Press Release Martinsried/Munich, July 29, 2004

MorphoSys Reports Six Months 2004 Results Company Raises Revenue and Cash Guidance for 2004

MorphoSys AG (Frankfurt Stock Exchange: MOR; Prime Standard Segment) today reported financial results for the first six months ending June 30, 2004, and at the same time, increased its full year revenue and cash projections. Revenues for the first six months increased by 22% over the prior year to € 8.8 million, and in the same period total operating expenses decreased by 8% to € 9.9 million. The Company increased its projections of year- end revenues to € 21 million (previously € 19 million). The new guidance represents an increase of sales of almost 40% compared to the prior year (2003: € 15.3 million), and resulted from MorphoSys´ strong deal flow during the last months. EBITDA (Earnings before Interest, Tax, Depreciation, and Amortization), excluding stock-based compensation, was positive and amounted to € 1.3 million in the first half of 2004 (2003: € -2.0 million). As a result the Company reduced its net loss by 84% to € 0.8 million. Additionally, MorphoSys’ cash position increased by 29% and amounted to € 29.9 million at the end of the second quarter 2004, compared to € 23.2 million at year-end 2003. On this basis, the Company raised its year-end cash position guidance predicting that the Company’s cash position at year-end 2004 would be at least at € 28 million (previously € 20 million).

First Half Year - 2004: In the first six months of 2004, revenues increased to € 8.8 million (2003: € 7.2 million). Total operating expenses including stock-based compensation for the first six months of 2004 amounted to € 9.9 million, compared to € 10.8 million in the same period of 2003. Research and development costs amounted to € 5.6 million (2003: € 5.7 million); sales, general & administrative expenses decreased to € 3.7 million (2003: € 4.1 million), and stock-based compensation fell to € 0.6 million (2003: € 1.1 million). Amortization of intangibles and depreciation amounted to € 1.5 million for the first six months of 2004 (2003: € 1.1 million). Non-operating income in the first six months of 2004 amounted to € 0.3 million (2003: expense of € 1.3 million). For the first six months of 2004, the Company posted a net loss of € 0.8 million compared to € 4.9 million in the same period of the previous year. The number of outstanding shares at June 30, 2004 was 5,349,203 shares, compared to 4,841,570 at December 31, 2003. The resulting net loss per share for the first six months of 2004 amounted to € 0.15 (2003: € -1.22 per share).

Second Quarter - 2004: In the second quarter of 2004, the Company generated revenues of € 4.5 million, compared to € 3.5 million in the same quarter of 2003. Total operating expenses amounted to € 5.5 million, compared to € 5.4 million in the same quarter of 2003. The resulting net loss for the second quarter was € 1.2 million, compared to € 3.1 million in the second quarter of 2003. At the end of the second quarter, MorphoSys employed 120 people, compared to 95 at year- end 2003. The increase in number of employees was attributed to recently signed collaborations.

Highlights of the Second Quarter 2004 Included: • Conclusion of a major therapeutic antibody collaboration with Novartis AG; Novartis purchased an equity stake of approx. 10% in MorphoSys • Full year revenue projections met during the second quarter of 2004, resulting in a upwards revision of revenue guidance for the full year • Granting of an U.S. patent for proprietary CysDisplayTM screening technologies • MorphoSys awarded for Corporate Governance Excellence • Appointment of Dr. Metin Colpan, cofounder and former Chief Executive Officer of QIAGEN N.V., to the Supervisory Board of MorphoSys

“Our core partnering business is developing very well”, commented Dave Lemus, Chief Financial Officer of MorphoSys AG. “As a result, we have upgraded our revenue guidance and remain optimistic about our prospects.” “We have had an excellent first half year ”, commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. “Our core partnering business is generating strong cash flow, as evidenced by the financial results. Most importantly, the good progress with partners continues to strengthen our therapeutic antibody pipeline. More than twenty active programs based on our HuCAL® technology represent substantial future value in the form of milestones and royalties.”

MorphoSys will hold a public conference call today at 10:00 CET to present the financial results of the first six months of 2004. Dial-in number for the Conference Call (listen-only): +49 (0)69 22222 247 Please dial in 10 minutes before the beginning of the conference. A replay of the conference call will be available on http://www.morphosys.com.

About MorphoSys: MorphoSys develops and applies innovative technologies for the production of synthetic antibodies, which accelerate drug discovery and target characterization. Founded in 1992, the Company's proprietary Human Combinatorial Antibody Library (HuCAL) technology is used by researchers worldwide for human antibody generation. The Company currently has licensing and research collaborations with Bayer (Berkeley, California/USA), Biogen Idec Inc. (Cambridge, Massachusetts/USA), Boehringer Ingelheim (Ingelheim, Germany), Bristol-Myers Squibb (Wilmington, Delaware/USA), Centocor Inc. (Malvern, Pennsylvania/USA), GPC Biotech AG (Munich/Germany), Hoffmann-La Roche AG (Basel/Switzerland), ImmunoGen Inc. (Cambridge, Massachusetts/USA), Novartis AG (Basel, Switzerland), Novoplant GmbH (Gatersleben/Germany), Oridis Biomed GmbH (Graz/Austria), Pfizer Inc. (Delaware/USA), ProChon Biotech Ltd. (Rehovot/Israel), Schering AG (Berlin/Germany) and Xoma Ltd. (Berkeley, California/USA). For further information please visit the corporate website at: http://www.morphosys.com/.

