MorphoSys AG — AGM Information 2010

May 23, 2010

Annual General Meeting 2010

Munich, Hanns-Seidel-Stiftung, May 21, 2010

Annual General Meeting 2010 Agenda

• 1. Presentation of the confirmed annual financial statements as of December 31, 2009, the management report together with the consolidated financial statements, the consolidated management report and the report of the Supervisory Board for the business year 2009
• 1. Formal approval on behalf of the Board of Management
• 1. Formal approval on behalf of the Supervisory Board
• 1. Appointment of the auditors for the business year 2010
• 1. Resolution on the Approval of the Remuneration Scheme of Members of the Board of Management
• 1. Resolution on the Authorization to purchase and use Treasury Stock and on the Exclusion of Subscription Rights
• 1. Resolution on Amendments of the Articles of Association in accordance with the Act Implementing the Shareholders' Rights Directive (ARUG)
• 1. Partial Deletion of the Conditional Capital 2003-II, amendment of the Articles
• 1. Compensation of the Supervisory Board

Annual General Meeting 2010

Report of the Management Board

Overview

• Operational Review 2009
• Group Review (Dr. Simon Moroney)
• Segment Review: Partnered Discovery (Dr. Marlies Sproll)
• Segment Review: Proprietary Development (Dr. Arndt Schottelius)
• Segment Review: AbD Serotec (Dr. Simon Moroney)
• Financial Review 2009 & Q1 2010 (Dave Lemus)
• Outlook 2010 (Dr. Simon Moroney)

Operational Review 2009

Group Review – Dr. Simon Moroney, CEO

Successful Performance in 2009

	2009	2008
Total Employees	413	334
Geographic Split
Germany	312	236
UK	82	82
USA	19	16
Split by Segment
Partnered Discovery	217
Proprietary Development	56	201
AbD Serotec	140	133

Shareprice Development Since Annual General Meeting 2009

MorphoSys AG – Annual General Meeting, May 21, 2010 Seite 8

Segment Review 2009

Partnered Discovery – Dr. Marlies Sproll, CSO

Partnered Discovery – Achievements in 2009

• Pipeline Progress & Expansion
• 65 programs in total, up from 55 at the beginning of the year
• Three new INDs, two new Ph 2 starts, 17 new program starts
• Secured Novartis commitment for full 10-year term of alliance
• Committed payments total over € 400 million
• Final ramp up of Novartis's R&D teams concluded
• Existing alliances extended & expanded
• Schering-Plough
• Shionogi
• First alliance in infectious diseases with Daiichi-Sankyo

Big Pharma's Rising Appetite for Infectious Disease Biologicals

• Big medical need
• Hospital acquired infections
• Resistance to antibiotics
• Deals around antibodies vs. infections have surged
• MorphoSys
• First infectious disease deal with Daiichi Sankyo in October 2009
• Features:
  • HuCAL PLATINUM
  • Funded development of ID specific technology

Name	Partner	Target / Indication	Phase 1	Phase 2	Phase 3	Market
BHQ880	Novartis	DKK-1 Multiple Myeloma			02/2009: Start of Combinatorial	phase study with	1/2 Zometa
n.d.	Centocor	n.d. Oncology/IPF			10/2009: Start of 10/2008: Start of	phase phase	2 in oncology 2 in IPF
n.d.	Novartis	n.d.			06/2009: Start of 05/2010: Clinical proof	phase of	1 concept
Gantenerumab	Roche	Amyloid-β Alzheimer's Disease			2009: Two Start of phase	phase 2 planned	1-trials ended in 2010:
n.d.	Centocor	n.d. Inflammatory Diseases			06/2009: Start of diseases	phase	1 in inflammatory
BAY 79-4620	Bayer Schering	CA IX (MN) Oncology			10/2009: Start of based	phase immunoconjugate	1; first HuCAL

n.d.: not disclosed

Partnered Discovery – Highlights for 2010

First P-o-C from HuCAL program with Novartis

• Pipeline continues to grow & mature
• 4 6 INDs with various partners
• Progress into Ph 2
• Roche plans to move into Ph 2 in 2010 with Gantenerumab (AD)
• Potentially other Ph 2 programs
• Continue technology development during 2010
• Dedicated team of 15 employees

