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MorphoSys AG (MOR) Q1 2021 Earnings Call Transcript

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MOR earnings call for the period ending March 31, 2021.

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MorphoSys AG (MOR -1.20%)
Q1 2021 Earnings Call
May 6, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, welcome to the MorphoSys First Quarter 2021 Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] Now I'd like to turn the conference over to Julia Neugebauer. Please go ahead.

Julia Neugebauer -- Director of Corporate Communications & Investor Relations

Ladies and gentlemen, good afternoon and good morning. My name is Julia Neugebauer, Senior Director, Investor Relations at MorphoSys, and it's my pleasure to welcome you to our first quarter 2021 financial results conference call. Joining me on the call today are Jean-Paul Kress, Chief Executive Officer; Sung Lee, Chief Financial Officer; Roland Wandeler, Chief Operating Officer; and Malte Peters, Chief Research and Development Officer. Our press release was issued yesterday with our Q1 2021 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 two 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, all for the year ended December 31, 2020, 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 will find the agenda for today's call. Jean-Paul will begin with an overview of corporate highlights from the first quarter of 2021, and will give an outlook. Roland will then provide a commercial update, before turning the call to Sung for a summary of our first quarter financial results. Following these prepared remarks, we will open the call for your questions. With that, I now hand the call over to Jean-Paul.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thank you, Julia. Welcome, everyone, and thank you for joining us today for our first quarter financial results and business update. As we move through 2021, our focus is on three key areas: executing on the Monjuvi launch, rapidly advancing the tafacitamab backbone strategy through additional clinical studies and expanding our pipeline. Starting with the execution on the Monjuvi launch. The operating environment in the first quarter remained challenging. As we mentioned on our last call, we experienced headwinds from the COVID pandemic in the U.S. in the first quarter, and we expect to see this carry over to the second quarter. We are cautiously optimistic that the impact will diminish in the second half of the year, with the increase in vaccinations and institutions gradually easing restrictions.

Despite the COVID headwinds, feedback from physicians is positive, and we are encouraged by the underlying demand trends and remain confident in the potential for Monjuvi given its broad second line label and overall profile in the r/r DLBCL setting. Building upon our long-term data for tafacitamab in r/r DLBCL, we will be sharing 3-year data from our L-MIND trial at ASCO, EHA and ICML along with other abstracts. We are progressing with our tafacitamab development strategy, with the aim to expand the tafacitamab label and establish it as a backbone therapy for multiple B-cell malignancies. In Europe, the Marketing Authorization Application for tafasitamab is currently under review for r/r DLBCL.

We just announced that the first patient was dosed in the pivotal L-MIND trial in follicular lymphoma and marginal zone lymphoma. In addition, we look to follow this up soon with the initiation of our next pivotal study, which will be firstMIND in first-line DLBCL. Also, a combination trial, topMIND with our partner, Incyte, parsaclisib for r/r B-cell malignancies is expected to be initiated this year. With the [length] on advancing and expanding our internal pipeline, we are making progress with felzartamab. Felzartamab is being evaluated in patients with autoimmune membranous nephropathy or aMN, a disease with a large unmet need. There are roughly 10,000 addressable patients in the U.S., of whom 30% to 50% develop end-stage renal disease within 10 to 15 years, ultimately requiring dialysis or kidney transplantation.

The M-PLACE trial is ongoing and we are aiming to share data at an upcoming medical conference this year. We are also continuing enrollment in a parallel Phase II study called New-PLACE to identify the dose schedule. Plans are well under way to initiate a trial midyear, exploring felzartamab in another indication, IgA nephropathy, as we look to expand its potential in adjacent autoimmune diseases. IgA nephropathy is the most common glomerular disease worldwide affecting primarily patients in the second or third decade of life. And there is currently no cure available, and we hope to bring a new treatment option to these patients. In summary, we are making great progress on our mission to bring innovative therapies to people living with cancer and autoimmune diseases. While we may continue to face near-term challenges associated with COVID, we are very excited about the future and are looking forward to keeping you updated on our progress. With that, I'd like now to turn the call over to Roland for a commercial update. Roland, please?

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Thank you, Jean-Paul, and hello, everyone. Monjuvi first quarter sales came in at $15.5 million, driven primarily by demand and were impacted by COVID and the windstorm that affected many parts of the U.S. While sales declined sequentially for nondemand-related reasons, underlying patient demand increased over the last quarter. We are encouraged to see progress in the fundamentals, with increasing share in second and third line, positive HCP feedback and the account trends that we see. Looking at account trends more closely. We are very encouraged by the continued traction in the number of accounts ordering Monjuvi, exiting the first quarter with more than 500 sites of care since launch.

