2021 Non-financial Report
01 02 Our Sustainability Approach ––––––––––– 03 Business Ethics and Compliance –––––––––––––––––––– 07 Social Matters –––––––––––––––––––––– 13 About This Non-Financial Group Report –––––––––––––––––––––––––– 03 Our Understanding of Sustainability –––– 03 Our Business Model ––––––––––––––––––––– 03 Non-Financial Risk Analysis ––––––––––––– 03 Statement on the Impact of the Global COVID-19 Pandemic ––––––––––––––––––– 04 Materiality Analysis –––––––––––––––––––– 04 EU Taxonomy Regulation –––––––––––––––– 05 Compliance Organization and Anti-Corruption ––––––––––––––––––– 08 Bioethics in Preclinical Research –––––––– 10 Bioethics in Clinical Development ––––––– 1 1 Selling Practices and Labeling –––––––––– 12 Quality of Products –––––––––––––––––––– 14 Access to Medicine ––––––––––––––––––––– 15 Innovation in Research and Development (R&D) –––––––––––––––– 16 Data Protection ––––––––––––––––––––––– 16 03 Additional Information –––––––––––– 25 Independent Practitioners’ Limited Assurance Report –––––––––––––– 25 Imprint ––––––––––––––––––––––––––––––– 27 Employee Matters –––––––––––––––––– 18 Employer Attractiveness –––––––––––––––– 19 Diversity and Equal Opportunities ––––––– 20 Employee Engagement ––––––––––––––––– 21 Occupational Health and Safety (OHS) ––––––––––––––––––––––– 23 Contents 2Our Sustainability Approach Business Ethics and Compliance Social Matters Employee Matters Additional Information ChapterContents Chapter Chapter
Our Sustainability Approach About This Non-Financial Group Report With the following separate non-financial report, MorphoSys AG provides information pursuant to Section 315b and Section 289b ff. HGB (German Commercial Code) on material non- financial aspects for the Group’s fiscal year 2021 (January 1, 2021 to December 31, 2021) and thus on those aspects relevant for an understanding of the Group’s business development, results of operations and group management as well as the effects of its business activities and pursuant to Article 8 of Reg- ulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on establishing a framework to facili- tate sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the “EU Taxonomy”). The requirements of the CSR Directive Implementation Act (CSR-RUG) were taken into account in the preparation of the non-financial report. In particular, the analysis of the material aspects as well as the description of the concepts were addi- tionally oriented on the Global Reporting Initiative (GRI) stand- ards. A full application of the GRI standard is too extensive for the MorphoSys Group at the current time and therefore not expedient. Unless otherwise stated, the report applies to the entire MorphoSys Group according to the scope of consolidation for financial report- ing purposes. In July 2021, we completed the acquisition of Con- stellation Pharmaceuticals Inc. (hereinafter “Constellation Phar- maceuticals”). The transaction added two clinical-stage cancer drug candidates, that complement and enhance MorphoSys’ own proprietary pipeline. Constellation Pharmaceuticals is therefore also in the scope of this report, and statements relating only to Constellation Pharmaceuticals are shown accordingly. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) has been engaged on a voluntary basis to perform a limited assurance on the non-financial report in accordance with ISAE 3000 (Revised). The report can be found ›› here. References made in this non-financial report to information outside of the Annual Report are additional information and are therefore not part of the assurance engagement. Our Understanding of Sustainability We are conscious of the responsibility we share for present and future generations and see sustainable action as a prerequisite for long-term business success. MorphoSys is dedicated to the discovery, development and commercialization of outstanding, innovative therapies for patients, with a focus on cancer and autoimmune diseases. To ensure sustainable business success, we incorporate Environmental, Social and Governance (ESG) into our daily business and base our business model on sus- tainable growth that is aligned with the interests of stakehold- ers. We are focused on creating long-term value and weigh our actions in terms of their impact on the environment, society, patients and employees. Our Business Model Information on our business model can be found in the 2021 Annual Report ›› on page 9. Non-Financial Risk Analysis According to the CSR-RUG on the disclosure of non-financial information, companies must, in addition to reporting on mate- rial aspects, also disclose related risks that are linked to their own business activities, business relationships, products and services, and that are very likely to have or will have serious negative effects on the material aspects according to Section 289c (2) HGB. The Group has not identified any such risks in the financial year under review on a net basis in accordance with Section 289c (3) Nos. 3 and 4 HGB. Further information on op- portunities and risks can be found in the Risk and Opportunity Report section of the 2021 Annual Report ›› on page 61. 3Our Sustainability Approach Business Ethics and Compliance Social Matters Employee Matters Additional Information About This Non-Financial Group Report Our Understanding of Sustainability Our Business Model Non-Financial Risk Analysis
Materiality Analysis Materiality scoring on impact and business relevance for identified material aspects per topic • • • • highest score among material aspects of the respective topic, descending by points Business Ethics and Compliance Employee Matters Social Matters Material non-financial aspects at MorphoSys • • • • Quality of Products • • • • Access to Medicine • • • • Innovation in Research and Development (R&D) • • • Data Protection • • • • Compliance Organization and Anti-Corruption • • • • Selling Practices and Labeling • • • Bioethics in Preclinical Research • • • Bioethics in Clinical Development • • • • Employer Attractiveness • • • Employee Engagement • • • Occupational Health and Safety (OHS) • • Diversity and Equal Opportunities 01 02 03 Statement on the Impact of the Global COVID-19 Pandemic MorphoSys recognizes the impact of the global COVID-19 pan- demic on healthcare systems and society worldwide, as well as the resulting potential impact on preclinical and clinical pro- grams, especially clinical trials. Measures to mitigate the im- pact of the pandemic on MorphoSys’ employees and patients were implemented immediately. We continuously monitored the situation and took appropriate decisions on a case-by-case basis to ensure the safety of our employees, patients, clinical trial personnel and other stakeholders, as well as to safeguard data integrity. More detailed information on mitigation measures and efforts to ensure normal business operations in the different areas can be found in the respective paragraphs of this report. Materiality Analysis The report presents the material non-financial aspects that have been determined according to their business relevance and the Group’s impact on the aspects according to Section 289c (3). The analysis was based on a business analysis and involved the responsible departments as well as MorphoSys’ Executive Committee in 2020. In 2021 we reviewed the analysis of all identified non-financial aspects of sustainability at MorphoSys. A yearly review is nec- essary to consider all current developments in selecting the most material topics for our non-financial report and to adjust the priorities as necessary. The validation has been done by in- ternal experts and two members of our Management Board, and we have made an adjustment of the material topics accordingly. The following three topics have been identified as most rele- vant: business ethics and compliance, social matters, and em- ployee matters with the respective subcategories. 4Business Ethics and Compliance Social Matters Employee Matters Additional InformationOur Sustainability Approach Statement on the Impact of the Global COVID-19 Pandemic Materiality Analysis