Segment-Review 2009

Proprietary Development – Dr. Arndt Schottelius, CDO

Achievements in 2009 – Development Organization Built

• Established a high-class development organization
• Attracted experienced professionals from Genentech, Novartis, Medigene, Fresenius, BMS, MSD
• Raised MorphoSys's profile as a drug developer in the industry
• New targets in-licensed from academia and biotech companies
• Established network of key opinion leaders, academic collaborators, clinical investigators & centers * not including protein sciences group

Segment	Headcount
Proprietary Development*	56
Pre-clinical and Clinical Development, including Quality Assurance & Regulatory Affairs	15
Target Scouting, Antibody Discovery & Pre-development	41

Achievements in 2009 – Proprietary Pipeline

• MOR103 (anti-GM-CSF)
• Successfully developed into Ph 1b/2a trial in rheumatoid arthritis
• Moved first proprietary HuCAL antibody MOR103 into clinical testing in patients
• Promising pre-clinical data for second indication

MOR202 (anti-CD38)

• Successfully developed towards the clinic
• Tapped external government funding through "m⁴ high tech cluster" participation
• Increased breadth of pipeline
• Added three new programs in 2009
• Two targets secured through in-licensing transactions

MOR103 – Ph 1b/2a (MSC-1001) in Rheumatoid Arthritis – Clinical Trial Update

• Trial approved in Germany, Bulgaria, The Netherlands
• Geographic mix provides access to full spectrum from biologics-pretreated to biologics-naïve RA patients
• Trial design
• Primary outcome measures: Adverse event rate and safety profile
• Secondary outcome measures: pharmacokinetics, immunogenicity, DAS28, ACR core set measures and EULAR28 response criteria; cytokines, synovitis, bone edema, and patient reported outcomes (up to 16 weeks)
• Stable regimen of concomitant RA therapy (including anti-TNFs)

	2008	2009	2010	2011	2012
Ph 1
Ph 1b/2a
Data Analysis
Final Ph 1b/2a Data

MOR202 – Sharpen Competitive Profile

• Manufacturing of clinical grade material completed according to plan
• Prepare for Ph 1/2 in multiple myeloma in 2011
• File CTA in Q4 2010
• Rationale for extended timeline of MOR202
• Sharpened competitive profile
• Longer chronic toxicity study to enable long-term clinical development
• Competitive advantage: Tox species available (cross-reactivity), robust development plan

	2009	2010	2011
Manufacturing
Toxicity Study
CTA Preparation
CTA Filing
Start of Ph 1/2a

Name	Name / Source of Target	Indication	Discovery	Preclinic	Phase 1	Phase 2	Phase 3	Market
	Target: GM-CSF	Rheumatoid Arthritis
MOR103	In-licensed	2 nd Indication
MOR202	Target: CD38 Target Scouts	Cancer
MOR205	In-licensed	Cancer
MOR104	In-licensed	Inflammatory Diseases
MOR/NOV (Co-development)	Novartis	n.d.
MOR105	Target Scouts	Inflammatory Diseases			Targets selected			2008A
MOR206	In-licensed	Cancer						2009A
New projects	n.d.	n.d.						2010E

Segment Review 2009

AbD Serotec – Dr. Simon Moroney, CEO

Achievements in 2009

New research partnerships in the diagnostics field

• FIND Diagnostics: Diagnostic kits for tropical diseases
• Establish HuCAL as source for immunodiagnostics
• Expansion of major account base
• Less dependent on single major accounts
• Added >1,500 products to catalog
• Strong financial result:
• Profit margin 5%
• +8% revenue growth (at constant average exchange rates of 2008)

