MorphoSys AG (MOR) 2014 Q2 法說會逐字稿

Ladies and gentlemen, welcome to MorphoSys's quarterly call on the financial results of Q2 2014. 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. (Operator Instructions)

Now I would like to turn the conference over to Dr. Gutjahr-Loeser. Please go ahead.

Good afternoon and also good morning, and welcome to our Q2 2014 conference call. I am Claudia Gutjahr-Loeser, Head of Corporate Communications and Investor Relations of MorphoSys.

Before we start the presentation, I have to remind you that during the conference call, we will present and discuss certain forward-looking statements concerning the development of MorphoSys's core technologies, the progress of its current research programs, and the initiation of additional programs. Should actual conditions differ from the Company's assumptions, actual results and actions may differ from those anticipated. You are therefore cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof.

With me today are Simon Moroney, our Chief Executive Officer; Arndt Schottelius, our Chief Development Officer; and Jens Holstein, our Chief Financial Officer. Simon will start by giving you an operational overview of the first six months, before Arndt will address the pipeline updates, which was published in the second press release today.

Before we open the call for your questions, Jens will review the financial results for the first six months of 2014. Afterwards, Simon and Jens will be available to answer your questions of these topics.

I would now like to hand over to Simon Moroney.

Thank you, Claudia. And also from me, a warm welcome to the call. Q2 was a busy quarter for us, and there's a lot to talk about today. The increased activity is most visible in the size of our pipeline, which now comprises 92 antibodies in various stages of discovery and development. This is an increase of 9 compared to the end of Q1; six additional partner programs, and three additional proprietary programs. The 92 antibodies comprise two in Phase III development, 11 in Phase II, seven in Phase I, 28 in preclinical development, and 44 in the discovery stage.

As Arndt is with us to talk about our proprietary clinical portfolio, I'll start this time with developments in our partner pipeline. First up is gantenerumab, our HuCAL anti-amyloid-beta antibody being developed by Roche for Alzheimer's disease. As a reminder, gantenerumab is currently in three Phase III trials in prodromal, mild, and genetically predisposed Alzheimer's patients. We expect that the prodromal study will be the first of these to readout, with the results expected in 2016.

Although there is no new data from gantenerumab at this time, Roche recently reported results from a Phase II study of another anti-amyloid antibody, crenezumab. Normally, we would not comment on these results; but as we feel there are many questions on this topic, we feel it is important to make the following point. The results of the crenezumab Phase II studies are encouraging because the data support the importance of testing potential disease-modifying agents, such as beta-amyloid antibodies for Alzheimer's disease, early in the course of the disease.

Of more immediate significance for us is that we are now able to disclose the royalties that we stand to earn on eventual sales of gantenerumab. These are on a tiered scale based on net sales of 5.5% to 7%. I'm sure I don't need to remind you that Alzheimer's disease represents a huge and growing unmet medical need, and that an effective treatment would command a very sizable market. Today's disclosure may be helpful for those of you who wish to estimate how high the potential value of the gantenerumab program could be for MorphoSys.

Turning to the remainder of our partner pipeline, there were several developments during the quarter, which I'll run through briefly. First, our partner Novartis initiated a new Phase II trial of bimagrumab, a HuCAL antibody being developed in various muscle-wasting conditions, in patients following hip fracture surgery. Bimagrumab is currently in clinical trials in five different indications, one in Phase III and four in Phase II.

Our partner Pfizer announced the initiation of a Phase I combination trial of a HuCAL antibody PF-05082566 with Merck's PD-1 inhibitor, MK-3475. The Finder antibody is directed against the checkpoint target 4-1BB. This trial highlights the current excitement in the field of immuno-oncology, and particularly, the increasing interest in combinations of checkpoint therapies. The Pfizer program is just one of several immune checkpoint programs we have with partners and for our own account.

Our partner OncoMed recently made two announcements on programs emerging from our collaboration. The first concerns our antibody program brentuximab that has been placed on clinical hold. Secondly, tarextumab, formally OMP-59R5, has now officially started the Phase II portion of an ongoing Phase I/II trial in pancreatic cancer. In addition to the Pfizer and OncoMed programs that I've just mentioned, promising data was presented at ASCO and AACR on the following programs: Novartis's HuCAL program LJM716, and Boehringer Ingelheim's HuCAL program, BI 836845. In all cases, the data sets presented support the further clinical development of these candidates.

