MorphoSys AG
Q3 2020 Earnings Call Transcript

Published: 12 Nov 2020

[Operator:]

So ladies and gentlemen, welcome to the MorphoSys Third Quarter Interim Statement 2020 Conference Call. Please note that for the duration of the presentation all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Please note that we can only take your questions if you have registered the name. Now I would like to turn the conference over to Dr. Julia Neugebauer. Please go ahead.

[Julia Neugebauer:]

Ladies and gentlemen, good afternoon or good morning. My name is Julia Neugebauer, Director of Investor Relations at MorphoSys, and it's my pleasure to welcome you to our third quarter 2020 financial results and operational update conference call.

[Jean-Paul Kress:]

Thank you, Julia. Good day everyone. And thank you for joining us to discuss the considerable progress we have made over the past month, as we transition to commercial company with sizable clinical development pipeline and multiple partnerships worldwide. In the third quarter of 2020, we achieved great progress in all operational areas, ranging from commercial to clinical development to research. The approval of Monjuvi, marked MorphoSys transformation into a fully integrated biopharma company aiming to master every step of the value chain. I am also very excited about two deals that will enhance our clinical development and our research capabilities. Our agreement with Xencor adds to our tafasitamab backbone strategy. While the in-licensing of an innovative technology from Cherry Biolabs complements our research portfolio. Moving to Slide 6. The third quarter of 2020 was highlighted by the FDA accelerated approval of Monjuvi. As a treatment for non-transplant eligible relapsed or refractory diffuse large B-cell lymphoma, or DLBCL which represents the FDAs first approval for the second line treatment in this indication. Since approval, our teams have been laser focused to bring Monjuvi to patients suffering with this deadly cancer, who have limited treatment options.

[Roland Wandeler:]

Thank you, Jean-Paul, and hello everyone. It's good to be speaking with you today. This is the first time we're sharing Monjuvi earnings with you. And I'll be talking about the strong momentum we've build in a market with our Monjuvi launch. Together with our partner Incyte we have delivered on a rapid speed to market. Our teams have been laser focused with a singular mission to bring Monjuvi to patients and we are pleased with what we are seeing.

[Malte Peters:]