Promising Market Opportunities

Financial Review 2009

Financial Review - Dave Lemus, CFO

FY2009: Key Financials

Expenditure on Proprietary Programs

		Results by Segment
--	--	--------------------	--

in million €	2009	2008
Partnered Discovery
Segment Revenues	61.7	54.3
Operating Expenses	22.1	19.9
Segment Result	39.6	34.4
Proprietary Development
Segment Revenues	1.0	0
Operating Expenses	19.3	8.9
Segment Result	(18.3)	(8.9)
AbD Serotec
Segment Revenues	19.4	18.2
COGS	6.7	7.1
Gross Profit	12.7	11.1
Other Operating Expenses	11.6	10.7
Segment Result	1.0	0.4

Differences due to rounding

Consolidated Statement of Operations (Group) Q1 2010

in million €	Q1 2010	Q1 2009
Revenues	20.6	19.1
Cost of Goods Sold	1.7	1.7
Research and Development Expenses	9.3	8.5
Sales, General & Administrative Expenses	4.9	4.8
Total Operating Expenses	15.9	14.9
Profit from Operations	4.7	4.2
Other Expenses/Income, net	(0.1)	0.9
Profit before Taxes	4.6	5.1
Income Tax Expense	1.4	1.6
Net Profit	3.2	3.5
Diluted Net Profit per Share in €	0.14	0.16

Consolidated Balance Sheet Q1 2010

Assets

Liabilities

Outlook

Dr. Simon Moroney, CEO

Partnered Discovery

Short-Term Goals

• Further maturation of the pipeline
• Novartis proves clinical efficacy of a HuCALantibody

More INDs

• At least one additional Ph 2 program
• 4 6 new INDs
• Announcement of new technological developments

Long-Term Perspective

• Strong increase of clinical programs with partners
• Increased visibility of clinical data
• Overall growth of number of programs in the pipeline
• New business opportunities
• In the field of infectious diseases
• Arising from technological developments

Proprietary Development

Short-Term Goals

MOR103

• Progress in the current Ph 1b/2a trial
• Advance second indication further
• MOR202
• CTA of a Ph 1/2 in Q4/2010
• Strengthening of proprietary portfolio
• Start new programs including co-development options

Long-Term Perspective

• Clinical data of MOR103 and MOR202 as basis for lucrative partnerships with pharma
• Increasing demand of pharma companies to fill their pipelines
• Growing need for innovative biological drugs

Complete Pipeline 2009 – 2010 Around 80 Product Candidates at Year End

Name	Partner	Target	Indication	Discovery	Präkinik	Phase 1	Phase 2	Phase 3	Market
BHQ880	Novartis	DKK-1	Cancer
n.d.	Centocor	n.d.	Immunology/ Cancer
Gantenerumab	Roche	Amyloid-β	Alzheimer's Disiease
n.d.	Centocor	n.d.	Inflammatory Diseases
n.d.	Novartis	n.d.	n.d.
BAY79-4620	Bayer Schering	CA IX (MN)	Cancer
4-6 INDs	Various	Various	Various
~30 Programs	Various	Various	Various
~30 Programs	Various	Various	Various
MOR103	Proprietary	GM-CSF	RA & others
MOR202	Proprietary	CD38	Cancer
MOR205	Proprietary	n.d.	Cancer
MOR104	Proprietary	n.d.	Inflammatory Diseases
MOR105	Proprietary	n.d.	Inflammatory Diseases
MOR206	Proprietary	n.d.	Cancer						2009A
~3 new programs	Proprietary	n.d.	n.d.						2010E
MOR/NOV	Novartis	n.d.	n.d.