Let's turn now to our proprietary development segment, which I'll open before handing over to Arndt to talk about the programs in the clinic. In June, we announced a new alliance with Merck Serono. This is a distinct type of collaboration for us, which, because of the level of our participation in the drugs to be developed, we include in our Proprietary Development segment. The collaboration is focused on the discovery and development of therapeutic antibody candidates against immune checkpoint targets, with the primary indication being oncology.

We'll use our Ylanthia platform to discover drug leads, and we'll have the option to co-fund development up to the completion of Phase III clinical trials. Merck Serono is solely responsible for commercializing any resulting products.

What's new about this type of deal is that our financial returns could be substantially higher than in our traditional product business. In particular, we stand to receive milestone payments in the low-triple-digit million range should the product be approved in multiple indications in all major markets, and tiered royalty percentages from mid-single-digits to low-double-digits on net sales.

This is an exciting opportunity and exemplifies our strategy of using Ylanthia as currency to enter deals which strengthen our proprietary portfolio. The Merck Serono deal complements the deal with Temple University that we announced at the end of April, which is focused more on target discovery. Related to this, we very recently announced that additional patents had been issued in the US and China on the Ylanthia technology platform.

To complete my part of the presentation, we have a new program, MOR106, in collaboration with Galapagos, which has moved into formal preclinical development. Added to several new discovery programs with a focus on oncology and information, this brings the total number of programs in our proprietary portfolio to nine.

With that, I'll hand over to Arndt for the latest from our programs in the clinic.

Thank you, Simon. And also from me, a warm welcome to the call. As part of the update on our proprietary portfolio, my section of today's call will focus on the clinical programs in order of their stage of development, namely MOR208, MOR103, and MOR202. Let's start with MOR208, our anti-CD90 and antibody.

As many of you know, MOR208 is currently being evaluated in a single searching approach, as monotherapy in Phase II trials and NHL in BALL. Based on the encouraging monotherapy data we saw in the Phase I/IIa trial in CLL, MOR208 is also being investigated in a Phase II combination trial with lenalidomide in this indication. This particular study is an investigator-sponsored trial led by John Birt at Ohio State University. Related to this, we recently announced that the FDA has granted orphan drug designation to MOR208, and that we have received a positive opinion from the EMA for an orphan medicinal product application in CLL for MOR208.

This positive opinion from the EMA has now been confirmed by the European Commission, which has granted orphan drug designation for MOR208 in CLL. These are important regulatory milestones for the advancement of the program.

MorphoSys has prioritized, presenting first clinical data from the NHL trial at a major conference later this year, earlier than previously anticipated. In the trial, four different subtypes of NHL, namely follicular lymphoma, Mantle cell lymphoma, diffuse large B cell lymphoma, and other indolent NHL types, are being investigated. Recruitment in BALL has recently been somewhat behind original plans. And for this reason, we don't intend to present clinical data for this indication in 2014. Notwithstanding this, enrollment is expected to be completed by the end of this year.

Moving on to MOR103, our anti-inflammatory HuCAL antibody targeting GM-CSF, which we have out-licensed to GlaxoSmithKline in 2013. Following the successful completion of the Phase Ib safety trial in multiple sclerosis earlier this year, responsibility for further development of MOR103 is now fully with GSK. With regard to the data from the Phase Ib trial of MOR103 in MS, we are pleased to report today that an abstract covering the results of this trial has been accepted for oral presentation at the ACTRIMS-ECTRIMS meeting to take place in Boston in September.

Clinical development of MOR202 is ongoing with our partner Celgene. And we are extremely pleased about the collaborative spirit of this partnership. Consistent with the views of many in this field, we believe that an anti-CD38 antibody, such as MOR202, will ultimately be used as combination therapy for the treatment of multiple myeloma. With this in mind, we are working closely with Celgene on preparing the combination studies that will follow the ongoing Phase I/IIa study of MOR202.

