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MorphoSys AG (NASDAQ:MOR)
Q3 2020 Earnings Call
Nov 12, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

We will start now. So, ladies and gentlemen, welcome to the MorphoSys Third Quarter Interim Statement 2020 Conference Call. 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. Julia Neugebauer. Please go ahead.

Julia Neugebauer -- Director, Investor Relations

Ladies and gentlemen, good morning, good afternoon or good morning. My name is Julia Neugebauer, Director, Investor Relations at MorphoSys, and it's my pleasure to welcome you to our third quarter 2020 financial results and operational update conference call. Joining me on the call today are Jean-Paul Kress, CEO; Jens Holstein, CFO; Malte Peters, Chief Research and Development Officer; and Roland Wandeler, Chief Operating Officer.

A press release was issued yesterday with our third quarter 2020 financial results and business update. This can be found on our website, along with the presentation for today's webcast.

Before we begin, I'd like to remind you on Slide 2 that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for the commercialization of our products and our development plans, the impact of COVID-19 on our business and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in MorphoSys' 20-F and Annual Report or for the year ended December 31, 2019 and from time to time in other SEC documents of MorphoSys.

It is important to keep in mind that our statements on this webcast speak as of today. On Slide 3, you find the agenda for today's call. Jean-Paul will begin with an overview of corporate highlights from the third quarter, followed by Roland, who will provide a commercial update, then Malte will discuss our R&D activities before turning the call to Jens for a summary of our third quarter and nine months financial results. Following these prepared remarks, we will open the call for your questions.

With that, I will now hand the call over to Jean-Paul.

Jean-Paul Kress -- Chief Executive Officer

Thank you, Julia. Good day, everyone, and thank you for joining us to discuss the considerable progress we have made over the past month, as we transition to a commercial company with a sizable clinical development pipeline and multiple partnerships worldwide.

In the third quarter of 2020, we achieved great progress in all operational areas, ranging from commercial to clinical development, to research. The approval of Monjuvi marked MorphoSys' transformation into a fully integrated biopharma company, aiming to muster every step of the value chain. I am also very excited about two deals that will enhance our clinical development and our research capabilities. Our agreement with Xencor adds to our tafasitamab backbone strategy, while the in-licensing of an innovative technology from Cherry Biolabs complements our research portfolio.

Moving to Slide 6. The third quarter of 2020 was highlighted by the FDA-accelerated approval of Monjuvi as a treatment for non-transplant-eligible relapsed or refractory diffuse large B cell lymphoma or DLBCL, which represents the FDA's first approval for a second-line treatment in this indication. Since approval, our teams have been laser-focused to bring Monjuvi to patients suffering with this deadly cancer, who have limited treatment options. We are very pleased by Monjuvi's early strong momentum and initial uptake.

Despite the challenge we faced with a market introduction during the COVID-19 pandemic, our launch is fully on track and has generated revenue of $5 million or EUR4.4 million in the first seven weeks of launch. During our KOL event in September, we provided an initial guidance range estimating the peak potential of Monjuvi in relapsed or refractory DLBCL in the U.S. to be between $500 million and $750 million, given the patient population and the duration of therapy. Roland will provide more color on the launch and the accelerated momentum we have seen since Monjuvi's approval.

We believe Monjuvi has the potential to transform the standard of care in DLBCL, given its approved indication, combinability and accessibility. Ultimately, our aim is to improve cure rates in first-line DLBCL, knowing that each year approximately 30,000 patients are diagnosed in the U.S. alone. This is just the beginning for tafasitamab as a backbone in DLBCL, and we believe it offers significant opportunities as a pipeline in a product and for growth into additional indications.

Speaking to other recent news, yesterday, we announced that we signed an agreement with Xencor to develop tafasitamab in combination with Xencor's bispecific CD20xCD3 antibody, plamotamab. Executing on our backbone strategy, this agreement supports our ongoing efforts to expand the use of tafasitamab into new treatment lines and indications, including frontline DLBCL as well as follicular lymphoma. Our aim is to establish tafasitamab as the combination partner of choice in hemato-oncology, and we have further interest from other companies who wants to combine tafasitamab with their assets.

Moving now to Slide 7 on the progress we have made with our broader pipeline. We continue to advance the development of felzartamab, our anti-CD38 antibody, in an autoimmune indication called autoimmune membranous nephropathy. Patients with this diagnosis have a high unmet medical need, could develop end-stage renal disease and ultimately require dialysis or kidney transplant. With an anti-CD38 antibody, we specifically target plasma cells, the source of the autoantibodies and therefore, potentially provide a targeted treatment for patients. Malte will provide additional details on this program later in the call.

Moving now to Tremfya, which continues to provide an increasing royalty stream. Tremfya was approved for the treatment of adult patients with active psoriatic arthritis in the U.S. and Canada. Earlier this year and in October, our partner Janssen announced a positive opinion from the CHMP, recommending the expanded use of Tremfya for the treatment of adult patients with active psoriatic arthritis in the European Union. We are very encouraged by Janssen's commitment to broadly develop Tremfya beyond rheumatoid arthritis or RA into other indications. Just recently, Janssen presented interim data from the GALAXI 1 study, which showed encouraging results in patients with Crohn's disease.

Turning now to otilimab, GSK has resumed the enrollment of patients into the ContRAst program after it had also been posed due to the COVID-19 pandemic. As a reminder, ContRAst is a Phase 3 program evaluating otilimab in patients with moderate-to-severe RA in three pivotal studies. GSK is also conducting a clinical trial called OSCAR to evaluate the efficacy and safety of otilimab in patients with severe pulmonary COVID-19-associated disease. Up to 800 patients are expected to be enrolled in the study, with data anticipated in the first half of 2021.