Thank you, Roland. In addition to the successful launch of Monjuvi, we continue to expand the clinical development of tafasitamab. Our ambition is to improve curates in DLBCL in all treatment lines and bring this medicine to as many patients as we can and as soon as we can. As Jean-Paul noted, Monjuvi is the only FDA approved second line treatment for patients with relapsed or refractory DLBCL who are not eligible for stem cell transplantation. We believe that based on the clinical data complemented by its safety profile, and accessibility Monjuvi is well positioned to become a preferred treatment option for second line patients with DLBCL. Long-term data from the L-MIND study were presented earlier this year at the Annual Meeting of the European Haematological Association or EHA. These data demonstrated an unprecedented durability with a median duration of response of 34.6 months, which equals to almost three years and the median overall survival of 31.6 months. These data are part of the MAA the European dossier, which was validated earlier this year. To complement this data, we initiated a new Real-World Data Study called RE-MIND 2. This study is collecting data not only from DLBCL patients treated with lenalidomide alone, but also from DLBCL patients being treated with other regimens. We are also developing tafasitamab as a first line treatment for DLBCL. And we have completed enrollment of our Phase 1/b 2 study one month ahead of schedule, which shows the great interest of the community in this potential treatment option. We will present initial data from this firstMIND study at the upcoming ASH conference later this year. Data from this study is the basis for our pivotal Phase 3 study frontMIND. There's a high unmet need for DLBCL patients in the first line setting, especially for high risk patients. Newly diagnosed DLBCL patients with an IPI score of three to five are considered high risk. For these patients, the chances of cure with R-CHOP alone are less than 50%. frontMIND will enroll up to 900 patients and we'll evaluate the tafasitamab lenalidomide combination in addition to R-CHOP compared to R-CHOP alone. We are on track to start this study early next year. Beyond DLBCL the next indication we are exploring in a pivotal trial is relapsed or refractory follicular lymphoma. We expect to enroll approximately 500 patients into this randomized Phase 3 study and expect to initiate the study in the early part of next year. We are confident to achieve our goal of developing tafasitamab as the backbone for the treatment of DLBCL across all therapeutic lines. Our agreement with Xencor is another step towards establishing tafasitamab as the combination partner of choice for DLBCL and beyond. We are excited to evaluate the combination of tafasitamab with Xencor's bispecific CD20xCD3 antibody plamotamab in patients with relapsed refractory DLBCL, but also in patients with frontline, DLBCL, and relapsed or refractory follicular lymphoma. As Jean-Paul mentioned earlier, we are in discussions to evaluate further opportunities for combination treatments of tafasitamab. Our goal is to bring tafasitamab to more haematological cancer indications where CD19 is associated with a mode of action of the disease. This year's ASH Meeting will feature several abstracts providing insights into our scientific and clinical activities to evaluate the efficacy and safety of tafasitamab in B-cell lymphoma. I already mentioned the publication of initial data from our first month study in frontline DLBCL. We will also present additional data from the L-MIND study that support the remarkable durability of responses. And for the first time, we will report on CD19 expression analyzing tumor biopsies of DLBCL patients before and after treatment with tafasitamab. Now moving on to our other pipeline assets, where we are very pleased with the progress we have made to-date in 2020. Felzartamab our anti CD38 antibody, previously known as MOR202, is currently being evaluated in the M-PLACE study in patients with autoimmune membranous nephropathy. We have resumed the enrollment of patients into the study after a pause due to the COVID-19 pandemic and are about to complete the safety run-in phase. After completion of the safety run-in phase, we expect that enrollment speed will significantly increase. We will share data from this study at one of the upcoming medical conferences. Also, our partner I-Mab is developing felzartamab for the treatment of multiple myeloma and is currently running two pivotal trials. As Jean-Paul touched upon this week we announced the licensing agreement with Cherry Biolabs. This agreement gives MorphoSys access to Cherry Biolabs innovative Hemibody technology. This technology could strongly increase specificity and selectivity of tumor targeting, and enable a substantially enlarge therapeutic window. The core of this technology is a T-cell engaging molecule that is split into two complimentary fragments. We use CD3 a clinically well-established target for the engagement of T-cells. This is combined with the concept of dual tumor targeting. One fragment of the split T-cell engager is fused to one tumor antigen targeting antibody, the other fragment to a different tumor antigen targeting antibody. These two molecules, called Hemibodies, circulate freely in the bloodstream and activate T-cells only once they bind to the antigen combination expressed on cancer cells. Both antigens have to be present on the tumor cell surface for the T-cell engager to become functional and to activate the T-cell. This licensing agreement is part of our strategy to enhance our research efforts and to focus on next generation modalities for the treatment of cancer and autoimmune disorders. With that, I now hand the call over to Jens for a review of our financial results.

[Jens Holstein:]

