Business Ethics and Compliance

This chapter deals with MorphoSys’ compliance organization and anti-corruption strategy, bioethics in preclinical research as well as in clinical development, and selling practices and labeling.

Compliance Organization and Anti-Corruption

We are committed to good corporate governance practices which include the highest standards in business ethics and compliance as set up in our ›› Code of Conduct. For further information please also see our ›› Corporate Governance Report 2020.

Our Global Compliance Committee comprises three Management Board members, the President of MorphoSys US Inc. and four executives in the legal, compliance and human resources functions. The Committee meets quarterly and is available to our employees as a point of contact at all times. The Head of Global Compliance, who also chairs the Global Compliance Committee, coordinates the different aspects of MorphoSys’ Compliance Management Program (CMP). Please see the following figure for details of our CMP.

Our maxim “Integrity in all we do” sets the direction for all our business activities. Our CMP adheres to state-of-the-art requirements and addresses anti-bribery and anti-corruption topics in line with our corporate culture, our values and applicable internal and external regulations. It is set up to protect patients and investors as well as MorphoSys as a company, its reputation, and to support business continuity and sustainable growth.

Our goal is to nurture the culture of integrity and compliance and prevent compliance violations as far as possible through continuous risk assessment, monitoring of our activities and training of all our employees.

Compliance Management Program (CMP)

Focus in 2020

In 2020 our main focus was to support all Monjuvi® (tafasitamab-cxix) launch activities in the U.S. in line with all relevant ethical and compliance standards. We built a compliance function for our U.S. subsidiary MorphoSys US Inc., complementing the existing processes in our headquarters in Germany. The local U.S. Compliance Management Program comprises all necessary elements, such as a local Compliance Committee, policies, risk assessment and training, to keep the organization compliant with all relevant regulations and to support our development and commercialization plans in the U.S., including the launch of Monjuvi.

In the fourth quarter of 2020, we conducted a compliance risk assessment which included several interviews with MorphoSys employees in Germany and the U.S. as well as an online survey based on a tailored risk register. A detailed evaluation is ongoing and appropriate mitigation measures are being developed and implemented.

In addition, we continuously improved our policies, processes and training based on the data analysis of the compliance risk assessment, monitoring results, internal audits and feedback from other departments. This led, for example, to a newly created social media policy that was rolled out, and which employees were trained to comply with.

Special attention was paid to training in the year under review. This is a result of the rapidly growing number of employees at MorphoSys who need to be trained to the Group level of compliance and corporate culture in order to be able to operate according to our ethical standards. The global COVID-19 pandemic posed a particular challenge, as face-to-face interactions were limited and we needed to switch to virtual engagements for all training. An e-learning on the Code of Conduct has been very well received by employees throughout the Group and has already been successfully completed by a vast majority of the workforce.

In November 2020 we launched a campaign for the “Compliance Week 2020” with the goal to raise awareness of the topic among all employees. The campaign was accompanied by internal and external communications from top-management, internal presentations, videos and giveaways educating colleagues about the importance of behaving with “Integrity in all we do.”

In the reporting year the Global Compliance department implemented an integrity line hosted by an external provider. This electronic incident management system allows employees to report any compliance concerns in four languages, along with having the option to be anonymous. Every employee has been trained on how to use this system. The non-retaliation principle is reflected in the respective policy. The MorphoSys Compliance department reviews potential compliance cases, escalates them to the respectively responsible local or global Compliance Committee where necessary, and manages investigations and follow-up actions, where required, in line with the respective policies.

The „Compliance Week 2020“ campaign was launched to raise awareness for „Integrity in all we do“

As an external benchmark, we use the Seven Elements of a Compliance Management Program as communicated by the Office of Inspector General (OIG), the updated Guidance 2020 of the U.S. Department of Justice, as well as applicable EU Directives and regulations. In addition, there are Entity Level Controls in the framework of Sarbanes-Oxley Act (SOX) controls addressing key compliance elements on a regular basis. These indicators are constantly monitored and improved.

One of our priority projects for 2021 will be the rollout of a transparency and disclosure system to seamlessly collect and report the spend under the U.S. Open Payments Act (“Sunshine Act”) and related regulations on a federal and state level. Both MorphoSys AG and MorphoSys US Inc. are subject to this reporting. Data collection will start in 2021; the first federal report is due in 2022. The system has already been set up and is currently in the test stage.

Bioethics in Preclinical Research

Founded in 1992, MorphoSys has almost 30 years of experience in biotechnological research. Our work on antibody discovery and research on behalf of pharmaceutical partners as well as for our proprietary portfolio has always been guided by the highest ethical standards.

As European and international legislation requires animal testing to determine the toxicity, pharmacokinetics and pharmacodynamics of drug candidates, we as a biopharmaceutical company cannot forgo this type of testing. Animal testing for our drug candidates is outsourced to contract research organizations (CROs) as we do not have laboratories suitable for this type of research.

As part of our product development activities, we award contracts for animal studies in accordance with the 3Rs principle of animal welfare (Replace, Reduce, Refine) as set out in national, European and international regulations. We aim to improve animal welfare by closely monitoring the adherence to the 3Rs principle. The principle describes the use of methods in research which replace the use of animals where possible, which enable researchers to obtain the same level of information from fewer animals (reduce), and which alleviate or minimize potential pain or distress for the animals (refine). We have established a quality assurance system with written standard operating procedures (SOPs) that are continuously updated to ensure that we work only with those CROs who comply with local, national and international guidelines and animal welfare regulations.

