Important Notice This Offering Is Available Only

IMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QIBS (AS DEFINED BELOW) UNDER RULE 144A OR (2) PERSONS OUTSIDE OF THE UNITED STATES MEETING APPLICABLE RESTRICTIONS

IMPORTANT: You must read the following before continuing. The following applies to the Offering Circular following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from the Company or the Joint Global Coordinators (each as defined in the Offering Circular) as a result of such access.

NOTHING HEREIN CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, PERSONS IN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE FOLLOWING OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS DOCUMENT CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORIZED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED IN THE OFFERING CIRCULAR.

Confirmation of your Representation: In order to be eligible to view this Offering Circular or make an investment decision with respect to the securities, investors must be either (1) Qualified Institutional Buyers (“QIBs”) (within the meaning of Rule 144A under the Securities Act) (subject to certain exceptions) or (2) persons who are outside of the United States. By accessing this Offering Circular, you shall be deemed to have represented to the Company and the Joint Global Coordinators that (1) you and any customers you represent are either (a) QIBs, subject to certain exceptions, or (b) outside of the United States and (2) you consent to delivery of such Offering Circular by electronic transmission. If you are in the United States you are deemed to confirm that you have already signed an investor letter and returned it to the Joint Global Coordinators. Other restrictions may apply as set out in the attached Offering Circular and you shall be deemed to have represented to the Company and the Joint Global Coordinators that you have complied therewith.

You are reminded that this Offering Circular has been made available to you on the basis that you are a person into whose possession this Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver or disclose the contents of this Offering Circular to any other person. The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Joint Global Coordinators or any affiliate of the Joint Global Coordinators is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Joint Global Coordinators or such affiliate on behalf of the Company in such jurisdiction.

This Offering Circular has been made available to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently, none of the Company or the Joint Global Coordinators nor any person who controls any of them nor any director, officer, employee nor agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Joint Global Coordinators. This document comprises 185 pages including this notice; please ensure that your copy is complete.

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INTERNATIONAL OFFERING CIRCULAR

LifeCycle Pharma A/S (a public company incorporated with limited liability under the laws of the Kingdom of Denmark, registered number 26527767)

Rights issue of up to a maximum of 395,974,670 new Shares of nominal DKK 1 each at DKK 1.20 per Share with Preemptive Rights for Existing Shareholders at the ratio of 7:1

This offering circular (the “Offering Circular”) has been prepared in connection with a capital increase comprising an offering (the “Offering”) of up to a maximum of 395,974,670 new Shares (the “Offer Shares”) of nominal DKK 1 each of LifeCycle Pharma A/S (the “Company” or “LifeCycle Pharma”) with preemptive rights to subscribe for Offer Shares (“Preemptive Rights”) to the Existing Shareholders (as defi ned below) at the ratio of 7:1. As of the date of this Offering Circular (the “Offering Circular Date”), but prior to the Offering, the Company’s registered share capital is nominal DKK 56,567,810 and consists of 56,567,810 Shares of nominal DKK 1 each, all of which are fully paid (the “Existing Shares”). Pursuant to the authorisation adopted as Article 9 of the Company’s Articles of Association, the board of directors (the “Board of Directors”) passed a resolution on 29 October 2010 to increase the Company’s share capital by up to nominal DKK 395,974,670 (corresponding to 395,974,670 Offer Shares of nominal DKK 1 each). The capital increase will be carried out with Preemptive Rights for Existing Shareholders. Offer Shares which have not been subscribed for by the Company’s shareholders through the exercise of their allocated Preemptive Rights or by other investors through the exercise of their acquired Preemptive Rights before the expiry of the Subscription Period (“Remaining Shares”) may be subscribed for, without compensation to the holders of unexercised Preemptive Rights, by Existing Shareholders and other investors who have made binding undertakings to subscribe for Offer Shares at the Offer Price before the end of the Subscription Period. In the event that binding undertakings made by Existing Shareholders and other investors exceed the number of Remaining Shares, the of Shares will be allocated on the basis of a plan of distribution to be determined by the Board of Directors upon consultation with the Joint Global Coordinators. Allocation will be made on the basis of undertakings received without taking into account whether or not the subscribers are shareholders. The advance undertakings made by LFI a/s and Novo A/S to subscribe for Remaining Shares, as described below, have for effect that they will be subordinate to the other undertakings. On 4 November 2010 at 12:30 p.m. CET (the “Allocation Time”) any person registered with VP Securities A/S (“VP Securities”) as a shareholder of the Company (“Existing Shareholders”) will be allocated 7 Preemptive Rights for each Existing Share held. For every 1 Preemptive Right, the holder will be entitled to subscribe for one (1) Offer Share at a price of DKK 1.20 per Offer Share (the “Offer Price”), which is below the offi cially quoted price of the Existing Shares on 25 October 2010 of DKK 3.02 per Share. The trading period for the Preemptive Rights will commence on 2 November 2010 at 9:00 a.m. CET and close on 15 November 2010 at 5:00 p.m. CET. The subscription period for the Offer Shares (the “Subscription Period” or the “Offer Period”) commences on 5 November 2010 at 9:00 a.m. CET and closes on 18 November 2010 at 5:00 p.m. CET. Preemptive Rights that are not exercised during the Subscription Period will lapse with no value, and the holder of such Preemptive Rights will not be entitled to compensation. Once a holder of Preemptive Rights has exercised such rights and subscribed for Offer Shares, such subscription cannot be revoked or modifi ed by the holder. The Preemptive Rights have been approved for trading and offi cial listing on NAS- DAQ OMX Copenhagen A/S (“NASDAQ OMX”). Investors should be aware that an investment in the Preemptive Rights and the Offer Shares involves a high degree of risk. See “Risk factors” to read about factors that should be considered before investing in the Preemptive Rights and the Offer Shares. LFI a/s, Novo A/S and Alta Partners have each made an advance undertaking to exercise the Preemptive Rights allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Offer Shares. In addition, LFI a/s and Novo A/S have made advance undertakings to subscribe for those Offer Shares that are not (i) subscribed for through the exercise of Preemptive Rights or (ii) otherwise subscribed for by shareholders and investors who, prior to the expiry of the Subscription Period, have submitted binding undertakings to the Joint Global Coordinators to subscribe for Offer Shares at the Offer Price. The advance undertakings made by LFI a/s and Novo A/S to subscribe for Remaining Shares have for effect that they will be subordinate to the other undertakings. As result of the advance undertakings described above, the Company will, subject to the fulfi lment of the condition attached to the advance undertakings and the completion of the Offering, receive total gross proceeds of DKK 475 million, equivalent to 100% of the Offering. The Offering comprises a public offering in Denmark and private placements in certain other jurisdictions. The Offering is subject to Danish law. This Offering Cir- cular has been prepared in order to comply with the standards and conditions applicable under Danish law. This Offering Circular may not be distributed or otherwise made available, and the Offer Shares may not be directly or indirectly offered, sold or subscribed for, and the Preemptive Rights may not be directly or indirectly offered, sold, acquired or exercised in the United States, Canada, Australia or Japan, unless such distribution, offering, sale, acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction, and the Company and the Joint Global Coordinators receive satisfactory documentation to that effect. The Offering Circular may not be distributed or otherwise made available, the Offer Shares may not be directly or indirectly offered, sold or subscribed and the Preemptive Rights may not be directly or indirectly offered, sold, acquired or exercised in any other jurisdiction, unless such distribution, offering, sale, acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction. The Company and the Joint Global Coordinators may require receipt of satisfactory documentation to that effect. Due to such restrictions under applicable legislation and regulations, the Company expects that certain investors residing in the U.S., Canada, Australia, Japan and other jurisdictions may not be able to receive this Offering Circular and may not be able to exercise their Preemptive Rights or subscribe the Offer Shares. Neither the Offer Shares nor the Preemptive Rights have been nor will be registered under the U.S. Securities Act of 1933 or any securities law of any state within the United States and may be offered and sold in the United States only in transactions that are exempt from, or are not subject to, the registration requirements of the U.S. Securities Act of 1933. The Company’s Existing Shares are listed on NASDAQ OMX under the symbol “LCP” and the ISIN code DK0060048148. The Offer Shares will not be issued or admitted to trading and offi cial listing on NASDAQ OMX until after registration of the capital increase relating to the Offer- ing with the Danish Commerce and Companies Agency. Admission to trading and offi cial listing of the Offer Shares is expected to take place on 29 November 2010 in the ISIN code of the Existing Shares (DK0060048148). The Preemptive Rights and the Offer Shares will be available for delivery by allocation to accounts through the book-entry facilities of VP Securities. The Offer Shares have been accepted for clearance through Euroclear Bank S.A./N.V. as operator of the Euroclear System (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”).