I am also very excited about building on our research strength and adding a new innovative technology to our portfolio. Yesterday as well, we announced a licensing agreement with Cherry Biolabs, which gives us access to the Hemibody technology for the development of next-generation T-cell engager molecules, building upon our CyCAT platform. We are excited to build one of our new next success stories on the basis of this pioneering technology. Again, Malte will provide more details later in the call.

Our agreement with Cherry Biolabs strengthens our innovative technology portfolio, and our new collaboration with Xencor underscores our confidence in tafasitamab as the backbone for new combinations and the potential new standard of care in DLBCL. With these advances and more to come, we are at the beginning of a new phase, investing in new technologies, adding to our portfolio and establishing tafasitamab as the combination partner of choice.

And finally, we reported strong financial results in the third quarter with Group revenue increasing 76% to EUR22 million. This solid performance was a result of growing revenues, primarily from property development and supported by the revenues from the initial seven weeks of the Monjuvi launch, along with royalty income from our partnered programs such as Tremfya. Importantly, we have a strong balance sheet from which to invest into the broad development of tafasitamab and our diversified pipeline in order to enhance shareholder value.

With that, I will now turn the call over to Roland for a commercial update on Monjuvi. Roland, please.

Roland Wandeler -- Chief Operating Officer

Thank you, Jean-Paul, and hello, everyone. It's good to be speaking with you today. This is the first time we're sharing Monjuvi earnings with you, and I'll be talking about the strong momentum we've built in the market with our Monjuvi launch. Together with our partner Incyte, we have delivered on a rapid speed to market. Our teams have been laser-focused with a singular mission to bring Monjuvi to patients, and we are pleased with what we are seeing.

Moving to Page 9 to take a look at the indication. Monjuvi, in combination with lenalidomide, was approved for the treatment of adult patients with relapsed or refractory diffuse large B cell lymphoma not otherwise specified, including DLBCL arising from low-grade lymphoma, and who are not eligible for autologous stem cell transplant. Speaking to efficacy, Monjuvi produces a meaningful and durable response to treatment. FDA approval was based on data from our L-Mind study, showing a best overall response rate of 55%, a complete response rate of 37%, and a median duration of response of 21.7 months. Note that this duration of response is based on the November 2018 L-Mind data and as Malte will highlight in his part, this duration of response is further extended with our longer-term data.

As we have shared before with you, our Monjuvi label translates into a set of important takeaways in our conversations with physicians. Monjuvi is the first and only second-line therapy resulting in a high number of complete and durable responses across subgroups. The combined safety and tolerability profile supports a paradigm shift toward treating patients through progression, potentially allowing for long-term disease control, and Monjuvi is accessible to patients in both community care and academic settings as an off-the-shelf product administered by a standard IV infusion that is easy to administer and does not require hospitalization or heavy monitoring. We are hearing consistently from physicians that Monjuvi's accessibility is a strong advantage, especially in community care settings.

Moving to Slide Number 10. As Jean-Paul shared, Monjuvi net sales were $5 million and fully in line with our launch expectations. As you know, Monjuvi received accelerated FDA approval on July 31 and the first patient was infused on August 13. The $5 million in net sales reflect orders from 140 sites of care from that time through the end of September, confirming the early momentum in the marketplace. As you look at the sales figure, please keep in mind that our treatment approach is different from other treatments in this space. Patients who are being infused with Monjuvi will be treated through progression, compared to other DLBCL treatments that are front loaded.

Our L-Mind data indicates how many of the patients starting treatment in Q3 will be able to potentially continue to benefit from Monjuvi into the coming quarters and years.

Moving to Slide 11 and looking beyond September. We have seen momentum in account uptake further accelerate in October. By the end of October, more than 250 sites of care have ordered and 80% of these accounts have already reordered. Looking at the account dynamics in more detail, we saw strong early uptake in leading academic centers right from launch. As a matter of fact, more than 90% of NCCN institutions have now approved Monjuvi for use and placed an order. Momentum is now shifting more to community care as we gained breadth in key networks with approximately 65% of accounts in October coming from community care, in line with our expectations. This speaks to the broad accessibility of Monjuvi in both academic and community settings. Overall, as we look at our account dynamics, we are on track and feel encouraged by the early adoption and continued interest in the market.

Moving to Slide Number 12. We've also had good momentum on the payer and reimbursement front. Payer coverage has been rapid and robust. Our teams early efforts set us up to receive the first payer confirmation for coverage to label within two weeks from launch. Since then, we have seen universal coverage for Monjuvi within both commercial and government channels and have not heard of any cases where coverage for Monjuvi has been denied for clinical reasons. In fact, we expect the vast majority of lives to be covered in the first year of launch.

Looking at key prescriber accounts, which include larger health systems and community oncology groups, we've made significant progress achieving nearly 90% formulary approvals so far in our top 30 accounts. This reflects the high unmet need and was aided by the early inclusion of Monjuvi in the NCCN guidelines. Also, more than 70% of EMR order sets were added in top 30 accounts, supporting pull through to enable broader uptake across the networks.

In addition to payer and account coverage, we understand how important it is to help remove barriers to patient care. At MorphoSys, we are committed to supporting appropriate patients throughout their access and treatment journeys and together with our colleagues at Incyte, we launched a robust patient support program called My MISSION Support. This program offers numerous services and resources to eligible patients who are prescribed Monjuvi and their caregivers.