EU Taxonomy Regulation Background and objectives of the regulation On June 22, 2020, the EU Taxonomy Regulation was published in the Official Journal of the European Union (EU) which entered into force on July 12, 2020. The basis for this is the Sustainable Finance Action Plan, which is one of the four pil- lars of the European Green Deal. To achieve the climate and energy targets 2050 of the EU it is necessary to redirect capital flows towards a more sustainable economy. The EU Taxonomy is a classification system for environmen- tally sustainable economic activities. The intention is to create greater transparency with regard to the degree of sustainabil- ity of corporate activities, investments and operating expendi- tures. Initial reporting for fiscal year 2021 According to Art. 8 EU Taxonomy Regulation and Art. 10 of the Art. 8 Delegated Act, all companies covered by the CSR-RUG must also provide information on the share of their group turn- over, capital expenditure (CapEx) and operating expenditure (OpEx) for the reporting period 2021, which are associated with Taxonomy-eligible economic activities related to the first two en- vironmental objectives (climate change mitigation and climate change adaptation). As the CSR-RUG applies to MorphoSys, we provide information on the EU taxonomy within our non- financial report. Basis of reporting Identification of Taxonomy-eligible activities The first step for the implementation of the EU Taxonomy for MorphoSys was the identification of the activities that could apply to our business activities based on the NACE (nomen- clature statistique des activités économiques dans la Commu- nauté) codes. As the business model of MorphoSys is to dis- cover, develop and deliver innovative medicines for patients impacted by cancer and autoimmune diseases, we have not iden- tified any EU Taxonomy-eligible economic activities. MorphoSys is therefore not covered by the Climate Delegated Act and not identified as a relevant source of greenhouse gas emissions. Accounting Policy The specification of the KPÍ s is determined in accordance with Annex 1 of Art. 8 Delegated Act. We determine the Taxo nomy- eligible KPÍ s in accordance with the legal requirements. In the following section we describe the accounting policy for turn- over, Capital Expenditure and Operating Expenditure. Turnover K PI Definition The turnover KPI is defined as Taxonomy-eligible turnover from product sales, license fees, milestone payments, service fees and royalties (numerator) divided by our total group turn- over (denominator). For further details on our accounting policies regarding our total turnover, please see ›› page 119 of our Annual Report 2021. As we have not identified any Taxonomy-eligible activities for the financial year 2021, this results in a share of Taxonomy- eligible economic activities in our total turnover of 0%. Reconciliation Our consolidated turnover can be reconciled to our consoli- dated statement of profit and loss (IFRS) on ›› page 103 of our Annual Report 2021 (“Revenues”). Capital Expenditure (CapEx) K PI Definition The CapEx KPI is defined as Taxonomy-eligible CapEx (numer- ator) divided by our total CapEx (denominator). The denominator comprises additions to property, plant and equipment and intangible assets during the financial year un- der review before depreciation, amortization and re-measure- ments, including those resulting from revaluations and impair- ments as well as excluding changes in fair value. It includes additions to fixed assets (IAS 16), intangible assets (IAS 38) and right-of-use assets (IFRS 16). Additions resulting from business combinations are also included. Goodwill is not in- cluded in CapEx as it is not defined as an intangible asset under IAS 38. As we report the numerator as zero, there is no risk of double counting of economic activities. For further details on our accounting policies regarding our CapEx, please see ›› page 128 and 129 of our Annual Report 2021. Reconciliation Our total CapEx can be reconciled to our consolidated balance sheet (IFRS) ›› on page 105 of our Annual Report 2021 (“Prop- erty, Plant and Equipment”, “Intangible Assets”); to our notes to the balance sheet ›› on page 128 (“5.8 Property, Plant and Equip- ment- Additions”), ›› on page 128 (“5.9 Leases-Additions”) and ›› on page 129 (“Intangible Assets-Additions”). 5Business Ethics and Compliance Social Matters Employee Matters Additional InformationOur Sustainability Approach EU Taxonomy Regulation
Operating Expenditure (OpEx) K PI Definition The OpEx KPI is defined as Taxonomy-eligible OpEx (numera- tor) divided by our total OpEx (denominator). Our OpEx has been determined via the following accounts as of the reporting date December 31, 2021: research and develop- ment costs, building renovation costs, short-term leases, main- tenance and repair costs and all other direct costs necessary to operate the asset. This does not include depreciation, amortiza- tion, impairment, and raw material costs. For further details on our accounting policies regarding our OpEx, please see ›› page 121 of our Annual Report 2021. Explanations on the numerator of the CapEx K PI and the OpEx K PI As MorphoSys has not identified Taxonomy-eligible economic activities for the reporting period 2021, we do not record CapEx and OpEx related to Taxonomy-eligible economic activities in the numerator of the CapEx KPI and OpEx KPI. Only “category c” for CapEx and OpEx apply to MorphoSys. This refers to economic activities that contribute to become low-carbon or to reduce greenhouse gas emissions (Sect. 1.1.2.2. (c) of Annex 1 to the Art. 8 Delegated Act). No expenses were inurred in fiscal year 2021. MorphoSys is committed to sustainability but due to the current EU Taxonomy requirements, we do not have EU Taxonomy- eligible economic activities. Furthermore, due to our business model and non-manufacturing nature, we have currently no sustainable CapEx and OpEx. 6Business Ethics and Compliance Social Matters Employee Matters Additional InformationOur Sustainability Approach EU Taxonomy Regulation Total Proportion of Taxonomy- eligible economic activities (in %) Proportion of Taxonomy- non-eligible economic activities (in %) Turnover 179.6 million € 0 % 100 % Capital Expenditure (CapEx) 748.6 million € 0 % 100 % Operating Expenditure (OpEx) 207.8 million € 0 % 100 % Proportion of Taxonomy-eligible and EU Taxonomy- non-eligible economic activities in total turnover, CapEx and OpEx
01 Business Ethics and Compliance Compliance Organization and Anti-Corruption ––––––––––––––––––– 08 Bioethics in Preclinical Research ––––––––– 10 Bioethics in Clinical Development ––––––– 11 Selling Practices and Labeling –––––––––– 12 7Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance
Compliance-Management-Program (CMP) reports to Head of Global Compliance Chief Executive Officer General Counsel, Member of the Executive Committee reports, if required, to Chairperson of the Audit Committee leading the global CMP and managing the interfaces between different compliance streams Anti-Bribery, Due Diligence of Third Parties Trainings & Awareness Integrity Line Compliance Documents Compliance Committee Transparency & Disclosure Compliance Management Program CMP Compliance Risk Management Review and Approval of Key Initiatives Monitoring & Continuous Improvement Credo Code of Conduct Business Ethics and Compliance This chapter deals with MorphoSys’ compliance organization and anti-corruption strategy, bioethics in preclinical research as well as in clinical development, and selling practices and labeling. Compliance Organization and Anti-Corruption We are committed to good corporate governance practices which include the highest standards in business ethics and compliance as set up in our ›› Code of Conduct. For further information please also see our latest ›› Corporate Governance Report. With the acquisition of Constellation Pharmaceuticals the organi zational structure of the compliance department changed. The Head of Global Compliance is now responsible for MorphoSys AG, MorphoSys US Inc. and Constellation Phar- maceuticals. We recognized that it is critically important to en- sure the same commitment to business ethics across all three companies. MorphoSys AG, MorphoSys US Inc. and Constella- tion Pharmaceuticals share a Code of Conduct, and are under the scope of MorphoSys Global policies to help achieve this goal. MorphoSys’ Compliance Management Program (CMP) ad- dresses the needs of various organizations across the company, including Research, Development, Commercial, Medical Affairs, and others. Our Global Compliance Committee comprises three Manage- ment Board members of MorphoSys AG, the General Manager of MorphoSys US Inc., the Site Head of Constellation Pharmaceuti- cals and five executives in the legal, compliance, medical and human resources functions, and is chaired by the Head of Global Compliance. The Committee meets quarterly and is available to our employees as a point of contact at all times. 8Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance Compliance Organization and Anti-Corruption
Our U.S. Compliance Committee has representation from U.S. business heads and meets quarterly to discuss U.S.-specific ac- tivities and compliance with applicable laws and regulations. The U.S. Compliance Committee is chaired by the U.S. General Counsel and Head of U.S. Compliance. Our Compliance Subcommittee with Incyte meets quarterly as well to discuss compliance matters related to co-commerciali- zation. Additionally, the Head of Global Compliance provides a report twice a year to the Audit Committee of the Supervisory Board, and coordinates different aspects of MorphoSys’ CMP based on the feedback. Our maxim “Integrity in all we do” sets the direction for all our business activities. Our CMP addresses anti-bribery and anti-cor- ruption topics in line with our corporate culture, our values and applicable internal and external regulations. It is set up to pro- tect patients, investors, other stakeholders, and MorphoSys’ reputation thereby supporting business continuity and sustain- able growth. Our goal is to nurture the culture of integrity and compliance and prevent compliance violations as far as possible through continuous risk assessment, monitoring of our activities, and training of all our employees. Focus in 2021 In 2021 our main focus was the execution of Monjuvi® commer- cialization and the integration of Constellation Pharmaceuticals. We are working on a new Code of Conduct which will be imple- mented in 2022 and we are working on a new e-learning platform for our new Code of Conduct and Anti-Bribery concepts that will guide our employees on applicable standards and best practices. As our business model has evolved we updated our MorphoSys 9Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance Compliance Organization and Anti-Corruption
