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HomeInvestmentMorphoSys AG (MOR) Q2 2022 Earnings Name Transcript

MorphoSys AG (MOR) Q2 2022 Earnings Name Transcript


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MorphoSys AG (MOR 0.35%)
Q2 2022 Earnings Name
Aug 04, 2022, 8:00 a.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Members

Ready Remarks:

Operator

Good day, and welcome to the MorphoSys Q2 2022 monetary outcomes convention name. At this time’s convention is being recorded. Presently, I want to flip the convention over to Julia Neugebauer. Please go forward.

Julia NeugebauerHead of Investor Relations

Girls and gents, good afternoon or good morning. My identify is Julia Neugebauer, head of investor relations at MorphoSys, and it’s my pleasure to welcome you to our half 12 months 2022 monetary outcomes convention name. With me on the decision at the moment are Jean-Paul Kress, chief government officer; Sung Lee, chief monetary officer; Malte Peters, chief analysis and growth officer; and Joe Horvat, U.S. basic supervisor.

Earlier than we start, I would prefer to remind you on Slide 2 that a few of our statements made in the course of the name at the moment are forward-looking statements, together with statements concerning our expectations for the commercialization of our merchandise and our growth plans and expectations for the compounds in our pipeline in addition to the event plans of our collaboration companions. These forward-looking statements are topic to numerous dangers and uncertainties which will trigger our precise outcomes to vary materially, together with these described in MorphoSys’ 20-F and annual report, all for the 12 months ended December 31, 2021, and infrequently in different SEC paperwork of MorphoSys. You will need to understand that our statements on this webcast converse as of at the moment. On Slide 3, you will discover the agenda for at the moment’s name.

Jean-Paul will start with an summary and can give an outlook. Joe then will present a business replace and Malte will present an replace on our growth pipeline earlier than turning the decision to Sung for a abstract of our second quarter 2022 monetary outcomes. Following these ready remarks, we’ll open the decision in your questions. With that, I now hand the decision over to Jean-Paul.

Jean-Paul KressChief Govt Officer

Thanks, Julia. Welcome, everybody, and thanks for becoming a member of us at the moment. Within the second quarter, we made progress on our technique and dedication in turning into a pacesetter in hematology/oncology and making a significant distinction within the lives of most cancers sufferers. Beginning with Monjuvi, our business most cancers immunotherapy.

We’re happy with the bounce again in gross sales within the second quarter in an atmosphere that’s turning into more and more extra aggressive. Joe will present extra particulars shortly. We’re inspired by what we’re seeing within the developments associated to period of remedy. Nonetheless, we additionally acknowledge the aggressive panorama has elevated, together with latest approvals of further second-line therapy choices.

As such, we lowered our expectations for development within the second half of 2022, which is mirrored in our revised gross sales steerage vary for Monjuvi. We proceed to drive second line development and work intently with healthcare professionals on the significance of period of therapy to make sure the very best consequence for the suitable sufferers. Turning now to our late-stage pipeline. We’re inspired with the tempo of enrollment for our pelabresib and Monjuvi pivotal Part 3 research.

We proceed to work in a targeted method to rework the therapy paradigm for difficult-to-treat hem-onc ailments and to have a constructive impression for sufferers. Pelabresib is being studied in first-line myelofibrosis together with ruxolitinib. If authorized, this routine may change the usual of take care of sufferers and generate greater than $1 billion in peak gross sales. We’re enthusiastic about Pelabresib’s potential disease-modifying dynamics, the place the information continues to mature.

We just lately introduced constructive information at EHA and proceed to obtain wonderful KOL suggestions, which Malte will discuss to later. For Monjuvi, the most important alternative is within the first-line DLBCL setting, the place there stays a big unmet want. There may be important curiosity from the medical group within the frontline examine that’s having a constructive impact on enrollment. The examine focuses on high-risk sufferers with an IPI rating of three to 5, which we imagine distinguishes this examine from others.

We even have a mid-stage asset with CPI-0209, which is our EZH2 inhibitor, and we might be offering information later this 12 months. Wanting now at enterprise growth. We have been excited to enter into an fairness participation and license settlement with HiBio for felzartamab and MOR210. The HiBio staff are very skilled drug builders and scientific specialists in autoimmune ailments and are exceptionally nicely positioned to efficiently advance felzartamab and MOR210 into new medicines for sufferers who’re in determined want of higher therapy choices.

This settlement permits us to focus our sources on hematology-oncology. The advantages of the deal are additionally mirrored in our up to date R&D steerage. Individually, we entered a medical trial collaboration with Pfizer as they give the impression of being to mix Monjuvi with their CD47 candidate referred to as TTI-622 in r/r DLBCL. We additionally proceed to be inspired concerning the progress inside our companion pipeline.

