Full Year Profit Guidance Increased - MorphoSys AG Reports Strong Results for the First Nine Months of 2008
10/30/2008 at 07:30 AM
Full Year Profit Guidance Increased
MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX) today announced its financial results for the nine months ending September 30, 2008. MorphoSys reports according to International Financial Reporting Standards (IFRS). Group revenues increased by 21 % to EUR 53.3 million (first nine months 2007: EUR 44.1 million) and operating profit more than doubled to EUR 15.1 million (first nine months 2007: EUR 6.9 million). Net profit amounted to EUR 11.8 million (first nine months 2007: EUR 4.9 million), and MorphoSys's cash position at September 30, 2008 was EUR 127.3 million (December 31, 2007: EUR 106.9 million). The Company increased its Group operating profit guidance to a range of EUR 15 million to EUR 16 million (previously EUR 9 million to EUR 11 million).
Both of MorphoSys's operating segments made good progress in the third quarter of 2008. The Company's therapeutic antibody pipeline continues to mature, and proprietary activities are gaining momentum. AbD Serotec, the research antibody business of MorphoSys AG, continues to make progress in diagnostics applications, and is operating profitably despite challenging markets.
Highlights of the Third Quarter of 2008:
The MOR103 Phase 1 trial continues according to plan and dosing of all volunteers has been completed. This includes two additional, higher dosage groups which were incorporated based on favourable safety and tolerability observed in the lower-dosed cohorts.
Publication in Molecular Immunology of compelling data on lead proprietary development program MOR103, an antibody against GM-CSF to treat rheumatoid arthritis.
MorphoSys has exercised its first option to participate in the development of a therapeutic antibody program within its collaboration with Novartis.
Astellas and Boehringer Ingelheim have both exercised pre-existing options to use MorphoSys's proprietary RapMAT technology for faster antibody optimization.
Shionogi has extended its research collaboration with MorphoSys for a further period of three years.
MorphoSys's partnered pipeline comprises 55 active therapeutic antibody projects (up from 50 at the end of 2007) which includes one potential co-development project with Novartis which is presently in pre-development: Of the 55 partnered programs, three are in phase 1 clinical development, 29 in pre-clinical development, and 23 in research.
AbD Serotec's customer Phadia AB, a world leader in autoimmunity and allergy testing, has implemented a series of HuCAL-based recombinant antibodies in two of its marketed autoimmune tests.
"Despite the ongoing financial turmoil in global capital markets, MorphoSys's operational and financial performance remained solid through the first nine-months of the year," commented Dave Lemus, Chief Financial Officer of MorphoSys AG. "With our strong balance sheet and numerous cash-generating partnerships, we are well positioned to weather the current adverse economic climate."
Financial Review for Nine Months of 2008 (IFRS):
Group revenues for the first nine months of 2008 amounted to EUR 53.3 million (first nine months 2007: EUR 44.1 million), an increase of 21 % over the prior year. Revenues arising from the Therapeutic Antibodies segment accounted for 75 % or EUR 39.9 million of total revenues (first nine months 2007: EUR 29.2 million). The AbD Research Antibody segment generated 25 % or EUR 13.4 million of total revenues (first nine months 2007: EUR 14.9 million). Measured at constant foreign exchange rates, revenues in the TAB and AbD segments would have amounted to EUR 40.1 million and EUR 14.5 million, respectively. MorphoSys's overall revenue growth was driven primarily by higher levels of funded research and licensing fees in the Therapeutic Antibodies segment, in large part from the strategic partnership with Novartis signed in December 2007, as well as by success-based payments in the amount of EUR 7.3 million (first nine months 2007: EUR 7.8 million).
Total operating expenses for the first nine months of 2008 amounted to EUR 38.2 million (first nine months 2007: EUR 37.2 million), representing an increase of 3 % over the prior year. Cost of goods sold (COGS) decreased to EUR 5.2 million (first nine months 2007: EUR 6.0 million), mainly a result of lower sales levels in the AbD segment and reduced amortization charges on acquired inventories. Research and development expenses rose by 17 % to EUR 18.3 million (first nine months 2007: EUR 15.7 million). In the first nine months of 2008, the Company incurred costs for proprietary product and technology development in the amount of EUR 4.0 million (first nine months 2007: EUR 4.0 million). Sales, general and administrative expenses decreased to EUR 14.6 million (first nine months 2007: EUR 15.5 million). Non-cash charges related to stock-based compensation are embedded in COGS, S,G&A and R&D expenses and amounted to EUR 0.8 million (first nine months 2007: EUR 1.0 million).
Total operating profit more than doubled and amounted to EUR 15.1 million (first nine months 2007: EUR 6.9 million). The segment result for the Therapeutic Antibodies segment amounted to EUR 21.2 million (first nine months 2007: EUR 13.1 million). The AbD segment result amounted to EUR 0.3 million (first nine months 2007: loss of EUR 0.6 million). Unallocated corporate costs in the nine months of 2008 amounted to EUR 6.4 million (first nine months 2007: EUR 5.7 million).
For the first nine months of 2008, non-operating income amounted to EUR 1.3 million (first nine months 2007: EUR 0.9 million). Profit before taxes amounted to EUR 16.4 million (first nine months 2007: EUR 7.8 million).
For the first nine months of 2008, the Company reported income tax expenses in the amount of EUR 4.7 million (first nine months 2007: EUR 2.9 million).
Net profit for the first nine months of 2008 reached a record high of EUR 11.8 million compared to a net profit of EUR 4.9 million in the same period of the previous year. The resulting diluted earnings per share for the first nine months of 2008 amounted to EUR 1.58 (first nine months 2007: Diluted earnings per share of EUR 0.68).
On September 30, 2008, the Company had EUR 127.3 million in cash, cash equivalents, and marketable securities, compared to EUR 106.9 million as of December 31, 2007. Cash inflow from operations in the first nine months of 2008 amounted to EUR 18.7 million (first nine months 2007: EUR 6.5 million). The number of issued shares at September 30, 2008 was 7,468,436, compared to 7,386,753 shares at December 31, 2007.
Financial Review for Third Quarter of 2008 (IFRS):
In the third quarter of 2008, revenues increased by 29 % to EUR 20.0 million, compared to EUR 15.5 million in the same quarter of 2007. Total operating expenses amounted to EUR 12.9 million, compared to EUR 12.1 million in the same period of 2007. The resulting profit from operations for the third quarter of 2008 more than doubled to EUR 7.1 million, compared to EUR 3.4 million in the same period of 2007. A net profit of EUR 5.5 million resulted for the third quarter of 2007, compared to EUR 2.8 million during the same period of 2007.
Financial Outlook for 2008:
MorphoSys has updated its financial outlook for the full year 2008. The Company expects total Group revenues of between EUR 73 million and EUR 76 million (previously EUR 73 million to EUR 77 million), which includes at least EUR 4 million in outstanding milestone payments that are contingent upon the success of partnered drug development programs. For the AbD segment, MorphoSys expects segment revenues of approx. EUR 19 million (previously EUR 20 million). The operating profit margin guidance for AbD remains unchanged between 5% and 10%. Operating profit guidance for the Group is increased to EUR 15 million to EUR 16 million (from EUR 9 million to EUR 11 million previously). This increase is mainly due to lower than anticipated R&D expenses, arising from (i) certain external costs being held below original expectations, and (ii) a shift in some development expenses into 2009. The latter is due to the addition of two cohorts to the MOR103 Phase 1 trial, which has the effect of pushing subsequent development activities into next year. The Company now expects R&D investments in technology and product development in 2008 of approximately EUR 9 million (previously EUR 13 million). |