During these unprecedented COVID times, we know patients may need extra support. For this reason, our My MISSION Support patient support program has launched a new initiative that supplies protective equipment of Monjuvi patients in need and provides them with helpful resources to receive the treatments without interruption during the pandemic. This program is one small part of our commitment to patients, who are always at the center of what we do. Since launch, we've had close to 200 patients and caregivers reach out to us to benefit from the valuable support to resources offered through My MISSION Support.

Moving to Slide 13. Because of COVID-19, we all know operate in a different reality. And during these unprecedented times, the Incyte and MorphoSys teams continued to successfully adapt and overcome COVID hurdles using digital technologies to meet healthcare professionals where they are and drive individual and peer-to-peer engagement.

While COVID impacts the absolute number of health professional engagements our teams have, we are extremely pleased to see the traction we have build across all channels to create strong awareness and interest from physicians at levels that exceeded our expectations during the pandemic. As we look at these last weeks, we see that our efforts to continue to engage with HCPs are effective and result in sustained leadership in share of voice with greater than 50% for Monjuvi, well ahead of other treatment options in this space. This shows that physicians want to hear about Monjuvi and is a testament to the team's ability to get to physicians and get our message across.

And moving to Slide 14. During interactions that we have with healthcare professionals, we continue to hear that they are excited about this important new treatment option on behalf of patients. Specifically, they are telling us that they are appreciating the overall response rate and the duration of response, they value the tolerability and safety profile that Monjuvi provides to patients, and they appreciate the accessibility and ease of use of Monjuvi in community and academic settings, especially during the COVID pandemic.

We are certainly still early in the launch and recent COVID dynamics add a degree of uncertainty for the winter months for all of us, but our teams remain laser focused to continue driving awareness of Monjuvi with healthcare professionals and we continue to be encouraged by the strong uptake and increasing momentum we are seeing after our first month in the market. It shows to us just how strong the unmet need for Monjuvi is and the promise it brings to patients.

And with that, I'll turn the call over to Malte.

Malte Peters -- Chief Research and Development Officer

Thank you, Roland. In addition to the successful launch of Monjuvi, we continue to expand the clinical development of tafasitamab. Our ambition is to improve cure rates in DLBCL in all treatment lines and bring this medicine to as many patients as we can and as soon as we can.

As Jean-Paul noted, Monjuvi is the only FDA-approved second-line treatment for patients with relapsed or refractory DLBCL, who are not eligible for stem cell transplantation. We believe that based on the clinical data complemented by its safety profile and accessibility, Monjuvi is well positioned to become a preferred treatment option for second-line patients with DLBCL.

Long-term data from the L-MIND study were presented earlier this year at the annual meeting of the European Hematological Association or EHA. These data demonstrated an unprecedented durability with a median duration of response of 34.6 months, which equals to almost three years, and a median overall survival of 31.6 months. These data are part of the MAA, their European dossier, which was validated earlier this year. To complement this data, we initiated a new real world data study called Re-MIND 2. This study is collecting data not only from DLBCL patients treated with lenalidomide alone, but also from DLBCL patients being treated with other regimens.

We are also developing tafasitamab as a first-line treatment for DLBCL, and we have completed enrollment of our Phase 1b/2 study one month ahead of schedule, which shows the great interest of the community in this potential treatment option. We will present initial data from this firstMIND study at the upcoming ASH conference later this year. Data from this study is the basis for our pivotal Phase 3 study frontMIND.

There is a high unmet need for DLBCL patients in the first-line setting, especially for high-risk patients. Newly diagnosed DLBCL patients with an IPI score of 3 to 5 are considered high risk. For these patients, the chances of cure with R-CHOP alone are less than 50%. frontMIND will enroll up to 900 patients and will evaluate the tafasitamab/lenalidomide combination, in addition to R-CHOP, compared to R-CHOP alone. We are on track to start this study early next year.

Beyond DLBCL, the next indication we are exploring in a pivotal trial is relapsed or refractory follicular lymphoma. We expect to enroll approximately 500 patients into this randomized Phase 3 study and expect to initiate the study in the early part of next year.

We are confident to achieve our goal of developing tafasitamab as the backbone for the treatment of DLBCL across all therapeutic lines. Our agreement with Xencor is another step toward establishing tafasitamab as the combination partner of choice for DLBCL and beyond. We are excited to evaluate the combination of tafasitamab with Xencor's bispecific CD20xCD3 antibody, plamotamab, in patients with relapsed/refractory DLBCL, but also in patients with frontline DLBCL and relapsed or refractory follicular lymphoma.

As Jean-Paul mentioned earlier, we are in discussions to evaluate further opportunities for combination treatments of tafasitamab. Our goal is to bring tafasitamab to more hematological cancer indications where CD19 is associated with a mode of action of the disease. This year's ASH meeting will feature several abstracts providing insights into our scientific and clinical activities to evaluate the efficacy and safety of tafasitamab in B cell lymphoma. I already mentioned the publication of initial data from our firstMIND study in frontline DLBCL. We will also present additional data from the L-MIND study that support the remarkable durability of responses. And for the first time, we will report on CD19 expression analyzed in tumor biopsies of DLBCL patients before and after treatment with tafasitamab.

Now moving onto our other pipeline assets, where we are very pleased with the progress we have made to date in 2020. Felzartamab, our anti-CD38 antibody, previously known as MOR202, is currently being evaluated in the M-PLACE study in patients with autoimmune membranous nephropathy. We have resumed the enrollment of patients into the study after a pause due to the COVID-19 pandemic and are about to complete the safety run-in phase. After completion of the safety run-in phase, we expect that enrollment speed will significantly increase. We will share data from the study at one of the upcoming medical conferences.