Key academic centers continue to be interested in Monjuvi as we are seeing increased momentum in community care, which now represents 70% of accounts that have ordered. The interest in both settings underscores the broad accessibility of Monjuvi, and we continue to see further traction in the second quarter. As we exited the first quarter, there are two themes that we are tracking, the continued impact of COVID and the potential for an acceleration in the second half of 2021 as the impact of vaccinations and easing of restrictions progress.

We already see more community centers reopening, allowing our teams to secure engagements with physicians in person. It has been our observation, thus far, that many larger institutions will be opening at a later pace, the community and smaller centers. We are carefully monitoring how vaccinations will impact healthcare professionals office accessibility over the coming months. We have maintained a leading share of voice near 50% so far, and our team is ready to take advantage of sites opening up. We are cautiously optimistic for the second half of the year to be able to engage even more healthcare professionals in person. With this in mind, we are focused on building momentum and are seeing incremental positive developments in the market since March. Monjuvi received a J code as of April 1, which will help us further streamline reimbursement, especially in the community setting. And we are looking forward to presenting multiple abstracts already accepted for ASCO, EHA and ICML in June, including our 3-year Monjuvi L-MIND data.

We continue to expect a gradual build from Monjuvi as we drive increased uptake in second line and longer treatment duration. Our continued focus in 2021 is to lay the foundation for long-term growth and continue to establish Monjuvi as the standard of care for appropriate second-line patients with relapsed refractory DLBCL. We remain focused on the 10,000 appropriate r/r DLBCL patients in the U.S. that could benefit from the promise of Monjuvi each year. It is our mission to provide this important new treatment to them. Thank you. And I will now turn the call over to Sung.

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Thank you, Roland. We're pleased to share our financial results for the first quarter of 2021. Moving to Slide 12. Total revenues for the first quarter of 2021 were EUR47.2 million compared to EUR251.2 million for the comparable period in 2020. The year-over-year decline was entirely driven by the recognition of EUR236.1 million as part of the upfront consideration from our partner Incyte in the first quarter of 2020. Monjuvi sales in Q1 2021 were EUR12.9 million, down 9% sequentially, driven by inventory dynamics and clinical trial purchases that benefited Q4 2020.

Royalties from net sales of Tremfya in the first quarter of 2021 were EUR11.6 million, an increase of 25% year-over-year. Cost of sales were EUR five million in the first quarter of 2021 compared to EUR3.3 million in the first quarter of 2020. Turning to operating expenses. R&D expenses in the first quarter were EUR33.3 million compared to EUR21.5 million in the same period of 2020. The growth primarily reflects the increased investment to support the advancement of our proprietary programs. Selling expenses were EUR28.2 million in the first quarter compared to EUR12.8 million in the first quarter of last year. The year-over-year increase was primarily driven by the full quarter impact of expenses for services provided by our partner, Incyte, in connection with Monjuvi. Recall that our global collaboration with Incyte closed in March of 2020.

G&A expenses in the first quarter were EUR10.3 million, nearly flat from a year ago. For the first quarter of 2021, we reported a consolidated net loss of EUR41.6 million compared to a consolidated net profit of EUR195.5 million in the first quarter of 2020. As mentioned earlier, 2020 benefited from the recognition of EUR236.1 million as part of the upfront consideration from our partner, Incyte. Turning to the balance sheet. We ended the first quarter of 2021 with cash and investments of EUR1.22 billion compared to EUR1.24 billion as of the end of 2020. Turning to our guidance for 2021 on Slide 13. We continue to monitor the impact of COVID-19 to our business and are reaffirming all aspects of our financial guidance for the full year 2021, which was provided earlier this year. With that, we would like to open the call for questions now. Operator?

Questions and Answers:

Operator

[Operator Instructions] The first question is by James Quigley of Morgan Stanley.

James Patrick Quigley -- Morgan Stanley -- Analyst

Hi there, thanks for taking my question. So just on the Monjuvi launch. Can you give us a bit more information or detail on how you're penetrating in the second-line setting compared to the third line setting? And if you could walk us through where the key disruptions were in the quarter. So obviously the storms in the U.S. impacting things, did you start to see sales picking up toward the end of the quarter and then into April as well? So any sort of additional color you can give us there would be fantastic. And secondly, on the backbone strategy for Monjuvi. You said in the slides that the trial with felzartamab CDC [Indecipherable] isn't expected to start until the end of the year.

