Shares in Germany's MorphoSys have climbed on the news that its collaboration with Pfizer has been expanded, a move which could lead to much more cash going into its coffers.

The original deal, which involves cooperation on therapeutic antibodies, was signed in December 2003 and had been scheduled to end in December 2008. This has now been extended to the end of 2011 and MorphoSys will continue to use its HuCAL GOLD library to generate therapeutic antibodies against multiple new targets from Pfizer, which will carry out clinical development and marketing of any products. At present, the collaboration covers five active therapeutic antibody programmes.

In financial terms, the potential value for MorphoSys in research funding and potential developmental milestone payments increases to more than $100 million, double the value of the original agreement and not including royalties. Additionally, the extension triggers a one-off payment from Pfizer but further financial details were not disclosed.

The German group's chief executive Simon Moroney, said that 2006 has been very successful for the firm and "today's news represents the fourth substantial expansion of an existing deal." He added that in combination with three new partnerships signed during the year, "this development clearly demonstrates the strong performance of our partnered therapeutic business."

Analyst notes 'excellent' long-term growth prospects

Meantime analysts at Dutton Associates have recently issued a report on MorphoSys which states that investors should focus primarily on the company's "fundamental, underlying momentum, which is positioning it to become, in time, a highly profitable, fast growing company. In short, we judge that MorphoSys' long-term growth prospects are excellent. "

However Dutton adjusted its rating on the stock from 'strong speculative buy' to 'speculative buy' because of a "better-than-20% price advance for the shares subsequent to our initial recommendation."