Also, our partner I-Mab is developing felzartamab for the treatment of multiple myeloma and is currently running two pivotal trials.

As Jean-Paul touched upon, this week, we announced a licensing agreement with Cherry Biolabs. This agreement gives MorphoSys access to Cherry Biolabs' innovative Hemibody technology. This technology could strongly increase specificity and selectivity of tumor targeting and enable a substantially enlarged therapeutic window. The core of this technology is a T-cell engaging molecule that is split into two complementary fragments.

We use CD3, a clinically well established target, for the engagement of T-cells. This is combined with the concept of dual tumor targeting. One fragment of the split T-cell engager is fused to one tumor antigen targeting antibody, the other fragment to a different tumor antigen targeting antibody. These two molecules called Hemibodies, circulate freely in the bloodstream and activate T-cells only once they bind to the androgen combination expressed on cancer cells. Both antigens have to be present on the tumor cell surface for the T-cell engager to become functional and to activate the T-cell. This licensing agreement is part of our strategy to enhance our research efforts and to focus on next-generation modalities for the treatment of cancer and autoimmune disorders.

With that, I'll now hand the call over to Jens for a review of our financial results.

Jens Holstein -- Chief Financial Officer

Thank you, Malte. The third quarter was yet another very successful quarter for MorphoSys, as we posted strong revenue growth and maintained a strong balance sheet while supporting a robust clinical development pipeline.

Let's turn now to Slide 21. Group revenues in the third quarter of 2020 amounted to EUR22 million, containing for the first time revenues of $5 million or EUR4.4 million from the sale of Monjuvi. Revenues also include success-based payments of EUR10.2 million, primarily from Janssen. As in previous quarters, the contractual royalty reported from Janssen for Tremfya has not been received yet. Tremfya royalties booked in Q3 2020 were estimated based on a public announcement made by Janssen J&J. Final numbers can still slightly vary due to the foreign exchange rate effects. In addition to Monjuvi revenues, the Company have been able to generate revenues from different collaborations such as Incyte as well as I-Mab in lymphoma[Phonetic].

Looking at expenses, our total operating expenses in the third quarter of 2020 increased to EUR84 million. The strong increase reflects our investments in the expansion of MorphoSys US Inc., the launch of Monjuvi, as well as the expanded clinical development for tafasitamab and felzartamab. The expenses for research and development rose to EUR34.2 million, largely driven by expenses for external laboratory services and personnel.

Selling expenses increased to EUR32.9 million and general and administrative expenses to EUR13.3 million, both driven by higher personnel expenses and expenses for external services in association with the Monjuvi launch. Selling expenses also comprised expenses for services rendered by Incyte in connection with the joined U.S. activities as we report all commercial costs for the sale of Monjuvi in our P&L.

Earnings before interest and taxes amounted to minus EUR61.7 million as a result of the higher expenses across all categories. Our consolidated net loss after taxes amounted to minus EUR65.3 million in the third quarter of 2020. Earnings per share were minus EUR2.

Slide 22 now presents a summary of our segment reporting for Q3 2020. As you can see in our Proprietary Development segment, MorphoSys reaches -- researches and develops its own drug candidates, focusing on cancer and inflammation. In Q3 2020, this segment recorded revenues of EUR10.5 million versus EUR1.4 million for the previous year. The increase primarily reflects product sales from Monjuvi as well as further revenues related to the Incyte collaboration.

Operating expenses in the Proprietary Development segment amounted to EUR72.3 million as compared to EUR32 million in Q3 of last year. The elevated expenses reflect our higher investments for the development of our proprietary programs. Hence, the EBIT of our Proprietary Development segment amounts to minus EUR61.7 million.

In the Partnered Discovery segment, MorphoSys applies its proprietary technology to discover new drug candidates for pharmaceutical companies and thus participate in its partners' development advancements through research and development funding, licensing fees, success-based milestone payments and royalties. Revenues in the Partnered Discovery segment amounted to EUR11.5 million in Q3 2020. The EBIT in our Partnered Discovery segment rose to EUR9.3 million.

Please now move to Slide 23 for the key financials for the first nine months of 2020. Group revenues grew fourfolds to EUR291.7 million from EUR60.7 million in the first nine months of 2019. The increase was mainly driven by the collaboration and licensing agreement with Incyte in the first quarter of this year to further develop and commercialize tafasitamab globally. Part of the $750 million upfront payment and of the $58 million premium was accounted for as revenues in Q1 2020 representing its share for the non-U.S. part of the transaction.

Research and development expenses amounted to EUR86.6 million versus EUR75.3 million for the same time period of last year. Selling expenses for the first nine months increased from EUR9.3 million in 2019 to EUR75 million in 2020, and general and administrative expenses from EUR22.4 million to EUR37.2 million.

EBIT strongly increased to EUR101.8 million, compared to minus EUR56.3 million in the first nine months of 2019.

Moving on to the balance sheet on Slide 24, you see that as of September 30, 2020, we recorded total assets of approximately EUR1.38 billion versus EUR496.4 million at the end of 2019. Our liquidity position amounted to EUR987.2 million, compared to EUR357.4 million as of December 31 2019. This liquidity position is reported on the balance sheet under the items cash and cash equivalents, financial assets at fair value through profit or loss, and current and non-current other financial assets at amortized costs.

Not included on our Q3 reporting are the proceeds from the convertible bond issued shortly after the end of the third quarter as you can see on Slide 25. On October 13, 2020, we successfully placed unsubordinated, unsecured convertible bonds due in 2025 in an aggregate principal amount of EUR325 million. The bond will be convertible into new and/or existing no-par ordinary bearer shares of MorphoSys. The convertible bond will be issued at 100% of their principal amount.

