MorphoSys AG

Good afternoon, good morning and welcome to our Q3 2019 conference call and webcast. My name is Sarah Fakih and I'm the Head of Corporate Communications and Investor Relations at MorphoSys.

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 technologies, the progress of its current research and development program and the initiation of additional programs. Should actual results differ from the company's assumptions, ensuing 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. With me on the call today are Jean-Paul Kress, our Chief Executive Officer; Jens Holstein, our Chief Financial Officer; and Malte Peters, our Chief Development Officer.

In the presentation, Jean-Paul will start by giving you an operational review of the third quarter as well as an outlook for the rest of this year. After that, Jens will review the financial results of the third quarter and the first nine months of 2019.

After the presentation, we will all be available for your questions. You'll find the slide deck for this presentation on our corporate website.

With this, I would now like to hand over to Jean-Paul Kress.

Thank you, Sarah. And also from me, a warm welcome to our Q3 2019 earnings call.

Yesterday was a very important day for the company on which we made great progress on our main priorities. We published impressive results on our real-world data approach concerning our regulatory strategy around our L-MIND trial.

With this data, we were able to deliver a critical component of the BLA filing package to the FDA. The rolling submission to the FDA was initiated and we already submitted the first preclinical data package.

Another top priority for us is the tafasitamab partnership. I have made clear that I am open to broad partnership settings, including a US co-promotion.

Our partnering approach follows the goal to maximize the value of tafasitamab and the pipeline and the product value proposition. We are also finalizing build-up of our US commercial organization and we're executing on a flawless US prelaunch plan.

In our proprietary clinical pipeline, we are accelerating the development of our anti-CD38 antibody, MOR202, for which the start of a clinical trial in membranous nephropathy is imminent. Lastly, we were encouraged by the latest news from Biogen on aducanumab and what this may represent for patients, their families and for the scientific community, though it is premature to draw any conclusions about the investigations of gantenerumab by our partner, Roche, as studies are ongoing.

I would now like to walk you through the details of our progress and then Jens will provide a financial update. Let me start with tafasitamab, our proprietary antibody against CD19 for application in hematological malignancies and the key asset of our clinical pipeline.

Tafasitamab is differentiated from other antibody direct candidates based on an Fc fragment selectively engineered to enable better recruitment of effector cells and potentially increase elimination of cancer cells. Our most important trial is L-MIND, the Phase II study of tafasitamab in combination with lenalidomide, or LEN, in patients with relapsed/refractory diffused large B cell lymphoma who are transplant ineligible and ineligible for high-dose chemotherapy.

The study reached its primary completion in May earlier this year. Yesterday, we announced very compelling top line results from Re-MIND, the synthetic control arm for L-MIND.

As L-MIND is a single-arm uncontrolled trial, Re-MIND was designed to compare the effectiveness of LEN-monotherapy based on real-world patient data with the efficacy of the tafasitamab-LEN combination from L-MIND. The study met its primary endpoint, showing statistically significant superiority of the best objective response rate of the tafasitamab-LEN combination therapy compared to therapy with LEN alone.

Let me give you some insights on how this analysis was carried out. Re-MIND collected real-world data from overall 490 non-transplant eligible relapsed/refractory DLBCL patients who had received LEN monotherapy in the US and in Europe.

Qualification criteria for matching patients of both studies were discussed and agreed with the FDA. Eligible patients were identified from this pool and matched 1 to 1 with patients from the L-MIND study based on important baseline characteristics.

This resulted in 76 eligible Re-MIND patients that could be matched with 76 of the overall 80 L-MIND patients. Objective response rates were calculated on the basis of this subset of 76 patients in Re-MIND and L-MIND, respectively.

Within this comparison, the objective response rate of the tafa-LEN combination was 67.1% and significantly superior to the real-world data based LEN-mono objective response rate of 34.2%. Superiority of the tafasitamab-LEN combination was consistently observed across all secondary endpoints, including complete response which was 39.5% for the tafasitamab-LEN combination compared to LEN monotherapy with 11.8%.

There was also a significant difference observed in overall survival, which was not reached in the tafa-LEN combination, compared to 9.3 months with LEN-monotherapy only. Most impressively, based on the hazard ratio, the probability to survive is twice as high in the tafasitamab-LEN combination versus the LEN monotherapy.