We count on pivotal information readouts from Roche, for gantenerumab in Alzheimer’s illness and from GSK for otilimab in RA by the top of this 12 months. As talked about in our Q1 earnings name, with ianalumab, abelacimab and setrusumab, the subsequent wave of companion applications has reached late-stage medical growth. We stay targeted on executing commercially and advancing our late-stage pipeline. The sphere groups are driving Monjuvi consciousness and schooling.

And as I beforehand talked about, we’re very inspired with the tempo of enrollment of our pivotal research, which symbolize potential giant value-creating alternatives over the mid to long run. We have now a powerful steadiness sheet and money runway. We have now additional strengthened this as we exercised our choice to attract on $300 million by way of growth funding bonds has per our settlement with Royalty Pharma. Thanks.

And with that, I’ll flip the decision now over to Joe for a monetary replace. Joe, please. We appear to have a technical problem. So we’ll go to Malte for the event replace.

Malte, please.

Malte PetersChief Analysis and Improvement Officer

Thanks, Jean-Paul. Good morning, and good afternoon, everyone. We have now a really robust pipeline, and we’re very happy with the progress we’re making in advancing our medical trials. First, let me begin with our three pivotal Part 3 research.

For pelabresib, affected person enrollment in our Manifest 2 examine in first-line myelofibrosis is progressing very nicely. For tafasitamab, affected person enrollment in frontMIND, our examine in first-line DLBCL; and inMIND, our examine in relapsed or refractory follicular or marginal zone lymphoma that’s being executed by Incyte, can be progressing very nicely. This quarter, we additionally progressed and entered new partnerships to additional examine tafasitamab together with different novel therapies as a therapy for DLBCL. We entered a medical trial collaboration with Pfizer and Incyte to research the immunotherapeutic mixture of Pfizer’s TTI-622, a novel fusion protein concentrating on the CD47 pathway; and tafasitamab plus lenalidomide in sufferers with relapsed or refractory DLBCL who usually are not eligible for autologous stem cell transplantation.

As well as, Xencor initiated a examine investigating the mix of tafasitamab, lenalidomide and plamotamab, Xencor’s CD20xCD3 bispecific antibody in sufferers with relapsed or refractory DLBCL. We imagine that the addition of novel immunotherapies to the mix of tafasitamab and lenalidomide could have the potential to offer new chemo-free mixture therapy choices to those sufferers. This quarter, we additionally launched new findings highlighting the potential of pelabresib as a first-line myelofibrosis therapy. In June, on the European Hematology Affiliation Congress, we introduced the most recent medical and translational analysis from the Part 2 Manifest trial.

The information confirmed that pelabresib has the potential to normalize mobile defects seen in myelofibrosis, and thereby getting on the root explanation for the illness, correlated with medical response. We analyzed cells deriving from the blood of sufferers who enrolled within the Manifest trial and from wholesome volunteers. The findings indicated that pelabresib alone or together with the JAK inhibitor, ruxolitinib, could have the potential to enhance the standard imbalance within the two white blood cell populations, the myeloid and the lymphoid cells, and assist restore regular blood cell growth. These enhancements concurred with decreases in megakaryocyte clustering in bone marrow and correlated with decreases in spleen quantity.

Megakaryocytes are the cells within the bone marrow chargeable for making platelets, and the clustering of those cells are one of many indicators of myelofibrosis. Moreover, pelabresib alone or together decreased pro-inflammatory and profibrotic signaling in monocytes, suggesting a possible attenuation of illness course of. These findings recommend that pelabresib could assist enhance outcomes for sufferers with myelofibrosis and reaffirms our confidence within the Part 3 Manifest-2 examine. We proceed to judge the information from the Manifest examine and are excited to current extra mature information on the sturdiness of spleen quantity discount and whole signs for a — discount later this 12 months.

We additionally count on to launch new information on tafasitamab and our second-generation EZH2 inhibitor, CPI-0209, later this 12 months. For tafasitamab, we’ll current up to date longer-term follow-up information of sufferers enrolled within the inMIND examine who responded to therapy, together with sufferers who’ve been handled for greater than 5 years. These information additional recommend a healing therapy potential of the tafasitamab-lenalidomide mixture for sufferers with DLBCL, as sufferers are experiencing sturdy remissions and longer-term responses with therapy. Additionally later this 12 months, we’ll current up to date information from firstMIND, our Part Ib examine in first-line DLBCL.