Unless previously converted, redeemed or repurchased and canceled, the convertible bonds will be redeemed at the principal amount of October 16, 2025. The convertible bonds were priced with a coupon of 0.625% per annum. Conversion price was set at EUR131.29, representing a conversion premium of 40% above the reference share price. With this multiple times oversubscribed transaction, we have secured a financing at very attractive conditions. More than 130 new and existing MorphoSys investors participated, underpinning the high level of trust in and the continued appeal of the MorphoSys story. The proceeds further strengthened our cash position, which allows us to execute our ambitious growth strategy.

For the financial guidance for the full-year 2020, please move to Slide 26. On October 27, we increased our financial guidance for 2020 and are now expecting revenues in the range of EUR317 million to EUR327 million and an EBIT in the range of plus EUR10 million to plus EUR20 million. Our guidance for R&D expenses remain unchanged in the range of EUR130 million to EUR140 million.

The updated guidance reflects higher revenues from participations and collaborations and Tremfya royalties are expected to be at the upper end of the guidance. In addition, it now also includes revenues from product sales of Monjuvi, following its approval and subsequent launch in the U.S. in the first half of August. This guidance is based on constant-currency exchange rate and does not include any effects from potential in-licensing or co-development deals for new development candidates.

The operational and financial guidance might potentially be impacted by the ongoing global COVID-19 crisis on MorphoSys' business operations including but not limited to the Company's supply chain, clinical trial conduct, as well as timelines for regulatory and commercial execution.

Ladies and gentlemen, at the end of my section, let me finish with a short personal statement. After close to 10 years with MorphoSys, this is my last conference call as CFO of the Company. Before I hand over to Jean-Paul, I want to thank you all for the collaborations, the trust, the good dialogues, we had for all those years.

MorphoSys has undergone a tremendous journey since I joined. When I now depart with Monjuvi and Tremfya on the market, a number of further development candidates in Phase 2 and 3 as well as innovative research platforms, I leave the Company in very good conditions. MorphoSys is known to have a large portfolio for proprietary and partnered compounds and is financially stronger than ever, allowing the Company to grow and create further value in the years to come.

Thanks to all of you. And with this, I will now turn the call over back to Jean-Paul. Thank you.

Jean-Paul Kress -- Chief Executive Officer

Thank you, Jens. I would like to take the opportunity to thank Jens for his dedication to MorphoSys over the last years and the great collaboration. Jens, it has been a true pleasure to work with you and I wish you all the best for your future endeavors.

Moving to Slide 28 for wrap up. The third quarter was a period of significant milestones and achievements for MorphoSys. We are successfully making strong progress across all dimensions of our business, from commercial to late-stage development, to research and innovative new collaborations. We executed on a strong launch of Monjuvi in the U.S. fully in line with our long-term targets, generated strong early momentum in the market, and we continued to be encouraged by the accelerated momentum and enhanced adoption we are creating, which will further grow Monjuvi revenues and broaden our impact to patients in need of new therapies.

At the same time, we continue to leverage and boost the current and potential future royalty stream from our collaborations, from the success of our partners with their respective products such as Tremfya or otilimab, and we are on track with our goal to reach increased financial guidance for 2020. Ultimately, we are driven to transform the standard of care and improve cure rates in DLBCL by leveraging and unlocking tafasitamab's full potential. We have a bold vision to establish tafasitamab as a backbone therapeutic in other indication and the combination partner of choice in hem-oncology.

Our Xencor collaboration is our first step, and we will continue to share our progress with you in the months ahead. In addition, we are progressing felzartamab in autoimmune indications and are expanding our strong R&D portfolio to create long-term success for the Company and shareholder value.

With that, we will now open up the line for your questions. Thank you. Operator?

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from Geoffrey Porges of SVB Leerink. Your line is now open.

Geoffrey Porges -- SVB Leerink -- Analyst

Thank you very much for the questions, and congratulations on all the progress. First on the CD20 collaboration. Could you talk about whether you're free to partner with other CD20 antibodies or bispecifics, since they two seem to be a lot in development? And secondly, do you anticipate that in order to administer the combination, patients will have to be hospitalized?

And then, Jens, I just want to congratulate you on bringing MorphoSys to its current very favorable position, and you've guided to profitability this year. Are you confident that MorphoSys can maintain profitability going forward? Thanks.

Jean-Paul Kress -- Chief Executive Officer

Geoff, thanks for your question. I'll answer the first one, Malte will answer the second one, and Jens will answer the third one. Yes, we are free to partner with any other companies having a bispecific, it was very important for us. Beyond the fact that we actually see a lot of value in this partnership with Xencor, we have a long-term relationship with them. This is obviously guaranteeing a great effectiveness in our collaboration for this. We have promising earlier-stage data on the asset and the combination rationale is very strong between Monjuvi and any CD20xCD3, which would add another layer of effectiveness with their T-cell engagement capabilities. So yes, we are free to operate with any other ones, but we saw this one is actually a very, very meaningful for us. On that -- Malte, can you answer the question on hospitalization or not?

Malte Peters -- Chief Research and Development Officer

Yeah, sure. Yeah. Hi, Geoff. It's, Malte. So the initial clinical studies will certainly occur in -- on hospitalization conditions. As you would normally do this in our Phase 1b setting, remember the two compounds have never been combined. So in the initial stages, of course, patients would come to the hospitals under Phase 1b conditions. And then depending on the safety signals, we would observe and you can then determine how the continuous treatments will occur and if this combination treatment would be appropriate to be administered in an outpatient or in a community hospital setting.