Thank you, Malte. The third quarter was yet another very successful quarter for MorphoSys as we posted strong revenue growth and maintain a strong balance sheet while supporting a robust clinical development pipeline. Let's turn now to Slide 21. Group revenues in the third quarter of 2020 amounted to €22 million containing for the first time revenues of US$5 million or €4.4 million from the sale of Monjuvi. Revenues also include success-based payments of €10.2 million primarily from Janssen. As in previous quarters, the contractual royalty reporting from Janssen for tremfya has not been received yet. Tremfya royalty is booked in Q3, 2020 were estimated based on the public announcement by Janssen J&J. Final numbers can still slightly vary due to the foreign exchange rate effect. In addition to Monjuvi revenues, the companies have been able to generate revenues from different collaborations such as Incyte as well as . Looking at expenses our total operating expenses in the third quarter of 2020 increase to €84 million, the strong increase reflects our investments in the expansion of MorphoSys U.S. Inc, the launch of Monjuvi as well as the expanded clinical development for tafasitamab and plamotamab. The expenses for research and development rose to €34.2 million largely driven by expenses for external laboratory services and personnel. Selling expenses increased to €32.9 million and general and administrative expenses to €15.3 million both driven by higher personnel expenses and expenses for external services in association with the Monjuvi launch. Selling expenses also comprised the expenses for services rendered by Incyte in connection with the joint U.S. activities as we report all commercial costs for the sale of Monjuvi in our P&L. Earnings before interest and taxes amounted to minus €61.7 million as a result of the higher expenses across all categories. Our consolidated net loss after taxes amounted to minus €65.3 million in the third quarter of 2020. Earnings per share were minus €2. Slide 22 and I'll present a summary of our segment reporting for Q3, 2020. As you can see in our Proprietary Development segment MorphoSys - researches and develops its own drug candidates focusing on cancer inflammation. In Q3, 2020 this segment recorded revenues of €10.5 million versus €1.4 million for the previous year. The increase primarily reflects product sales from Monjuvi as well as further revenues related to the Incyte collaboration. Operating expenses in the Proprietary Development segment amounted to €72.3 million as compared to €32 million in Q3 of last year. The elevated expenses reflect our higher investment for the development of our proprietary programs. Hence, the EBIT of our Proprietary Development segment amounts to minus €61.7 million. In the Partner Discovery segment MorphoSys applies its propriety technology to discover new drug candidates for pharmaceutical companies and thus participates in its partners development advancements through research and development funding, licensing fees, success-based milestone payments and royalties. Revenues in the Partner Discovery segment amounted to €11.5 million in Q3 2020. The EBIT in our Partner Discovery segment rose to €9.3 million. Please now move to Slide 23 for the key financials for the first nine months of 2020. Group revenues grew fourfolds to €291.7 million from €60.7 million in the first nine months of 2019. The increase was mainly driven by the collaboration and licensing agreement with Incyte in the first quarter of this year to further develop and commercialize tafasitamab globally. Part of the US$750 million upfront payment and of the US$58 million premium was accounted for as revenues in Q1, 2020 representing its share for the non-U.S. part of the transaction. Research and Development expenses amounted to €86.6 million versus €75.3 million for the same time period of last year. Selling expenses for the first nine months increased from €9.3 million in 2019 to €75 million in 2020 and general and administrative expenses from €22.4 million to €37.2 million. The EBIT strongly increased to €101.8 million compared to minus €56.3 million in the first nine months of 2019. Moving on to the balance sheet on Slide 24, you see that as of September 30, 2020, we recorded total assets of approximately €1.38 billion versus €496.4 million at the end of 2019. Our liquidity position amounted to €987.2 million compared to €357.4 million as of December 31, 2019. This liquidity position is reported on the balance sheet under the items cash and cash equivalents, financial assets at fair value through profit or loss and current and non-current other financial assets at amortized cost. Not included on our Q3 reporting are the proceeds from the convertible bonds issued shortly after the end of the third quarter as you can see on slide 25. On October 13, 2020, we successfully placed unsubordinated, unsecured convertible bonds due in 2025 in an aggregate principal amount of €325 million. The bond will be convertible into new and/or existing no-par ordinary bearer shares of MorphoSys. The convertible bond will be issued at 100% of their principal amount, unless previously converted, redeemed or repurchased and canceled. The convertible bonds will be redeemed at the principal amount on October 16, 2025. The convertible bonds were priced with a coupon of 0.625% per annum. Conversion price was set at €131.29 representing a conversion premium of 40% above the reference share price. With this multiple times oversubscribed transaction we have secured financing in very attractive conditions. More than 130 new and existing MorphoSys investors participated underpinning the high level of trust and the continued appeal of the MorphoSys story. The proceeds further strengthen our cash position which allows us to execute our ambitious growth strategy. For the financial guidance for the full year 2020, please move to Slide 26. On October the 27th, we increased our financial guidance for 2020 and are now expecting revenues in the range of €317 million to €327 million and then EBIT in the range of plus €10 million to plus €20 million. Our guidance for R&D expenses remains unchanged in the range of €130 million to €140 million. The updated guidance reflects higher revenues from participations in collaborations and Tremfya royalties are expected to be at the upper end of the guidance. In addition, it now also includes revenues from product sales of Monjuvi, following its approval and subsequent launch in the U.S. in the first half of August. This guidance is based on constant currency exchange rate and does not include any effects from potential in-licensing or co-development deals for new development candidates. The operational and financial guidance might potentially be impacted by ongoing - the ongoing global COVID-19 crisis on MorphoSys' operations including, but not limited to the company's supply chain clinical trial conduct as well as time lines for regulatory and commercial execution. Ladies and gentlemen, at the end of my section, let me finish with a short personal statement. After close of 10 years with MorphoSys, this is my last conference call as CFO of the company. Before I hand over to Jean-Paul, I want to thank you all for the collaborations, the trust, the good dialogues we had throughout those years. MorphoSys has undergone a tremendous journey since I joined. When I now depart with Monjuvi and Tremfya on the market, and number of further development candidates in Phase 2 and 3 as well as innovative research platforms. I leave the company in very good conditions. MorphoSys is known to have a large portfolio of proprietary and partner compounds and is financially stronger than ever allowing the company to grow and create further value in the years to come. Thanks to all of you and with this, I will now turn the call over back to Jean-Paul. Thank you.