The focus of future studies will be on IMiD combinations; in particular, on combining MOR202 with pomalidomide, which is the newest immunomodulatory drug to have received regulatory approval. As many of you know, IMiDs have been shown the ability to activate natural killer cells, and thereby facilitate a better ADCC response. Thus, combining our antibody MOR202 with immunomodulatory drugs is an attractive development route.

In support of this study, we have generated preclinical data showing synergy between MOR202 and pomalidomide, and aim to present these data at a major conference before year-end. In the meantime, we continue to round out the data package for MOR202 as monotherapy. Our goal here is to obtain a thorough understanding of the pharmacology of MOR202. And for this reason, we have added two additional treatment arms as amendments to the ongoing Phase I/II study of MOR202 in relapsed refractory multiple myeloma patients.

These study components at a weekly dosing schedule with and without dexamethasone to the almost completed trial of MOR202 alone dosed biweekly. The full details will be posted on clinicaltrials.gov shortly. Our purpose in expanding the Phase I/IIa study is to complete the picture of MOR202 as monotherapy before the start of combination studies. As the now expended Phase I/IIa trial will not be completed until 2015, the companies do not plan to publish any clinical data this year.

That concludes my summary of the operational highlights of the quarter. I'll now hand over to Jens for his presentation of the financial results.

Thank you, Arndt. Also from my end, a warm welcome to our Q2 2014 conference call. As in previously quarterly calls, I will start my report with a recap of the most important financial figures for the first six months of 2014.

Total group revenues from continuing operations amounted to EUR30.5 million for the first six months of 2014 compared to EUR48.2 million in the same period of the previous year. The reason for this decrease were one-time effects in the first half of 2013. In the first six months of 2013, we signed a license agreement with GlaxoSmithKline for MOR103. And, in addition, we received a license payment from Bio-Rad in connection with a sale of MorphoSys's business unit AbD Serotec.

Total operating expenses from continuing operations decreased to EUR30.1 million from EUR31.2 million in the first six months of 2013. Expenses for research and development increased slightly and amounted to EUR23.4 million with personnel expenses and costs for external laboratory services being the biggest cost blocks. The investments in proprietary product and technology development during the first six months amounted to EUR14.9 million as compared to EUR14.6 million in the previous year. We expect investments in proprietary R&D to increase further over the course of the year.

Selling, general and administrative expenses amounted to EUR6.7 million in the first six months of 2014 compared to EUR8.4 million in 2013, with the decrease driven by lower expenses for personnel and external services. In the first six months of 2014, the EBIT from continuing operations decreased to EUR0.4 million in comparison to EUR17.3 million for the same period of the previous year. A net profit of EUR0.6 million was generated by our continuing operations in the first six months of 2014 compared to a net profit of [EUR13 million] in the first six months of 2013.

Let's now have a closer look at our two business segments. Department Discovery segment generated revenues in the amount of EUR22.8 million in the first six months of 2014 compared to EUR27.9 million in the previous year. The segment's revenues from funded research and license fees decreased to 21% -- by 21% to EUR21.4 million, a result of the one-time effect in connection with the sale of AbD Serotec in the first quarter of 2013. Revenues from success-based payments increased to EUR1.4 million in the first six months of 2014 compared to EUR0.9 million in the previous year. Operating expenses in this segment decreased EUR10.2 million.

The Proprietary Development segment achieved revenues of EUR7.7 million in the first six months of this year compared to EUR20.9 million in the same period of 2013. This year, we have revenues in the segment are derived from our core development activities with Celgene in connection with MOR202. Operating expenses in this segment increased from EUR12.2 million in the first half of 2013 to EUR13.6 million this year.

On June 30, 2014, MorphoSys held liquid funds and marketable securities as well as other financial assets in the amount of EUR374.2 million compared to EUR390.7 million on the 31st of December 2013. This decrease was significantly influenced by the repurchase of shares in connection with the Company's LTi program in the first quarter of this year.