These information reaffirm our assumption of the synergistic impact of tafasitamab and lenalidomide in sufferers with first-line DLBCL. We’re excited to review this impact in our ongoing pivotal Part 3 examine frontMIND and the potential to offer these sufferers with a simpler therapy choice. Now our EZH2 inhibitor, CPI-0209, is at present being assessed in a bucket trial for a number of strong tumors in addition to lymphoma. We’re inspired by the preliminary efficacy information we’re observing in a number of indications, which we will even launch throughout a medical convention within the second half of this 12 months.

As you’ll be able to see, we count on to ship a gentle stream of medical information over the subsequent a number of years. We have now made lots of nice progress, and we’re enthusiastic about our pipeline potential. With that, I’ll now flip the decision over to Sung for a evaluation of the financials.

Julia NeugebauerHead of Investor Relations

Sure. Girls and gents, apologies for this small technical glitch. We must always have Joe again with us now. So — and I want to ask Joe to cowl the business outcomes now.

Joe? If that is not working, then perhaps Jean-Paul, you would need to leap in and go over the business outcomes. Thanks.

Jean-Paul KressChief Govt Officer

Sure. We’re turning now to our Monjuvi business outcomes. Monjuvi web gross sales within the second quarter have been $23.3 million, representing 29% year-over-year development. On a sequential foundation, we noticed a constructive 25% improve.

Underlying demand was notably the very best since launch, which additional underscores Monjuvi as an necessary therapy for sufferers. Our gross sales groups at the moment are in particular person, with clients for 90% of their whole visits educating on Monjuvi’s worth proposition. That is necessary because it permits our groups the chance to conduct an entire workplace name and guarantee a broad understanding of Monjuvi to all key workers that work together with sufferers. By way of the second quarter, we proceed to take care of main market share in second line new affected person begins.

We expanded our attain with greater than 1,250 websites of care ordering Monjuvi since launch and having roughly 80% of websites repeating their orders. Higher than 70% of orders got here from the group setting, the place we proceed to have good traction, and the steadiness from the tutorial setting. Our share of voice stays excessive, making certain an growing degree of consciousness for Monjuvi. This gives us with a possibility to proceed increasing its use for a better variety of sufferers.

As I outlined in our up to date steerage, the therapy panorama is evolving and have become extra aggressive over the previous few months as a consequence of new entrants into the market. Nonetheless, we’ll proceed to ship Monjuvi’s differentiated profile as the one immunotherapy choice in second line that may be administered on the doctor’s observe and permits sufferers to stay of their communities and native observe as they obtain therapy. Our focus earlier this 12 months, as you understand, was educating healthcare suppliers on the optimum period of remedy and the advantages of protecting sufferers on our immunotherapy therapy longer. We are literally seeing some constructive developments in persistence and are dedicated to working with physicians to extend the therapy period in order that applicable sufferers have the very best and most sturdy outcomes potential.

So far, we now have seen numerous sufferers proceed on therapy for greater than a 12 months. We imagine there’s a continued alternative forward of Monjuvi, and we look ahead to updating you additional. With that, I’ll flip the decision over to Sung for a monetary replace. Sung, please.

Sung LeeChief Monetary Officer

Thanks, Jean-Paul. We’re happy to share our monetary outcomes for the second quarter and first half of 2022. Transferring to Slide 14. As Jean-Paul acknowledged earlier, Monjuvi gross sales have been $23.3 million within the second quarter of 2022, rising 25% sequentially and 29% 12 months over 12 months.

We additionally recorded EUR 0.7 million in royalty income for Monjuvi gross sales outdoors of the U.S. from our companion, Incyte, within the second quarter of this 12 months. As our companion Incyte has just lately acknowledged, gross sales so far have been principally from Germany, and the royalties are reflective of that. We count on royalties to develop as Monjuvi achieves pricing and reimbursement in different nations in Europe.

On Slide 15. Complete revenues within the second quarter of 2022 have been EUR 59.4 million in comparison with EUR 38.2 million in the identical interval a 12 months in the past. Complete price of gross sales was EUR 17.2 million within the second quarter, in comparison with EUR 10.1 million a 12 months in the past. The year-over-year improve was primarily pushed by increased Monjuvi gross sales within the U.S.

and Monjuvi equipped outdoors of the U.S. Recall that MorphoSys gives Incyte with Monjuvi provide for ex-U.S. gross sales. This provide is recorded as income and mirrored within the licenses, milestones and different class beneath income; and an equal quantity is recorded in price of gross sales, yielding a 0 gross margin.

Value of gross sales particular to Monjuvi U.S. product gross sales was EUR 4.3 million within the second quarter of 2022. Turning to working bills. R&D bills within the second quarter of 2022 have been EUR 60.9 million, in comparison with EUR 40.5 million for the second quarter of 2021.