You're looking to file their CD3, CD20 potentially this year. So is there any urgency in terms of other CD3, CD20 combinations or partnerships from your end? And how our partnership negotiations going here? And then thirdly, on felzartamab, can you give us some color on the IgA nephropathy indication? Is there any mechanistic benefits that you can think of targeting CD38 as opposed to targeting the C5 Part III? I know that Novartis are looking out for their LNP023, the factor B inhibitor? And I'll leave it there.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Okay. Thank you, James. This is Jean-Paul. I'll start with the launch question, and one might [Indecipherable] on that, and then we'll have Malte address the backbone and the Xencor question. On the launch, James, a couple of factors here. First, DLBCL is a tough disease. Patients need treatment rapidly. They can't wait. And they need a solution pretty quickly. However, we have observed that the patient visits have decreased by around 10% because of COVID. And in this context, we were very pleased with the feedback that we got from the HCP all along since the launch on our regimen, on the strength of the regimen, the efficacy and durability, the convenience, the safety profile.

And our challenge is basically to continue to educate HCPs that we've been engaging with, but probably not at the level that we wanted with COVID. And we see an opportunity in the next couple of months, while things reopen with increasing vaccination and other favorable measures that we will be able to engage at a higher rate and basically engage and talk on what we think is exciting data like our new long-term data, three years data that we'll be presenting at some conferences, as I alluded to. So we are optimistic in the near term, but understanding that we have not been able to operate at the rate we wanted. So that's the point I'd like to make here. Now maybe Malte on the backbone and on the Xencor questions, please.

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Yes. Thanks, Jean-Paul. Thanks, James, for the question. Let me start with two or three sort of general remarks on the backbone strategy. So when we speak about backbone, we mean really to make Monjuvi available to every patient suffering from a disease that has CD19 in it mechanistically. And we are really very happy of how much progress we have made to execute on that strategy. And just to hit the high notes here, we are very pleased that our partner, Incyte, has already treated the first patient in the inMIND trial, which is conducted in follicular lymphoma marginal zone lymphoma. We are just, I would say, days or moments away from treating the first patient in frontMIND.

We have the first 10 or so sites active and initiated. Patients are signing the consent forms as we speak. So we expect to see very good progress on the frontMIND execution. And we are also quite excited about the opportunity of partnering with our partner Incyte to test a combination with parsaclisib, their P3 kinase delta inhibitor in combination with Monjuvi, in various B-cell malignancies. And now addressing your point regarding the Xencor study. I think we have mentioned it a couple of times that we look at this opportunity of combining Monjuvi with biospecific compounds in an opportunistic manner. So we really went forward with the first opportunity that was out there.

That in this case, was the Xencor molecule. We know the company Xencor very well, as you know. But other -- discussions with other companies are ongoing as we speak and just not as far advanced. In principle, we believe that combining Monjuvi with multiple CD20-CD3 molecules is the right thing to do and may yield exciting data, particularly thinking about opportunities of moving into chemo-free frontline settings in DLBCL. So with respect to your second question regarding the pathophysiology of the IgA nephropathy.

If you look at the data for IgAN nephritis, the disease is induced by a specific aberrant form of IgA1 molecules, they are galactose-deficient and by the generation of autoantibodies directed against these specific molecules. So felzartamab potentially attacks both components of the pathophysiology, not only the autoantibodies but also the generation of IgA molecules in itself. And we know this and have learned this from our previous experience with felzartamab in multiple myeloma. So that's really our thinking, and we think we have an opportunity here to test the activity of felzartamab in yet another very significant autoimmune disorder affecting the kidney, as Jean-Paul alluded to, in very many patients worldwide.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks, Malte. Just realized, James, that we didn't address your question on second line versus third line. So Roland, briefly please.

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Of course, James. As it is quite common in hematology/oncology, healthcare professionals try and new treatment in later line patients first. That's what we've been seeing in launch as well. And we are very encouraged in seeing actually increasing traction recently in the second line. And that's where our focus is, to make sure that patients will be able to benefit from Monjuvi early in their treatment plan, where we also know the treatment average duration will be longer. And as we look forward, we are very happy to have -- see a range of tailwinds.

Jean-Paul talked about the fact that we see COVID easing up and we have an increased ability to see physicians in person. Jean-Paul also mentioned the three-year data. Remember, last year, we showed our two-year data for L-MIND that showed the duration of response of 34 months. We will now be adding an additional year of observation, and I'm very excited to share this data at ASCO. And we have the J code in hand. Looking at all of that, we look forward to engaging even more physicians in person over these coming months as things open up, especially toward the second half of this year.