Joint Global Coordinators

The date of this Offering Circular is 29 October 2010. Important notice

This Offering Circular has been prepared for the Offering in compli- distributed or otherwise made available, the Offer Shares may not ance with Danish legislation and regulations, including Consolidated be directly or indirectly offered, sold or subscribed for and the Act no. 959 of 11 August 2010 on Securities Trading, as amended Preemptive Rights may not be directly or indirectly offered, sold, (the ‘‘Danish Securities Trading Act’’), Commission Regulation (EC) acquired or exercised in any other jurisdiction, unless such distri- no. 809/2004 of 29 April 2004, as amended and Executive Order bution, offering, sale, acquisition, exercise or subscription is per- no. 223 of 10 March 2010, issued by the Danish Financial Supervi- mitted under applicable laws of the relevant jurisdiction. The sory Authority on prospectuses for securities admitted for trading Company and the Joint Global Coordinators may require receipt of on a regulated market and for public offerings of securities of at satisfactory documentation to that effect. least EUR 2,500,000 (the ‘‘Danish Prospectus Order’’) and the rules for issuers of shares of NASDAQ OMX. Due to such restrictions under applicable legislations and regulations, the Company expects that certain investors residing in the The Offering Circular has been prepared in the Danish language U.S., Canada, Australia, Japan and other jurisdictions may not be (the “Danish Offering Circular”), in English for the private place- able to receive this Offering Circular and may not be able to exer- ment of securities outside of Denmark and the United States (the cise their Preemptive Rights or subscribe for the Offer Shares. “International Offering Circular”) and in English for the private placement of securities in the United States (the “U.S. Offering Certain statements in this Offering Circular are based on the Circular”). The Danish Offering Circular, the International Offering beliefs of the Board of Directors and the Executive Management, Circular and the U.S. Offering Circular are equivalent except that as well as assumptions made by and information currently avail- (i) the Danish Offering Circular contains certain statements from able to the Board of Directors and the Executive Management, the Company’s independent auditors and the Joint Global Coordi- and such statements may constitute forward-looking statements. nators that are not included in the International Offering Circular These forward-looking statements (other than statements of his- or the U.S. Offering Circular and (ii) the Danish Offering Circular torical fact) regarding the future results of operations, fi nancial and the International Offering Circular contain a report from the condition, cash fl ows and business strategy, and the plans and Company’s independent auditors that is not included in the U.S. objectives of the Board of Directors and the Executive Manage- Offering Circular. The U.S. Offering Circular includes a form of ment for future operations can generally be identifi ed by termi- investor letter to be executed by any eligible person in the U.S. nology such as “targets”, “believes”, “expects”, “aims”, “intends”, wishing to exercise Preemptive Rights to subscribe for Offer “plans”, “seeks”, “will”, “may”, “anticipates”, “would”, “could”, Shares. “continues” or similar expressions or the negatives thereof.