We believe this is an outstanding outcome and confirms our confidence in the path forward. Importantly, since the real-world LEN-monotherapy data was collected from local sources, it was investigator assessed.

To allow for a like-to-like comparison of the efficacy of both therapy approaches, the data of the 76 L-MIND patients were therefore also the investigator-assessed data. The data we reported on the L-MIND primary analysis in June were centrally assessed data.

So, the outcome of Re-MIND clearly supports the clinical superiority of the tafasitamab-LEN combination and significantly complements the compelling primary analysis of L-MIND data we reported earlier this year. Both studies will form core components of the BLA filing package.

As I already highlighted, we are now executing on our rolling submission to the FDA and this also demonstrates how confident we are that this package is very robust. I am very confident that this is the right strategy to move ahead with the approval.

We remain fully committed to finalize the submission to the FDA by the end of the year and we are planning for US launch by mid-2020. The other ongoing trials with tafasitamab are the Phase III B-MIND trial, also in relapsed or refractory DLBCL, and the COSMOS trial, the Phase II trial focusing on patients with chronic lymphocytic leukemia or small lymphocytic lymphoma.

For B-MIND, we await the outcome of the interim analysis until year-end. The interim analysis will be done by an independent data monitoring committee, or IDMC.

And as a result of this analysis, the IDMC will inform us about their recommendation of how to pursue this study. To clarify again, the L-MIND and Re-MIND data approach is robust and is the regulatory pathway agreed with the FDA.

We believe the outcome of B-MIND will have no effect on the US approvability of the tafasitamab-LEN combination. However, B-MIND has an upside potential for us as it could serve as one of the possible options for a confirmatory trial in case of a conditional approval.

Our plans to start a frontline trial in DLBCL are also well on track and we expect to start it in the next few weeks. The trial will enroll about 60 patients and will evaluate safety and first signs of efficacy of the combination of tafasitamab plus R-CHOP versus tafasitamab plus LEN plus R-CHOP in previously untreated DLBCL patients.

We're confident we have designed a trial with great chances of success. And depending on the outcome, the study will be followed by a pivotal Phase I/III study with roughly 900 patients as soon as possible.

Lastly, for our exploratory Phase II COSMOS trial in CLL, we plan to present updated data at ASH at the beginning of December. Obviously, our top priority remains to execute on a flawless BLA submission for tafasitamab to the US FDA by end of this year and, given FDA approval, to be launch-ready by mid-next year.

Also, we reaffirm our plans to seek regulatory approval in Europe based on the L-MIND and intend to complete submission of a marketing authorization application to EMA by mid-2020. I would now like to update you on MOR202, our anti-CD38 antibody that we are pursuing in membranous nephropathy, a chronic autoimmune kidney disease with high unmet need.

The Phase I/II study will assess the safety and tolerability of MOR202 and also first signs of efficacy in this indication. The first clinical sites have been activated and we expect dosing of the first patient to happen very shortly.

As you know, MOR202 is also currently developed by our partner I-Mab in multiple myeloma in Greater China. With original licensing agreement we signed with I-Mab in November 2017, I-Mab was granted exclusive rights for the development of MOR202 in the Greater China region.

I-Mab is currently conducting two clinical trials with MOR202 in multiple myeloma in Taiwan, a Phase II study with MOR202 in third-line relapsed/refractory multiple myeloma and a Phase III study in combination with LEN as second-line treatment. In mid-October, I-Mab also received IND clearances granted by the Chinese National Medical Products Administration for both ongoing multiple myeloma trials.

These clearances allow I-Mab to expand the ongoing trials also to Mainland China and approved for I-Mab's successful fast-to-market strategy. Let me continue with an update on MOR106, the antibody directed against IL-17C, which we jointly developed with Galapagos and fully out-licensed to Novartis in July 2018.

You may have seen from our announcement on Monday that, based on the joint decision of MorphoSys, Galapagos and Novartis, the clinical development of MOR106 in atopic dermatitis, or AD, was ended. The decision was based on an interim analysis for futility which was performed in the Phase II IGUANA trial and which resulted in a low probability of the study to meet its primary endpoint.