The year-over-year development primarily displays the inclusion of Constellation and elevated investments to help the development of our medical stage applications. Promoting bills decreased to EUR 24 million within the second quarter of 2022, in comparison with EUR 28.5 million for a similar interval in 2021. The year-over-year decline was pushed by the extra investments made in 2021 to help the primary full 12 months of the Monjuvi launch. G&A bills within the second quarter of 2022 have been EUR 12.4 million, in comparison with EUR 30.5 million within the second quarter of 2021.

The second quarter of 2021 included EUR 18.8 million in transaction prices associated to the acquisition of Constellation and settlement with Royalty Pharma. For the second quarter of 2022, we reported a consolidated web lack of EUR 235 million in comparison with a web revenue of EUR 20.9 million for a similar interval a 12 months in the past. Recall that the revenue within the second quarter of 2021 was pushed by the popularity of noncash finance revenue as a consequence of a lower within the monetary liabilities from the collaboration with Incyte. Turning to our steadiness sheet.

We ended the second quarter of 2022 with money and investments of EUR 754.3 million, in comparison with EUR 976.9 million on the finish of 2021. We just lately notified Royalty Pharma that we intend to attract $300 million from the event funding bond and anticipate receiving the proceeds in September of this 12 months. The funds might be used to advance our pivotal research and put together for future product launches. With our present money and investments readily available and the long run proceeds from the event funding bond, we’re nicely capitalized to fund operations by way of a number of necessary medical milestones.

Turning to our steerage for 2022 on Slide 16. As we beforehand communicated on July 26, a number of parts of our monetary steerage for 2022 have been up to date, which I will summarize. Monjuvi U.S. web product gross sales are anticipated to be within the vary of $90 million to $110 million, in comparison with the earlier vary of $110 million to $135 million.

Gross margin for Monjuvi U.S. web product gross sales stays unchanged and is anticipated to be within the vary of 75% to 80%. R&D bills are anticipated to be within the vary of EUR 275 million to EUR 300 million in comparison with the earlier vary of EUR 300 million to EUR 325 million. The numerous discount within the R&D steerage vary was achieved by partnering up out felzartamab to HiBio.

SG&A bills are anticipated to be within the vary of EUR 150 million to EUR 165 million. The earlier vary was EUR 155 million to EUR 170 million. With that, I want to hand the decision again to Jean-Paul.

Jean-Paul KressChief Govt Officer

Earlier than we go into Q&A, I would prefer to conclude with just a few phrases. We’re intensively specializing in enrolling our pivotal research of pelabresib and tafasitamab, and we’re making nice progress on this entrance. We stay motivated and dedicated to driving the uptake of Monjuvi with a possible flagship indication in first-line DLBCL but to return. We imagine the profitable execution on the late-stage pipeline over the subsequent three years has the potential to create important worth for sufferers and all stakeholders.

With that, we might prefer to open the decision for questions. Operator?

Questions & Solutions:

Operator

[Operator instructions] And we’ll go forward and take our first query from Jason Butler with JMP Securities.

Jason ButlerJMP Securities — Analyst

First one on Monjuvi. Are you able to simply discuss a bit of bit extra concerning the aggressive dynamics you are seeing within the quarter and what you are doing to both reinforce or refine the messaging to prescribers? After which once you take a look at your share in second-line affected person begins, has that — what is the development been all through the quarter? Are you able to give us any extra coloration there as to what the share was firstly versus the top of the quarter?

Jean-Paul KressChief Govt Officer

Thanks, Jason. Look, concerning the aggressive atmosphere, sure, it is not a secret that DLBCL has been fairly aggressive these days. And more and more, we have seen some new entrants. And clearly, we have mirrored that in our steerage replace just lately.

However once more, let me inform you why we’re very excited with Monjuvi. However the backside line is that we’re the best-suited choice for a group setting. We principally permit sufferers to remain of their properties with long-term outcomes. I discussed earlier that we now have now sufferers with nearly two years of therapy in actual life.

In order that’s really a really spectacular consequence and with healing potential. So a few of the choices on the market do not have this risk to maintain the sufferers at residence, and finally, that is what they need. So we’re very proud with our development right here over 12 months. And we’ll hold, clearly, a detailed eye on competitors, however we imagine we’re extraordinarily nicely positioned for, this group setting sufferers.

And in your questions on the second-line affected person begin, I imply, the market share, we have communicated up to now that we’re principally capturing between one out of three to 2 out of three new sufferers in second line. And that fluctuates quarter-to-quarter and there are low ends in our information. However sure, the second quarter we have been in all probability extra shut to at least one out of three sufferers. And we’re hopeful, clearly, that we’ll return to increased numbers.