Before we open the call for your questions, we would like to reconfirm our financial guidance for 2014. We anticipate total group revenues between EUR58 million and EUR63 million, and a negative EBIT of between minus EUR11 million and minus EUR16 million. We estimate that investments in Proprietary Technology development will be in the range of EUR36 million to EUR41 million, and anticipate the spending for Proprietary Product and Technology Development at the lower end of this range, and consequently the EBIT at the upper end of the guidance range. That means EBIT is expected to be at the EUR11 million level -- minus EUR11 million level, sorry.

Ladies and gentlemen, that concludes my review for the first six months of 2014. And I'll now hand back to Claudia for the Q&A session.

Thank you very much. We are opening now the call for your questions.

(Operator Instructions) Diana Ney, JPMorgan.

Thank you for taking my questions. I have four questions, please. First, in terms of the MOR208 data in NHL, could you confirm that we'll be seeing data across all four subtypes of NHL at the end of the year? And will this data presentation be at the ASH conference?

And then, secondly, with respect to the combination trial for MOR202 with pomalidomide, when can we expect enrollment to begin? And also, is there reason as to why pomalidomide was chosen as a combination partner as opposed to REVLIMID or Velcade, which are more widely used?

And then thirdly, for the ongoing MOR202 trial, you've highlighted that additional cohorts were added into the trial. I'm wondering if there is a reason as to why the monotherapy data couldn't be published earlier ahead of the data from the new cohorts?

And then, lastly, for the MOR106 compound in development with Galapagos, would you perhaps be able to give us more color on the mechanism of action and the disease target? And how long do you think it will take before the drug progresses into the clinical stages of development? Many thanks.

Diana, many thanks for that. It sounds like all four of those questions are actually for Arndt. So we'll hand it over to him.

Yes. Diana, thanks very much. Let me try to remember all four, but then we'll get back. So your first question was about NHL and if we plan to show data on all subforms?

Yes.

Yes, indeed. We have gone through -- as you know, this is a part one and part two trial, and we want to give updates by the end of the year, and would address all subforms. We are not disclosing what, at this time, what results we have seen in the different subforms. So there could, of course, be differences. That's why we have this signal searching approach. But, yes, all four will be addressed by the end of the year. And while we won't be specific what conference -- I mean, you can probably make a good assumption where the most appropriate conference will be.

Your second question was about the choice of pomalidomide for 202. At first, when we expect for those now earlier than anticipated in the course to start? That could be around the end of the year. Why did we choose this with our partner Celgene? First of all, I don't need to explain to you that Celgene is the leader in the field. Of course, has fought long and hard how to position differentiate this molecule.

The pom is kind of a logical combination partner to go for. It is the newest of the IMiDs. It's been shown, of course, to have, like the other IMiDs, strong ADCC-enhancing abilities. Of course, it is in kind of somewhat later lines of therapy that would provide for specific subpopulation to look at 202, and positioning and differentiation potential.

Then, your third question, I believe, was about we have expanded the current cohort. Why don't we show the already available data from the monotherapy part? Maybe just to explain again. What we have done is, we see this as one trial. Indeed, it has been one trial that has been amended; where we have added additional trials to add weekly dosing, as well as dosing plus minus dex. And we would just prefer, as we really look at the full pharmacological package and potential of this molecule to present this as one package. This will happen in 2015 when we have fully enrolled this first part of the study, including those enhanced components with weekly plus minus dex.

And your fourth and final question was about mechanism of action and target of MOR106. I hope you understand that we, at this very early stage, we usually do not disclose mechanism of action and targets. But usually, speaking generically, when we move these molecules in preclinical development, it usually takes about two to three years until we start clinical development. I hope this addresses your questions.

Great. Thank you very much.

Thank you, Diana.

Steve Chesney, Goldman Sachs.

Good afternoon and thanks for taking my questions. Steve Chesney from Goldman Sachs. Several questions, please.

First, on MOR202 and the dexamethasone combination, I'm unclear on why you are choosing to start this combination now. Is it in response to infusion reactions observed in the monotherapy arm? Or is in an effort to boost the monotherapy efficacy?

Secondly, I'm a little bit clearer on the combination study timelines. As Arndt just outlined, I understand pomalidomide combo might start before the end of this year. But with some of the PK work still left to be done, which regimen, i.e., will it be weekly or biweekly? And will it be in combination with dexamethasone or without?