All of the currently four ongoing studies in AD will be ended and the decision was based on the lack of efficacy and not on any safety issues. All three parties will explore the future strategy with MOR106.

Now, let me briefly turn to our Partnered Discovery segment. The most advanced product of the Partnered Discovery segment is Janssen's Tremfya.

We're very pleased by Janssen's strong and continuous commitment to Tremfya, as expressed in this broad spectrum of indications, in ongoing trial conducted by Janssen. Janssen also reported a strong quarter for Tremfya sales, which led us to adapt our expectations of the 2019 royalty income and Jens will cover that in a minute.

That concludes my part of the presentation. Before I hand over to Jens for the financial review, I would like to take the opportunity to thank our employees and our partners for their commitment and key contribution to the success of MorphoSys.

I am very excited by the opportunities ahead of us. Jens, please.

Yeah Thank you, Jean-Paul. Ladies and gentlemen, also from my side, a warm welcome to all of you.

And as we just heard, we look back on an operationally very successful quarter for the company and I will now guide you through the most important financial figures of MorphoSys for the third quarter of 2019. I would like to start with the consolidated statement of profit or loss on slide 12.

Group revenues in Q3 totaled €12.5 million compared to revenues of €55 million in the third quarter of 2018. Please remember that revenues in the third quarter of 2018 included the payment of Novartis of €47.5 million following the licensing agreement for MOR106.

Looking at expenses, our total operating expenses reached €40.3 million. The expenses for research and development amounted to €25.9 million compared to €18 million in Q3 2018.

Expenses for proprietary R&D and technology development amounted to €23.7 million compared to €15.9 million in the previous year. Selling expenses rose to €4.4 million as compared to an expense of €1.3 million in the year before.

Looking at general and administrative expenses, those increased to €9 million versus €5.1 million in Q3 2018. Cost of sales for the third quarter of 2019 were €1 million after €0.9 million in the previous year.

This item consists of expenses related to services provided to partners such as Novartis or I-Mab and also manufacturing costs for the expected market supply of tafasitamab. Earnings before interest and taxes amounted to minus €27 million in Q3 2019 in comparison to plus €30.1 million in the third quarter of 2018.

Our consolidated net loss after taxes amounted to €24.2 million in Q3 2019 compared to a net profit after taxes of €30.2 million in Q3 of the previous year. The earnings per share for Q3 2019 reached minus €0.76 after plus €0.96 in Q3 of the previous year.

And now, on slide 13, to give you an overview of our segment reporting for Q3 2019. Now, Propriety Development segment in which we focus on the research and clinical development of our own drug candidates, we recorded revenues of €1.4 million in the third quarter of 2019 compared to €48.8 million in Q3 2018.

Operating expenses in this segment amounted to €32 million as compared to €18.6 million in Q3 2018. The main reason for this increase is our increasing investment for the development of our proprietary programs.

Consequently, the EBIT of our Proprietary Development segment amounted to minus €30.5 million compared to €30.3 million for the previous year. In our Partnered Discovery segment, we apply our proprietary technology to discover new antibodies for third parties and benefit from our partners' development advancements through R&D funding, licensing fees, success-based milestone payments and royalties.

In the third quarter of 2019, revenues amounted to €11 million as compared to €6.2 million in Q3 2018. The revenues include an estimate of Tremfya revenues of €9.3 million.

As Janssen reported strong sales for Tremfya in Q3 of this year, we adjusted our royalty guidance for 2019. We now expect revenues between €30 million to €35 million, up from €23 million to €30 million at a constant US dollar exchange rate.

The EBIT in our Partnered Discovery segment increased and amounted to plus €8.8 million as compared to plus €3.8 million in Q3 2018. Moving on to the balance sheet on slide 14.

As of September 30, 2019, we recorded total assets of €541.1 million compared to €558.8 million by year-end 2018. At the end of Q3, we had a cash position of €412.4 million compared to €454.7 million as of December 31, 2018.

On the balance sheet, this cash position is reported under following items – cash and cash equivalents, financial assets at fair value for profit and loss, and current and non-current other financial assets at amortized cost. The number of shares issued totaled 31,927,958 at the end of Q3 2019 compared to 31,839,572 shares by year-end 2018.