Credo to include our commitments regarding commercializa- tion and bringing medicines to patients. In the fourth quarter of 2021, we conducted a compliance risk assessment which in- cluded several interviews with MorphoSys employees in Ger- many and the U.S. as well as an online survey based on a tai- lored risk register. This compliance risk-assessment covered MorphoSys AG and MorphoSys US Inc., and will inform our compliance strategy and efforts going forward in 2022. Training also remains an important focus of our CMP. It is our goal to ensure that our employees receive relevant compliance training in line with our values, culture and ethical standards. Examples of compliance training delivered in 2021 include: appropriate use of social media, compliance with transparency regulations, and compliant interactions with healthcare profes- sionals and other stakeholders. Company-wide training incor- porated Constellation Pharmaceuticals employees after the ac- quisition, including training on thoughtful communication. The U.S. organization also conducted numerous training and employee engagement activities on U.S.-specific laws and asso- ciated compliance policies. MorphoSys utilizes various methods to deliver training, includ- ing via “live” webcast presentation of content, delivery of e-lean- ing modules through the Company’s new learning management platform Learn4MOR, and through regular knowledge assess- ments via the Company’s intranet page. All training courses have been well received by employees and have already been successfully completed by a vast majority of the workforce. In November 2021 we held our second “Compliance Week,” which was successfully launched in 2020. In 2020, the Compli- ance Week generated a great deal of interest in the Company, including successful social media posts on Twitter and LinkedIn and internal adoption of Compliance concepts such as “Integrity in all we do” throughout various business functions. The 2021 Compliance Week increased awareness of the Compliance func- tion, provided the opportunity to communicate live with the Compliance team for all MorphoSys employees in Planegg and Boston. Maintaining open lines of communication is also a fundamen- tal aspect of our CMP. As part of the Constellation Pharmaceu- ticals integration, the Company provided access to the Integ- rity Line of MorphoSys. This electronic incident management system is hosted by an external provider, and allows employees to report any compliance concerns in three languages, along with having the option to remain anonymous. MorphoSys frequently informs employees about the MorphoSys Integrity Line in a variety of channels, including training, communica- tion, and other awareness initiatives. We make clear that retal- iation or harassment against anyone who makes a report in good faith is prohibited. The MorphoSys Compliance depart- ment reviews potential compliance cases, escalates them to the responsible local or global Compliance Committee where nec- essary, and manages investigations and follow-up actions, where required, in line with the respective policies. MorphoSys frames its CMP on several key regulations and guidances, where notably we use the Seven Elements of a Com- pliance Management Program as communicated by the Office of Inspector General (OIG), the updated Guidance 2020 of the U.S. Department of Justice, as well as applicable EU Directives and regulations. In addition, there are Entity Level Controls in the framework of Sarbanes-Oxley Act (SOX) addressing key compliance elements on a regular basis. These indicators are constantly monitored and improved. Our key priorities for 2022 will be finalizing the integration of Constellation Pharmaceuticals regarding the extension of our global policies as well as building lean and business-friendly processes including the approval process for Constellation Pharmaceuticals activities. Additional priorities in 2022 include compliance with the U.S. Open Payments law (or “Sunshine Act”) and related U.S. state laws on a federal and state level for which MorphoSys has been preparing via successful launch of an aggregate spend tool, continuing to develop relevant compli- ance training and communication, and continuing a risk-based approach to monitoring our business activities to ensure com- pliance and continuous improvement. Bioethics in Preclinical Research Our research and discovery activities are guided by the high- est ethical standards. As European and international legis- lation requires animal testing to determine the toxicity, phar- macokinetics and pharmacodynamics of drug candidates, we as a biopharmaceutical company cannot forgo this type of test- ing. Animal testing for our drug candidates at MorphoSys AG is outsourced to contract research organizations (CROs) as we do not have laboratories suitable for this type of research. As part of our product development activities at MorphoSys AG, we award contracts for animal studies in accordance with the 3Rs principle of animal welfare (Replace, Reduce, Refine) as set out in national, European and international regulations. We aim to improve animal welfare by closely monitoring the adher- ence to the 3Rs principle. The principle describes the use of methods in research which replace the use of animals where possible, which enable researchers to obtain the same level of information from fewer animals (reduce), and which alleviate or minimize potential pain or distress for the animals (refine). 10Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance Bioethics in Preclinical Reasearch Compliance Organization and Anti-Corruption
Our Clinical Pipeline Most advanced development stage Program Indication Tafasitamab1 L-MIND / Relapsed or refractory (r/r) diffuse large B-cell lymphoma (DLBCL) B-MIND / r/r DLBCL firstMIND / First-line DLBCL frontMIND / First-line DLBCL inMIND / r/r follicular lymphoma / marginal zone lymphoma Pelabresib MANIFEST-2 / Myelofibrosis MANIFEST / Myelofibrosis Most advanced development stage Program Indication Felzartamab IGNAZ / Immunoglobulin A nephropathy M-PLACE / Anti-PLA2R-positive membranous nephropathy New-PLACE / Anti-PLA2R-positive membranous nephropathy CPI-0209 Advanced Solid Tumors / Hematologic Malignancies P H A S E 1 P H A S E 2 P H A S E 3 L A U N C H E D P H A S E 1 P H A S E 2 P H A S E 3 L A U N C H E D 1 Global Collaboration and License Agreement with Incyte Corporation; co-commercialization in the U.S.; Incyte has exclusive commercialization rights outside the U.S. 2 Not conducted, as not necessary 2 We have established a quality assurance system with written standard operating procedures (SOPs) at MorphoSys AG that are continuously updated to ensure that we work only with those CROs who comply with local, national and international guidelines and animal welfare regulations. The institutions we work with also need to ensure that they are complying with the ethical principles and legal requirements involving animal research. In case Good Laboratory Practice (GLP) studies are conducted, as required by applicable the In- ternational Council for Harmonisation of Technical Require- ments for Pharmaceuticals for Human Use (ICH) guidelines, these facilities are required to have a GLP quality assurance certificate. These steps are intended to help fulfill our moral obligation to treat animals respectfully as well as our legal ob- ligations. On-site visits are also conducted to check the contract research institutes’ test centers, the training and competence of the staff responsible and animal welfare. The department is in regular contact with the Head of Research, who reports to the responsible Management Board Member for Research and Development. Focus in 2021 In the reporting year MorphoSys AG continued to strictly apply the 3Rs principle of animal welfare which is tracked by various metrics. All scientists working in the preclinical research area at MorphoSys AG are instructed in regular meetings to comply with this principle, and 3R newsletters are distributed. One CRO visit planned for 2021 was conducted by MorphoSys AG and further visits are planned for next year. Bioethics in Clinical Development We conduct clinical trials in accordance with the ICH Harmo- nized Tripartite Guidelines for Good Clinical Practice (ICH- GCP), with applicable local regulations and with the ethical prin- ciples laid down in the Declaration of Helsinki. At MorphoSys, we make it a priority to protect the rights, safety and well-being of all participants involved in clinical trials. Clinical trials are only initiated after the Independent Ethics Committee (IEC)/ Institutional Review Board (IRB) and/or regulatory authorities give written approval or a favorable opinion as required. In ad- dition, written informed consent of clinical trial participants must be obtained prior to their participation. Focus in 2021 The acquisition of Constellation Pharmaceuticals has acceler- ated the growth of the MorphoSys pipeline with the addition of two compounds in mid- to late-stage clinical development, CPI-0209 and pelabresib respectively. Focus in 2021 was the integration of Constellation Pharmaceu- tical’s development activities into MorphoSys, leveraging on the current established infrastructure of MorphoSys and build- ing one global Development Organization. 11Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance Bioethics in Clinical Developement Bioethics in Preclinical Reasearch