James Patrick Quigley -- Morgan Stanley -- Analyst

Great. Thank you very much.

Operator

The next question is by Rosie Turner, Barclays.

Rosie Turner -- Barclays Bank PLC -- Analyst

Hi, good afternoon. thank you very much for taking my questions. So just a couple from me. So in terms of patients presenting for DLBCL being down kind of 10% in Q1, I just wondered if you could give us the kind of flavor of what you're seeing as we're now into Q2 and whether that's getting back to a more normalized level? And kind of following on from that, whether we are seeing those community centers in the U.S. reopening. Secondly, that J code addition, is that having a material impact? I think you said before the J code approval wasn't going to be significantly detrimental.

But I just wondered if you are seeing a positive impact from now having that. And then finally, can you just remind me of the treatments of -- treatment duration of Monjuvi and whether we are actually kind of seeing that come through, just thinking about kind of the Q-on-Q growth and kind of how many patients you would expect to kind of still be on therapy quarter-on-quarter? And then kind of trying to extrapolate that for new patient adds in the quarter, if that makes sense. Thank you.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks, Rosie, for the question. Roland will address that.

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Absolutely, Rosie, going to three parts, four parts. In terms of patients presenting the minus 10% that Jean-Paul cited was what we were seeing in the highs over the holidays out of claims data. Claims data is lagging. So we do not have any data there for Q2 at this moment. But what we are seeing across the country is that as vaccinations progress that patient flows are getting more closely back to normal levels. In terms of community centers reopening, yes, we see some smaller centers in which we are able to engage healthcare professionals in person.

But we also see that oncology there is lagging behind all the specialties, just given that patients with oncological diseases need to be protected in this area, where even caregivers may not be able to access some of the centers. So we expect that the opening -- the broader opening of oncology sites will be lagging behind some of the other specialties, but we're cautiously optimistic for the second half of the year. In terms of the J code approval, you're right. We have not seen any hurdles to reimbursement for Monjuvi since launch. But we also know that there's some community centers that prefer to have a J code in place just to be in a position of knowing time lines of reimbursement for government patients.

And with the J code in place, that's now there. So reimbursement is very streamlined now. And if any center had a hesitance there, these centers now have all the tools in hand. And in terms of the treatment duration, that's where we really take our cues from the L-MIND study. And there, we are very encouraged with the duration of response that we see combined with the complete response rate, especially in second line. And we look forward to showing even more updated the data there at ASCO and at EHA.

Rosie Turner -- Barclays Bank PLC -- Analyst

That's right. [Indecipherable] Very Thank you.

Operator

The next question is by Geoffrey Porges of SVB Leerink.

Geoffrey Craig Porges -- SVB Leerink LLC -- Analyst

Thank you very much for taking the question. I appreciate all the callers on the call. A few questions. Could you give us a sense of the percentage of demand from academic versus community? You gave us the number of accounts, but just the contribution of demand would be helpful. And then could you give us a sense of how much of the revenue that you're reporting is bridging to CAR-T, because we're hearing that there is some use in that context as well as the more traditional L-MIND use? And then lastly, for perhaps Roland and Jean-Paul, given your focus now on deploying capital and still on business development, you have the Tremfya royalty, the focus of the company really is on commercialization and wholly owned products now. Is there any opportunity for you to either leverage that royalty as other companies have done or even sell off part of it to secure more capital to your business development ambitions? Thanks,

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks, Jeff, for your questions. I'll start by the -- your last question, and Roland will address the commercial questions. Regarding our bidding strategies, we are executing on what we've been signaling for some time now. With the capital we have in hand and the potential monetization of royalties, it's always a possibility. We have optionality. So we will stay very disciplined in capital allocation strategy. We're seeing things out there that we like. But as you know, this is always a journey to come to something that you can pull the trigger on.

But we're in a good position. We have now a great development -- late-stage development machine. We have a commercial engine. And that put us in a very favorable position to bring synergies and added value in case we would go for an external innovation move in addition to our internal pipeline, because we obviously have to weigh in both. So things are in motion, and we stay very disciplined, but again leveraging our strength. And on that, Roland, if you can address the other questions.

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Absolutely. Geoff, the demand split in terms of academic community as well as how bridging contribute is, of course, something that we track closely, but not something that we want to parse out here in more detail. What I can say is that in terms of demand, the majority of our demand is coming from the community setting. And in terms of bridging. it is something that we see that especially some genetic centers are comfortable and are using Monjuvi way. But it's not something which is dominating our demand.