To briefly sum up the key figures for the first nine months of 2019, please turn to slide 15. Group revenues amounted to €60.7 million for the first nine months of 2019.

In the first nine months of 2018, group revenues reached €66 million. Of the revenues in the first nine months of 2019, €53.4 million were success-based payments.

The majority of this sum was made up by the milestone payment received from GSK as well as Tremfya royalty income that amounted and totaled to €23 million. R&D expenses amounted to €75.3 million in the first nine months, of which €68.8 million represent R&D expenses for proprietary drug development and technology development.

Hence, EBIT in the first nine months of 2019 amounted to minus €56.3 million compared to minus €30 million for the first nine months of 2018. Consolidated net loss reached minus €52.7 million for the first nine months of 2019.

Let's now move to our financial guidance. Today, we would like to reaffirm our financial guidance for the full-year 2019, which was updated in July in connection with the start of a Phase III clinical development program with otilimab, formerly MOR103 as described before.

For 2019, we anticipate group revenues in the range of €65 million to €72 million. As mentioned earlier, we updated our royalty guidance due to strong Tremfya sales in Q3 2019, as reported by Janssen.

Thus, we now estimate Tremfya royalties to be in the range of €30 million to €35 million. And consequently, we anticipate to reach the upper end of our revenue guidance for 2019.

We expect an EBIT in the range of minus €105 million to minus €115 million. Proprietary R&D expenses, including technology development in 2019, are anticipated in the corridor of €95 million to €105 million.

Of note, the guidance does not include revenues from potential future partnerships or licensing agreement for tafasitamab or any other compound that is in our proprietary development. Effects from potential in-licensing or co-development deemed for new development of candidates are also not included in this guide.

Ladies and gentlemen, this concludes my review for the third quarter of 2019. I would like to hand over to Sarah again.

Thank you.

Thank you, Jens. We will now open the call for your questions.

Thanks for taking my questions and congrats to Jean-Paul on his first MorphoSys call and to the team for initiating BLA submission for tafa. So, my questions relate to Re-MIND.

Are the results from the lenalidomide monotherapy arm in line with your expectations? What should we expect to see in the detailed presentation at ASH versus the top line release?

And will you include duration of response and progression-free survival data?

Thanks, Konstantinos. And Malte will handle the question.

Thank you, Konstantinos. Thank you, Jean-Paul.

The outcome of the Re-MIND lenalidomide monotherapy arm met our expectations. And if you recall that we had frequently referred to published lenalidomide monotherapy trials, published by [indiscernible].

You can see that data we published yesterday are fully in line with what has been published before. So, we are extremely encouraged and also satisfied to see this data.

We're extremely encouraged by the magnitude of the differences between the treatment effect between the two arms. And in our eyes, this increases certainly the chances that FDA will look at our data with a positive opinion.

To your second point regarding ASH, we will provide more data. We will include duration of response and progression-free survival data in that presentation.

And we will provide also more details on the parameters on the covariates that we have selected together with FDA. So, you can expect to see more data at that meeting.

And then, a quick follow-up on Re-MIND. Do you expect the data, especially the overall survival findings, to affect your chances for full versus accelerated approval for tafa?

What are your thoughts there?

Yeah. That's the million-dollar question, of course.

I know from having spoken several times to FDA that they will make this a review issue. So, they will look at the data and, during review, will take a decision as to whether this is a full approval or a conditional approval.

I don't want to stick my head out yet to give you any speculation. But as I said in my first reply, I think the probability of success of our filing here has certainly gone up with – looking at the very significant magnitude of difference that we have reported.

So, I would leave it as that, to not put any words into FDA's mouth.

Good morning and good afternoon. Dr.

Kress, welcome to MorphoSys earning call. Given it is your first time, I'll go easy on you with a very simple question.

So, can you please share more color with us regarding the progress of securing the European partnership for tafasitamab? Given the recent news that the ex-CEO, Dr.

Simon Moroney, was nominated as a board member of Novartis, it is an indicator of future partnership between MorphoSys and Novartis.

Hi, Shanshan. Thank you for the question and the kind words.

So, you might remember that I've always been a very open on the partnership philosophy and approach. The idea is basically to maximize the value of tafasitamab, not only commercially short term, but also for the pipeline and the product approach.