Despite an improving situation of the global COVID-19 pan- demic, restrictions on visits to healthcare facilities, increased demands on healthcare services and changes in the availabil- ity of study personnel are still present. MorphoSys continu- ously monitors the situation and decides on a case-by-case basis to ensure the safety of patients, study personnel and other stakeholders, as well as to safeguard data integrity in the conduct of all ongoing studies of tafasitamab, felzartamab, pelabresib and CPI-0209 programs. Selling Practices and Labeling In 2020 the U.S. Food and Drug Administration (FDA) approved our immunotherapy Monjuvi® (tafasitamab-cxix) under acceler- ated approval. MorphoSys US Inc. and Incyte have a partnership to co-commercialize Monjuvi® in the U.S. Outside of the U.S., In- cyte has exclusive commercialization rights of tafasitamab-cxix which is sold under the trade name Minjuvi®. As Monjuvi® is co-commercialized, a joint multidisciplinary review committee (RC) has been established to review and approve all commercial materials and tactics. The joint RC consists of Legal, Medical and Regulatory functional reviewers represented by both MorphoSys US Inc. and Incyte and convenes on a weekly basis, in order to review and approve materials. For commercial mate- rials not covered by the co- commercialization agreement with Incyte, MorphoSys US Inc. has an independent RC, which consist of the same functional representatives. All sales and marketing materials must be reviewed and ap- proved by the joint RCs prior to submission to the health author- ities. Due to the accelerated approval subpart E pathway for Monjuvi®, once commercial materials are submitted to the FDA, there is a 30-day review period required prior to the use of any promotional materials supporting the product. The formal training of our sales representatives is an essential element of our commercial operations aligned to business ethics and compliance policies. Each representative completes detailed training on the product and disease state. Successful certifica- tion is required before engagement with any healthcare profes- sionals. A learning management system and a new validated learning platform tracks training progress and certification. In addition, our sales representatives are trained on all relevant compliance and legal policies by the MorphoSys compliance and legal teams. As we are consistently evaluating the evolving landscape and the effectiveness of our promotional materials, enhancements may be made to our materials, including the use of new data, as appropriate. Subsequent and continuous train- ing and certification of the sales representatives on how to ap- propriately educate customers using new material is always planned and completed prior to actual use. The balance of efficacy and safety consistent with product labe- ling is always displayed in all promotional materials. As this is the primary information that can be shared with healthcare providers, we attach great importance to ensure all relevant in- formation is included to achieve the highest quality standards. Focus in 2021 Despite the global COVID-19 pandemic, our focus in 2021 was to continue to execute on the launch of Monjuvi® to support patients with relapsed or refractory DLBCL (r/r DLBCL). As the pandemic impacted the physical access to hospitals and other healthcare facilities across the U.S., MorphoSys US Inc. adapted its engagement approach and accelerated our digital personal and non-personal efforts to provide educational information to healthcare professionals and customers.We anticipate the mix between in-person and virtual customer engagements will con- tinue to evolve during the COVID-19 pandemic. In addition to adapting our customer engagement model, we have made it easier for healthcare professionals to directly re- quest the information they need to support treatment decisions. Now available on the MorphoSys website is an option for health- care providers to compliantly notify the organization of their interest for an engagement with a sales representative. In 2022, we plan to continue in the future to increase the aware- ness of Monjuvi® and its efficacy and safety data with health- care professionals so that they can make the best treatment choices for their patients impacted by r/r DLBCL. We will continue in the future to improve our peer-to-peer healthcare educational resources inclusive of case-based roundtable dis- cussions and the development of Hematologic Oncology expert “On Demand” video series reviewing Monjuvi® data. Lastly, to increase our understanding of and support for the people living with and directly impacted by DLBCL, we will appropriately and compliantly strengthen our partnerships in the future with patient advocacy groups. 12Our Sustainability Approach Social Matters Employee Matters Additional InformationBusiness Ethics and Compliance Selling Practices and Labeling Bioethics in Clinical Developement
13Our Sustainability Approach Business Ethics and Compliance Employee Matters Additional InformationSocial Matters 02 Social Matters Quality of Products ––––––––––––––––––––– 14 Access to Medicine –––––––––––––––––––––– 15 Innovation in Research and Development (R&D) –––––––––––––––– 16 Data Protection –––––––––––––––––––––––– 16
QMS Corporate Requirements/ Departmental Requirements Executive Committee Regulatory Requirements Social Matters In the field of social matters, MorphoSys focuses on the follow- ing aspects as identified in the materiality analysis: 1) quality of products, 2) access to medicine, 3) innovation in research and development (R&D) and 4) data protection. Quality of Products We have a special responsibility to comply with the utmost in quality standards with all processes. We use a quality man- agement system (QMS) at MorphoSys AG and a QMS at Con- stellation Pharmaceuticals to ensure the quality of commercial and investigational medicinal products and the integrity and reliability of the data generated. Furthermore, the QMS shall ensure the protection of rights, safety and well-being of clini- cal trial subjects. Our integrated QMS complies with the applicable principles of Good Manufacturing Practice (GMP), Good Clinical Practice (GCP), Good Laboratory Practice (GLP), Good Distribution Prac- tice (GDP) and Good Pharmacovigilance Practice (GVP), com- monly referred to as GxP in aggregate, to control and regulate these processes in our own drug development activities. In do- ing so, we want to ensure that all development activities follow national and international laws, rules and guidelines. Our in- dependent quality department prepares an annual risk-based audit plan for the objective auditing of contract research organ- izations, investigational sites, suppliers and contract manu- facturers in the GxP area as well as for internal GxP systems and processes. The Head of Global Quality reports to the Head of Technical Operations with a dotted line to the Chief Executive Officer (CEO). The integration of Constellation Pharmaceuticals has al- ready been initiated, starting with a direct reporting line from the Vice President Quality to the Head of Global Quality and implementation of regular meetings. The central aim of this integration is to establish a fully integrated and aligned organ- ization, governance and quality standards. In addition, GMP/ GDP status updates are reported and discussed with relevant members of the operational management team in a quality management review meeting every quarter and an annual review with the operation managers. Quality Management System at MorphoSys 1 Standard operating procedures 2 Contract manufacturing organization 3 Contract testing organization 4 Contract research organization 01 Training and Qualification 02 Self-Inspection/ Internal Audits 03 Documentation System 04 Handling of Deviations, Change Control, Complaints, Out of Specification (OOS) and Recalls 05 Batch Record Review/ Batch Release 06 SOP1 System 07 External Audits (CMO2, CTO3, CRO4, clinical trial sites 14Our Sustainability Approach Business Ethics and Compliance Employee Matters Additional InformationSocial Matters Quality of Products
