Issue of Warrants

On May 2, 2008 allocations were made under an options scheme. Under the scheme, a maximum of 4,500,000 options may be issued. Each employee stock option originally entitled the holder to acquire one B share in Morphic at a price of SEK 16 during the period March 1–May 31, 2013.

After adjustment to take account of terms and conditions in options contracts relating to rights issues, each employee stock option now entitles the holder to subscribe for 1.29 B shares at a price of SEK 12.40. The right to exercise the options is subject to a performance condition linked to the Group’s turnover and operating margin. The option holder must also be an employee of the Morphic Group.

To guarantee the company’s obligations in respect of issued options and its duty to pay social-security contributions, it was decided to issue 6,000,000 warrants. If all 6,000,000 warrants are issued and exercised to subscribe for 7,740,000 shares under the options scheme, the new shares would represent approximately 2.4 percent of the company’s share capital at December 31, 2008.