We think this asset has blockbuster potential at the least, and obviously a partnership makes a lot of sense. So, to realize all the potential, there is a need to broaden beyond one single geography.

And that's the approach we've been taking in a real disciplined way over the last couple of weeks since I joined. As you know, there have been discussions in the past, but probably more regional for kind of out-licensing or this kind of thing.

So, this is not completely out of the table, but my approach is more global. And I have to say that we've got great traction from several strategic or potential partners.

And we are in the middle of very positive discussions that are very promising. And again, you can probably expect that the discussions are also around US co-promotion.

Thank you. Maybe one for Malte.

Malte, can you please confirm the reason you used investigator-assessed data in Re-MIND? Because lenalidomide monotherapy is not really officially approved for relapsed/refractory DLBCL and there might be a lot of single-center data in your real-world data set.

And also for your ASH L-MIND presentation, are you going to stratify your patients into natural killer cell high versus low?

So, let me start with the second question first. We will not stratify in NK high and NK low patients because we have looked at the data and are fairly confident that the combination of tafasitamab and lenalidomide sort of mitigates the difference between NK high and low.

So, the presence of lenalidomide basically outweighs the number of NK cells that a patient has to begin with. So, that's the reason why we haven't seen a striking difference.

You will, hopefully, see a subgroup analysis that will show this data. So, I can't really preempt that discussion.

But that's the reason why we will not stratify for that in L-MIND. With respect to your first question, because of the nature of the real-world data study, it's actually impossible to have an independent review committee level of review for real-world data.

So, that's why you have to go with investigator-read data. We discussed it with FDA.

FDA was fully aware and supportive of this fact. And just to compare like-to-like, we – for this analysis – compared then the investigator data from Re-MIND with the investigator data from L-MIND.

The concordance state in L-MIND for investigator and independent review committee data is extremely high. So, it didn't make a lot of difference.

So, that's why we decided to do this.

One was just on B-MIND futility. And I appreciate it's in the hands of the DSM.

But can your narrow down the timelines at all? Is it plausible it's sort of late November or could it even be into December?

And how likely do you see the different outcomes as in continuing all-comers or continuing NK sub-population versus total futility? And just one other one on B-MIND which would also be, if you do pass through the futility analysis, when are you expecting to have the efficacy analysis results?

And could they also be pushed out? Because the futility has been pushed out and I think that's event-driven.

The final result I think is also event-driven, but I'm not sure if it has been pushed out. And this will be the final one.

Actually, also just on partnering, can you talk about what the key things you're most looking for in a partner?

Hi, James. I'll talk about the partnering and Malte on the B-MIND.

So, there is a couple of components here and you have some [indiscernible] and appeals on the market, which makes sense for us. I think we need, first and foremost, to think about the synergies commercially, but also for development.

I think it's very important that we – if and when we establish a partnership, we'll have someone complementary, but at the same time very focused on the same aim, which is to unlock the pipeline and the product. So, we need competencies.

And, obviously, there is a timing which is important for a potential partner, what is the status in terms of other priorities. So, we want the commitment.

We want the right economics for us, obviously, and in a fair way that both parties are incentivized. We also want to make sure that our asset is handled properly and that we will be sure that there will be the right commitment.

For me, it's very important. So, in the discussions we've been having, I think we are pretty confident that it is following these lines and hopefully more to come soon.

So, Malte, for the other question, please.

Yes. Thanks, Jean-Paul.

Before going to answer your questions, I may repeat what Jean-Paul said in his initial remarks that, in our eyes, the data that we published yesterday significantly reduced the risk associated to the L-MIND filing. Or in other words, the probability of success in our opinion has clearly gone up.

So, that means that B-MIND in itself becomes almost a moot point in our eyes because of what I just said before. But answering your question, the futility analysis will be performed in the fourth quarter.

So, it's coming up really fairly soon. I don't want to give a firm date.

But we are on track with what we had planned. With respect to the probability, that's a very difficult question also.

I think it's fair to say that, with the introduction of the amendment, the probability that B-MIND becomes a positive study has gone up. And with respect to the timelines for the overall study, we are enrolling well.

We don't see any dip in terms of enrollment. So, the timeline has not changed compared to what we had said before.

Great, thank you very much for taking my questions. And congratulations on the progress in the quarter.