In the event of any discrepancy between the Danish Offering Cir- Such forward-looking statements involve known and unknown cular and the International Offering Circular or the U.S. Offering risks, uncertainties and other important factors that could cause Circular, the Danish Offering Circular shall prevail. the actual results, performance or achievements, or industry results, to differ materially from any future results, performance The distribution of this Offering Circular and the Offering is, in or achievements expressed or implied by such forward-looking certain jurisdictions, restricted by law, and this Offering Circular statements. may not be used for the purpose of, or in connection with, any offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it Notice to investors in the U.S. is unlawful to make such offer or solicitation. This Offering Circu- lar does not constitute an offer of or an invitation to acquire any The Preemptive Rights and the Offer Shares have not been Preemptive Rights or to subscribe for Offer Shares in any jurisdic- approved by the U.S. Securities and Exchange Commission, any tion in which such offer or invitation would be unlawful. Persons state securities commission in the U.S. or any other U.S. regulatory into whose possession this Offering Circular comes shall inform authority, nor have any of such regulatory authorities passed upon themselves of and observe all such restrictions. Neither the Com- or endorsed the merits of the Offering or the accuracy or adequacy pany nor the Joint Global Coordinators accept any legal responsi- of this Offering Circular. Any representation to the contrary is a bility for any violation by any person, whether or not a prospec- criminal offence in the U.S. tive purchaser of Preemptive Rights or Offer Shares, of any such restrictions. For a more detailed description of certain restrictions The Preemptive Rights and the Offer Shares have not been and will in connection with the Offering, see Part III, Section 5.14 “Juris- not be registered under the Securities Act or any state securities dictions in which the Offering will be made and restrictions appli- laws in the U.S. Accordingly, the Preemptive Rights may not be cable to the Offering”. offered, sold, purchased or exercised in the U.S., and the Offered Shares may not be subscribed for, offered or sold in the U.S. unless This Offering Circular may not be distributed or otherwise made they are registered under the Securities Act of 1933 (the “Securi- available, and the Offer Shares may not be directly or indirectly ties Act”) or an exemption from such registration requirements is offered, sold or subscribed for, and the Preemptive Rights may available. Any person in the U.S. wishing to exercise Preemptive not be directly or indirectly offered, sold, acquired or exercised in Rights or subscribe for Offer Shares must execute and deliver an the United States, Canada, Australia or Japan, unless such distri- investor letter satisfactory to the Company and the Joint Global bution, offering, sale, acquisition, exercise or subscription is per- Coordinators to the effect that such person is a “Qualiﬁ ed Institu- mitted under applicable laws of the relevant jurisdiction, and the tional Buyer” (“QIB”) within the meaning of Rule 144A under the Company and the Joint Global Coordinators receive satisfactory Securities Act and satisﬁ es certain other requirements, subject to documentation to that effect. The Offering Circular may not be certain exceptions.

2 Any person who wishes to acquire or exercise Preemptive Rights or • to any legal entity fulfi lling at least two of the following condi- subscribe for Offer Shares will be deemed to have declared, war- tions (1) an average of at least 250 employees during the last ranted and agreed, by accepting delivery of this Offering Circular fi nancial year; (2) a total balance sheet of more than EUR 43 and delivery of Preemptive Rights or Offer Shares, either that he is million and (3) an annual net turnover of more than EUR 50 acquiring or exercising the Preemptive Rights or subscribing for the million, as shown in its last annual or consolidated accounts; Offer Shares in an offshore transaction as defi ned by Regulation S of the Securities Act, or that he is acquiring or exercising the Pre- • to fewer than 100 natural or legal persons (other than quali- emptive Rights or subscribing for the Offer Shares in his capacity as fi ed investors as defi ned in the Prospectus Directive) subject to a QIB and that he will not re-sell, pledge or otherwise transfer the obtaining the prior written consent of the Joint Global Coordi- Preemptive Rights or the Offer Shares except (i) in an offshore nators, for any such offer; or transaction meeting the requirements of Regulation S of the Securi- ties Act, (ii) pursuant to an effective registration statement or (iii) • in any other circumstances falling within Article 3(2) of the pursuant to an exemption from registration. Prospectus Directive,