[Jean-Paul Kress:]

Thank you, Jens. I would like to take the opportunity to thank Jens' for his dedication to MorphoSys over the last 10 years, and the great collaboration. Jens, it has been a true pleasure to work with you, and I wish you all the best for your future endeavors. Moving to Slide 28 for wrap up, the third quarter was a period of significant milestones and achievements for MorphoSys. We are successfully making strong progress across all dimensions of our business, from commercial to late stage development, to research and innovative new collaborations. We executed on a strong launch of Monjuvi in the U.S. fully in line with our launch targets, generated strong early momentum in the market. And we continue to be encouraged with by the accelerated momentum and enhanced adoption we are creating, which will further grow Monjuvi revenues and broaden our impacts to patients in need of new therapies. At the same time, we continue to leverage and boost the current and potential future royalty stream from our collaborations from the success of our partners with their respective product to just Tremfya or otilimab and we are on track with our goal to reach increase financial guidance for 2022. Ultimately, we are driven to transform the standard of care and improve cure rates in DLBCL by leveraging and unlocking tafasitamab full potential. We have a bold vision to establish tafasitamab as the backbone therapeutic in other indication, and the combination partner of choice in Hem/oncology. Our Xencor collaboration is our first step, and we will continue to share our progress with you in the month ahead. In addition, we are progressing felzartamab to immune indications, and are expanding our strong R&D portfolio to create long-term success of the company and shareholder value. With that, we will now open up the line for your questions. Thank you. Operator?

[Operator:]

The first question is from Geoffrey Porges of SVB Leerink. Your line is now open.

[Geoffrey Porges:]

Thank you very much for the questions and congratulations on all the progress. First on the CD20 collaboration. Could you talk about whether you're free to partner with other CD20 antibodies, or biospecifics institution to be a lot in development? And secondly, do you anticipate that in order to administer the combination, patients will have to be hospitalized. And then Jens, I just want to congratulate you on bringing MorphoSys to its current very favorable position. And you've guided to profitability this year. Are you confident that MorphoSys can maintain profitability going forward? Thanks.

[Jean-Paul Kress:]

Geoff, thanks for your question. I'll answer the first one. Malte will answer the second one. And Jens, will answer the third one. Yes, we are free to partner with any other companies having a biospecific, it was very important for us. Beyond the fact that we actually see a lot of value in this partnership with Xencor, we have a long-term relationship with them. This is obviously granting great effectiveness in our collaboration for this. They have promising, or stage data on the asset. And the combination rationale is very strong between Monjuvi and anti CD23, which would add another layer of effectiveness with their T-cell engagement capabilities. So yes, we are free to operate with any other ones. But we thought this one is actually a very, very meaningful for us. On that, Malte, can you answer the question on hospitalization on that?

[Malte Peters:]

Yes, sure. Hi, Geoff it Malte. So the initial clinical studies will certainly occur in hospitalization conditions, as you would normally do this and our Phase 1 resetting remember, the two components have never been combined. So in the initial stages, of course, patients would come to the hospitals under Phase 1b conditions, and then depending on the safety signals, we would observe, you can then determine of how the continuous treatments will occur. And if this combination treatment would be appropriate to be administered in an outpatient or in a community hospital setting.

[Jens Holstein:]

And then, Geoff, first of all, thanks very much for the nice word. Regarding profitability, indeed, you know, we turned profitable this year, you might remember many, many years back we have been profitable for quite a long time actually and then decided to invest in the assets that we have in our portfolio. Given that, we have Monjuvi now in various clinical trials ongoing to make that compound really a big one, not only in relapsed refractory DLBCL, but in other settings as well in another indications. Short-term, I would not expect despite the fact that there are increasing revenues of course, that we expect coming in that we will turn profitable in the short-term frame. So we also see that on quite some cash with the intention to broaden our portfolio and therefore, I think that reminds another sort of reason why you should not expect short-term profitable company.

[Operator:]

The next question is from James Gordon of JPMorgan. Your line is now open.