Maybe I could just switch to the commercialization efforts as you ramp up for potential launch in the US. and whether there are things that you can help either qualitatively or quantitatively describe for us in terms of your commercialization efforts and how the progress has been in the past quarter and kind of what else needs to be done before you feel that you are in a very good place to launch.

Also, just on that in terms of whether there's been any incremental work that's been done on your end in terms of gauging position and/or payer feedback just as to the profile of tafasitamab. I'll stop there and then I have one other follow-up question.

Thank you.

Hi, Graig. Thanks for the question.

So, obviously, the commercialization has been a big focus of mine since I joined for many reasons. The main one is probably the timing and the encouraging data that we just are generating which make us pretty certain that we will be launching mid next year.

So, I think it's very important that everybody understands that we are in a very good position in the US with a very good team that we've put in place, and now which is going from the hiring mode to the execution mode to bring fully for launch, which for every launch – like for every launch, it's obviously a lot of tasks. And we're also gaining a customer in [indiscernible] and engagement with the space.

We have people in the field, partially in the field, engaging not only with the KOLs and the prescribers, at the same time also now with patient associations. And to your question with payers, at least within payer research, to make sure that we will make sense when we launch, at the same time for the reputation of the company, but also for the economics and the NPV.

So, this is going well, Graig. Obviously, it's a little bit where I come from.

So, that's a big, big focus with my colleagues here, very much kind of shifting from probably more development stage to commercialization stage. I'm very pleased with the progress we're making here.

And my follow-up question does focus kind of on your BD strategy, partnership strategy. In general – obviously, there's been a lot of focus around what the potential partnership strategy around tafasitamab are.

The first part of this question is, now that you've got your positive Re-MIND data in hand, does that change in any way how you think about kind of the deal value that you can potentially extract from a partner? And do you necessarily feel that the B-MIND data changes that dynamic?

So, that's the first question. And then, my second question – or second part of that question with regards to BD strategy is, beyond just partnerships for tafasitamab, can you give us a flavor of any other BD interests that you may have as a company that are non-tafasitamab related, whether they're in-licensing or any other efforts?

Thank you.

Thanks. So, regarding the partnership, obviously, the data we just announced put us in a stronger position.

It was, obviously, assumed it would be successful, but now it's out there. It's very good.

It's very good timing. It will help everyone to take an informed decision.

And because this again the regulatory pathway, it's very important for everyone here. So, we obviously are still in a very good position.

Now saying that we'll extract more value, I don't know in what form. But at the same time, I think the simple fact that these data are out are very helpful.

And I'll let Jens comment maybe on that part as well. The other deal, I think it's very important that we prioritize.

We are a lean organization. We have to be mission-critical focused on tafasitamab.

It's also what I've been trying to really push in the organization to really focus on the main asset, which is a pipeline in a product. And it doesn't mean that we stop looking at other things because there are ongoing assessments of potential in-licensing opportunities.

But it is not something I would put at the top of the priority right now.

Yeah. And maybe to add, Graig, and also maybe starting with your first question, we are really well on track in terms of the setup of that organization in the US.

You will see that specifically when you look at our year-end forecast in terms of EBIT, the spend will increase and that will come mainly from that activity that we actually have in the US. So, to a lesser extent, coming from the R&D.

They will also increase versus the previous quarters, but not to that great extent. So, it is actually highlighting what sort of effort we undertake.

And as Jean-Paul said, I think the organization has shifted to the priorities that Jean-Paul said in his speech at the beginning, to really focus our activities on, of course, delivering to the plan in terms of development, but to make the launch of tafasitamab a success. And then, thirdly, of course, the partnering has gained a lot of traction.

And the stronger the package is, the higher the interest of the people are to participate in such a product. And we feel very good.

We feel that we're well on track and, therefore, we're really optimistic for the rest of the year and for 2020 that we deliver according to what we told you.

Thank you. Thanks, guys, for the questions.

Just a few. Can you remind us which baseline characteristics were matched from Re-MIND?

How much variability is there between the two data sets and how much is acceptable? And then, I have a quick follow-up.

So, we have not publicly disclosed what the matching criteria were in the Re-MIND study to compare the tafasitamab/lenalidomide combination, with lenalidomide single agent data. But I can make a couple of comments and say that this was a very fruitful discussion with FDA where we agreed on criteria.