What I want to say, though, is that our focus is clearly on driving our uptake in second line, especially in community where we expect patients to then be able to benefit until they progress and actually benefit from the promise of the duration of response that we are able to show in our L-MIND study. And look forward to sharing even more updated data in the upcoming conferences at ASCO.

Geoffrey Craig Porges -- SVB Leerink LLC -- Analyst

Sure, thank you very much.

Operator

The next question is by James Gordon of JPMorgan.

James Daniel Gordon -- JPMorgan Chase & Co -- Analyst

Hello. James Gordon, JPMorgan. The first one was on Q1 on one-offs. I think at Q4, you said that Monjuvi had a benefit from inventory dynamics and maybe clinical trial purchases that was low single digit. Is that still how you quantify it? And could you also try and quantify the storm impact? So what do you think the sequential trend might have been in Q1 if it wasn't for the storm and the one-off factors to do with inventory, please? Second question was just thoughts into Q2. So in terms of what you're seeing so far in Q2.

So if you don't have the storm, you don't have the stocking issues, you do now have a J code. COVID situation in terms of vaccinations, et cetera, is probably a little bit better. What are you seeing so far? Because the commentary sounds a bit more like you're not expecting much of a change until H2 rather than Q2, is that fair? Or is Q2 already looking quite a bit better? And then the third and final question was just about 2021 guidance.

So despite the Monjuvi performance, you have reiterated the full guidance range today for revenues, so EUR150 million to EUR200 million. But are you still seeing the top end of the guide as being achievable? Because based on what we've seen in Q1, you could see -- if you were to perhaps over extrapolate that, it would look like only the bottom end of the revenue range would be achievable. So just wanted to check, are you still seeing the full ranges actually being achievable?

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks, James. Sung will take your questions.

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Sure. Thanks for the questions, James. And I'll start with your last question about the guidance reiteration. So We reiterated it. There's a range of scenarios in there that cover the bottom end and the upper end. And recall, when we gave this guidance, we have to be confident that with the moving dynamics of COVID that we could stand behind it. And so obviously, we've just reiterated it, and we're counting on an acceleration in the second half. And of course, with that, come is the anticipation that COVID would diminish.

So the second half is still in front of us. So again, this is the reason why we reiterated guidance. With regard to your question on the dynamics in Q4, there were some one-offs that we highlighted, and we actually quantified them. So Q4 benefited roughly about USD one million, this is with regard to Monjuvi, due to clinical trial purchases and also inventory build. And you can split that $1 million evenly between clin trials and inventory. So obviously, those are things that aren't repeating in Q1. So that impacted the sequential performance. In fact, if you just look at the inventory piece alone, there's about an additional USD0.5 million buy-in in Q4. And obviously, the way those dynamics work, you lose that in Q1. So there's $1 million swing just as a result of that. Was there another -- there was a third question?

James Daniel Gordon -- JPMorgan Chase & Co -- Analyst

Yes. Just as part of that question, it was maybe difficult. But in terms of the store -- as part of the first question, so it was not in the inventory in clinical trials but also the storm. So if you were to try and adjust them both out, do you have a sense of where you would have been? And the second question was it seems like quite a long list of positive things that should be better in Q2 than Q1, but the commentary seems to be more about things being materially better in H2 rather than Q2. So my question -- the second question was whether that's fair. If you've now got the storm and stocking issues, you've got the J code and the COVID situation has improved, shouldn't we be seeing quite a bit of improvement in Q2 rather than H2?

Sung H. Lee -- Chief Financial Officer & Member of Management Board

It's a possibility. And again, we're in the overhang of COVID and we do see things loosening up. But you don't know exactly what the lag effect could be. So obviously, I would say the first half of Q1 was very difficult as we signaled in our prior earnings call, and we are in an incrementally better environment in Q2. But let's get through Q2 to see if this sustains, but we're really looking forward to an acceleration in the second half.

James Daniel Gordon -- JPMorgan Chase & Co -- Analyst

Thank you

Operator

The next question is by Graig Suvannavejh of Goldman Sachs.

Unidentified Participant

This is [Nanja] on for Graig. So first on the current feedback that you are setting can be positioned on the use of Monjuvi. And this would be as well used of Monjuvi currently, are you seeing it more in the later line of credit? And then how are you thinking about trying to further penetrate in these second-line setting?

Sung H. Lee -- Chief Financial Officer & Member of Management Board

I'm sorry, you broke up the last 10 seconds there, it was inaudible. If you could please repeat your question, that would be great.

Unidentified Participant

Okay. Can you hear me clearly now?