And then, finally, for MOR202 on daratumumab, recently, they've announced that they will move into a front-line multiple myeloma trial. Wondering what your and Celgene's plans are in order to catch up?

And then, if I may, a question on crenezumab. Given the variability of the response that we saw for the various exposures, whether it be via IV or subcutaneous in the ABBY trial, I'm wondering how confident you are in the doses for SCarlet RoAD? And then on top of that, I'm wondering if you have any visibility on the regimen for MArguerite RoAD? Thank you.

Steve, so, this is Arndt. I will take the first three questions, and then crenezumab, hand over to Simon. Thanks for those questions.

So the reason for a dex -- adding these dex cohorts, one, we really wanted to learn the full potential pharmacological of the molecule in monotherapy. As you know, in all of the combo treatments, dexamethasone is used as a backbone. That's why it's added now -- not because of infusion reactions -- added now to lay the basis for these future combo studies where it will be included.

You asked again about the timelines for those IMiD cohorts to start. I did say around the end of the year. You know, it looks like we are -- you know, we, of course, are exploring the weekly, so it could be and it's probably likely we would go for the weekly regimen for those IMiD cohorts.

And then your third question was about the DARA study that has now started in the front-line multiple myeloma, and would we be able to catch up? I would just refer also to the Celgene call that was recently -- we feel very confident with Celgene, our partner. If somebody in the community out there will find paths to bring this to approval quickly, we are very confident that Celgene is able to. And the answer is yes. I think we believe -- Celgene believes we can catch up.

There are multiple ways to do that, find fast approval pathways, not necessarily always going the front-line path. And I have mentioned that there is a focus going on with pomalidomide, which I think will provide ways to differentiate and position this molecule. So it's important that there are many different subpopulations that can be investigated. And it will be also Celgene's plan to find those gaps and close those.

So I hope that addresses your 202 questions.

And Steve, we'll give Arndt a breather, and I'll take the question on crenezumab.

In terms of the response -- and this is simply going off the data that we've all seen from AIC a couple of weeks ago -- the differences in response we saw in the subcutaneous and intravenous studies -- and I think the doses mentioned there were 300 MGs SC, and about 1200 MGs, if I remember correctly, IV. And, of course, I guess we have to allow for the bioavailability of the subcutaneous dose.

And Roche made a point of describing these two doses as high-dose and low-dose. So I think one shouldn't overinterpret the means of administration. It was really just two different dosing levels. And clearly, the effects that they did see, which was in the mild subgroup, was achieved with the higher dose, which is probably, I guess, roughly what you'd expect.

In terms of the regimen for Marguerite Road, what's on clinicaltrials.gov is that it's a subcutaneous administration once every four weeks. And the patients are on treatment for 100 weeks, so basically two years. And at this stage, the actual dosing level has not been disclosed as far as we are aware.

Thank you.

Sarah Potter, Bank of America.

This is Sarah Potter from Bank of America. Just two, please. Firstly on bimagrumab. I wondered if you could give any more color on why the trial in mechanically ventilated patients was abandoned? And why it was replaced with the head fracture study? And if there is any read across we can take from that into the ongoing studies, or even if there's a chance of there to be more studies in them in different patient populations?

And then, secondly, on MOR103, I can see that you've announced the MS data will be presented at ACTRIMS-ECTRIMS. I wonder if you could just provide an update on rheumatoid arthritis? I think you had previously said a Phase II start was possible in 2014, and is this still on the cards? Thank you.

Yes. Thanks, Sarah. Let me take the bimagrumab question, and then Arndt will talk about 103.

Unfortunately, there is really nothing that we can tell you about bimagrumab. We can't give you an answer on why the mechanically ventilated study was discontinued. We are obviously happy than an additional indication has been added. Obviously, as a product targeting muscle-wasting diseases in general, it's probably not surprising that there may potentially be additional indications as well. But at this stage, we have no information regarding what other studies could be added at what time.

But as soon as we learn anything that we can make you aware of, we'll certainly communicate that. I think, as usual, it's best simply to track clinicaltrials.gov is probably the first port of call for information on any of these studies.