In addition, until the expiration of the 40-day period beginning on provided that no such offer of Offer Shares shall result in a require- the Offering Circular Date, an offer to sell or a sale of the Preemp- ment for the publication by the Company or any Joint Global Coordi- tive Rights or the Offer Shares within the U.S. by a broker/dealer nator of a prospectus pursuant to Article 3 of the Prospectus Direc- (whether or not it is participating in the Offering) may violate the tive. registration requirements of the Securities Act if such offer to sell or sale is made otherwise than pursuant to the foregoing. For the purposes of the above, the expression an “offer of Preemp- tive Rights and Offer Shares to the public” in relation to Preemptive Rights and Offer Shares in any Relevant Member State means the Notice to New Hampshire residents communication in any form and by any means of suffi cient information on the terms of the Offering, the Preemptive Rights and Offer NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLI- Shares so as to enable an investor to decide to exercise or acquire CATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF Preemptive Rights or subscribe for Offer Shares, as the same may THE NEW HAMPSHIRE REVISED STATUTES (“RSA”) WITH THE STATE OF be varied in that Member State by any measure implementing the NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY Prospectus Directive in that Member State. REGISTERED OR A PERSON IS LICENCED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B Notice to investors in the United Kingdom IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE This communication is only being distributed to, and is only directed FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY at, (i) persons who are outside the United Kingdom or (ii) invest- OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFI- ment professionals falling within article 19(5) of the Financial Ser- CATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PER- vices and Markets Act 2000 (fi nancial promotion) order 2005 (the SON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR “Order”) or (iii) high net worth companies, and other persons to CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER whom it may lawfully be communicated, falling within article 49(2) OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVI- (a) to (d) of the Order (all such persons together being referred to SIONS OF THIS PARAGRAPH. as “Relevant Persons”). The Preemptive Rights and the Offer Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Preemptive Rights or Notice to investors in the European Economic Offer Shares will be engaged in only with, Relevant Persons. Any Area person who is not a Relevant Person should not act or rely on this document or any of its contents. In relation to each Member State of the European Economic Area which has implemented the EU Directive 2003/71 (together with all current implementing measures in the individual Member States, Notice concerning Canada, Australia and Japan the “Prospectus Directive”) (each a “Relevant Member State”) no offering of Preemptive Rights and Offer Shares to the public will be This Offering Circular may not be distributed or otherwise made made in any Relevant Member State prior to the publication of a available, the Offer Shares may not be directly or indirectly offered, prospectus concerning the Preemptive Rights and the Offer Shares, sold or subscribed for, and the Preemptive Rights may not be which has been approved by the competent authority in such Rele- directly or indirectly offered, sold, acquired or exercised in Canada, vant Member State or, where relevant, approved in another Rele- Australia or Japan, unless such distribution, offering, sale, acquisi- vant Member State and notifi ed to the competent authority in such tion, exercise or subscription is permitted under applicable laws of Relevant Member State, all pursuant to the Prospectus Directive, the relevant jurisdiction, and the Company and the Joint Global except that with effect from and including the date of implementa- Coordinators receive satisfactory documentation to that effect. tion of the Prospectus Directive in such Relevant Member State, an offering of Preemptive Rights and Offer Shares may be made to the Due to such restrictions under applicable legislation and regula- public at any time in such Relevant Member State: tions, the Company expects that certain investors residing in Can- ada, Australia, Japan and other jurisdictions may not be able to • to legal entities that are authorised or regulated to operate in receive this Offering Circular and may not be able to exercise their the fi nancial markets or, if not so authorised or regulated, Preemptive Rights or subscribe for the Offer Shares. No offering whose corporate purpose is solely to invest in securities; and no solicitation to any person is being made by the Company in any jurisdiction or under any circumstances that would be unlawful.

3 Table of contents

Important notice 2 Table of contents 4 Tables and ﬁ gures 5 Responsibility and statements 6 Summary 10 Risk factors 22 General information 42

I. Description of the Company 46

1. Persons responsible 47 2. Statutory auditors 48 3. Selected fi nancial information 49 4. Risk factors 50 5. Information about the Company 51 6. Business 54 7. Organisational structure 71 8. Property, plant, equipment, etc. 73 9. Prospective consolidated fi nancial information 74 10. Review of operations and fi nancial statements 77 11. Capital Resources 84 12. Research and development, patents and licences 85 13. Trend information 89 14. Board of Directors, Executive Management and Senior Management 90 15. Remuneration and benefi ts 96 16. Practices of the Board of Directors, the Executive Management and the Senior Management 97 17. Staff 101 18. Major shareholders 103 19. Related party transactions 104 20. Financial information concerning the Company’s assets and liabilities, fi nancial position and profi ts and losses 105 21. Additional information 106 22. Material agreements 113 23. Third-party information and statements by experts and declarations of any interest 115 24. Documentation material 116 25. Information on capital holdings 117 26. Defi nitions 118 27. Acronyms and glossary 119

II. Financial information 122

III. The Offering 128

1. Responsibility statements 129 2. Risk factors related to the Offering 130 3. Key information 131 4. Information concerning the securities to be offered 133 5. Terms and conditions of the Offering 144 6. Admission to trading and ofﬁ cial listing 151 7. Selling security holders and lock-up agreements 152 8. Net proceeds and aggregate costs 153 9. Dilution 154 10. Additional information 155

IV. Appendices 156 Articles of association of LifeCycle Pharma A/S 157

4 Tables and ﬁ gures

Table 1. Results of Phase II clinical study in de novo kidney transplant patients 58 Table 2. Conditions leading to end-stage organ failure 59 Table 3. Overview of major immunosuppressants in the U.S., Japan, the United Kingdom, France, Germany, Italy and Spain 60 Table 4. Total Operating Costs 85 Table 5. Board of directors 90 Table 6. Executive Management 92 Table 7. Senior Management 93 Table 8. Shareholdings of the Board of Directors, the Executive Management and the Senior Management 101 Table 9. Warrants currently outstanding 102 Table 10. Major Shareholders in the Company as of the Offering Circular Date 103 Table 11. Issued and outstanding warrants 107 Table 12. Changes in share capital 109 Table 13. Cross reference table 123 Table 14. Costs of the Offering 153

Figure 1. Mean dose uncorrected whole blood concentrations of tacrolimus in patients on days 7, 14 and 21 [linear (upper panel) and semi-logarithmic (lower panel) scales] (study # 109386, n = 47) 58 Figure 2. Solubility and permeability considerations for oral absorption of drugs 63 Figure 3. Comparison of drug particle size 64 Figure 4. Functional structure of the Company and its subsidiary 71 Figure 5. LifeCycle Pharma Patent Applications 87

5 Responsibility and statements

LifeCycle Pharma is responsible for this Offering Circular in accordance with Danish law.

Company statement

We hereby declare that we have taken all reasonable care to ensure that, to the best of our knowledge and belief, the information contained in this Offering Circular is in accordance with the facts and contains no omissions likely to affect the import thereof.

