SOURCE: MorphoSys AG

June 26, 2006 01:43 ET

MorphoSys Announces Expansion of Collaboration With Novartis

Antibody Alliance Is Extended Until Mid-2011

MUNICH, GERMANY -- (MARKET WIRE) -- June 26, 2006 -- MorphoSys AG (FRANKFURT: MOR) (Prime Standard Segment, TecDAX) announced an expansion of its existing therapeutic antibody collaboration with Novartis. The original collaboration agreement provided for a three-year term with an option for Novartis to extend. The collaboration will now go through May 2011. In light of the expanded collaboration, MorphoSys is currently reviewing the status of its financial guidance 2006 and will provide an update latest by July 28, 2006, the presentation of its Q2 results.

In May 2004, the two companies forged a strategic antibody alliance to jointly develop new antibody-based therapeutics against a range of illnesses. As part of the collaboration, Novartis took an equity stake in MorphoSys worth approximately EUR 9 million and is today the Company's largest shareholder. In August 2005, MorphoSys successfully concluded the first therapeutic antibody program with Novartis. Subsequently, work for several other antibody projects at MorphoSys was concluded successfully, resulting in multiple milestone payments for MorphoSys.

Within the framework of the extended agreement, Novartis commits to an increase in the number of new therapeutic antibody projects annually - resulting in increased levels of Novartis's funding for research and development at MorphoSys. In addition, Novartis will have the option to receive access to the MorphoSys HuCAL GOLD® library at an additional research site and will have access to a certain HuCAL® affinity optimization technology at the HuCAL® library installation sites at Novartis for optimization of non-therapeutic antibodies. Furthermore, the agreement also provides for increased annual license fees, with commercial license fees, research and developmental milestones, and royalties on marketed antibody products remaining unchanged. The non-exclusive option on internalization of the entire MorphoSys HuCAL® technology platform, offered to Novartis under the terms of the initial collaboration in 2004, will remain in place. Triggering of this option would result in an additional payment by Novartis to MorphoSys. Further financial details were not disclosed.

"We are very pleased to announce an expansion of our largest and our most productive collaboration to date," commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys. "Expanding our existing collaborations is a cornerstone of our strategy and we have been very successful in this regard. The extended agreement provides a higher number of therapeutic antibody programs to be pursued in the years to come."

MorphoSys will hold a public conference call on Monday, June 26, 2006 at 10:00 CET to provide more information on today's release.

Dial-in number for the Conference Call (listen-only): +49 (0) 89 2030 3238

Please dial in 10 minutes before the beginning of the conference. A replay of the conference call will be available on http://www.morphosys.com.

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 (HuCALâ) 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), Daiichi Sankyo & Co., Ltd. (Tokyo/Japan), GPC Biotech AG (Munich/Germany), Hoffmann-La Roche AG (Basel/Switzerland), ImmunoGen Inc. (Cambridge, Massachusetts/USA), Merck & Co., Inc. (Whitehouse Station, New Jersey/USA), Novartis AG (Basel, Switzerland), Novoplant GmbH (Gatersleben, Germany), OncoMed Pharmaceuticals Inc. (Mountain View, C USA), Pfizer Inc. (Delaware/USA), ProChon Biotech Ltd. (Rehovot/Israel), Schering AG (Berlin/Germany), Schering-Plough (Palo Alto/USA), Shionogi & Co., Ltd. (Osaka/Japan), Xoma Ltd. (Berkeley, California/USA) and others. 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 and Serotec Group in 2006. 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.

For further information please contact:

Dr. Claudia Gutjahr-Löser Director Corporate Communications Tel: +49 (0) 89 / 899 27-122 gutjahr-loeser@morphosys.com

Mario Brkulj Manager Public Relations Tel: +49 (0) 89 / 899 27-454 brkulj@morphosys.com

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