Jason ButlerJMP Securities — Analyst

Nice. After which simply my final query is on pelabresib. Are you able to discuss concerning the suggestions you’ve got been getting from KOLs? And particularly physicians enrolling in Manifest-2, what the suggestions was on the disease-modifying information that you simply introduced at EHA?

Jean-Paul KressChief Govt Officer

Thanks, Jason. And Malte will tackle your query.

Malte PetersChief Analysis and Improvement Officer

Thanks, Jason. So we had a very very profitable assembly at EHA. We hosted a Manifest-2 investigator assembly. I believe in my profession, I’ve by no means seen a gathering with so many contributors and a lot pleasure within the room.

The widespread denominator we’re listening to is that pelabresib is the very best unapproved therapy choice for sufferers with myelofibrosis. That is just about the underside line that we’re listening to from everyone. And I may give you perhaps one or two anecdotes that’s type of talking into this path. One is, after we acquired the trial — after we adopted the trial, so after the Constellation acquisition, we now have seen actually an amazing turnaround and improve in pleasure in placing sufferers on the examine.

So after having a gradual begin, the examine is now enrolling actually at an unprecedented velocity. And I am tremendous pleased with the progress we’re making. The second fast anecdote I may give you is we’re at present doing a roadshow, all of the senior R&D hosts at MorphoSys are principally going and go to key websites in Asia, within the U.S. and in Europe.

And the suggestions we’re listening to is basically very constructive. And we’re seeing this once more as mirrored by a lift in enrollment. So I will be solely tremendous constructive, Jason. And I hope the examine continues to enroll in addition to it’s doing proper now.

And we’re tremendous excited, clearly, to see the information as quickly as we will.

Operator

And we’ll go forward and take our subsequent query from James Gordon with J.P. Morgan.

James GordonJ.P. Morgan — Analyst

James Gordon from J.P. Morgan. Three questions, please. The primary one was on Monjuvi.

So you’ve got referred to as out some extra competitors within the second half of this 12 months, however you are not anticipating a slowdown. However trying past, you’ve got bought a bit extra CAR-T competitors and perhaps the beginning of CD3, CD20 competitors. So subsequent 12 months, do you assume type of you keep the present tempo, you speed up, otherwise you decelerate? How ought to we take into consideration the shifting elements there, please? That is the primary query. Second query was on opex and an analogous query.

I believe SG&A on a clear foundation might be down about 20% this 12 months in your up to date steerage. Are you finished when it comes to the flexibility to take that price and may we have to ramp up spend to cope with extra competitors? Or are you continue to seeing many areas you’ll be able to in the reduction of on price as we go into subsequent years? After which that type of results in the third query, which is profitability. So what’s the newest considering on when you possibly can attain profitability on an working foundation and what the money runway is? I believe you stated that you will have handed by way of key milestones. So is that saying that you simply’d have cash to — money to maintain you thru form of reporting in ’24, and that is once you then may want to lift some extra money?

Jean-Paul KressChief Govt Officer

Thanks, James. We are going to begin by query two and three with Sung. After which we’ll return to the business questions with Joe.

Sung LeeChief Monetary Officer

Sure. So, James, you had a few questions round SG&A usually opex, money runway and profitability. So let me tackle your query about SG&A. So we did fine-tune our SG&A steerage coming down EUR 5 million on the underside and high finish of the vary.

However, take into accout, that we face some — in addition to different corporations, some main FX headwinds. And naturally, the overwhelming majority, 95% plus, of our business expense, is incurred within the U.S. the place we co-promote Monjuvi with Incyte. So I believe you’d have seen an additional discount within the SG&A steerage have been it not for the FX headwinds.

And customarily, for all the 12 months, whole opex, we’re dealing with a couple of unfavorable 7% FX headwind as a result of the vast majority of our bills are incurred within the U.S., particularly with the acquisition of Constellation. So I believe that must be factored in, that there was room in SG&A for additional trim, however we suffered from the FX headwinds. And clearly, that impacts R&D bills as nicely. However after we look to the long run, we’re continually our price construction.

We’re continually fine-tuning this and that won’t cease. After all, after we began this 12 months, we took a significant motion with our analysis group, consolidating that in Germany. In order that was capable of assist us when it comes to price discount. So we’ll proceed to be very vigilant on methods to optimize our price construction.

After which your query on profitability. I believe what I’ve stated earlier than following the Constellation acquisition is, our objective is to be worthwhile and money stream constructive in 2026. That is the 12 months we’d anticipate having the primary full 12 months of pelabresib revenues within the U.S. However let me form of change the query to one thing else, and I do not know if you happen to have been alluding to this.

