MorphoSys AG has announced its financial results for the three months ending 31 March 2013. Group revenues from continuing operations increased by 44 % to EUR 16.9 million compared to the same period of the previous year.
The reason for the increase was a fully paid-up license payment from Bio-Rad for a non-exclusive license for HuCAL in research and diagnostic applications in connection with the sale of the Company's AbD Serotec segment to Bio-Rad.
Earnings before interest and taxes (EBIT) from continued operations amounted to EUR 2.5 million (Q1 2012: EUR -0.7 million).
On 31 March 2013, MorphoSys's cash, securities and interest-bearing assignable loans amounted to EUR 177.4 million (31 December 2012: EUR 135.7 million).
Highlights of the First Quarter
• MorphoSys completes sale of AbD Serotec to Bio-Rad. With the divestment of AbD Serotec completed, MorphoSys can devote 100% of its attention to building value in its core therapeutics business.
• MorphoSys and Heptares sign alliance to develop antibody therapeutics targeting G protein-coupled receptors (GPCRs). The collaboration opens up new target space for therapeutic antibodies from the MorphoSys Ylanthia platform.
• MorphoSys receives first patent on novel antibody platform Ylanthia in the US.
• MorphoSys achieves first clinical milestone in a partnered program in 2013 as Novartis completes clinical trial application for a phase 1 study using a HuCAL antibody in ophthalmology.
• At the end of the first quarter of 2013, the MorphoSys partnered and proprietary pipeline comprises 21 clinical programs.
• Shortly after the end of the first quarter, MorphoSys initiates a share buy-back program, and plans to acquire up to 85,000 shares. The Company intends to use the shares primarily for its long-term incentive programs for its management.
"We expect 2013 to be a very exciting year for MorphoSys with our pipeline being once again the main newsflow and value driver," stated Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "With the sale of AbD Serotec successfully completed, we can now focus on advancing our proprietary and partnered development pipeline."
"The Q1 2013 results again highlight the attractive terms we were able to secure in the AbD Serotec divestment. With the sale of AbD Serotec we strengthened our financial resources, allowing us to increase our investments in proprietary research and development," commented Jens Holstein, Chief Financial Officer of MorphoSys AG.
Financial Review for the First Quarter of 2013 (IFRS)
On 10 January 2013, MorphoSys completed the sale of its research and diagnostic antibody segment AbD Serotec to Bio-Rad Laboratories, Inc. As a consequence, substantially all of the AbD Serotec segment was classified as discontinued operations. The operating segments Partnered Discovery and Proprietary Development as well as the part of AbD Serotec which remained with MorphoSys are presented as continuing operations.
Results from Continuing Operations
Group revenues from continuing operations for the first quarter of 2013 amounted to EUR 16.9 million (Q1 2012: EUR 11.7 million), an increase of 44 % over the prior year. The strong increase resulted predominantly from a license payment from Bio-Rad for a non-exclusive license for HuCAL in research and diagnostic applications in connection with their purchase of MorphoSys's research and diagnostic segment AbD Serotec.
Revenues in the Partnered Discovery segment comprised EUR 16.5 million in funded research and licensing fees (Q1 2012: EUR 10.7 million) and EUR 0.4 million in success-based payments (Q1 2012: EUR 0.4 million). The Proprietary Development segment did not record revenues, as a result of the waiver of the existing co-development options with Novartis (Q1 2012: EUR 0.5 million).
Total operating expenses from continuing operations for the first quarter of 2013 increased by 17 % to EUR 14.6 million (Q1 2012: EUR 12.5 million). Total research and development expenses increased by 11 % to EUR 11.0 million (Q1 2012: EUR 9.9 million).
The increase in R&D expenses mainly resulted from higher personnel and material costs. Investment in proprietary product and technology development amounted to EUR 7.0 million (Q1 2012: EUR 6.4 million). Sales, general and administrative expenses increased by 44 % to EUR 3.6 million (Q1 2012: EUR 2.5 million) driven by higher expenses for personnel and for external services. Non-cash charges related to share-based payments are embedded in S,G&A and R&D expenses and amounted to EUR 1.1 million (Q1 2012: EUR 0.3 million).
Earnings before interest and taxes (EBIT) from continuing operations amounted to EUR 2.5 million (Q1 2012: EUR -0.7 million). Partnered Discovery showed a segment EBIT of EUR 10.9 million (Q1 2012: EUR 6.2 million), while the Proprietary Development segment reported a segment EBIT of EUR -5.5 million (Q1 2012: EUR -5.1 million) due to investments in proprietary development.
For the first quarter of 2013, MorphoSys realized a net profit from continuing operations of EUR 1.9 million compared to a net loss of EUR 0.3 million in the same period of the previous year. The resulting diluted earnings per share from continuing operations for the first three months of 2013 amounted to EUR 0.08 (Q1 2012: EUR -0.01).
Results from the AbD Serotec segment (discontinued operations)
The sale of the research and diagnostic antibody segment AbD Serotec to Bio-Rad Laboratories, Inc. was completed on 10 January 2013. Results under discontinued operations reflect only the first 10 days of the quarter. Sales from discontinued operations decreased to EUR 0.6 million (Q1 2012: EUR 4.5 million). The revenues from discontinued operations are not included in the Group revenues from continuing operations.
Total operating costs for discontinued operations amounted to EUR 2.3 million (Q1 2012: EUR 4.6 million), including cost of goods sold (COGS) in the amount of EUR 0.1 million (Q1 2012: EUR 1.7 million) as well as transaction-related costs in the amount of EUR 1.8 million (Q1 2012: 0.02 million).
During the first three months of 2013, EBIT of discontinued operations after deduction of all attributable transaction costs amounted to EUR -1.7 million (Q1 2012: EUR -0.1 million). In connection with the deconsolidation, a disposal gain of EUR 8.0 million was accounted for, resulting in a profit before taxes of EUR 6.3 million (Q1 2012: EUR -0.1 million). The net profit of the discontinued operations amounted to EUR 6.0 million (Q1 2012: EUR -0.2 million).
Results for the Group
Group net profit amounted to EUR 7.9 million (Q1 2012: EUR -0.5 million). The resulting diluted Group earnings per share amounted to EUR 0.33 (Q1 2012: EUR -0.02).
On 31 March 2013, the Company had EUR 177.4 million in cash, cash equivalents and marketable securities, including an interest-bearing assignable loan in the amount of EUR 15.0 million, compared to EUR 135.7 million as of 31 December 2012. Net cash inflow from operations in Q1 2013 amounted to EUR 5.8 million (Q1 2012: EUR 2.3 million). The number of issued shares at 31 March 2013 was 23,358,228, unchanged from 31 December 2012.
Outlook for 2013
MorphoSys re-confirmed its guidance for 2013. Without taking into account a successful out-licensing of one of its proprietary compounds, MorphoSys anticipates total Group revenues of EUR 48 million to EUR 52 million and anticipates an EBIT in the range of EUR -18 to EUR -22 million in 2013.
Total operating expenses will amount to EUR 70 million to EUR 74 million, of which EUR 32 million to EUR 37 million represent investments in proprietary products and technologies. Additional income from an out-licensing deal in 2013, which is not included in the current guidance, could lead to out-performance of the guidance.