Focus in 2021 MorphoSys conducted audits in 2021 in the GxP area. Due to COVID-19 pandemic constraints, some of the audits were con- ducted remotely. There have been no critical audit findings in 2021. To make our organization more agile and lean, the integration of Constellation Pharmaceuticals has been a key priority in 2021. We are also aiming to roll out an electronic quality sys- tem encompassing key quality processes which will proceed throughout 2022 for MorphoSys and Constellation Pharmaceu- ticals. In addition, we implemented online inspection readiness training as part of our preparation for hosting regular inspec- tions by the U.S. FDA or local authorities for all employees at MorphoSys AG and MorphoSys US Inc. Access to Medicine Ensuring access to our medicines is a critical priority for MorphoSys, and we make considerable investments in develop- ing potential medicines for patients in need. MorphoSys does so without a guarantee of clinical and commercial success, as many products in research and development phases do not achieve market authorization. Sustainable revenues from ap- proved and commercially viable medicines allow for future investments into our research and development efforts. At MorphoSys, our philosophy is to responsibly price our med- icines by balancing the value of the outcomes and innovation they bring to patients and the healthcare system. There are patients who do not have third-party coverage in several coun- tries of the world. For this reason, access to medicine also i nvolves a social, charitable commitment to help patients without insur- ance coverage. MorphoSys is dedicated to supporting patients throughout their treatment journeys, and we are working to- gether to help remove patient access barriers. The responsible department consists of a global team responsi- ble for setting the strategic direction for value, access and policy across all markets and of a respective team to execute tactics in the U.S. The reporting line structure is directly to the General Manager of MorphoSys US Inc. with regular updates to the Management Board. The integration of Constellation Pharmaceuticals is currently ongoing. As part of MorphoSysʼ and Incyteʼs commitment to supporting patients, the ›› My MISSION Support program was launched in 2020. My MISSION Support is a robust patient support program offering financial assistance, ongoing education and other re- sources to eligible patients who are prescribed Monjuvi® in the U.S. The My MISSION Support program has been able to support patients in initiating treatment with Monjuvi® since FDA approval, by helping them understand their insurance benefits and offering financial assistance to those who qualify. In addition to My MISSION Support, the non-profit MorphoSys Foundation (“the Foundation”) was established in the previous year in the U.S. Its purpose is to help patients access appropri- ate and necessary care by administering Free Drug Patient As- sistant Program (PAP). All patients must meet certain eligibil- ity requirements, and are either uninsured, have insurance that does not cover Monjuvi®, or cannot afford the cost-sharing for the drug under policies set by their insurance. Furthermore, the Foundation provides charitable donations to independent charitable organizations that provide financial or other assis- tance to patients undergoing treatment for particular disease. Focus in 2021 Patients receiving cancer treatments during the COVID-19 pandemic were isolated from their caregivers during their treatment and in many instances hesitant to go to their doctors offices to receive treatment. The burden of the pandemic was high for these patients. In response to this need, we offered a Patient Appointment Kit for those patients enrolled in the My MISSION Support program, which included hand sanitizer, gloves and masks. We also implemented several digital tools to support our patients and their providers in enrolling in the My MISSION Support program, since many patients had limited access to financial counselors within the practice. In 2021 the MorphoSys Foundation helped fund programs to support pa- tients affected by the COVID-19 pandemic. In 2022 we want to ensure patient support programs continue to offer robust support for patients. 15Our Sustainability Approach Business Ethics and Compliance Employee Matters Additional InformationSocial Matters Access to Medicine Quality of Products
Innovation in Research and Development (R&D) At MorphoSys, our ambition is to redefine how cancer is treated. Our research and development activities address areas of high unmet medical need where people’s lives depend on novel, more effective and differentiated treatment options. We aim to make a real difference in patients’ lives by focusing on thera- peutic areas that best fit our expertise and make the best use of our resources. This includes hematological and solid tumor in- dications as well as autoimmune diseases. At the core, we are aiming to discover, develop, and deliver innovative medicines, and to make them accessible to patients – a commitment for a sustainable contribution to society’s health. Focus in 2021 Our focus in 2021 was to identify and evaluate suitable licens- ing or acquisition opportunities to expand our clinical pipeline. In July 2021, we completed the acquisition of Constellation Pharmaceuticals. Both companies, MorphoSys and Constella- tion Pharmaceuticals, work in the fields of hematology and on- cology and with the combination of our research and develop- ment portfolio, we are best positioned to discover and develop highly differentiated cancer medicines. Following the closure of the acquisition, there was an extensive period of exchange and alignment between the two companies. Both on the portfolio as well as on the functional level a series of deep dives and review sessions took place to ultimately agree on and execute on a port- folio prioritization strategy and on a fully integrated functional set up. By the end of 2021, the combined Research and Develop- ment organization operates in an integrated, global organiza- tional setup. Both, the Head of Research and Head of Develop- ment report directly to the Chief Research & Development Officer (CR&DO) ensuring full alignment and close collaboration be- tween the organizations. All divisions from MorphoSys and Constellation Pharmaceuticals are working closely together to advance our combined portfolio and overall R&D activities. Our cross-functional governance body, the Portfolio Innovation Board (PIB), builds the platform to elevate and advance key stra- tegic questions, to ensure an effective and globally aligned exe- cution of our R&D strategy. Our laboratory operations continued to run smoothly during the COVID-19 pandemic. Significant advances were also made to use patient-derived ma- terials and in vitro disease models to minimize the need for animal testing. Information about ongoing clinical trials with our investiga- tional drugs is available on ›› www.clinicaltrials.gov. Our clinical pipeline can be accessed ›› here. Data Protection As a biopharmaceutical company, we constantly work with per- sonal data of patients, employees, partners and other stakehold- ers. The protection of these data is important. In conjunction with the General Data Protection Regulation of the EU (GDPR) as well as U.S. requirements for the protection and confidential handling of protected health information (PHI), we imple- mented various procedures to safeguard compliance with these regulations and are continuously working on further enhance- ments. Our team in the U.S. is offered trainings on compliance with the Healthcare Insurance Portability and Accountability Act (HIPAA) and the appropriate use of PHI. MorphoSys AG continues to have an external Data Protection Officer (eDPO) in line with the GDPR and the German Data Pro- tection Act. The eDPO summarizes results in a report. A defined reporting process comes into force immediately in case of sus- picious incidents. Focus in 2021 We implemented a data protection e-learning platform to make training accessible also in a remote working area. This train- ing is for all MorphoSys AG employees, and it comprises the principles of GDPR, obligations of employees, data processing, rights of data subjects, the role of our eDPO and legal conse- quences regarding data protection violations. 16Our Sustainability Approach Business Ethics and Compliance Employee Matters Additional InformationSocial Matters Data Protection Innovation in Research and Development (R&D)
We also updated our intercompany data processing agreement to incorporate Constellation Pharmaceuticals and the new Standard Contractual Clauses adopted by the European Com- mission in June 2021. There were no reportable data protection incidents at MorphoSys AG in 2021. Data protection via respective IT security measures continued to be a key topic in the reporting year. The Company utilized an automated penetration testing and validation platform to verify the technical security controls and detect potential weak- nesses. No serious weaknesses were identified. Within the scope of special training and phishing simulations, employees learned about their joint responsibility and essential contribu- tion to IT security in our Company. Measures to improve collab- oration were selected with a focus on security and additionally secured through integration in Security Information & Event Management (SIEM) and Identity & Access Management System (IAM). Our internal Computer Emergency Response Team (CERT) has not detected any serious security incidents during the report- ing year. Finally, various platforms in the area of Endpoint Detection & Respond (EDR), Cloud Access Security Broker (CASB), Identity & Access Management System (IAM), Security Information & Event Management (SIEM) and Mobile Threat Defense (MTD) were introduced or further developed in order to optimize our cyber defense measures and to ensure data integrity and protection. Data Protection 17Our Sustainability Approach Business Ethics and Compliance Employee Matters Additional InformationSocial Matters