[James Gordon:]

This is James Gordon here from JPMorgan, thanks for taking the questions. One question on the convertible please to start with. So could you just talk about your intended use of funds, if M&A or business development is likely to feature? What is the focus or wish-list in terms of targets? And I see the comment just now also about maybe broadening the portfolio? So that's the first question, please. And the second question is about Q3 revenues in the full-year 2020 revenue guidance. So you upgraded full-year '20 guidance by €37 million in terms of revenues. How much of the upgrade was Monjuvi sales related versus other factors between '20? And what are the other contributors, and also could you help us by breaking down the €10.5 million of proprietary revenues we had this quarter? So $4.4 million was Monjuvi sales? I think you said the majority was the rest is coming from inside. But if you hit exactly what are in fact paying you for and how do you think this is going to evolve same Q4. And just finally, Monjuvi can you tell us how many patients have now had the product commercial, please?

[Jean-Paul Kress:]

James, thank you for your question. I'll handle the first one. Then Jens will answer the next ones and follow my piping for the Monjuvi last question. Regarding the convert and aim for the convert, you know we wanted to be in the position to have the capital and the means to invest when - first of all, on our internal portfolio where you probably, understand that we have a lot of opportunities ahead of us, together with insight will also be on inside. And we are actively looking at BD opportunities which is executed on two that we announced today. But at the same time, we are looking at other possibilities to continue diversify our pipeline, and we thought it was the right time to do this move to be ready to act on potential opportunities. Jens on the guidance?

[Jens Holstein:]

Yes. So James, first of all, thanks very much for the questions. So maybe in terms of a little bit support here, as you've seen, we came in at €292 million give or take. Guidance is 317 to 327. So you talk about €25 million to €35 million that we would expect for Q4. If you take into account that Tremfya have certain contribution, we booked a bit more than €30 million for the first three quarters. Q4 we would expect given further approval and psoriatic arthritis and so on that number is of 10 million on average is the minimum, but rather a lower one, we came to the conclusion that we think that overall the Tremfya guidance ends at the upper end of the range that we have given €37 million to €42 million. So you have to take this number into account and deduct it from the €25 million to €35 million. So there the rest is all kinds of other stuff in the first and foremost Monjuvi contribution from the sales of the product in the U.S. The other parts are the usual couple of million milestone payments that you know from partners that move compounds into Phase 1, 2, or 3 like we've seen it and now Novartis as we announced, and there is FTE funding from collaborations that we have. And first and foremost area, there are some revenue contribution from the inside collaboration in that respect that contributes a few million. And similarly you have a little bit from our other collaborations as well. So that's why and that explains more or less the third question out of the 10.5 million question because as you've seen 4.4 million you made the math is for the revenues from Monjuvi. But the remainder is from milestone payments/from FTE funding out of the collaborations. I hope that helped.

[James Gordon:]

A lot. Thank you.

[Roland Wandeler:]

Yes, James. This is Roland regarding new patients from Monjuvi. This of course is a number that our teams are closely looking at. It's also a number, however, that requires triangulation at this moment in the launch, given our weight based dosing and different timing of initiation. So that we do not provide a precise number at this moment in time. Having said that, the number of sites of care that we disclosed in the call is - I think a good reference point of the kind of interest and of the kind of magnitude that we see in terms of new patient's initiation.

[Operator:]

The next question is from Jason Butler of JMP Securities. Your line is now open.

[Unidentified Analyst:]

It is Roy in for Jason. Thanks for taking our questions. Just a couple quick ones, so you're at over 250 treatment sites at the end of October. Can you remind us the number of target sites that you have for the U.S.? And are you ahead of your initial expectations to achieve a given number of orders at those sites. And then one on felzartamab MOR202 for membranous nephropathy, how many patients are in the U.S. and the EU and how many progressed to ESRD? Thanks.

[Jean-Paul Kress:]

Thanks, Roy. Roland will take the first part of your question and probably Malte take the second part.

[Roland Wandeler:]

Yes, thank you Jean-Paul and Roy. As we disclosed earlier, we are looking at about 11,000 healthcare professionals that we have in our target. And these are distributed over thousands of sites of care that we have in the States. Our main focus is of course on those top 30, top 100, top 300 accounts where we have the - highest number of patients. And we are very pleased with the uptake that we saw and the orders we've received from these top accounts. We've also seen more from the periphery in detail from smaller accounts to overcoming as physicians have a patient in front of them, where they consider Monjuvi and where they purchased through the channels that Monjuvi is available. And also there we see that we are on a good track to actually get both the demand that we want from our most important top accounts as well as have the bottom of demand in the periphery that we expected to see.

