MorphoSys Reports Six Months 2005 Results

Revenues increased by 73% in the first six months of 2005 to € 15.4 million (June 30, 2004: € 8.9 million). The Research Antibody segment, comprising Antibodies by Design as well as Biogenesis, contributed 1.8 million to total revenues. Revenue growth was driven by higher revenues from existing cooperations, as well as through the achievement of collaboration milestones. Cost of goods sold amounted to € 1.1 million (June 30, 2004: € 0.4 million), representing cost of sales for goods sold by the research antibody segment. Gross profit amounted to € 14.3 million, compared to € 8.5 million in the first six months of the previous year.

Total other operating expenses for the first six months of 2005 amounted to € 12.2 million, compared to € 9.3 million in the same period of 2004. Research and development costs increased to € 6.8 million from € 5.2 million, mainly from increases on the Therapeutic Antibody segment; Sales, general & administrative expenses amounted to € 4.9 million compared to € 3.5 million in the previous year, and were impacted by the Biogenesis acquisition. Stock-based compensation remained unchanged compared to the prior year at € 0.6 million. The operating profit for the first six months of 2005 summed to € 2.0 million (June 30, 2004: loss from operations of € 0.7 million).

Non-operating expenses in the first six months of 2005 amounted to € 0.2 million (June 30, 2004: non-operating expenses of € 0.5 million). In the first half of 2005, MorphoSys achieved a net income of € 1.8 million, compared to a net loss in the previous year (June 30, 2004: € 1.2 million loss).

The number of shares outstanding at June 30, 2005 was 5,930,448, compared to 5,408,790 at December 31, 2004. Earnings per share for the first six months of 2005 amounted to € 0.32 (June 30, 2004: loss per share of € 0.24).

Events of the Second Quarter 2005 Included:
• Conclusion of new agreement with ImmunoGen: ImmunoGen licensed access to HuCAL GOLD® library for its internal target research programs
• Update on MOR102 Comparison Study in Psoriasis: Results were inconclusive due to the high rate of spontaneous healing witnessed in the control group
• Dr. Robert Friesen, Director of Pre-Clinical Development and Dr. Bernhard Erning, Director of Treasury & Corporate Development, were appointed
• MorphoSys was awarded for good Corporate Governance

Dave Lemus, Chief Financial Officer of MorphoSys AG commented: “We are pleased with the financial results presented today, which mirror solid operational progress made during the quarter.”

About MorphoSys:
MorphoSys develops and applies innovative technologies for the production of synthetic antibodies, which accelerate drug discovery and target characterization. Founded in 1992, the Company's proprietary Human Combinatorial Antibody Library (HuCAL) technology is used by researchers worldwide for human antibody generation. The Company currently has licensing agreements and/or research collaborations with Bayer (Berkeley, California/USA), Boehringer Ingelheim (Ingelheim, Germany), Bristol-Myers Squibb (New Jersey/USA), Centocor Inc. (Malvern, Pennsylvania/USA), GPC Biotech AG (Munich/Germany), Hoffmann-La Roche AG (Basel/Switzerland), ImmunoGen Inc. (Cambridge, Massachusetts/USA), Novartis AG (Basel, Switzerland), Pfizer Inc. (Delaware/USA), ProChon Biotech Ltd. (Rehovot/Israel), Schering AG (Berlin/Germany) and Xoma Ltd. (Berkeley, California/USA). Additionally, MorphoSys is active in the antibody research market through its Antibodies by Design business unit. Antibodies by Design was founded in 2003 for the purpose of exploiting the MorphoSys non-therapeutic antibody markets. MorphoSys’ activities in the research antibody segment were significantly strengthened through the acquisition of the U.K. and U.S.-based Biogenesis Group in January 2005. For further information please visit the corporate website at: http://www.morphosys.com/.


Statements included in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbour provided by Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words including “anticipates”, “believes”, “intends”, “estimates”, “expects” and similar expressions. The company cautions readers that forward-looking statements, including without limitation those relating to the company’s future operations and business prospects, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors that may affect future operations and business prospects include, but are not limited to, clinical and scientific results and developments concerning corporate collaborations and the company’s proprietary rights and other factors described in the prospectus relating to the company’s recent public offering.