Hørsholm, 29 October 2010

LifeCycle Pharma A/S

Board of directors

______Paul Edick Thomas Dyrberg Jean Deleage (Chairman) (Deputy Chairman)

______Kurt Anker Nielsen Dr. Gérard Soula Anders Götzsche

______Mette Kirstine Agger

Paul Edick is Chief Executive Ofﬁ cer of Durata Therapeutics Inc.

Thomas Dyrberg is Partner at Novo Ventures, Novo A/S.

Jean Deleage is Managing Director of Alta Partners.

Kurt Anker Nielsen a professional board member.

Gérard Soula is President and Chief Executive Ofﬁ cer of Adocia S.A.S

Anders Götzsche is Executive Vice President and Chief Financial Ofﬁ cer at H. Lundbeck A/S

Mette Kirstine Agger is Executive Director and Head of LFI Life Science Investments at LFI a/s.

Executive Management

______William J. Polvino Peter G. Nielsen President and Chief Executive Ofﬁ cer. Executive Vice President, Pharmaceutical Development and CMC.

6 [Intentionally left blank]

7 [Intentionally left blank]

8 [Intentionally left blank]

9 Summary

This Summary must be read as an introduction to this clinical studies for treatment of stable and de novo kid- Offering Circular. Any decision to invest in any Offer ney transplant patients. Shares and the Preemptive Rights should be based on a consideration of this Offering Circular as a whole, includ- The Company seeks to raise net proceeds of approxi- ing the documents incorporated by reference and the mately DKK 442 million primarily to support the comple- risks of investing in the Offer Shares and the Preemptive tion of its Phase III clinical studies for LCP-Tacro in kidney Rights set out in the section entitled ‘‘Risk factors”. This transplant patients through to New Drug Application Summary is not complete and does not contain all the (“NDA”)/Marketing Authorisation Application (“MAA”) information that you should consider in connection with submission in the United States and the European Union, any decision relating to the Offer Shares and the Preemp- respectively, expected in the ﬁ rst quarter of 2013. tive Rights.

Where an action regarding information in this Offering Cir- Corporate information cular is brought before a court, the plaintiff investor may be required to bear the costs of translation of this Offer- LifeCycle Pharma commenced operations in June 2002 as ing Circular before such legal proceedings are initiated. a spin-off from H. Lundbeck A/S. The Company is based north of Copenhagen, Denmark, and currently employs 50 The Company, which has prepared summary or any trans- permanent staff in Denmark and the United States. The lation thereof, and which has applied for approval Company’s registered ofﬁ ce is located at Kogle Allé 4, thereof, may be subject to civil liability, but only if it is DK-2970, Hørsholm, Denmark and it is domiciled in the misleading, incorrect or inconsistent when read in con- municipality of Rudersdal. The Company’s telephone num- junction with the other parts of this Offering Circular. ber is +45 70 33 33 00. The Company’s Existing Shares are listed on NASDAQ OMX under the symbol “LCP” and the ISIN code DK0060048148. Overview

LifeCycle Pharma is a speciality pharmaceutical company Key strengths currently focused on the development of pharmaceutical products in the immunosuppression and cardiovascular • One product candidate in late stage development. therapeutic areas. LifeCycle Pharma’s product candidate LCP-Tacro is in Phase III clinical studies for treatment of kidney trans- The Company uses its proprietary MeltDose technology plant patients with NDA/MAA submission in the United which has been validated especially in clinical studies States and European Union respectively expected in through U.S. Food and Drug Administration (“FDA”) the fi rst quarter of 2013. In Phase II clinical studies in approval of LCP-FenoChol (now on the market), to create kidney transplant patients, LCP-Tacro demonstrated a new, potentially best-in-class, versions of existing mar- once-a-day profi le as well as improved bioavailability keted drugs by enhancing the bioavailability of com- and reduced variability as compared with Prograf, the pounds with low water-solubility and allowing for a con- only branded tacrolimus product currently marketed in trolled or modifi ed release plasma profi le. the U.S.

The Company has a pipeline with one Phase III programme • Proprietary MeltDose technology with proven (LCP-Tacro for de novo and stable kidney transplant track record. LifeCycle Pharma’s proprietary MeltDose patients), one Phase II programme (LCP-Tacro for liver technology has been validated in a number of clinical transplant patients), one completed Phase II programme studies and has received regulatory acceptance (LCP-AtorFen for dyslipidemia), one completed Phase I through the FDA approval of Fenoglide (LCP-FenoChol) programme (LCP-Feno for dyslipidemia) and ﬁ ve com- for sale in the U.S. pounds in early stage pre-clinical development. Following encouraging results from LCP-Tacro Phase II clinical stud- • Development strategy which potentially reduces ies, the Company has decided to focus its development costs and development timelines. Compared with efforts on LCP-Tacro for the treatment of kidney trans- product candidates developed through the traditional plant patients. LCP-Tacro is a once-daily dosage version of pharmaceutical development process, LifeCycle Pharma tacrolimus, the market-leading primary immunosuppres- believes that using known active ingredients in combi- sant in the transplant space and is currently in Phase III nation with the Company’s proprietary MeltDose tech-