[Jean-Paul Kress:]

Malte, answer that.

[Malte Peters:]

Yes, thanks. I think we are thinking or we are envisaging around 10,000 patients with autoimmune membranous nephropathy in the United States. And Roland please chime in or correct me if my memory is incorrect, but I think this is what we have as an assumption for the U.S. population yes.

[Unidentified Analyst:]

Okay, great, the most progress to ESRD?

[Malte Peters:]

Yes.

[Unidentified Analyst:]

Okay, thank you.

[Jean-Paul Kress:]

Roy and just to compliment on that these patients are mostly treated by all the therapies, all immunosuppressant very toxic drugs, some with rituximab, and many actually end up in ESRD or even transplant. So, there is a very high unmet need.

[Operator:]

The next question is from Etzer Darout of Guggenheim Securities. Your line is now open.

[Etzer Darout:]

Great, thanks for taking the question and congrats on the progress, I guess. Just wanted to know if we could see any initial efficacy data at ASH, particularly in the patients that were sort of IPI three and four in the cohort that should be presenting. And then secondly, just wondered if you had any, or any of your partners sort of ran any preclinical studies on the Monjuvi, plamotamab combination, and just wondered to what extent you or your partners have tested the CD20, CD19 co-expression rationale with your combinations? Thank you.

[Jean-Paul Kress:]

Thank you, Etzer. Malte will handle your question.

[Malte Peters:]

So the data that we presented at ASH regarding firstMIND, we're primarily focused on the safety profile of the two arms combining with tafasitamab and lenalidomide, and we are in the sort of final stages of evaluating the data. And depending on how far we get, we may present some very high-level efficacy data. But remember, it's quite early in the conduct of the study, and patients have not been observed long enough to give a reliable estimate on the CR NPRA. So we are we are looking at this right now. And depending on what we can say we will say but the main focus is really going to be safety for this ASH conference.

[Etzer Darout:]

And Malte on the CD3, CD20, CD19 rationale?

[Malte Peters:]

Oh okay, sorry I didn't catch the question. Can you repeat please the question?

[Etzer Darout:]

Yes, just wondered if you are partners have at all tested sort of the CD20, CD19 core expression rationale with your own sort of the combination of Monjuvi and plamotamab or you sort of just, you know, kind of looked at the literature there is some precedents right for combining those two molecules I just wondered if you had any sort of preclinical experience yourselves?

[Malte Peters:]

We have some experience regarding CD19 and CD20. And in fact, at ASH we will present some data showing synergistic activity combining tafasitamab and felzartamab. I am looking at these two targets, but we have not, of course, looked at CD20 CD3 bispecific in combination with CD19 CD3, but on the synergistic potential of anti CD19 and CD20 antibodies. We have generated some data in the laboratory, and we will show some details also at ASH this year.

[Jens Holstein:]

Yes, it's Jens in addition to the Jean-Paul - just that the ADCC and ADCP pathway of Monjuvi plus the T-cell engagement potential of CD20, CD3 are extremely compelling.

[Etzer Darout:]

Yes, well, thank you.

[Jean-Paul Kress:]

Thanks. Next question please.

[Operator:]

The next question is from Graig Suvannavejh of Goldman Sachs. Your line is now open.

[Graig Suvannavejh:]

Good afternoon and good morning. And Jens, just want to thank you for your efforts and - best wishes on your next endeavors as well. A couple of questions just on CD3, CD20 so when looking at the Xencor asset, could you just maybe describe kind of your initial thoughts around what you're seeing on the efficacy and safety of that agent as a standalone? We've looked at some of the data and how it compares with the other CD3, CD20s? The efficacy seems a little bit modest. And maybe there's some CRS is the big issue for all of these compounds. Could you just give us your high-level view on how you think this asset compares to the others and in the setting of combining with Monjuvi is really more? Do you think the ability to differentiate will be more on the tolerability side or really more on the efficacy side and then a follow-up just around the questions on the Xencor asset? Two questions, one just on Monjuvi. Are there any thoughts on perhaps pursuing a subcutaneous formulation of Monjuvi especially in the context of Genmab assets that is going into a Phase 3 trial and relapsed and refractory DLBCL they're anti-CD3, anti-CD20 subcus, so just any thoughts on subcu? Thanks.