There are nine criteria, so that's a lot. And whenever we think about the design of our Re-MIND study to investigate us, for example, they are really surprised about how many matching criteria we have selected together with FDA, which speaks to the quality of the data and to the robustness of the whole exercise here.

So, stay tuned for more information that's coming out. And the fact that we have selected nine criteria also led to the fact that, from the almost 500 patients that we found globally, we boiled it down to 76 who met all of these criteria.

So, that in itself shows you how massive the effort was and how broad we started. And we're really, really happy to have found a very well-defined patient population that allowed us for a very strong matching exercise.

Thanks, Malte. That's helpful.

And then I'm just curious, more broadly speaking about how your efforts to increase physician awareness of MOR208 in the US are progressing.

So, Danielle, this is Jean-Paul. Very well, actually.

This is part of my comment I made earlier on the execution acceleration we're doing now, which is normal, like six to nine months before the launch. We are in the field.

We have a great opportunity at ASH in a few weeks. So, we'll have many, many engagement interactions with the space.

And, obviously, the publications and the presentations of the data, the numerous data including these ones, will help in that regard. So, it's going well.

It's progressing. It's, obviously, one of our main priorities and we have the right teams in the field.

But it's important to understand that, regardless of a partnership, we feel in a very good position to launch in the US. I would say a partnership with a co-promotion in the US would double-down.

But our goal and our aim is to be resourced adequately for a solo launch, I would say. Malte?

Yeah. Maybe just to add one or two more details on what Jean-Paul said, we have massively increased our medical affairs capabilities.

We are on a roll of starting investigator-initiated trials. We have medical science liaisons in the field, as we speak.

We are way beyond 700 visits of our own [indiscernible] with key opinion leaders and doctors in the United States. We want to bring that number close to 2,000 visits, so that we really spread the word of our product.

So, I think I can only support what Jean-Paul said. We are making a massive effort to double-down on these activities.

And I would add, Danielle, that the product profile that's emerging now with this data is best in class. We really, I would say, [indiscernible] and that's the feedback we get.

Hi. Thanks for taking the questions.

Just a couple on pipeline assets. The first on MOR202, can you just tell us what you're looking for in terms of first signs of efficacy in membranous nephropathy?

And are there any PD markers that we should be looking for as that trial progresses? And then, on MOR106, just any thoughts on the potential path forward here?

Do you see any potential in other indications or not? Thanks.

Hi, Jason. Malte will handle the first part and I'll add a comment.

So, let me start with MOR202. I can give you a little bit more detail here.

So, we selected the indication because it's characterized by the presence of an autoantibody directed against the PLA2R antigen. And these antigen antibody deposits are found in the glomerular capillary membrane leading to a nephrotic syndrome in roughly 80% of patients.

There's a direct correlation which makes this indication extremely well-studiable, I would say, between the presence of the autoantibodies and the disease severity, and this has been confirmed by several publications and treatments. So, you can actually consider the presence of these autoantibody as a true surrogate marker, which has also been accepted by FDA.

So, coming to your question, what am I looking for? I'm really looking for a decrease in the autoantibody level.

We know that roughly 80% of patients that we enroll in our study are positive for the autoantibody. So, it doesn't require a lot of pretesting.

And, of course, I'm looking at signs of amelioration of the nephrotic syndrome. So, that's the, I would say, high level or bird's eye perspective of what we're trying to accomplish here.

I would add that this indication is actually underserved. There is a high unmet need.

It's only immunosuppressants and corticosteroids and some rituximab. And so, there is no modern agent and not many, as we know, products in the pipeline.

So, I think we are excited by the fact we could fill an unmet need here. And the mechanism seems to make a lot of sense.

Yeah. Excellent comment.

And rituximab, to make it worse for patients, works only in those patients with low titers of the antibody. So, we believe we have a real unmet medical need here where our antibody could make a true difference.

And last comment on that, this is an update between Malte and me, but we're excited by this compound increasingly because of the unmet need and the series of indications. That's what I wanted to say here.

We can actually double-down in nephrology. There are other nephrology/kidney indications that we could leverage here.