The institutions we work with also need to ensure that they are complying with the ethical principles and legal requirements involving animal research. In certain circumstances, these facilities are required to have a Good Laboratory Practice (GLP) quality assurance certificate. These steps are intended to help fulfill our moral obligation to treat animals respectfully as well as our legal obligations. On-site visits are also conducted with the scope of audits to check the contract research institutes’ test centers, the training and competence of the responsible staff and animal welfare.

The department is in regular contact with the Head of Research, who reports to the responsible Management Board Member for Research and Development.

Focus in 2020

In the reporting year we continued to strictly apply the 3Rs principle of animal welfare which is tracked by various metrics. All scientists working in the preclinical research area are instructed in regular meetings to comply with this principle.

Due to the COVID-19 pandemic, one CRO audit planned for the reporting year had to be postponed to January 2021.

Bioethics in Clinical Development

We conduct clinical trials in accordance with the ICH Harmonized Tripartite Guidelines for Good Clinical Practice (ICH-GCP), with applicable local regulations and with the ethical principles laid down in the Declaration of Helsinki. At MorphoSys, we make it a priority to protect the rights, safety and well-being of all participants involved in clinical trials. Clinical trials are only initiated after the Independent Ethics Committee (IEC)/Institutional Review Board (IRB) and/or regulatory authorities give written approval or a favorable opinion as required. In addition, written informed consent of clinical trial participants must be obtained prior to their participation.

Our Clinical Pipeline

Focus in 2020

With the accelerated approval of Monjuvi by the U.S. Food and Drug Administration (FDA), our first proprietary drug, in July 2020, MorphoSys became a fully integrated biopharmaceutical company. The FDA approval was based on data from the MorphoSys-sponsored Phase 2 L-MIND study (MOR208C203), an open label, multicenter, single-arm trial of Monjuvi in combination with lenalidomide as a treatment for adult patients with relapsed or refractory (r/r) diffuse large B-cell lymphoma (DLBCL).

Receiving approval based on a single-arm study without a comparator arm required highly innovative approaches to drive clinical development. The contribution of tafasitamab to the activity of the combination was supported by the efficacy of tafasitamab monotherapy in an r/r DLBCL cohort from the MOR208C201 study. With regards to the activity of lenalidomide, MorphoSys chose to follow a real world data approach via an observational retrospective study (MOR208C206, RE-MIND). The study was designed to characterize the effectiveness of lenalidomide monotherapy in the treatment of r/r DLBCL and to compare the effectiveness of lenalidomide monotherapy with the efficacy outcomes with tafasitamab + lenalidomide therapy. The efficacy data of the L-MIND trial was considered by the authorities in the context of results observed in the RE-MIND study and literature reports regarding the activity of single agent lenalidomide.

Due to the global COVID-19 pandemic, MorphoSys took a variety of factors into consideration, such as a potential adaptation of clinical trials due to restrictions on visits to healthcare facilities, increased demands on healthcare services and changes in the availability of study personnel. MorphoSys continuously monitored the situation and took appropriate decisions on a case-by-case basis to ensure the safety of patients, study personnel and other stakeholders, as well as to safeguard data integrity.

Patient enrollment for all ongoing tafasitamab studies in the reporting year continued as planned. Patients with DLBCL suffer from a life-threatening disease that requires treatment and usually does not allow a delay in therapy. However, a potential delay in recruitment cannot be ruled out due to the factors mentioned above.

Patient enrollment for the M-PLACE study with felzartamab (MOR202), which had been temporarily paused due to the COVID-19 pandemic, was resumed in the second quarter of 2020.

Selling Practices and Labeling

The FDA approval and U.S. launch of Monjuvi was a milestone in the reporting year. In January 2020, MorphoSys and Incyte entered into a collaboration and licensing agreement to further develop and commercialize the drug globally. Monjuvi is being co-commercialized by Incyte and MorphoSys in the U.S. Incyte has exclusive commercialization rights outside the U.S.

The Monjuvi launch also brought anticipated changes in the organizational structure of MorphoSys, including the implementation of completely new functions and departments along the Company’s value chain.

In particular, marketing and sales structures had to be established starting in 2019 – a process that has continued throughout 2020. By building up a highly qualified team of experts, we wanted to ensure that we meet all relevant standards of business ethics and compliance.

To adhere to good commercial practice, Review Committees (RCs) have been established to review and approve all commercial materials and tactics. An internal RC focuses on MorphoSys materials only, a second joint RC is set up together with our partner Incyte and consists of representatives of both companies focusing on reviewing and approving joint materials and activities. Any sales and marketing materials must be reviewed and approved by the RCs prior to submission to the health authorities.

The formal training of our sales representatives is a cornerstone of our strategy when it comes to business ethics and compliance in this field. Each representative undergoes detailed training on the product and disease state. Successful certification is required before they can begin to engage with healthcare professionals. A learning management system tracks training progress and certification. In addition, our sales representatives are trained in all relevant compliance and legal policies by the MorphoSys compliance and legal teams.

Regarding product labeling, the balance of benefit and risk is always displayed in any promotional materials. As this is the main information that can be shared with prescribers, we attach great importance to ensure that all relevant information is included in all promotional materials to achieve the highest quality standards.

Focus in 2020

Our focus in 2020 was the ongoing refinement of the organizational structures as outlined above. Training courses for sales representatives were conducted and their progress was monitored. The measures implemented in the reporting year support us on our growth path as a commercial-stage biopharmaceutical company.

Major milestones for MorphoSys in 2020 were the FDA approval and U.S. launch of Monjuvi