[Jean-Paul Kress:]

Graig, thank you. Malte will address the first one and potentially the second one.

[Malte Peters:]

Yes, so we have of course studied the existing CD20, CD3 bispecific molecules to pretty good detail. I think there are my personal take is that the differences in efficacy at this moment are probably not very high. I think there are nuances between the various modalities. We are quite encouraged of what we see regarding the Xencor activity also with respect to the efficacy and safety profile of the molecule. We will see a little bit more data at upcoming conferences. So I think overall, we think that the Xencor molecule is on par with the other molecules that are currently being developed. With respect to your…

[Jean-Paul Kress:]

Maybe one comment.

[Malte Peters:]

Yes.

[Jean-Paul Kress:]

Malte for you one comment on that Graig I mean, beyond the asset itself and the comparison with potential other assets. That by the way, we could still partner with as we said earlier, because we have a non-exclusive agreement with Xencor. It's important to remember that one of the drivers of partnering with Xencor is our long-term relationship with them. We know that well they know as well, there is a trust/effectiveness factor here, which will make things much easier in the implementation of the development plan. I mean, partnering with another company for development is always a challenge, and with Xencor we are in known territory and as you know very well Monjuvi comes from the Xencor bench. So, there is kind of a familiarity here, which is a big factor in addition to the strength of the asset. Multistory, I think.

[Jens Holstein:]

No, no. Thanks, Jean-Paul for the addition. With respect to the subcutaneous developments, I would say we are considering various option regarding different schedules and modes of application of Monjuvi going forward, and at this moment is probably a little early to say what we will do as a long-term strategy, but it's on our radar screen. It's part of our life cycle management strategy. And we will probably be able to speak to this in the next coming months. But it's clear that we are thinking about lifecycle management strategies for Monjuvi. This includes subcutaneous formulation, but potentially also other options to facilitate the administration of Monjuvi.

[Operator:]

The last question is from Shanshan Xu of Berenberg. Your line is now open.

[Shanshan Xu:]

Thanks very much for taking my question and congrats on the progress. Two questions, please. First is an early stage asset more 210. I think your partner released some quite exciting preclinical data SEC. If I recall correctly, you retain the rights in the U.S. Just wondering if you have any plans to further develop that asset in the oncology setting? And then also, secondly, on the - one of the ASH presentation, you present some preclinical data, combining tough CD47 antibody. Wondering if that's something you are looking at giving your partner I-Mab has CD47 antibodies just want to get your thoughts there. Thanks very much.

[Jean-Paul Kress:]

Thank you for the question. I'll give a short answer and Malte will elaborate obviously. Yes, 210 - we're very excited by 210 and obviously are polarized with a partner here. And for 47, as I mentioned earlier in calls, they are - we've been looking at 47 as well, in addition to CD20, CD3. So this is something we have in the radar. But obviously, we have to see if it makes sense in terms of capital allocation versus device specifics. But yes, we have within the radar, Malte, do you want to speak about 210?

[Malte Peters:]

Yes, very quickly, we have a good relationship and partnership with I-Mab to whom our 210 molecule is licensed at the moment. We are looking at the data on a continuous basis. And then the contractual situation enables us to periodically assess the data and to decide whether we want to opt back in and participate in the future stages of development. So that's a good situation. We are really pleased with how I-Mab is pursuing this. And we will stay tuned and update you of course of any progress. And on the tafasitamab CD47 combination I think Jean-Paul answered it well. It's part of our backbone strategy to evaluate tafasitamab as a potential combination partner with multiple modalities being used in lymphoma treatment. And that of course includes some anti CD47 molecules. And as Jean-Paul said, it's at the back of our mind, and we will continue to evaluate opportunities here.

[Jean-Paul Kress:]

Operator, back to you.

[Operator:]

Yes, so I would just hand back to Julia Neugebauer to wrap up today's call.

[Julia Neugebauer:]

Ladies and gentlemen, this concludes today's conference call. If any of you would like to follow-up, the Investor Relations team of MorphoSys is available for the remainder of today. Once again, thank you for joining our call. Have a good day and goodbye.

[Operator:]

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.