Geoffrey Porges -- SVB Leerink -- Analyst

Great. Thank you.

Malte Peters -- Chief Research and Development Officer

Jens?

Jens Holstein -- Chief Financial Officer

And then, Geoff, first of all, thanks very much for the nice words. Regarding profitability, indeed we turned profitable this year. You might remember many, many years back, we have been profitable for quite a long time actually, and then decided to invest in the assets that we have in our portfolio. Given that we have Monjuvi now in various clinical trials ongoing to make that compound really a big one, not only in relapsed/refractory DLBCL but in other settings as well and in other indications, short term, I would not expect despite the fact that they're increasing revenues of course that we expect coming in, that we will turn profitable in the short time frame. So, we also see it, as you know, on quite some cash with the intention to broaden our portfolio. And therefore, I think that reminds another sort of reason why you should not expect short-term profitable company.

Geoffrey Porges -- SVB Leerink -- Analyst

Great, thanks. Congratulations again.

Jens Holstein -- Chief Financial Officer

Thank you.

Jean-Paul Kress -- Chief Executive Officer

Thank you and next question please.

Operator

The next question is from James Gordon of J.P. Morgan. Your line is now open.

James Gordon -- J.P. Morgan Cazenove -- Analyst

Hello, this is James Gordon here from J.P. Morgan. Thanks for taking the questions. One question on the convertible, please, to start with. So, could you just talk about your intended use of funds? And if M&A or business development is likely to feature, what is the focus or wish list in terms of targets? And I think the comment is just now also about maybe forwarding the portfolio. So that's the first question please.

And the second question is about Q3 revenues in the full-year 2020 revenue guidance. So, you upgraded full-year '20 guidance by EUR37 million in terms of revenues. So how much of the upgrade is for Monjuvi sales-related versus other factors for 2020? And what are the other contributors? And also, could you help us by breaking down the EUR10.5 million of Proprietary revenues that you had this quarter. So the EUR4.4 million is Monjuvi sales. I think you said the majority was -- the rest was coming from Incyte, but if you can clarify exactly what are in fact paying you for and how do you think this is going to evolve say in Q4.

And just finally, Monjuvi, can you tell us how many patients have now had the product commercially, please?

Jean-Paul Kress -- Chief Executive Officer

James, thank you for your question. I'll handle the first one, then Jens will answer the next ones and Roland might type in for the Monjuvi last question. Regarding the convert and aim for the convert, we wanted to be in a position to have the capital and the means to invest when, first of all, on our internal portfolio, you'd probably understand that we have a lot of opportunities ahead of us, together with Incyte, we will also be on Incyte. And we are actively looking at BT opportunities, we just executed on two that we announced today. But at the same time, we are looking at other possibilities to continue to diversify our pipeline and we thought it was the right time to do this move to be ready to act on potential opportunities. Jens, on the guidance?

Jens Holstein -- Chief Financial Officer

Yeah. And so, James, first of all, thanks very much for the questions. So, maybe in terms of a little bit support here, as you've seen, we came in at EUR292 million give or take. Guidance is EUR317 million to EUR327 million. So you talked about EUR25 million to EUR35 million that we would expect for Q4. If you take into account that Tremfya has certain contribution, we booked a bit more than EUR30 million for the first three quarters. Q4, we would expect, given further approval in psoriatic arthritis, and so on that -- this number is -- of EUR10 million on average is the minimum, but rather a lower one, we came to the conclusion that we think that overall the Tremfya guidance ends at the upper end of the range that we have given EUR37 million to EUR42 million.

So you have to take this number into account and deduct it from the EUR25 million to EUR35 million. So the rest is all kinds of other stuff in the call, first and foremost, Monjuvi contribution from the sales of the product in the U.S. The other parts of the usual couple of million milestone payments that you know from from partners that moved compounds into Phase 1, 2 or 3, like we've seen it and now with Novartis as we announced. And there are -- there is FTE funding from collaborations that we have. And first and foremost, there are some revenue contribution from the Incyte collaboration, in that respect, that contributes a few million. And similarly, you have a little bit from our other collaborations as well.

So that's why -- and that explains more or less the third question, the EUR10.5 million question, because as you've seen EUR4.4 million, you made the math, is for the revenues from Monjuvi, but the remainder is from milestone payments/from FTE funding out of the collaborations. I hope that helped.

Jean-Paul Kress -- Chief Executive Officer

And Ronald, I think -- that does help. Thank you.

Roland Wandeler -- Chief Operating Officer

Yeah. James, this is Roland. Regarding new patients for Monjuvi, this of course is a number that our teams are closely looking at. It's also a number, however, that requires triangulation at this moment in the launch, given our weight-based dosing and different timing of initiation so that we do not provide a precise number at this moment in time. Having said that, the number of sites of care that we disclosed in the call gives you, I think, a good reference point of the kind of interest and of the kind of magnitude that we see in terms of new patients initiation.

James Gordon -- J.P. Morgan Cazenove -- Analyst

Thank you.

Jean-Paul Kress -- Chief Executive Officer

Thanks. Next question please.

Operator

The next question is from Jason Butler of JMP Securities. Your line is now open.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Hi. It's Roy in for Jason. Thanks for taking our questions. Just a couple of quick ones. So you -- you're at over 250 treatment sites at the end of October. Can you remind us the number of target sites that you have for the U.S.? And are you ahead of your initial expectations to achieve a given number of orders at those sites? And then, one on felzartamab, MOR202. For membranous nephropathy, how many patients are in the U.S. and the EU? And how many progressed to ESRD? Thanks.