For those who’re simply trying on the Monjuvi co-commercialization when it comes to when can that be worthwhile between us and Incyte. And naturally, it is a type of a skinning-down P&L, simply having the co-comm parts. We do not assume we’re that far-off. If we generate Monjuvi gross sales within the higher 20 million, low 30 million per quarter, that will get us to worthwhile situations.

And we predict that is nicely inside attain within the subsequent 12 months. After which when it comes to money runway. We stated this many instances, with our natural money, the EUR 754 million, this can take us to mid-2024. And clearly, the $300 million proceeds from the event funding bonds from Royalty Pharma, that can improve our flexibility.

And we’re in a great place when it comes to having the ability to fund our pivotal applications. So I will go away it at that. And I believe I will hand it over to Joe with regard to the query on Monjuvi second half competitors.

Joe HorvatU.S. Common Supervisor

Thanks, Sung, and hopefully everybody can hear me. And thanks for the query, James. The DLBCL house has been aggressive since we entered it, and it evolves yearly with new present entrants to the market and extra upcoming competitors. We’re conscious of this dynamic aggressive atmosphere as it is also mirrored in our up to date steerage.

With that stated, I would like to return again to our Q2 outcomes, the place we noticed the strongest demand from Monjuvi gross sales since launch. We proceed to have main share in second line with our enticing off-the-shelf worth proposition, which is predicated on a powerful security profile of efficacy, security and comfort, being the one in observe outpatient immunotherapy that enables sufferers to remain of their properties, of their communities and with their native groups. And looking out ahead, we’d identical to to level you to the brand new full 12 months steerage we offered which might offer you a good suggestion of the expansion we see forward within the second half.

James GordonJ.P. Morgan — Analyst

I do not know if you happen to can hear me, however that is very useful. The query was, even trying past this 12 months, do you assume — is Monjuvi accelerating as we go into subsequent 12 months? Or do you hope to take care of within the face of extra competitors? Or may issues gradual? How are you fascinated with type of the exit price for the 12 months?

Jean-Paul KressChief Govt Officer

Joe.

Joe HorvatU.S. Common Supervisor

Completely.

Jean-Paul KressChief Govt Officer

Sure. Simply I wished to ask Sung to touch upon the long term.

Sung LeeChief Monetary Officer

Sure. So, James, clearly, these are latest aggressive dynamics we’re highlighting with the entrants of a pair extra therapy choices in second line. I believe we might prefer to get just a few quarters of expertise right here beneath this new dynamic to make the decision extra long term. Clearly, making a name on the long term has implications for us in our — when it comes to monetary legal responsibility.

So we wish to be very measured and cautious when it comes to placing out any statements with regard to the long run of Monjuvi. However our optimism remains to be there. Look, the query is about peak gross sales. Nothing past this 12 months basically has modified when it comes to how we’re fascinated with the long-term alternative for Monjuvi.

This might be an schooling course of. However we’re seeing enchancment on the persistence aspect, and we simply want just a few extra quarters of expertise to see what impression, if any, the altering — the latest altering aggressive dynamics have on the long run.

Jean-Paul KressChief Govt Officer

And I’d add that the first-line alternative clearly builds up considerably within the profile of — and the angle for Monjuvi. It is a very giant untapped alternative for us.

Operator

We’ll go forward and transfer on to our subsequent query with Xian Deng with Berenberg.

Xian DengBerenberg Capital Markets — Analyst

I’ve two, please. The primary one is extra of a type of a basic query. Relating to the brand new steerage, simply very usually, simply questioning what are your assumptions for the overall macroeconomic situation? What are your ideas on — you form of already defined a bit on FX, however how concerning the strengthening of the U.S. greenback and the inflation, rate of interest hikes? Simply questioning what are your assumptions for the up to date steerage.

That may be nice. And the second query might be a bit extra on the Monjuvi, if that is all proper. So I imply, in your presentation, you stated very excessive utilization in group setting, main share within the second line. All of it sounds very constructive.

However on the identical time, you lowered the complete 12 months steerage. I used to be simply questioning, when it comes to competitors, as a result of we felt that the bispecifics usually are not coming in all probability till subsequent 12 months. I am simply questioning if you happen to may elaborate a bit extra on — when it comes to near-term competitors, whether or not it is Polivy and even CAR-T. Sure.

Any remark, that may be nice.

Jean-Paul KressChief Govt Officer

Thanks for the questions. I will begin by the business query as a few of us have already answered it, however I will come again to the truth that these new labels for some rivals, particularly the CAR-Ts, that is fairly latest. And that does not actually change the basics right here, which is that we principally are the best option for group sufferers. Once more, we allow sufferers to remain at their properties, and that is essential.