03 Employee Matters Employer Attractiveness –––––––––––––––– 19 Diversity and Equal Opportunities ––––––– 20 Employee Engagement ––––––––––––––––– 21 Occupational Health and Safety (OHS) ––– 23 18Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters
Employee Matters Our Human Resources (HR) department manages all topics re- lated to employer attractiveness, diversity and equal opportuni- ties, and employee engagement. Our Health and Safety depart- ment, integrated into the Technical Operations area, takes care of all aspects of occupational health and safety (OHS). Our aspiration is to give more hope to people with cancer and our employees are crucial to our success. In an industry such as biotechnology, where success largely depends on the innova- tion capability and commitment of our employees, aspects such as employee attraction, retention and engagement are critical success factors. The Management Board has made it a key pri- ority to focus on employee engagement. Employee satisfaction is part of our short and long-term goals and this commitment is reflected in the inclusion of employee engagement as key perfor- mance indicator for the Long-Term Incentive Plan 2021 of the Management Board and selective employee groups becoming due in 2025. For the first time in 2021, we assessed Environmen- tal, Social and Governance topics as part of our future annual employee survey to identify areas of improvement. MorphoSys is aiming for sustainable management practices across all three areas and moving forward we will measure progress annually. Employer Attractiveness With the acquisition of Constellation Pharmaceuticals our workforce has grown to more than 7001 employees at the end of 2021. As a combined company, we are focusing on the needs of patients and are inspired by our company values – Courage, Urgency, Innovation and Collaboration – in everything we do. Our employer proposition is based on our strong commitment to patients and our employees. With the global COVID-19 pandemic, the biotech sector has been in focus. New investments are being made in the pharma- ceutical industry, worldwide, and particularly in the U.S. and Germany, the main markets in which MorphoSys operates. To engage qualified professionals across scientific, medical, com- mercial and enabling functions, MorphoSys is keen to articu- late a value proposition and providing a working environment of personal growth, aligned with the Company’s objective to become a leader in hematology/oncology. This is embedded in our new employee program ESPRIT, “The Spirit of MorphoSys,” as well as the New Work concept, providing attractive working models aligned with current demands for flexibility and hybrid approaches, both launched in 2021. As we want to be well posi- tioned for our growth, we have further expanded our social media presence by making more content available on LinkedIn and selective portals, and are working continuously and with focus on workforce planning and securing the talent to enable our strategic goals. Our workforce planning efforts were focused on understanding the synergy potential after the acquisition of Constellation Pharmaceuticals, as well as staffing new areas to drive automatization and digitalization. In 2021 the Company’s Life and Job pages in LinkedIn were visited by more than 13,000 visitors. 54% of the visitors viewed the Jobs area and 39% of new hires visited the Life or Job pages, showing a high degree of success in our employer branding and external outreach. We are committed to transparency and equal opportunities in our job vacancies, development of em- ployees, and a positive working environment. All our open job opportunities are advertised worldwide. In 2021, we launched a new initiative “ESPRIT” in MorphoSys AG and MorphoSys US Inc., our new performance philosophy to build a culture of growth and established new people practices that are aligned with our values. This includes priority setting, ongoing feedback, rewards and recognition, and value-based leadership. As part of the integration process, Constellation Pharmaceuticals employees will also be part of the ESPRIT pro- gram from 2022 onwards. MorphoSys’ employer attractiveness strategy builds upon creating a modern and appealing working environment for candidates who are looking to make a differ- ence and bring more hope to people with cancer. The ESPRIT program is one of the main pillars and embeds our ways of working at MorphoSys. MorphoSys is focused on attracting skilled employees in all technical areas as well as leadership competencies, since lead- ership is directly connected to employee engagement, sustain- able management and our overall Company success. Our Global Leadership Group is comprised of more than 10% leaders from all departments across the Company, worked with the Manage- ment Board on enabling the implementation of our strategy, balancing a growing organizational structure with reduced complexity and cross-functional collaboration and the launch and implementation of ESPRIT. We view a leadership environ- ment characterized by strong values, empowerment and ac- countability as essential to achieving our goals. 1 Released employees, trainees and employees on parental leave are not included. 19Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Employer Attractiveness
Total Employees (in %) Employees2 by Gender (December 31, 2021) 458 U.S. Germany female male 59 43 Nations732 2021 415842 Total Employees (Number) Employees by Region (Number) 33 46 2020 44 32 2021 Executives3 (Number) 2020 274 2 Released employees, trainees and employees on parental leave are not included. 3 Executives of the first and second management level. Diversity and Equal Opportunities Valuing diversity and ensuring equal opportunities are firmly anchored in our corporate culture. We believe that every single colleague needs to be heard and plays an important role in con- tributing to our success. We therefore are committed to policies that do not discriminate in recruitment, hiring, training, pro- motion or other employment practices for reasons of race, color, religion, gender, gender identity, national origin, age, sexual orientation, marital or protected veteran status, medical condi- tion, pregnancy, disability or any other legally protected status. We aim for an open working environment where creativity and innovation can flourish. In 2020 our CEO Jean-Paul Kress, M.D., signed the “CEO Pledge for a More Equitable and Inclusive Life Sciences Industry” ini- tiated by the Massachusetts Biotechnology Council to demon- strate the commitment of MorphoSys and the whole biotechnol- ogy industry to diversity and inclusion. Our diversity concept pursuant to the German Commercial Code (HGB) can be found in our ›› Corporate Governance Report. It is paramount to MorphoSys to create a culture of collabora- tion and inclusion of different perspectives, where everyone can contribute and bet at their best. At the end of 2021, 59% of employees were women, and 58% of executives3 were women. The proportion of women in the Com- pany’s workforce thus remains at a consistently high level. In addition, we proudly employed individuals of 43 different nation- alities, which adds to our identity as a truly global organization. For a comparison with the 2020 figures, it should be taken into account that Constellation Pharmaceuticals is now included in the 2021 figures. Employees2 by Nations (December 31, 2021) 20Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Diversity and Equal Opportunities