Statements included in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbour provided by Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward- looking statements may be identified by words including “anticipates”, “believes”, “intends”, “estimates”, “expects” and similar expressions. The company cautions readers that forward-looking statements, including without limitation those relating to the company’s future operations and business prospects, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors that may affect future operations and business prospects include, but are not limited to, clinical and scientific results and developments concerning corporate collaborations and the company’s proprietary rights and other factors described in the prospectus relating to the company’s recent public offering.

For more information, please contact MorphoSys:

Dave Lemus Chief Financial Officer Tel: +49 (0) 89 / 899 27-439 Fax: +49 (0) 89 / 899 27-5439 [email protected]

Dr. Claudia Gutjahr-Löser Mario Brkulj Director Corporate Communications PR Specialist Tel: +49 (0) 89 / 899 27-122 Tel: +49 (0) 89 / 899 27-454 Fax: +49 (0) 89 / 899 27-5122 Fax: +49 (0) 89 / 899 27-5454 [email protected] [email protected]

Condensed Consolidated Statement of Operations (U.S. GAAP) - unaudited Three Months Ended June 30, Six Months Ended June 30, In €, except share data 2004 2003 2004 2002 Revenues 4,536,336 3,499,336 8,783,423 7,243,382 Research & Development expenses 3,043,314 2,968,785 5,645,683 5,708,947 General & Administrative expenses 2,161,656 1,823,560 3,652,032 4,071,981 Stock-Based Compensation 249,980 596,146 585,673 1,057,242 Total Operating expenses 5,454,950 5,388,491 9,883,388 10,838,170 Loss from Operations (918,614) (1,889,155) (1,099,965) (3,594,788) Interest Income 9,465 165,494 113,275 185,560 Interest Expense 80,303 812,672 158,009 911,532 Impairment of Marketable Securities - (753,768) - (753,768) Other Income, net (254,485) 192,316 366,906 189,251 Loss before income tax (1,243,937) (3,097,785) (777,793) (4,885,277) Foreign Income Tax Expense - (1) - (1) NET LOSS (1,243,937) (3,097,784) (777,793) (4,885,276)

Basic and Diluted Net Loss per Share (0.25) (0.75) (0.15) (1.22) Shares Used in Computing Basic and Diluted Net Loss per Share 4,931,426 4,113,615 5,097,324 4,002,398

Condensed Consolidated Balance Sheet (U.S. GAAP) in € 6/30/2004 (unaudited) 12/31/03 Cash, Cash Equivalents and Marketable Securities 29,932,523 23,161,031 Accounts Receivable 3,205,792 2,111,710 Prepaid Expenses and Othr Current Assets 699,924 948,575 Total Current Assets 33,838,239 26,221,316 Property and Equipment, Net 2,206,879 1,907,895 Patents, Net 5,712,381 6,103,675 License Fees, Net 10,278,151 10,898,904 Other Assets 3,810,738 627,130 Total Assets 55,846,388 45,758,920

Current Liabilities Accounts Payable 173,379 258,732 Current Portion of License Payable 792,799 677,060 Current Portion of Deferred Revenue 4,524,001 4,272,249 Accrued Employee Benefits 773,121 949,122 Other Accrued Expenses and Liabilities 1,540,251 1,524,439 Total Current Liabilities 7,803,551 7,681,602

Non-Current Liabilities License payable, Net of Current Portion 1,648,925 1,651,360 Deferred Revenue, Net of Current Portion 4,024,103 6,086,205 Other Non-Current Liabilities 3,656,973 - Convertible Bonds Due to Related parties 134,300 157,200 Total Non-Current Liabilities 9,464,301 7,894,765 Total Stockholders’ Equity 38,578,536 30,182,553 Total Liabilities and Stockholders' Equity 55,846,388 45,758,920

Condensed Consolidated Statement of Cash Flows (U.S. GAAP) - unaudited Six Months Ended June 30, in € 2004 2003 Net Income / (Loss) (777, 793) (4,885,276) Net Cash Used in Operating Activities (2, 182,646) (335, 339) Net Cash Used in Investing Activities (4,958,937) (26, 519) Net Cash Provided by Financing Activities 9,364,566 3 8,786 Effect of Exchange Rate Differences in Cash 792 (15,149) Increase/(Decrease) in Cash and Cash Equivalents 2 ,223,775 (338,221) Cash and Cash Equivalents at the Beginning of the Period 6, 652,456 842, 082 Cash and Cash Equivalents at the End of the Period 8, 876,231 503, 861