And there are, obviously, other autoimmune disease. We'll be disciplined, but it's exciting.

And 106?

106, what was the question again? Sorry.

Yeah, so I think it's a little early to really speculate on that. The three companies had a good development program in atopic dermatitis, which we terminated, as you read two days ago.

And we are certainly doing everything that's needed to finish up the clinical development program. We are now in the process, between the three companies, to look again at the preclinical data to brainstorm essentially what other opportunities there are and then to collectively decide what other possibilities may come up in the future.

I think I would leave it at this. It's a bit too early to really be precise or be more precise because these discussions are ongoing as we speak.

Hello. Thanks for taking my question.

I have two questions. The first one, so I think now I totally understand why you're only matched with 15% of the actual real-world data.

But at the same time, I'm just now wondering, why did you feel that you need to have nine eligibility criteria in order to do the comparison analysis? My thought on that is that, are you not by default then reducing the variability of the sample and, therefore, it's almost like you're looking at a sub cohort of the real-world setting?

And as a follow-up, in theory, if you had to run actual Phase III trial with LEN as a control, would you have used the same nine eligibility criteria?

Yeah, really great questions. Thank you very much.

So, as I've said to the earlier participants, we agreed on the nine criteria with FDA because, if you remember the earlier discussions we had, it was very important for us that we select a patient population that's highly matchable and highly similar to the population that we have in L-MIND. So, the more criteria you select, the higher is your confidence level that you're really looking at almost identical patients, I would say.

And we also agreed on the level of stringency that we wanted to accomplish between the two study cohorts. And we're very pleased about what we accomplished on the stringency side.

And your last question is also very good. If you would design a Phase III study, now you would select these criteria because they are known to be prognostic and have a big influence on the natural history of disease in this patient population.

So, we have selected, of course, highly clinically relevant criteria that are applied in the everyday treatment paradigm of patients.

Great. And as a follow-up, with regards to the patients that were excluded from the L-MIND arm for the purpose of this analysis, I know that – could you share maybe perhaps what were the characteristics of those patients?

Were they complete response, partial response? And also, why they didn't make it into the analysis?

How much different they were versus the rest of the patients of the L-MIND population?

Yeah. So, these four patients didn't match the criteria that I just specified.

We haven't given details, but we will describe these patients in our future publication. Hopefully, it will come up at ASH.

But they did not match the criteria. And at that moment, we will also give you more details on the treatment outcome of these patients that were excluded.

Okay. Could I just follow-up?

Should we then perhaps see there might be a risk that the FDA will request these patients to be excluded from the final analysis?

No, I don't think so. Because what we will do is we will basically submit two datasets, right?

That's how you have to look at it. So, we will submit our L-MIND data.

That's the 81 patients that we already spoke about. And then, we will submit the Re-MIND data set which will contain the comparison of the 76 and 76.

So, the FDA will get to see everything. They will get to see the raw data of every single patient that was involved in L-MIND and in Re-MIND.

And, of course, as you know, FDA is free to conduct their own statistical analysis, right? So, they get the raw data and then can apply the raw data in any way or form they consider adequate.

But they will, of course, see all data sets containing of every single patient that was treated.

Okay. Thank you very much.

You're welcome.

Thank you all very much for your questions. To wrap up, I hope you got the sentiment that we're well on track to achieving our goal set for this year.

We're very pleased by the recently announced Re-MIND data. With Re-MIND, we achieved an important milestone that brings us closer to our planned completion of the BLA filing based on L-MIND to the FDA by year-end, as planned.

If accepted, it allows us approval and market entry by mid-2020. In parallel, our plans for Europe remain unchanged.

We still intend to file an MAA to the European Medicine Agency by mid-2020. For B-MIND, the event-driven [indiscernible] IDMC is expected to occur until year-end.

We initiate the frontline study with tafa in DLBCL soon and aim to further broaden the development of this key asset. Our other proprietary program, MOR202, is also making good progress.

We announced progress for our partner I-Mab as well and our own clinical development for MOR202 and are very pleased to see this compound contributing to our proprietary clinical footprint. All together, we look forward to the very exciting development [indiscernible].

Thank you.

That concludes the call. If any of you would like to follow-up, we're in the office for the remainder of the day.

Thank you for your participation on the call and good-bye.