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Yes

Unidentified Participant

So just on how you're planning to penetrate in the second-line setting for Monjuvi and what is the current distinction that you see. Are you seeing this use more in the third line or more in the second line setting?

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Okay. Roland?

Roland Wandeler -- Chief Operating Officer & Member of Management Board

I'll take the question. Yes, as mentioned at launch, we saw that many health professionals were starting their trial of Monjuvi in late-line patients. And more recently, we're very encouraged with the shift that we see toward earlier treatment in second-line. And I think the part that I want to highlight is the positive feedback that we are receiving from physicians when they look at, especially our second line cut of our long-term data, where we see complete response rates that are very promising combined with duration of responses that we hear from physicians are changing the way that they look at their clinical practice. And that's where our focus lies. And we look forward, especially also with the new data that will be coming out at ASCO to have more and more interactions with healthcare professionals in person, as things open up here in the U.S., to show the benefit of Monjuvi can bring in second line.

Unidentified Participant

Thank you

Operator

The next question is by Vineet Agrawal of Citi. Your line is now open sir.

Vineet R Agrawal -- Citigroup Inc. -- Analyst

Yes hi. Okay great. Thanks for taking the questions. So maybe So maybe first for Sung. So you said on last call that gross margin this year is likely to be stable at mid- to high-70s. But I calculate close to 60% for the quarter. So can you correct me if I'm wrong or were there any inventory adjustments or anything else in the quarter? Then the second question was our discussions with some of the KOLs have suggested that if POLARIX hits and if it becomes standard of care, then it would require Phase III trials to be run against Polivy, how would you respond to that?

And then third question was on Tremfya, so royalties were up 25% in 1Q, right, but we're still guiding for moderate growth in 2021. So just wanted to check what are the gating factors there? Or how should we interpret the moderate growth? And lastly, if I can squeeze in one clarification question, it's very tiny. But R&D expenses, you said are EUR33.3 million. But in the P&L, I can see it's EUR32.3 million. So just wanted to clarify which one is correct. Thank you.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Okay. Thank you, Vineet. So let's organize the questions here. Why don't you, Sung, start by the financial questions, and Michael will address the POLARIX question.

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Great. So I appreciate those questions. I hope I've got them all. So I think you asked about gross margin. And I want to be very specific here, and I'm talking about the gross margin for Monjuvi. So I had mentioned in the previous call that you could expect a range there between the mid-70s to high 70s with regard to Monjuvi. Now obviously, we have other bits and pieces of revenue, and some of those carry cost of sales, especially services that we perform on behalf of our partners. So when you look at the total gross margin for the quarter, I believe it comes out close to 90%. This is a total company gross margin for Q1. And obviously, it's influenced heavily by the milestone that we collected from GSK, the EUR16 million, which comes with 0 cost of sales. So hopefully, that helps you on gross margin. With regard to your question on Tremfya, we did see nice year-over-year growth.

I think the growth rate was 25% for the royalty. In terms of Tremfya actual year-over-year growth in terms of net product sales that our partner reported, I think that was closer to 40%. We're very happy with the growth rate, obviously. This is a blockbuster product. But it's -- again, I just want to make clear, we did not receive any forecast from our partner. There's a tiered royalty rate involved with a very narrow range. And I would say that we still expect moderate growth. And how would you define that? Well, we just saw 25% year-on-year growth. Will it be 25% every quarter? We'll have to wait and see. Because, again, we don't receive sales forecasts from our partner. And then your last question, I think, just some housekeeping for R&D. I'd like to follow up with you, but it is EUR33.3 million. But we can look into that and follow up with you, yes. And then a question -- I think you had a question on...

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

POLARIX. Malte, please.

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Yes. Happy to take that question. So of course, we need -- we are aware of the competition and you can be certain that we are following the competition very closely. I'm personally and we are all personally excited that we can start our frontMIND study so quickly. I alluded to this in one of my previous answers. The patient population that we are targeting are patients that still have a very bad prognosis. The cure rate is lower than 50% in these [Indecipherable] patients. And based on what we have learned in the recent years looking at other unsuccessful trials in frontMIND DLBCL, we have made certain very important decisions for the design of the study.

For example, adding two compounds to the arch of backbone, we start the treatment extremely shortly after diagnosis. And we believe that we have a very good opportunity of creating significant results that may move the needle in frontMIND DLBCL. We do not think that there's a need to adjust it based on potential data that we will see from POLARIX in the future. And as you may know, if you start a study of the size of frontMIND, you do have very detailed and very specific discussions with health authorities, particularly when you have studies that have a registrational intent, which is the case for our frontMIND study. So that gives us confidence that the study does not need any adjustments. And in the best of all worlds for patients, there may be more than one additional treatment options for frontline patients.