And Sarah, in terms of 103 in MS, yes, we are really happy, obviously, that was a successful trial. It shows I think there is sufficient large interest in the community, MS community, for new mechanisms of action, and have this there as an oral presentation.

In terms of your specific questions, timelines for RA, yes, that is still the plan. Of course, GSK can comment in more detail, but this is the information that we have. And nothing has changed to that extent that we do expect the RA IIb trial to start by the end of 2014.

Right. Thank you.

(Operator Instructions) Sachin Soni, Kempen & Co.

My first question is regarding as Alzheimer's. I was a little bit surprised by newfounded enthusiasm here from MorphoSys's side. I know I'm an investor and Roche is there. But could you please help me understand why would you think it would work in a protomer phase, when the signs have moved towards testing the subjective cognitive decline?

And initially, the plan was this antibody would be additive to a base inhibitor, which Roche was doing. And it's not working any more, the base inhibitors on that. So, how do you see it going forward? I mean, removing a beta plaques alone, even if it works, is really going to do a clinical benefit or not? That's one.

And the other one is regarding MOR202. Is there a particular reason to just not reveal monotherapy data when you should have data from clinical subjects by now, given the timeline you set to begin with? Thanks.

Thanks, Sachin. Let me start with the Alzheimer's question, if I understood it correctly. I mean, this is perhaps a kind of question that is better addressed to Roche. But let me have a stab at it anyway.

So it wasn't my understanding, at least, that a base inhibitor was intended to be a combo therapy for an antibody such as gantenerumab. As you know, until now, gantenerumab has only been tested clinically as monotherapy. And although there has been speculation that anti-amyloid antibodies could be used in combinations, to my -- to the best understanding that I have, it's not necessarily a prerequisite or not a requirement.

Third, the thinking behind the approach of going into earlier and earlier stage patients is that you essentially clear plaque before it has the chance to become toxic at levels that it can become toxic. And hence the reason why Roche, already in 2011, started this -- the SCarlet RoAD study in the prodromal patient population.

And we think that actually, the picture that's emerging more and more is consistent with the view that experts have that, if you're going to be effective in treating Alzheimer's, you need to go into the earliest patient population possible. We saw hints of that in the SOLAR study of Lily. We've seen hints of that now in the crenezumab study. So we think that everything is pointing in the direction that suggests that actually gantenerumab is being developed in exactly the right way.

And we hope that -- obviously, we hope that the SCarlet RoAD prodromal study will be successful. And we also note that Roche has added an additional mile study, the MArguerite RoAD study, which all, to our mind, adds up to the same message, which is you need to go into an earlier stage patient population if you're going to have an effect. And the mechanism -- we hope the effective mechanism is clearance of plaque at the earliest stage possible before it can really have a toxic effect.

And Sachin, this is Arndt. I'll take your 202 question. Thank you for that. So, as I explained a little bit earlier, we have now added -- expanded the trial to add a weekly dosing and plus/minus dex. So you might remember we have started with a pure monotherapy study, also without dex. And the purpose here really is to get the full picture of the pharmacology. We would like to share that full picture with you.

We believe that the weekly dosing regimen is the best dosing regimen. We think that adding dex now provides the basis for the later planned in the combos, because it will be part of that. So the real reason is we would like to show you the whole story when we have it. And we'll share that when this part of the monotherapy study, including the expanded course, is fully enrolled.

Sounds good. And Simon -- so I'll go back to you, Simon, after the call. Thanks a lot for answering the question.

Steve Chesney, Goldman Sachs.

Thanks very much for taking the follow-up. I just wanted to touch quickly on guselkumab. I know it wasn't the subject of the update today. But Jansen has recently initiated a trial that's looking at certain HLA alleles in patients from a variety of psoriasis clinical trials. Is that, to your knowledge, a gating factor for the initiation of a guselkumab Phase III? And what is the timeline for the beginning of that trial? Thank you.

So, Steve, to the best of my knowledge, that is not gating on the start of the Phase III. At the time when they released the Phase IIb data, they indicated that they would take guselkumab into Phase III. We are optimistic that that can be this year still, before the end of the year; but we don't have official confirmation on that.