Overall ESG scores (in %) 4 Overall scores: Average favorable score of all 31 questions asked in the 2021 survey. Environment Social Governance 78 75 61 “At MorphoSys, we are committed to ensuring the best talent is chosen, regardless of an indivi- dual's gender, race, religion, national origin, or age.” Jean-Paul Kress, M.D., CEO, MorphoSys In 2021 MorphoSys was ranked the number one company in Germany and number two among European healthcare compa- nies for female representation at the leadership level and in decision-making positions in the European Women on Boards Gender Equality Index Report, which was released on January 20, 2022. The European Women on Boards Gender Equality Index Report assessed 668 European companies across 19 countries. Based on their Gender Diversity Index, an aggregated indicator that reflects and weighs the share of women in leader- ship positions, in executive functions, on boards and in board committees. MorphoSys received a score of 0.89, representing nearly a per- fect gender-balanced leadership team (score of 1 is a perfect score). MorphoSys’ Supervisory Board is gender balanced with three female and three male members, and the Company’s Exec- utive Committee, the highest Management Body within the or- ganization, includes three female members out of seven leaders. In 2022 our goal is to focus on further enhancing our diversity and inclusion efforts by driving focused initiatives with em- ployee resource groups (ERGs), diversified supplier networks, and social responsibility initiatives in our communities. Employee Engagement As we are striving to create a working environment that em- braces sustainability and social responsibility, the Manage- ment Board has made our employee survey a top priority and included the results in our KPIs to make sure it is measured and reviewed regularly. In addition, employee engagement is an important success factor, giving insights into the degree to which employees identify with the values of MorphoSys and the Company practices, and how strong their bond with the Company is. In 2021 we conducted an employee survey for the first time for all MorphoSys employees in the U.S. and Germany to evaluate environmental, social and governance aspects. We achieved a participation rate of 81%, which is a very strong response rate for a first-time survey, and all three dimensions of Environ- ment, Social and Governance overall scored positive4 above 60%. The high participation rate and the favorable responses in many questions are evidence of an open feedback culture and a high degree of identification and interest of employees with ESG topics. A total of 31 questions were asked. Environmental questions were related to safety in the workplace and environmentally friendly practices at MorphoSys. The overall environment score was 78%. Social questions were related to the commitment to patients, delivering excellence and quality standards, and career development and training. The overall social score was 75%. Questions on governance related to diversity and in clusion, ethics and compliance, and learning culture. The overall gov- ernance score was 61%. Our strongest results highlighted the connection between our employees’ work and our purpose to help people living with cancer, our strong commitment to deliv- ering excellence for patients, our supportive and collaborative working environment and our commitment to em loyee’s health and safety, especially in COVID times. 21Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Diversity and Equal Opportunities Employee Engagement
Based on these first-time baseline results we had the opportu- nity to gather valuable feedback and identify improvement potential from which the following measures are derived for 2022: We will be focusing on providing clarity around MorphoSys’ environmental actions, strengthening our commu- nication around our Company strategy and goals, enhancing personal/professional development opportunities, and foster- ing a learning culture. Going forward, there will be an ESG metric in the Long-Term Compensation Plans for executives and selective employee groups. The ESG metric is derived from the ESG Survey and reflects Employee Engagement. The 2021 Employee Engagement score was 63%. Our employees showed in 2021 a high degree of involvement in their communities, sponsoring specific charity events and get- ting involved on World Cancer Day and Blood Cancer Aware- ness Month. Many MorphoSys employees also joined efforts with the Leukemia and Lymphoma Society for awareness events such as “Light the Night.” In December 2021 our German Teams organized a Christmas charity campaign where wish lists from girls who are cared for by a local organization in shelters and homes, mostly girls and families in crisis situations, were fulfilled by our employees. In the US, MorphoSys partnered with the East End House in Cam- bridge to fulfill Christmas wish lists for families in need of some support. The East End House’s Adopt-A-Family program helped families in 2021 by matching them with individuals, families, and businesses who could gather the items on their wish lists. In 2022 our goal is to continue to engage employees with a com- bination of communication, discussion forums, social events in virtual, hybrid and in-person settings to encourage connections and sense of belonging across all our workforce. In addition, we will continue our community outreach efforts and promote awareness initiatives around cancer and its impact on society. Christmas Charity Campaign in Planegg (December 2021) 22Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Employee Engagement
Occupational Health and Safety (OHS) MorphoSys considers it a key responsibility to provide a safe, healthy and clean working environment as stated in our Code of Conduct, and to comply with all applicable health, safety and environmental laws and regulations, company standards and best practices. Focus in 2021 The COVID-19 pandemic has accelerated the rethinking of our workplace. At MorphoSys, the compatibility of working re- motely and in the office has played an important role. A focus in 2021 was to introduce the New Work concept at MorphoSys AG, which leads to a completely new way of working in our Com- pany in response to the new demands of digital working. To improve the ergonomic situation of our employees we equipped the offices with electronically height-adjustable desks and pro- vided instructional videos for the correct adjustment of the chair in the home office. Our employees at MorphoSys AG have the possibility to book their workstation via an internal booking tool. All workstations are equipped in the same way, but if special equipment is needed, the workstation can also be booked permanently. MorphoSys wants to offer its employees the most flexible work- ing conditions, both in the home office and in the local office. During peaks of the pandemic, employees were encouraged to work from home where feasible. In-office work was optional and at the discretion of the employee and the respective line manager within the existing pandemic guidelines for office work. Measures taken included capacity limitations, wearing masks, use of sanitizers, social distancing and contact tracing. Principles for Occupational Safety at MorphoSys Only certified companies are authorized by MorphoSys to dispose of chemical waste Only specially trained employees are allowed to work with toxic substances Pathogenic organisms are processed in labora- tories with particular safety standards Lowest possible amounts of hazardous substances used Introduction of hazardous biological materials for R&D purposes at MorphoSys AG • A dedicated biosafety team as defined by the “Gentechnik Sicherheitsverordnung” (German Genetic Engineering Safety Directive) and Infek- tionsschutzgesetz (infection control act ) • ▪ Safety professionals perform an internal audit to assess the risk involved • ▪ Specific safety training for the employees working with the substances • ▪ Assurance that all safety measures are implemented before actual work commences 23Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Occupational Health and Safety (OHS)
For the Planegg site, our task force led by the Health and Safety department guaranteed the implementation of all regulatory requirements as well as informed all employees about upcom- ing measures and their potential impact. For the Boston offices, the site manager was responsible for the strict adherence to federal and state guidelines as communicated and updated on state and federal websites. As part of our Business Continuity Plan, a Company-wide health emergency plan has been established for MorphoSys AG and MorphoSys US Inc. which includes a local plan for each site as there are different requirements and regulations by law in Ger- many and the United States. The health emergency plan and the above-listed measures, with a continuous adaption to all applicable COVID-19 regula- tions, enabled us to ensure normal business operations despite the restrictions caused by the COVID-19 pandemic. During the reporting year there was one reportable occupa- tional accident for MorphoSys AG, and therefore the number of work-related accidents remained at a very low level and was significantly below the average level for the chemical industry in Germany, which is used as a comparative value (13.8 notifia- ble accidents at work per 1,000 full-time employees in the lat- est survey by the German Employer’s Liability Insurance Asso- ciation for Raw Materials and the Chemical Industry (BG RCI) in 2020; a reportable accident as defined by the BG is an acci- dent at work or a commuting accident that causes more than three calendar days of incapacity to work). Through the help of guidelines, training and regular medical checkups, our goal is to be vigilant and ahead of the curve in order to keep the number of accidents at this low level while maintaining the safety and well-being of all our employees. 24Our Sustainability Approach Business Ethics and Compliance Social Matters Additional InformationEmployee Matters Occupational Health and Safety (OHS)