AbD Serotec

Short-Term Goals	Long-Term Perspective
 Increased market share  Revenue growth of ~10 %  Operating margin 5 - 8 %	 Potential for HuCAL technology in delivering truly differentiated diagnostic products  Growing importance of diagnostics in pharmaceutical development  Increasing regulatory demands for post market monitoring, patient segmentation, etc.  Synergies with therapeutic area

MorphoSys Group

Short-Term Goals

• Revenue growth of 10 15 %
• Increasing investment in proprietary development
• Operating profit of € 5 9m
• Possible strategic transactions
• Expansion of the existing technology platform
• Growth of AbD Serotec in the diagnostics field
• Focus on fit and financial strength

Long-Term Perspective

• Ability to finance long-term plans from strong operating cash-flow without need to raise new money
• Prospects for strong revenue increase driven by lucrative partnerships and marketed products
• Growing importance of diagnostics for drug development and during treatment
• Proprietary technologies and business segment AbD Serotec as link between both fields

Future Value Creation

Annual General Meeting 2010 Agenda

• 1. Presentation of the confirmed annual financial statements as of December 31, 2009, the management report together with the consolidated financial statements, the consolidated management report and the report of the Supervisory Board for the business year 2009
• 1. Formal approval on behalf of the Board of Management
• 1. Formal approval on behalf of the Supervisory Board
• 1. Appointment of the auditors for the business year 2010
• 1. Resolution on the Approval of the Remuneration Scheme of Members of the Board of Management
• 1. Resolution on the Authorization to purchase and use Treasury Stock and on the Exclusion of Subscription Rights
• 1. Resolution on Amendments of the Articles of Association in accordance with the Act Implementing the Shareholders' Rights Directive (ARUG)
• 1. Partial Deletion of the Conditional Capital 2003-II, amendment of the Articles
• 1. Compensation of the Supervisory Board

Annual General Meeting 2010

Report of the Supervisory Board

Item 5: Approval of the Remuneration Scheme of Members of the Board of Management

Ongoing discussion about the appropriateness of the remuneration of Management Boards

Reaction of legislative body: Executive Compensation Act (VorstAG) (enacted in 08/2009)

• Remuneration now aims at a stronger alignment of the companies' compensation system towards the realization of long-term sustainable corporate success
• The shareholders' plenum might cast a non-committal vote about the compensation system for Executive Board members during the Annual General Meeting

Current Remuneration Scheme

	Remuneration	Elements of total direct compensation
e bl xi e Fl	Long-term incentive / Long-term variable	Long-term variable elements of the compensation are sufficiently dependent on long-term development of the company	Result
e bl a ri a V	Short-term incentive / Bonus	Executive Board members receive performance-related annual bonus	The remuneration is already now in accordance with VorstAG, regarding both
d e x Fi	Fixed allowance/ Annual gross base salary	The fixed allowance differentiates CEO and other members of the Executive Board and its respective amount is appropriate	pay-mix as well as amount

Adjustments of the Remuneration Scheme as of July 1, 2010

• Extension of the vesting-period for convertible bonds to 4 years
• Adjustment of the D&O-insurance: 10% deductible per incident (up to max. 1,5 x annual base salary) for Executive Board members, corresponding adjustment of deductible for members of the Supervisory Board
• In case of a deterioration of the Company's performance the Supervisory Board might reduce bonus/compensation of Executive Board to an appropriate amount

Aim:

Ideal liaison between economic success of MorphoSys and shareholders' interests

Planned Remuneration Scheme

• The Executive Board's activities have to be aligned with the major corporate targets of MorphoSys and therefore with a long-term positive company development
• Long-term incentive components of the compensation in
• accordance with the requirements of the VorstAG are being adjusted together with an external remuneration expert
• Special attention is paid to the sustainability of variable compensation components

Appropriateness of the Compensation of the Supervisory Board

Corporate Governance Code provides for a performance-related remuneration of Supervisory Board members, but:

Increasing number of remuneration experts is of another opinion:

• Performance-related remuneration of the Supervisory Board carries the inherent danger of colliding interests
• Control and monitoring function must not be influenced by the economic situation of the company

MorphoSys agrees with the experts' opinion:

• Compensation of the Supervisory Board will comprise only fixed components
• Increase of the fixed remuneration due to the discontinuation of performance-related components
• Level of fixed compensation is also appropriate when compared to competitors

Annual General Meeting 2010

MorphoSys thanks its shareholders!

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, AutoCAL®, CysDisplay®, Agx® and RapMAT® are registered trademarks of MorphoSys AG