Vineet R Agrawal -- Citigroup Inc. -- Analyst

Thank you

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Your welcome

Operator

The next question is by Zhiqiang Shu of Berenberg.

Zhiqiang Shu -- Joh. Berenberg, Gossler & Co. KG -- Analyst

Hi. Thanks for taking my question, I have a couple. The first one is on Monjuvi's commercial launch here. Just curious, can you provide a bit of color on this third line -- second line and third line, a breakdown for the utilization? And also on that topic, regarding the community and academic physicians split, any particular pushback from academic physicians since you have over -- about 70% are from community setting? And then the second question is on the frontline DLBCL study. For the Phase Ib, I believe it's still ongoing. Do you plan to provide more data this year on that trial? And how should we kind of make read across from that trial to the potential Phase III success. The third question is on the members [Indecipherable] nephropathy study. Do you plan to provide more data, the Phase I data this year? And why would you advance to the Phase II study so quickly? Thanks.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks for your questions. I suggest we start by Malte, as we just spoke about first line, and then we'll come back to your commercial question. Malte, please, on the front line and aMN?

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Yes. So we will share more data on the firstMIND study. We have submitted abstracts for ASCO, EHA and ICML, and we will cover firstMIND in all three of these conferences, so you will learn more details about the study. With regard to your endpoint question, please remember the study is a small safety study. We did compare to regimens, but the intent was never to make an efficacy comparison only to pick up potential safety signals that would guide us one way or the other in terms of the combination partner for front line.

We achieved that goal actually earlier than we expected because the excitement about firstMIND was really high, and the enrollment ended earlier than we had expected. So we had exactly what we wanted to have a very robust safety database to justify the design of our firstMIND study. But again, there is data coming in all three of the major oncology and lymphoma conferences that we will have in the middle of the year.

For the aMN question, we are collecting clinical data as we speak. We will submit an abstract on the clinical data for one of the immunology and nephrology conferences, which are taking place in November, December of this year. And you will see the first data, of course, looking at the autoantibody titers, also proteinuria data in some patients. And that will form the basis for our further development decisions that we will make during the course of this year as soon as we have published and shared the data with the public. So back to you, Jean-Paul, with that.

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks. Roland, for the commercial question on the second line?

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Yes. Zhiqiang, the number of patients in second line is, of course, something that we very closely track But it requires tabulation at this point in time if you just think about the data sources that are available. And while we don't want to parse this out here, what I can say is that the progress in increasing penetration in second line is something that we see across the different data sources that we track, as well as we hear in the feedback from healthcare professionals in the field, that tell us about more patients that they initiate in second line.

And to your second question regarding community academic, the 70%. As we shared in one of our early calls, we were very pleased to see the very early interest in the key academic centers across that state. And the fact that we're now at 70% community is just the result of community growing above that and scaling beyond that. So it's a reflection of community growth and not a reflection of pushback in academics.

Zhiqiang Shu -- Joh. Berenberg, Gossler & Co. KG -- Analyst

Thanks very much.

Operator

The next question is by Etzer Darout of Guggenheim.

Paul Jeng -- Guggenheim Securities, LLC -- Analyst

Hi. This is Paul on for Etzer. Just a couple from us on ongoing trials. First, hoping to get some color on potential time lines to data for the inMIND study, now that the first patient has been dosed and maybe expectations for pace of recruitment for follicular and marginal zone lymphoma patients based on current trends. And secondly, just a quick update on current guidance to B-MIND, update relative to the previous guidance, is that still sort of a first half of 2022 update? And then lastly, a quick follow-up on the M-PLACE question. Any benchmarks we should look to for comparison for the autoantibody titers and proteinuria ahead of the data?

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thank you for your questions. Malte will take them.

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

So with the -- let's start with the inMIND study, we are well on track with the study. As you have read, first patients have been enrolled and are treated in the study. I don't think we have commented on the precise time line for that trial. I can only say that the medical need in the indolent lymphoma space is extremely high. The name is a bit misleading. The name indolent suggests it's not very bad, but as a matter of fact, patients are dying until this moment from indolent lymphoma. So the medical need is extremely high, and we are really happy that, together with Incyte, we were able to launch this study at the beginning of this year. And I think as we move on with the execution of the study, we will shed a little bit more light on how it goes, and we will give updates as soon as we see the first details on the enrollment.