And it’s how we get probably the most traction and proceed to work on that and have interaction and educate on that. You mix that with the period of therapy, which I discussed. We have now some sufferers in actual life who have already got nearly two years of therapy, which is completely improbable. And that is with the healing potential.

So sure, this can be a very dynamic market. We’re conscious of the aggressive panorama evolving. There might be new rivals, however we’re very aggressive and we’ll proceed to coach and have interaction on the advantages of our drug within the present indication and within the first-line indication and different indications to return. On the opposite query, I will move to Sung.

Sung LeeChief Monetary Officer

Sure, Xian, so thanks in your questions. And also you have been principally asking concerning the macroeconomic results on our steerage with regard to inflation, rates of interest, FX. I believe the steerage vary that we have stated, we have factored in all these macroeconomic occasions. And the vary can account for some variation in FX, though principally, we’re assuming present charges within the second half.

But when there’s a slight strengthening of the U.S. greenback, then actually, there’s some — the vary can take in some fluctuation, however not excessive fluctuations. Inflation is one thing that we now have to regulate, as do all corporations. So I believe that is an ongoing subject that can proceed to be monitored.

Now with regard to rates of interest, I believe this can be a very fascinating variable and considerably of a wildcard. A variety of our companies within the U.S., and our enterprise is tied to rates of interest within the U.S. And naturally, the U.S. Federal Reserve has been very aggressive in mountaineering rates of interest.

When rates of interest improve, this could have a unfavorable impression on the weighted common price of capital for corporations. Now what does this imply for MorphoSys? There’s a danger that additional rises in rates of interest may lower the carrying worth of goodwill, which in flip would trigger a noncash impairment cost. Our steerage ranges for SG&A and R&D exclude any potential impairment prices. So I believe that is one thing essential to bear in mind.

Operator

We’ll go forward and take our subsequent query from Pippa Pritchard with Morgan Stanley.

Philippa PritchardMorgan Stanley — Analyst

Only a few for me. Firstly, would you be capable of take us by way of the dynamics of accounting for the curiosity on — and the money flows across the compensation of the event bonds? Is curiosity paid on a quarterly foundation? Or does it roll up over time? After which what’s the timeframe to compensation and what are the choices for refinancing sooner or later? A second one on Monjuvi. You highlighted within the report that competitors has elevated within the second-line DLBCL setting, which appears to consult with the CD19 CAR-T property you talked about earlier. You’ve got already commented on the aggressive dynamics, however I used to be questioning if there have been any issues talked about round sequencing of CD19-directed therapies, i.e., do medical doctors wish to use the CAR-T first adopted by Monjuvi or the opposite approach round? After which a really fast third one for me.

Is there an interim evaluation deliberate on pelabresib?

Jean-Paul KressChief Govt Officer

Nice. Thanks in your questions, Pippa. We’ll begin by Sung, then Joe for the aggressive query. After which Malte on the third query on pelabresib.

Sung LeeChief Monetary Officer

Nice. Thanks, Jean-Paul. So with regard to the Royalty Pharma growing funding bond, the $300 million that we will be taking, the fundamental phrases are, the primary compensation will begin in Q3 of 2024. In order that’s two years away.

And the primary 4 quarterly funds might be $9.7 million every. The following 32 quarterly funds might be $19.4 million every. So principally, you are 36 quarters of repayments on this bond beginning in Q3 of 2024.

Jean-Paul KressChief Govt Officer

Sure. So, Joe, and Malte really on the CD19 sequencing.

Joe HorvatU.S. Common Supervisor

Completely. Thanks Jean-Paul, and thanks for the query, Pippa. From a aggressive perspective, clearly, there are some physicians that query whether or not or not you need to use Monjuvi-LEN or sequence CD19 as we have seen them sequence CD20. We have not had — we have not seen any points to this point when physicians have used tafa-len previous to CAR-T.

However clearly, I will flip that over to Malte to speak concerning the medical dynamics there. However it has come up in some accounts, after which that is been dealt with by our medical staff.

Malte PetersChief Analysis and Improvement Officer

Thanks, Joe. A few remarks from my finish. So to this point, we now have not seen any proof that the CD19 expression goes down considerably after the more durable lenalidomide mixture therapy. We have now really revealed fairly numerous publications so far.