Jean-Paul Kress -- Chief Executive Officer

Thanks, Roy. Roland will take the first part of your question, and probably Malte second part.

Roland Wandeler -- Chief Operating Officer

Yes. Thank you, Jean-Paul. Ryan [Phonetic], as we disclosed earlier, we are looking at about 11,000 healthcare professionals that we have in our target. And these are distributed over thousands of sites of care that we have in the States. Our main focus is of course on those top 30, top 100, top 300 accounts where we have the higher -- highest number of patients. And we are very pleased with the uptake that we saw in the orders we've received from these top accounts. We've also seen more from the periphery in detail from smaller accounts to overcoming as physicians have a patient in front of them where they consider Monjuvi and where they purchased through the channels that Monjuvi is available. And so, also, there we see that we are on a good track to actually get both the demand that we want from our most important top accounts, as well as have the bottom-up demand in the periphery that we expected to see.

Jean-Paul Kress -- Chief Executive Officer

Malte on felzartamab?

Malte Peters -- Chief Research and Development Officer

Yeah. Thanks. I think we are thinking about -- we are envisaging around 10,000 patients with autoimmune membranous nephropathy in the United States. And Roland please chime in or correct me if my memory is incorrect, but I think this is what we have as an assumption for the U.S. population.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Okay, great. Do most progress to ESRD?

Malte Peters -- Chief Research and Development Officer

Yes.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Okay. Thank you.

Jean-Paul Kress -- Chief Executive Officer

Roy, just to complement on that, these patients are mostly treated by all the therapies, all immuno-suppressant very toxic drugs, some with rituximab and many actually end up in ESRD or even a transplant. So, there is a very high unmet need.

Douglas Royal Buchanan -- JMP Securities -- Analyst

Thank you.

Jean-Paul Kress -- Chief Executive Officer

Sure. Next question, please.

Operator

The next question is from Etzer Darout of Guggenheim Securities. Your line is now open.

Etzer Darout -- Guggenheim Securities, LLC -- Analyst

Great. Thanks for taking the question, and congrats on the progress. I guess, just wanted to know if we could see any initial efficacy data at ASH, particularly in the patients that were sort of IPI 3 and 4 in the cohort that should be presenting? And then secondly, just wondered if you had any or any of your partners sort of ran any preclinical studies on the Monjuvi/plamotamab combination? And just wondered to what extent you or your partners have tested the CD20, CD19 co-expression rationale with your combinations? Thank you.

Jean-Paul Kress -- Chief Executive Officer

Thank you, Etzer. Malte will handle your question.

Malte Peters -- Chief Research and Development Officer

So the data that we presented at ASH regarding firstMIND were primarily focused on the safety profile of the two arms combining R-CHOP with tafasitamab alone, as opposed to R-CHOP with tafasitamab and lenalidomide, and we are in the sort of final stages of evaluating the data. And depending on how far we get, we may present some very high-level efficacy data. But remember, it's quite early in the conduct of the study, and patients have not been observed long enough to give a reliable estimate on the CR and PRA. So, we are we are looking at this right now. And depending on what we can say, we will say, but the main focus is really going to be safety for this ASH conference.

Etzer Darout -- Guggenheim Securities, LLC -- Analyst

And Malte on the CD3, CD20, CD19 rationale?

Malte Peters -- Chief Research and Development Officer

Okay. Sorry, I didn't catch the question. Can you repeat please the question?

Etzer Darout -- Guggenheim Securities, LLC -- Analyst

Yeah. Just wondered if you or partners have at all tested sort of the CD20, CD19 co-expression rationale with your own sort of the combination of Monjuvi and plamotamab? Or you sort of just kind of look at the literature, there is some precedents right for combining those two molecules. I just wondered if you had any sort of preclinical experience yourselves.

Malte Peters -- Chief Research and Development Officer

We have some experience regarding CD19 and CD20. And in fact, at ASH we will present some data showing synergistic activity combining tafasitamab and rituximab. I'm looking at these two targets, but we have not, of course, looked at CD20xCD3 bispecific in combination with CD19xCD3. But on the synergistic potential of naked anti-CD19 and CD20 antibodies, we have generated some data in the laboratory, and we will show some details also at ASH this year.

Jens Holstein -- Chief Financial Officer

The important thing in this is during, in addition to Jean-Paul, just that the ADCC and ADCP pathway of Monjuvi plus the T-cell engagement potential of CD20xCD3 are extremely compelling.

Etzer Darout -- Guggenheim Securities, LLC -- Analyst

Well, thank you.

Jean-Paul Kress -- Chief Executive Officer

Next question, please.

Operator

The next question is from Graig Suvannavejh of Goldman Sachs. Your line is now open.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Okay. Great. Thank you for taking my questions. Good afternoon, and good morning. And Jens, just want to thank you for your efforts and best wishes on your next endeavors as well. A couple of questions just on CD3xCD20. So when looking at the Xencor asset, could you just maybe describe kind of your initial thoughts around what you're seeing on the efficacy and safety of that agent as a stand-alone? We've looked at some of the data and how it compares with the other CD3xCD20s. The efficacy seems a little bit modest. And maybe there's some CRS is the big issue for all of these compounds.

Could you just give us your high-level view on how you think this asset compares to the others? And in the setting of combining with Monjuvi is really more, do you think the ability to differentiate will be more on the tolerability side or really more on the efficacy side?