To MorphoSys AG, Planegg We have performed a limited assurance engagement on the separate non-financial group report of MorphoSys AG, Planegg, (hereinafter the “Company”) for the period from 1 January to 31 December 2021 (hereinafter the “Separate Non-financial Group Report”). Not subject to our assurance engagement are the external sources of documentation or expert opinions mentioned in the Separate Non-financial Group Report. Responsibility of the Executive Directors The executive directors of the Company are responsible for the preparation of the Separate Non-financial Group Report in ac- cordance with §§ (Articles) 315c in conjunction with 289c to 289e HGB ("Handelsgesetzbuch": "German Commercial Code") and Article 8 of REGULATION (EU) 2020/852 OF THE EURO- PEAN PARLIAMENT AND OF THE COUNCIL of 18 June 2020 on establishing a framework to facilitate sustainable invest- ment and amending Regulation (EU) 2019/2088 (hereinafter the "EU Taxonomy Regulation”) and the Delegated Acts adopted thereunder, as well as for making their own interpretation of the wording and terms contained in the EU Taxonomy Regula- tion and the Delegated Acts adopted thereunder, as set out in section EU Taxonomy Regulation of the Separate Non-financial Group Report. This responsibility includes the selection and application of appropriate non-financial reporting methods and making as- sumptions and estimates about individual non-financial disclo- sures of the Group that are reasonable in the circumstances. Furthermore, the executive directors are responsible for such internal controls as they consider necessary to enable the preparation of a Separate Non-financial Group Report that is free from material misstatement whether due to fraud or error. The EU Taxonomy Regulation and the Delegated Acts issued thereunder contain wording and terms that are still subject to considerable interpretation uncertainties and for which clarifi- cations have not yet been published in every case. Therefore, the executive directors have disclosed their interpretation of the EU Taxonomy Regulation and the Delegated Acts adopted thereunder in section EU Taxonomy Regulation of the Separate Non-financial Group Report. They are responsible for the defen- sibility of this interpretation. Due to the immanent risk that indeterminate legal terms may be interpreted differently, the legal conformity of the interpretation is subject to un- certainties. Independence and Quality Control of the Audit Firm We have complied with the German professional provisions re- garding independence as well as other ethical requirements. Our audit firm applies the national legal requirements and pro- fessional standards – in particular the Professional Code for German Public Auditors and German Chartered Auditors (“Berufssatzung für Wirtschaftsprüfer und vereidigte Buch- prüfer“: “BS WP/vBP”) as well as the Standard on Quality Con- trol 1 published by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany; IDW): Requirements to quality control for audit firms (IDW Qualitätssicherungsstandard 1: Anforderungen an die Qualitätssicherung in der Wirtschaft- sprüferpraxis - IDW QS 1) – and accordingly maintains a com- prehensive system of quality control including documented policies and procedures regarding compliance with ethical re- quirements, professional standards and applicable legal and regulatory requirements. Responsibility of the Assurance Practitioner Our responsibility is to express a conclusion with limited assurance on the Separate Non-financial Group based on our assurance engagement. We conducted our assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance Engagements other than Audits or Reviews of Historical Financial Information, issued by the IAASB. This Standard requires that we plan and perform the assurance engagement to obtain limited assurance about whether any matters have come to our attention that cause us Independent Practitioner’s Report on a Limited Assurance Engagement on Non-financial Reporting1 1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on the German version of the separate non-financial group report and issued an independent practitioner`s report in German language, which is authoritative. The following text is a translation of the independent practitioner`s report.. 25Our Sustainability Approach Business Ethics and Compliance Social Matters Employee Matters Additional Information Limited Assurance Report
to believe that the Company’s Separate Non-financial Group Report, other than the external sources of documentation or expert opinions mentioned in the Separate Non-financial Group Report, is not prepared, in all material respects, in accordance with §§ 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the Delegated Acts issued thereun- der as well as the interpretation by the executive directors dis- closed in section EU Taxonomy Regulation of the Separate Non-financial Group Report. In a limited assurance engagement the procedures performed are less extensive than in a reasonable assurance engagement, and accordingly a substantially lower level of assurance is ob- tained. The selection of the assurance procedures is subject to the professional judgement of the assurance practitioner. In the course of our assurance engagement, we have, amongst other things, performed the following assurance procedures and other activities: • Gain an understanding of the structure of the Group’s sus- tainability organisation and stakeholder engagement • Inquiries of the executive directors and relevant employees involved in the preparation of the Separate Non-financial Group Report about the preparation process, about the inter- nal control system relating to this process and about disclo- sures in the Separate Non-financial Group Report • Identification of likely risks of material misstatement in the Separate Non-financial Group Report • Analytical procedures on selected disclosures in the Sepa- rate Non-financial Group Report • Performance of web meetings as part of the inspection of pro- cesses for collecting, analyzing and aggregating selected data • Reconciliation of selected disclosures with the correspond- ing data in the consolidated financial statements and group management report • Evaluation of the presentation of the Separate Non-financial Group Report • Evaluation of the process to identify taxonomy-eligible eco- nomic activities and the corresponding disclosures in the Separate Non-financial Group Report • Inquiries on the relevance of climate-risks In determining the disclosures in accordance with Article 8 of the EU Taxonomy Regulation, the executive directors are re- quired to interpret undefined legal terms. Due to the immanent risk that undefined legal terms may be interpreted differently, the legal conformity of their interpretation and, accordingly, our assurance engagement thereon are subject to uncertainties. Assurance Opinion Based on the assurance procedures performed and evidence ob- tained, nothing has come to our attention that causes us to believe that the Separate Non-financial Group Report of the Company for the period 1 January to 31 December 2021 is not prepared, in all material respects, in accordance with §§ 315c in conjunction with 289c to 289e HGB and the EU Taxonomy Regulation and the Dele- gated Acts issued thereunder as well as the interpretation by the executive directors disclosed in section EU Taxonomy Regula- tion of the Separate Non-financial Group Report. We do not express an assurance opinion on the external sources of documentation or expert opinions mentioned in the Separate Non-financial Group Report. Restriction of Use We draw attention to the fact that the assurance engagement was conducted for the Company’s purposes and that the report is intended solely to inform the Company about the result of the assurance engagement. Consequently, it may not be suitable for any other purpose than the aforementioned. Accordingly, the report is not intended to be used by third parties for mak- ing (financial) decisions based on it. Our responsibility is to the Company. We do not accept any responsibility to third parties. Our assurance opinion is not modified in this respect. Munich, 15 March 2022 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft Hendrik Fink ppa. Felix Wandel Wirtschaftsprüfer Wirtschaftsprüfer [German public auditor] [German public auditor] 26Our Sustainability Approach Business Ethics and Compliance Social Matters Employee Matters Additional Information Limited Assurance Report
MorphoSys AG Semmelweisstrasse 7 82152 Planegg Germany Phone: +49-89-89927-0 Fax: +49-89-89927-222 Email: info@morphosys.com www.morphosys.com/en Investor Relations Phone: +49-89-89927-404 Fax: +49-89-89927-5404 Email: investors@morphosys.com Concept and Design 3st kommunikation GmbH, Mainz Photography/Picture Credits Getty Images iStock MorphoSys Translation Klusmann Communications, Niedernhausen This non-financial report is also published in German and is available for download on our website. For better readability, the masculine form has been used in this report equally to all genders. HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, CysDisplay®, RapMAT®, Ylanthia®, 100 billion high potentials®, Slonomics®, CyCAT®, MONJUVI® and MINJUVI® are registered trademarks of the MorphoSys Group. Tremfya® is a registered trademark of Janssen Biotech, Inc. XmAb® is a registered trademark of Xencor Inc. National Comprehensive Cancer Network®, NCCN® and NCCN Guidelines® are registered trademarks of the National Comprehensive Cancer Network, Inc. Imprint 27Our Sustainability Approach Business Ethics and Compliance Social Matters Employee Matters Additional Information Imprint