We have now additionally seen numerous sufferers who’ve been moved from tafasitamab-lenalidomide mixture therapy to CAR-T cell therapy with good outcomes upon the CAR-T cell therapy. And the final remark I wished to make is that figuring out or understanding that this is a crucial subject for investigators, we are literally going to host along with our colleagues at Incyte, a complete symposium on the CD19 expression sample at ASH. So we’re going to compile all out there information and current it in a single session on the upcoming ASH assembly. However to this point, there’s completely no proof {that a} affected person wouldn’t reply to a CAR-T cell therapy after the affected person has been handled with tafasitamab-lenalidomide mixture.

Jean-Paul KressChief Govt Officer

To you on the or a —

Joe HorvatU.S. Common Supervisor

Take the —

Jean-Paul KressChief Govt Officer

Sorry. You need to deal with the pela interim query. Thanks, Malte.

Malte PetersChief Analysis and Improvement Officer

OK. Sure, sorry. So for the interim evaluation, it is a query we really ceaselessly obtain. And we now have constantly stated that our choice is to not give any particulars on our statistical evaluation plan, and that features whether or not or not we’re going to conduct an interim evaluation.

And I offer you a really brief motive of why that’s. So FDA strongly advises corporations to not disclose any particulars on the statistical evaluation processes and that features interim analyses. And the reason being quite simple. After getting spoken about whether or not or not you may have plans to do an interim evaluation, this might probably change the enrollment sample in a medical trial, introducing bias within the medical trial.

And that is one thing regulators don’t love. And that is why the robust suggestion from regulators will not be to discuss it, and we’re following this. However I wish to come again to my ready remarks and say how blissful and happy we’re with the intense excessive curiosity within the enrollment of the Manifest-2 trial and how briskly enrollment goes. So apologies for not providing you with extra coloration right here, however higher secure than sorry, and keep tuned, and the examine is progressing nicely.

Operator

We’ll take our subsequent query from Vineet Agarwal with Citi. And as a consequence of no response —

Jean-Paul KressChief Govt Officer

Operator. Sure. Let’s transfer on to the subsequent.

Operator

As a consequence of no response, we’ll transfer on to our subsequent query from Victor Floc’h with Stifel.

Victor Floc’hStifel Monetary Corp. — Analyst

I’ve two. So to begin with, I used to be questioning in case you have any replace on therapy period. If I keep in mind appropriately, you talked about a three-months determine over the past convention name. So questioning in case you have seen any enhancements since then.

And my second query is concerning the ex U.S. gross sales momentum, which appears fairly difficult. So I used to be questioning if you happen to may present any updates in your business efforts in Europe in addition to the reimbursement course of there.

Jean-Paul KressChief Govt Officer

Thanks, Victor. Joe will reply your query.

Joe HorvatU.S. Common Supervisor

Glorious. Thanks, Victor. In order it pertains to period of therapy, we’re inspired with the progress that we’re seeing on period of therapy. As you talked about, beforehand, we acknowledged that period of therapy was roughly round three months.

However we at the moment are seeing this begin to development towards 4 months. Maintaining in thoughts that this elongation of period of therapy will take time, we’re dedicated to persevering with to coach physicians concerning the nuances of utilizing immunotherapy. Because it pertains to ex U.S. efficiency, we proceed to see good progress by our companions, Incyte, who’re commercializing Monjuvi outdoors of the U.S.

Based mostly off of the pricing reimbursement plan that they laid out for Europe, they’re progressing fairly nicely. We’re fairly blissful and happy with what we see. And we proceed to — they proceed to work with the well being authorities to be sure that they’re getting Monjuvi into the markets as rapidly as potential.

Jean-Paul KressChief Govt Officer

And I’d add, Joe, they’re making good business progress already in Germany, the place they’ve launched. And so they have an ATU — [Inaudible] ATU in France the place they make progress, however they do not report gross sales.

Operator

And with that, that does conclude our question-and-answer session for at the moment. I’d now like handy the decision again over to Julia for any further or closing remarks.

Julia NeugebauerHead of Investor Relations

Girls and gents, this concludes at the moment’s convention name. If any of you want to comply with up, the Investor Relations staff of MorphoSys is on the market for the rest of the day. As soon as once more, thanks for becoming a member of our name. Have day, and goodbye.

Operator

[Operator signoff]

Period: 0 minutes

Name contributors:

Julia NeugebauerHead of Investor Relations

Jean-Paul KressChief Govt Officer

Malte PetersChief Analysis and Improvement Officer

Sung LeeChief Monetary Officer

Jason ButlerJMP Securities — Analyst

James GordonJ.P. Morgan — Analyst

Joe HorvatU.S. Common Supervisor

Xian DengBerenberg Capital Markets — Analyst

Philippa PritchardMorgan Stanley — Analyst

Victor Floc’hStifel Monetary Corp. — Analyst

Extra MOR evaluation

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