With respect to B-MIND, I can say we are almost done on our enrollment target. We have only a handful of patients up and waiting to enroll in the study. And our previous comments on the time lines and reporting for B-MIND have not changed. And I'm blanking on what we exactly said. I think we said '22. I'm not sure if we said first half or second half. But our previous statement regarding to B-MIND finalization has not changed. And if you could repeat your third question, there was some static here on my phone. If you could repeat your...

Paul Jeng -- Guggenheim Securities, LLC -- Analyst

Yes. just a follow-up on, yes, the M-PLACE data and sort of and sort of any benchmarks we should look toward to compare the data for autoantibody titers and proteinuria that you referenced.

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Okay. Okay. So I think you have to look at the specific patient population you're referring to. And you know, and you can read it online, that the M-PLACE study involves really refractory patients who have progressed on many prior treatments, including rituximab treatment. In these patients, there is no alternative out there. So in these patients, as you can imagine, almost any response of an autoantibody titer would be meaningful. In those patients who have not seen significant prior treatments, it's a different story.

There, you would want to see a more radical decrease of autoantibody titers. So it depends a bit on the patient population you're referring to. But generally speaking, we, of course, hope and see in the majority of patients, a significant drop in autoantibody titers to be able to say that this is a meaningful response on the mechanism of action.

Paul Jeng -- Guggenheim Securities, LLC -- Analyst

Great. Thanks very much.

Operator

The last question is by Jason Butler of JMP Securities.

Douglas Royal Buchanan -- JMP Securities LLC -- Analyst

Hi. It's Roy for Jason. Thanks for taking my questions, just a couple of quick ones. So for felzartamab and IgAN, just curious what you see as a market opportunity. And then for the trial that's going to start later, any details you can share on that trial design? And then just a quick one, any potential milestones from GSK for otilimab that you can remind us of?

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Thanks, Roy, for your questions. Just a remark on IgA nephropathy, and Malte will address the questions. This is a pretty high unmet need. This is the #1 or three immuno-nephrology disease, and there are no standard of care or approved treatment. So that's a very important goal for us to address the unmet need here. And we'll communicate later on the more precise target in terms of patients and everything. But keep in mind, it's a high unmet need disease. Malte, please?

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

Yes. It's -- just building on that, we have not shared details about the trial design. We will typically do this once the study design is out there in clinicaltrials.gov. But I think it's fair to say that we utilize a study design that would make us confident of whether or not we have a compound in our hands that provides a meaningful clinical benefit to these patients. We will also most likely look at different schedules of felzartamab in this study. And of course, as in most clinical trials, it will be a placebo-controlled design, so that you have a good understanding of what the actual treatment effect is. But please stay tuned, more details is coming. And we will share this as soon as we can and as soon as the data is out there.

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Okay. Then you had aquestion on the GSK milestone, any others for this year. We have not factored in any major milestones in our revenue guidance for this year. Are there -- outside of this year, are there potential milestones possible with that deal? Yes, because recall the original deal, there were up to EUR423 million of milestones potential for development -- regulatory, commercial and sales-based milestones. And we collected EUR16 million of that. So I think as we get closer to these in the out-years, it's something we could provide further guidance on.

Douglas Royal Buchanan -- JMP Securities LLC -- Analyst

Okay thank you

Operator

Thank you. We have no further questions coming through. So I will now hand back over to Julia Neugebauer to wrap up today's call.

Julia Neugebauer -- Director of Corporate Communications & 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 the day. Once again, thank you for joining our call. Have a good day and goodbye.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Julia Neugebauer -- Director of Corporate Communications & Investor Relations

Jean-Paul Kress -- Chairman of Management Board, Managing Director & Chief Executive Officer

Roland Wandeler -- Chief Operating Officer & Member of Management Board

Sung H. Lee -- Chief Financial Officer & Member of Management Board

Malte Peters -- Chief Research & Development Officer and Member of the Management Board

James Patrick Quigley -- Morgan Stanley -- Analyst

Rosie Turner -- Barclays Bank PLC -- Analyst

Geoffrey Craig Porges -- SVB Leerink LLC -- Analyst

James Daniel Gordon -- JPMorgan Chase & Co -- Analyst

Unidentified Participant

Vineet R Agrawal -- Citigroup Inc. -- Analyst

Zhiqiang Shu -- Joh. Berenberg, Gossler & Co. KG -- Analyst

Paul Jeng -- Guggenheim Securities, LLC -- Analyst

Douglas Royal Buchanan -- JMP Securities LLC -- Analyst

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