10 nology may reduce the risk of product development • Maximise the full value of the LCP-Tacro pro- failure and may shorten development timelines and gramme by funding in-house through the comple- reduce overall development cost. LifeCycle Pharma tion of Phase III and to NDA/MAA submission. The believes that this enables the Company to advance its Company initiated Phase III clinical studies for LCP- product candidates through late-stage clinical studies Tacro in the second half of 2008 in stable kidney and/or regulatory approval at a faster rate. transplant patients and in de novo kidney transplant patients in the fourth quarter of 2010. The de novo • Experienced management and employees. LifeCycle transplant study protocol received a Special Protocol Pharma has internationally experienced management Assessment (“SPA”) from the FDA, which defi ned the and key employees consisting of biopharmaceutical parameters of this Phase III clinical study protocol. executives and recognised experts who offer diverse Following successful completion of the Offering, the backgrounds and complementary skill-sets in research, Company will be positioned to fund the full research development, drug approval, commercialisation and and development programme through NDA/MAA sub- fi nance. The Company’s Executive Management and mission, enabling the Company to maximise the full Senior Management draw from experience gained at value of the programme and either facilitate high-value leading pharmaceutical and biotech companies such as partnering through suitable global or regional partners Novartis AG (“Novartis”), Novo Nordisk A/S (“Novo or establish its own sales and marketing capabilities in Nordisk”), and Wyeth Pharmaceuticals (“Wyeth”) (now selected markets where the Company believes, through Pfi zer Inc. (“Pfi zer”)). such a strategy, it can maximise its commercial potential. Given the special characteristics of the organ transplant market, the fi eld force required to market Business strategy successfully in the transplant space is relatively small and, for example, the U.S. market can be covered The primary goal of LifeCycle Pharma is to build a clinical effectively with 20-30 sales representatives. See Part I, and market-stage pharmaceutical business around the Section 6 “Business – Transplantation market overview Company’s key, late stage transplant immunosuppression – Market structure” for more information. Conse- product candidate LCP-Tacro and its other pipeline prod- quently, the Company will retain the fl exibility to estab- uct candidates as well as to continue to look for and eval- lish its own sales force if so desired and depending on uate opportunities to apply the Company’s proprietary the strength of the Phase III data. MeltDose technology in other major therapeutic areas with established commercial potential. The key elements • Continue to leverage the Company’s proprietary of LifeCycle Pharma’s business strategy are as follows: MeltDose technology in additional therapeutic areas with established commercial potential. The • Advance LCP-Tacro through clinical studies within Company believes that its proprietary MeltDose tech- the organ transplantation area. LCP-Tacro (once- nology has broad applicability across multiple existing daily dosage) has received positive Phase II clinical drugs and disease areas. The Company intends to fur- data in kidney transplant patients demonstrating a ther maximise the commercial value of the MeltDose potential best-in-class profi le when compared head-to- technology by applying it to products across a broad head with Prograf (twice-daily dosage), the only tac- range of therapeutic indications where the Company rolimus product currently available on the U.S. market. believes it can retain signifi cant commercial rights to its In addition, the Company has received positive Phase II products and maximise their commercial potential. data for LCP-Tacro in liver transplant patients indicating a potential best-in-class profi le when compared head- • Partner strategically to enhance the commercial to-head with Prograf (twice-daily dosage). The Com- potential of the Company’s product candidates. pany has elected to focus its development efforts on For products that serve very large markets or those pursuing LCP-Tacro for treatment of kidney transplant that may be widely distributed geographically, such as patients, given the larger potential patient population the Company’s cardiovascular product candidates, the and demand. Company seeks to enter into commercialisation and marketing licences with pharmaceutical companies. It intends to continue this partnering strategy for such product candidates in major therapeutic markets in which the expanded marketing capabilities of potential partners may signifi cantly increase the market penetration of its products.

11 Product portfolio

Transplant immunosuppression – LCP-Tacro

Product Disease Indications Status Marketing Rights

1. LCP-Tacro Organ transplant–Kidney Phase III clinical studies ongoing: Worldwide – - Stable kidney transplant patients LifeCycle Pharma - De novo kidney transplant patients

2. LCP-Tacro Organ transplant–Liver Phase II clinical studies ongoing: Worldwide – - De novo liver transplant patients LifeCycle Pharma

LCP-Tacro is in ongoing Phase III clinical studies for has been elaborated with comments from the FDA as part patients who have undergone a kidney transplant and is of the SPA approval process. The Company and the FDA completing Phase II clinical studies for patients who have have agreed that this Phase III study will be a multicenter, undergone a liver transplant. randomised, double-blind, double-dummy study comparing Prograf to LCP-Tacro. The primary endpoint will be the Kidney – Phase III clinical studies traditional, non-inferiority comparative endpoint of: Biopsy-proven acute rejection (BPAR), graft loss, death, A Phase III programme in kidney transplant patients was and/or loss to follow-up. The study duration will be 12 initiated in the second half of 2008. The programme con- months with a 12-month extension to follow. Secondary sists of one conversion (switch) study in stable kidney endpoints will include assessments of pharmacokinetics transplant patients with Prograf as comparator, as well as and safety/tolerability measures such as new onset dia- one de novo kidney transplant study versus Prograf. Ulti- betes, renal function, and tremors. Patients will be evalu- mately, these combined Phase III clinical studies are ated on treatment every few months. Approximately 100 expected to have a total of nearly 900 patients. centres will be activated throughout the United States, Europe, and selected countries in the rest of the world. As of the date of this Offering Circular, the Phase III open Topline results from the study are expected by the end of label conversion study has fully enrolled 326 stable kidney 2012. Following completion of the 12-month primary transplant patients, with patients being switched from endpoint study, the Company estimates that it will require Prograf (twice-daily dosage) to LCP-Tacro (once-daily dos- approximately three to four months to consolidate and age, representing a 30% lower dose than Prograf) at least analyse the study results for submission of an NDA and a three months after transplantation once their transplant MAA to regulatory agencies in the United States and the is considered stable. Topline results from this study are European Union, respectively, currently anticipated for the expected in mid-2011. The primary endpoint for the study fi rst quarter of 2013. will be a comparison of the traditional non-inferiority composite endpoint of: biopsy-proven acute rejection CARDIOVASCULAR – LCP-FENOCHOL, LCP-ATORFEN, AND (BPAR), graft loss, death, and/or loss to follow-up. Sec- LCP-FENO ondary endpoints will include assessments of pharmacokinetics and safety/tolerability measures such as new Within the cardiovascular area, one product, LCP-FenoChol onset diabetes, renal function, and tremors. Patients will marketed as Fenoglide, developed using the Company’s be evaluated on treatment every few months over a proprietary MeltDose technology has received approval 12-month treatment duration plus a safety follow-up visit from the FDA for commercial sale in the U.S. for the treat- at Month 13. ment of dyslipidemia (which includes hypertriglyceri- demia, mixed dyslipidemia and hypercholesterolemia). The The Phase III clinical study in de novo kidney transplant royalty stream from Fenoglide was sold to Cowen Health- patients will include approximately 540 patients being care Royalty Partners in 2008. In addition, the Company treated with LCP-Tacro (once-daily dosage) versus Prograf has two product candidates: LCP-AtorFen, a fi xed dose (twice-daily dosage) immediately after they receive their combination tablet of fenofi brate and atorvastatin, as well kidney transplant. Enrolment in the study was recently as LCP-Feno, a generic 145 mg fenofi brate tablet. While commenced and the Company’s expects that recruitment these two product candidates are not in the active stage of all 540 patients will take approximately one year to of development, the Company continues to pursue possi- complete, i.e., by the fourth quarter of 2011. This study ble partnership opportunities.

