BioWorld International Correspondent

MorphoSys took on its 18th research partner - Schering-Plough Corp. - which has signed a two-year R&D agreement that provides it with access to MorphoSys' HuCal GOLD antibody library.

Kenilworth, N.J.-based Schering-Plough will install the platform at its research site in Palo Alto, Calif. It has an option to extend the contract for three more years and to develop therapeutic antibodies against up to 10 disease-related targets.

Terms were not disclosed, but Munich, Germany-based MorphoSys receives an up-front payment, annual user fees and optional R&D funding.

It also would gain license and milestone payments from future clinical development programs based on the HuCal technology, as well as royalties on eventual product sales.

The deal comes amid renewed interest in antibody-based biotechnology companies, following London-based AstraZeneca plc's agreed cash-based takeover of Cambridge Antibody Technology (CAT) Group, which values CAT at £702 million (US$1.3 billion). (See BioWorld International, May 16, 2006.)

However, MorphoSys CEO and co-founder Simon Moroney told BioWorld International that the company aims to develop independently.

"We believe that MorphoSys has a very attractive independent future, and we want to continue down that track," he said.

The CAT deal, along with the recent takeover of Fremont, Calif.-based Abgenix Inc. by Thousand Oaks, Calif.-based Amgen Inc. has been positive for MorphoSys, he said, as it underlines the importance of antibody-based drugs. "I think it certainly improves our competitive situation," Moroney added.

The company has estimated revenues of €50 million (US$64.2 million) for the current year and a net profit of €1 million. It already has reported €14.8 million in revenues and €4.9 million in net income for the first quarter.

Two-thirds of its business is derived from its therapeutic antibodies segment, which includes its research and development agreements with biotechnology and pharmaceutical firms and its proprietary drug development pipeline, which comprises two preclinical programs. The company aims to develop those further before seeking partners.

The remaining third of the business is focused on the production of both custom-generated and catalogue antibodies for the research market. The company made two acquisitions in the area of late: Oxford, UK-based Serotec Ltd. and Poole, UK-based Biogenesis Group. It is on the lookout for more, and it has about €60 million in cash that will help it to execute future transactions, Moroney said.

"It's a very fragmented industry. There are a number of interesting companies out there," he added. The company aims to establish its human antibody platform as a standard in the $1 billion research market. "It's completely dominated by old technologies, by animal technologies," he said.

"I do not like that part of the business that much," Martin Possienke, analyst at Frankfurt-based Equinet Institutional Services AG, told BioWorld International.

"If they are successful on that side, it can be a substantial new column in the MorphoSys model, of course," he added.

Its therapeutic antibody business has better potential to deliver high margins, though, he said. "I think this is the most important story about MorphoSys because it can be seen as a broadly diversified portfolio."

So far, just two HuCal-derived antibodies have entered clinical development. GPC Biotech AG, of Munich, is evaluating 1D09C3 in B-cell lymphomas, and F. Hoffmann-La Roche Ltd., of Basel, Switzerland, is developing an antibody-based therapy for Alzheimer's disease.

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