MorphoSys to boost R&D budget by 40% as clinical trial program ramps up

MorphoSys (ETR:MOR) has committed to a mushrooming of its proprietary product R&D budget to support its growing program of clinical trials. The plan is to funnel up to €83 million ($90 million) into development of the products, giving MorphoSys the financial clout to move two drugs into the clinic and kick off a pair of Phase II trials of MOR202.

MorphoSys CEO Simon Moroney

Martinsried, Germany-based MorphoSys gave an outline of its spending plan back in September, but at that time it was unwilling to disclose exactly how much it planned to plow into R&D. Now, it has released figures. MorphoSys is budgeting €76 million to €83 million for proprietary R&D this year. If the final figure comes in at the midpoint of that range, it will equate to a 40% year-on-year rise in spending on proprietary R&D projects. As recently as 2014, MorphoSys was spending less than €40 million a year on proprietary R&D.

The quick escalation of R&D expenditure is the result of the progress of candidates--and MorphoSys' confidence that it can support the outlay. With Phase III readouts and potential regulatory filings for bimagrumab in sporadic inclusion body myositis and guselkumab in psoriasis due to arrive this year, MorphoSys is now closing in on income from royalties. Bimagrumab and guselkumab are partnered with Novartis ($NVS) and Johnson & Johnson ($JNJ), respectively. "We expect [our product-based revenue stream that] will grow significantly," MorphoSys CEO Simon Moroney said in a statement.

With the promise of this income on the horizon and almost €300 million in the bank as of the end of 2015, MorphoSys is willing to commit cash to its internal programs. The willingness has increased in line with the need for investment. MorphoSys ended 2015 with 14 proprietary programs, up from 10 one year ago. Four of the drugs are in the clinic, compared to three at the end of 2014. The plan is to add MOR106 and MOR107 to the list of clinical-stage programs this year. MorphoSys is working on inflammatory disease drug MOR106 with Galapagos ($GLPG).

The studies of MOR106 and MOR107 will join a growing slate of clinical trials. MorphoSys plans to start a pair of Phase II trials of MOR202 this year. One of the trials will test MOR202 in combination with lenalidomide in diffuse large B-cell lymphoma, while the other will give patients with ibrutinib-refractory chronic lymphocytic leukemia the drug along with idelalisib.

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