And then a follow-up just around the questions on the Xencor asset. Two questions. One just on Monjuvi. Are there any thoughts on perhaps pursuing a subcutaneous formulation of Monjuvi, especially in the context of Genmab-AbbVie assets that is going into a Phase 3 trial in relapsed and refractory DLBCL, their anti-CD3, anti-CD20 subcus? So just any thoughts on subcu. Thanks.

Jean-Paul Kress -- Chief Executive Officer

Graig, thank you. Malte will address the first one and potentially the second one.

Malte Peters -- Chief Research and Development Officer

Yeah. So, we have of course studied the existing CD20xCD3 bispecific molecules to a pretty good detail. I think there are -- my personal take is that the differences in efficacy at this moment are probably not very high. I think there are nuances between the various modalities. We are quite encouraged of what we see regarding the Xencor activity. Also with respect to the efficacy and safety profile of the molecule, we will see a little bit more data at upcoming conferences. So, I think, overall, we think that the Xencor molecule is on par with the other molecules that are currently being developed. With respect to your...

Jean-Paul Kress -- Chief Executive Officer

Maybe one comment, Malte.

Malte Peters -- Chief Research and Development Officer

Yeah. Sure.

Jean-Paul Kress -- Chief Executive Officer

Malte sorry. One comment on that, Graig. I mean, beyond the asset itself and the comparison with potential other assets, that by the way we could still partner with as we said earlier, because we have a non-exclusive agreement with Xencor, it's important to remember that one of the drivers of partnering with Xencor is our long-term relationship with them. We know them well, they know us well. There is a trust/effectiveness factor here, which will make things much easier in the implementation of the development plan. I mean, partnering with another company for development is always a challenge. And with Xencor, we are in known territory, and, as you know very well, Monjuvi comes from the Xencor bench. So, there is kind of a familiarity here, which is a big factor in addition to the strength of the asset. Malte, sorry, you can go on.

Malte Peters -- Chief Research and Development Officer

No, no. Thanks, Jean-Paul for the addition. With respect to the subcutaneous developments, I would say we are considering various options regarding different schedules and modes of application of Monjuvi going forward. And this moment is probably a little early to say what we will do as a long-term strategy, but it's on our radar screen, it's part of our life cycle management strategy, and we will probably be able to speak to this in the next coming months. But it's clear that we are thinking about life cycle management strategies for Monjuvi. This includes subcutaneous formulation, but potentially also other options to facilitate the administration of Monjuvi.

Graig Suvannavejh -- Goldman Sachs -- Analyst

Thank you.

Jean-Paul Kress -- Chief Executive Officer

One last question, maybe.

Operator

The last question is from Zhiqiang Shu of Berenberg. Your line is now open.

Zhiqiang Shu -- Berenberg -- Analyst

Thanks very much for taking my questions, and congrats on the progress. Two questions, please. First is on an early stage asset MOR210. I think your partner released some quite exciting preclinical data at SITC. If I recall correctly, you retained the rights in the U.S. Just wondering if you have any plans to further develop that asset in the oncology setting?

And then also, secondly, on the -- one of the ASH presentation, you presented some preclinical data combining tafa and the CD47 antibody. Wondering if that's something you are looking at giving your partner I-Mab has a CD47 antibodies? Just want to get your thoughts there. Thanks very much.

Jean-Paul Kress -- Chief Executive Officer

Thank you for the question. I'll give a short answer and Malte will elaborate obviously. Yeah, 210, we're very excited by 210 and obviously are polarized [Phonetic] with a partner here. And for 47, as I mentioned earlier in calls, there are -- we've been looking at 47 as well in addition to CD20xCD3. So this is something we have in the radar. But obviously, we have to see if it makes sense in terms of capital allocation versus the bispecifics. But yes, we are within the radar. Malte, do you want to speak about 210?

Malte Peters -- Chief Research and Development Officer

Yeah, very quickly, we have a good relationship and partnership with I-Mab to whom our 210 molecule is licensed at the moment. We are looking at the data on a continuous basis. And then the contractual situation enables us to periodically assess the data and to decide whether we want to opt back in and participate in the future stages of development. So that's a good situation. We are really pleased with how I-Mab is pursuing this, and we will stay tuned and update you of course of any progress.

And on the tafasitamab/CD47 combination, I think Jean-Paul answered it well. It's part of our backbone strategy to evaluate tafasitamab as a potential combination partner with multiple modalities being used in lymphoma treatment. And that of course includes some anti-CD47 molecules. And as Jean-Paul said, we -- it's at the back of our mind, and we will continue to evaluate opportunities here.

Zhiqiang Shu -- Berenberg -- Analyst

That's helpful. Thank you very much.

Jean-Paul Kress -- Chief Executive Officer

Thank you. Operator, back to you. I think you can close the call.

Operator

Yes. So, I would just hand back to Julia Neugebauer to wrap up today's call.

Julia Neugebauer -- Director, Investor Relations

Ladies and gentlemen, this concludes today's conference call. If any of you would like to follow-up, the Investor Relations team of MorphoSys is available for the remainder of day. Once again, thank you for joining our call. Have a good day, and goodbye.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Julia Neugebauer -- Director, Investor Relations

Jean-Paul Kress -- Chief Executive Officer

Roland Wandeler -- Chief Operating Officer

Malte Peters -- Chief Research and Development Officer

Jens Holstein -- Chief Financial Officer

Geoffrey Porges -- SVB Leerink -- Analyst

James Gordon -- J.P. Morgan Cazenove -- Analyst

Douglas Royal Buchanan -- JMP Securities -- Analyst

Etzer Darout -- Guggenheim Securities, LLC -- Analyst

Graig Suvannavejh -- Goldman Sachs -- Analyst

Zhiqiang Shu -- Berenberg -- Analyst

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