Great. Thanks very much.

Mick Cooper, Edison.

Just one quick question from me. What kind of data should we expect to be presented at ACTRIMS-ECTRIMS on MOR103?

Yes, Mick, let me take that question. This is Arndt. So you might recall the Phase Ib was a safety study. So, primary endpoints is safety. The exploratory later -- actually exploratory activity. So what you should expect is a safety readout from a safety study.

But given that it's a oral presentation, should we expect a bit more?

You know, I think the best is really to expect the -- mainly the safety study -- the safety data. I think one has to maybe just explain the oral presentation, which, of course, we are really pleased. But I think it's very understandable that there is great interest, as I said before. I mean, of course, this is also kind of a busy field, but a really novel mechanism of action that has not been explored. We know macrophages play a big role in MS. So anything, any work like this substantially to get started to lay the foundation of groundwork, I think is of specific interest.

Okay, thank you.

Thank you.

Victoria English, MedNous.

Yes, Simon -- thank you for taking the questions -- in your opening remarks, you mentioned that you've got 44 discovery compounds at the moment. Are we seeing any flow-through yet from your agreement with Temple? And if not, do you expect to be seeing some impact of this Temple agreement any time in the next 12 months?

Yes. Thanks, Victoria. That 44 doesn't yet include any Temple programs. It's just a little bit too soon. The installation of the technology is just taking place, so they are really just getting going. But we would hope that the interesting targets will flow out of that collaboration. On what timescale, it's difficult to say at this point.

Okay. Thanks very much.

Daniel Wendorff, Commerzbank.

Thanks for taking my questions. Two, if I may. And one question on MOR103. And maybe I didn't quite catch it at the beginning during the presentation, but has GSK already made a decision whether to continue the development of the program in MS beyond the Phase I?

And second question on MOR208. And can you update me again on what kind of data you will present in 2014? Thank you.

Yes, Daniel. Thanks for the questions. This is Arndt. So the first one related to MS. Do we have any information from the GSK? That's something we cannot share with you. You would need to ask GSK. It's in their hands. They haven't spoken about that publicly, so I think it's appropriate if you would pose that question to them. There is clearly -- they're moving ahead with RA. And I would suggest maybe just asking that directly.

Then 208, you ask about what kind of data can we expect? So, again, just as a reminder, this is a Phase II study. Where we represented of the Phase II, the difference of forms of NHL, these four subforms that we talked about. And as I said, previously, we will share data of those subforms, which, of course, could be different. But we will speak about the first part of that -- studies in those different subforms that we have concluded.

Thank you

(Operator Instructions) Igor Kim, Close Brothers Seydler.

I have just one short question regarding your royalties on gantenerumab. You said that -- I appreciate that you specified the range. It's just -- the question is, what does it depend on? Whether it's going to be at the lower range of the guidance of 5% -- 5.5% or at the upper range of 7%? Thank you.

Yes, Igor, thanks for the question. It's a tiered structure that's common in the industry, which basically means that it's linked to product sales. So, product sales reach X, then the lower royalty rate is applicable; if product sales reach Y, then a medium royalty rate is applicable; and if product sales reach Z, then a higher royalty rate is applicable.

Okay. Very clear. Thank you.

Thank you.

Thank you. We have no further questions coming through, so I will now hand back over to Dr. Simon Moroney to wrap up today's call.

To complete the call, I'd just like to remind you of the key take-home messages. First, our therapeutic antibody pipeline is bigger and more advanced than ever before. The sheer size of this pipeline means that news flow is increasing, and the medical and commercial prospects of certain programs are becoming clearer, as exemplified by the disclosure of the royalty rate and our relationship with Roche around gantenerumab.

In addition, we continue to advance our proprietary portfolio with clinical data from two of our programs to be presented before the end of this year. And finally, our development of Ylanthia is paying off, as we utilize this technology as currency to build value into our proprietary product portfolio over the longer-term.

That concludes our call. If you would like to follow-up with us directly, we are in the office for the remainder of the day. Thank you for your participation on the call and good bye.

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