12 Intellectual property and European Medicines Agency (“EMA”), respectively, expected in the fi rst quarter of 2013. As of the Offering Circular Date, a total of 15 patents relating to the Company’s MeltDose technology and 10 In addition, the net proceeds from the Offering will be patents relating to the Company’s product and product used for development of new drugs along with general candidates have issued. The Company has four pending corporate purposes, including administration, as well as to families of patent applications pending related to the obtain and maintain patents and submit registration MeltDose technology, fi ve patent families pending relating applications with the FDA and other regulatory authori- to further drug delivery technologies and 12 patent fami- ties. lies pending relating to specifi c formulations of product and product candidates. The amount as well as the timing of the actual expenditures cannot be predicted with certainty, and the specifi c As of the Offering Circular Date, the Company has a total use of the net proceeds of the Offering will depend upon of 27 issued patents and 85 pending patent applications numerous factors. Pending utilisation of such net pro- (wherein essentially identical patent applications that are ceeds, the Company intends to invest such funds in cash intended to serve only as priority applications are counted deposits, short-term, interest-bearing securities and as a single patent application). other similar low-risk investments in and outside Den- mark.

Reasons for the Offering and use of proceeds Risk factors The reasons for the Offering are to provide additional funding for future clinical development of the Company’s There are risks associated with an investment in the Offer product portfolio, for research and development activities Shares and the Preemptive Rights, including risks associ- and for general corporate purposes. ated with the development of pharmaceutical products and the biopharmaceutical industry, with the Company’s LFI a/s, Novo A/S and Alta Partners have each made an business and with the Offering, which investors should advance undertaking to exercise the Preemptive Rights take into account before the acquisition or exercise of the allocated to them in the Offering to subscribe for, in Preemptive Rights and/or subscription of the Offer aggregate, 229,806,983 Offer Shares. Shares. The information set forth below is only a summary of these risks. For a more complete analysis of each In addition, LFI a/s and Novo A/S have made advance of the risks described in the categories below, see the undertakings to subscribe for those Offer Shares that are section entitled “Risk factors”. Investors should carefully not (i) subscribed for through the exercise of Preemptive consider these risk factors together with all of the other Rights or (ii) otherwise subscribed for by shareholders information included in this Offering Circular before mak- and investors who, prior to the expiry of the Subscription ing a decision regarding the acquisition or exercise of Pre- Period, have submitted binding undertakings to the Joint emptive Rights and/or subscription for the Offer Shares. Global Coordinators to subscribe for Offer Shares at the These risks are divided into the following categories: Offer Price. The advance undertakings made by LFI a/s and Novo A/S to subscribe for Remaining Shares have for • Risks related to the Company’s business effect that they will be subordinate to the other undertakings. • Risks related to ﬁ nancial results

As a result of the advance undertakings described above, • Risks related to the Company’s intellectual property the Company will, subject to the fulﬁ lment of the condition attached to the advance undertakings and the com- • Risks related to government regulatory and legal pletion of the Offering, receive total gross proceeds of requirements DKK 475 million, equivalent to 100% of the Offering. • Risks related to the Company’s employees The Company expects to receive net proceeds from the Offering of approximately DKK 442 million. • Risks related to currency and other ﬁ nancial risks

The Company intends to use the largest part of the net • Risks related to the Offering proceeds from the Offering and existing cash balances mainly to further the development of LCP-Tacro in stable kidney transplant patients and de novo kidney transplant patients towards an NDA/MAA submission with the FDA

13 Summary of the Offering

See Part III “The Offering” for a detailed description of the Offering.

The issuer LifeCycle Pharma A/S, a public company incorporated with limited liability under the laws of Denmark.

The Offering The Offering comprises up to a maximum of 395,974,670 Offer Shares of nominal DKK 1 each, with Preemptive Rights to the Existing Shareholders at the ratio of 7:1.

Offer Price The Offer Shares are offered at DKK 1.20 per Offer Share of nominal DKK 1 each, free of brokerage fees.

Subscription ratio and allocation Any person who is registered with VP Securities as a shareholder of the Company on 4 of Preemptive Rights November 2010 at 12.30 p.m. CET will be entitled to and will be allocated 7 Preemptive Rights for each Existing Share of nominal DKK 1 each. For every 1 Preemptive Right, the holder will be entitled to subscribe for one (1) Offer Share at the Offer Price. No fractional Shares will be issued.

