s something that we expect to be able to reduce further.

Obviously, the advantage that we currently have looking at our two hour infusion versus their perhaps initial up to eight hour infusion and subsequent perhaps five or six hours infusion that diminishes that they’re indeed able to come with a subcutaneous version, which is administered in less than an hour or so. But I think, we're also very intrigued to see what the experience so for the patient ultimately the data that we saw at ASH involved 60 milliliters and 90 milliliters subcutaneous infusions at rotating sides around the abdomen weekly.

I think what's going to determine, the relative comfort of the two approaches is the actual patient experience in reality rather than the absolute amount of time required for the administration. Coming on to your second question around the timing of the Phase 3 starts that in turn depends on the precise setting that the Phase III would be running.

That’s something that we would of course discuss and agree with potential partners and it's premature at this stage to speculate as to when that could take place. Regarding your third question on any preclinical evidence we have regarding solid tumors, we do have some evidence that the suppressive effect of MOR202 looks to be similar other anti-CD38 antibody.

So this idea that for example anti-CD38 antibody can suppress MDSCs and the tumor micro environment is something that we have been able to verify as well pre-clinically. So based on that one would expect the same kind of effect in man in the solid tumor setting as is supposed for other CD38 antibodies.

And then James regarding your question on the Novartis revenue impact, so to remind everyone on the phone the current amount of money that the company generates within the year within 12 months is EUR40 million. So the contract runs out end of November, Novartis still have the opportunity to review its options contractually.

So it's a little bit pretty mature to give guidance on how the impact would be going forward. So for this year in our guidance you have to calculate something like EUR36.5 million that we have anticipated coming in as a revenue figure.

Again for ‘18, a little bit too early to say how the financial implication would be in case that we have some sort of further collaboration with Novartis, but we certainly will keep you updated on this. Just would like to maybe highlight in that respect that our LEO cooperation has a bigger financial implication as we have originally indicated.

So in that respect and that’s some sort of - similar sort of setting, we estimate that this figure over the next two years will increase to a high single-digit million figure, minimum. So at least it's not making up for the EUR40 million as we always said, but it would help a little bit at least.

Thanks a lot.

Hi, and thank you for taking my question. This is Jean Paul from Kempen.

Two short ones, you mentioned 208 L-MIND study, there will be additional data this year, is it reasonable to expect that that could be also mid-year. I thought, I would recall from a previous conversation it could be around ASCO or something?

And second one I noted on MOR209 that there was an extension of the terms, the initial terms to June 2017, end of June 2017. How does that relate to the ongoing Phase 1 trial, could you shed a bit more light on that?

Thanks.

Yes, thanks, Jean Paul. Indeed we would hope to have some L-MIND data at ASCO so mid-year.

But certainly at ASH at the end of the year, but I think we feel reasonable that we could have something to share with you at ASCO. Regarding MOR209 you refer correctly to a renegotiation of the agreement with Aptevo, which simply was a reflection of the fact that because we had to sort of pause and reformulate the drug and then kind of restart the timeline is delayed compared to what we originally thought when we entered the agreement with them.

And we were able to therefore agree with them to renegotiate that six-month period from the end of last year up until the end of the June this year. So it's really just the contractual arrangement it doesn't have any bearing on the trial itself.

Okay that's clear. Thank you very much.

Hi I've just got three questions. Firstly following on from the previous question about MOR202, might you do small Phase 1b studies in either solid tumors or in autoimmune indications.

Secondly, could you give us some more information about the characteristics of 107 and I noticed that you're doing the Phase 1 trials in patients on a low sodium diet, is that particularly important low sodium diet? And finally just could you give us some cash guidance for the end of the year?

Thank you.

Thanks, Mick. Let's start with the MOR202 question.

I think the exciting thing about the MOR202 is that just have massive possibilities in all sorts of indications. We originally thought if it is an MM drug with maybe application in AML/CLL perhaps.

But it now we’ve seen speculations that CD38 antibody could be developed in all sorts of places. It's unrealistic for us to think that we can reasonably cover the universe of trials and studies that could be done.

So as I said during the presentation we feel that the best way forward is to secure a good partner that can help us exploit the potential on MOR202. So our focus right now is on completing the ongoing study and in engaging in appropriate discussions with pontifical partners.

Regarding MOR107 there was the question about the characteristics and the approach using testing it in patients with low sodium. Marlies?

Yes I can take that question, thanks. So I mean your first question about molecule itself as described it's a short lenthipeptide and agonist against the 82 receptor.

The study that has been initiated is a study in healthy volunteers, single ascending doses and the multiple ascending doses. And you're right in the second part of the trial with all kind of investigates the characteristics of the molecules in healthy volunteers with low sodium diet.

And you might recall we are looking into different possibilities like fibrotic diseases, kidney diseases. So it's important for us to understand that behavior.

And then regarding your third question Mick on the cash position expect the full year end 2017 you should expect an amount somewhere around EUR275 million to EUR285 million.

Many, thanks.

Hi yes, just one question about the lenthipeptide program. Can you give us some idea of where you see that developing in the next year or two?

And then secondly I don't know whether you're still in a legal conflict with Genmab over the CD38 patent, could you bring us up-to-date on that?

Yeah thanks Victoria. So your question about the lenthipeptide was specific to MOR107 as Marlies just mentioned we see this has certainly potential in the variety of fibrotic diseases based on the preclinical data we have, but we haven't yet made the decision in going from healthy volunteer study, which is currently ongoing and to precisely what patient setting we would look next.

But as certainly it seems that potential in the variety of fibrotic and potentially other indications as well. Regarding the legal thing, yes indeed recall that we had sued Janssen and Genmab for patent infringement and that case proceeds and we’re in what I would describe as the procedural formulistic parts of the process as well-known under American wall.

So at this stage we actually provided a brief update couple of weeks ago I think in a press release about the first hearing. But at this stage we simply way hear away through the process.

Thank you.

Thank you very much everyone for participating in the call today. As we said we're looking forward to a very exciting 2017, with lots of data to be expected.

And we look forward to keeping you update on progress throughout the course of the year.