Shares traded after 1 November 2010 will be traded ex Preemptive Rights.

Offer Shares The Offer Shares, when issued by the Company, will belong to the same class as the Existing Shares. The Offer Shares will not be issued or admitted to trading and offi cial listing on NASDAQ OMX until registration of the capital increase has taken place with the Danish Commerce and Companies Agency. Accordingly, shareholders and investors should note that the while the Offer Shares will be registered under a temporary ISIN code, they will not be admitted to trading and offi cial listing on NASDAQ OMX under such temporary ISIN code. The Offer Shares will be issued and admitted to trading and offi cial listing on NASDAQ OMX directly under the ISIN code of the Existing Shares (DK0060048148) following registration of the capital increase with the Danish Commerce and Companies Agency, which is expected to take place on 25 November 2010.

The Preemptive Rights and the Offer Shares will be available for delivery by allocation to accounts through the book-entry facilities of VP Securities.

When the Offer Shares have been admitted to trading and ofﬁ cial listing, the Offer Shares will be accepted for clearance through Euroclear and Clearstream.

Trading period for The Preemptive Rights will be traded on NASDAQ OMX during the period from 2 November 2010 Preemptive Rights at 9:00 a.m. CET to 15 November 2010 at 5:00 p.m. CET.

Subscription Period The Subscription Period for the Offer Shares commences on 5 November 2010 at 9:00 a.m. CET for Offer Shares and closes on 18 November 2010 at 5:00 p.m. CET.

Subscription procedure Holders of Preemptive Rights wishing to subscribe for Offer Shares must do so through their own custodian institution, in accordance with the rules of such institution. The time until which notifi cation of exercise may be given will depend upon the holder’s agreement with, and the rules and procedures of, the relevant custodian institution or other fi nancial intermediary and may be earlier than the end of the Subscription Period. Once a holder has exercised Preemptive Rights, the exercise may not be revoked or modifi ed.

Upon payment of the Offer Price and exercise of Preemptive Rights, the Offer Shares will be allocated through VP Securities at the close of any Banking Day. The Offer Shares will not be issued or admitted to trading and ofﬁ cial listing on NASDAQ OMX until registration of the capital increase has taken place with the Danish Commerce and Companies Agency. The admission to trading and ofﬁ cial listing of the Offer Shares under the existing ISIN code on NASDAQ OMX is expected to take place on 29 November 2010.

14 Existing Shareholders and investors in Denmark wishing to subscribe for Remaining Shares must do so by making binding undertakings through their own account-holding institution or through the Joint Global Coordinators. Existing Shareholders in Denmark and investors in Denmark may use the subscription form that accompanies the Danish Offering Circular. Existing Shareholders outside Denmark should contact their account-holding institution. Investors outside Denmark who are not Existing Shareholders will be invited to participate in a separate process by the Joint Global Coordinators with a view to making binding undertakings to subscribe for Offer Shares and upon providing other documentation as may be required by the Joint Global Coordinators. The subscription form or any other binding undertakings must be in the possession of Danske Bank Corporate Actions or Handelsbanken Capital Markets no later than at 5.00 p.m. CET on 18 November 2010. Orders are binding and cannot be altered or cancelled.

Remaining Shares may be subscribed for, without compensation to the holders of unexercised Preemptive Rights, by Existing Shareholders and other investors who have made binding undertakings to subscribe for Offer Shares at the Offer Price before the end of the Subscription Period. In the event that binding undertakings made by Existing Shareholders and other investors exceed the number of Remaining Shares, the Shares will be allocated on the basis of a plan of distribution to be determined by the Board of Directors upon consultation with the Joint Global Coordinators. Allocation will be made on the basis of undertakings received without taking into account whether or not the subscribers are shareholders. The advance undertakings made by LFI a/s and Novo A/S to subscribe for Remaining Shares have for effect that they will be subordinate to the other undertakings.

Two shareholders, LFI a/s and Novo A/S have made advance undertakings to take effect if the Offering is not fully subscribed, to subscribe for, in aggregate, 166,167,687 Offer Shares corresponding to total gross proceeds of approximately DKK 199.4 million.

Neither the Company nor the Joint Global Coordinators can guarantee that investors or shareholders who want to subscribe for Offer Shares will be allocated Remaining Shares. Only shareholders and investors who acquire and exercise Preemptive Rights are guaranteed allocation of Offer Shares in the Company and only in the event that the Offering is completed. Accordingly, Remaining Shares will only be available for allocation if the Offer Shares have not been subscribed for by the Company’s shareholders through the exercise of allocated Preemptive Rights or by investors through the exercise of acquired Preemptive Rights.

Method of payment Upon exercise of the Preemptive Rights, the holder must pay DKK 1.20 per Offer Share for which it subscribes. Payment for the Offer Shares shall be made in Danish Kroner at the time of subscription, however, not later than 18 November 2010 at 5:00 p.m. CET. Holders of Preemptive Rights are required to adhere to the account agreement with their Danish custodian or other ﬁ nancial intermediaries through which they hold Shares. Financial intermediaries through whom a holder may hold Preemptive Rights may require payment by an earlier date.

Failure to exercise Preemptive Rights that are not exercised during the Subscription Period will lapse with no value, Preemptive Rights and the holder of such Preemptive Rights will not be entitled to compensation. The Subscription Period will end on 18 November 2010 at 5:00 p.m. CET.

Withdrawal of the Offering The Offering may be withdrawn at any time prior to registration of the capital increase relating to the Offer Shares has taken place with the Danish Commerce and Companies Agency. The Rights Issue Agreement dated 29 October 2010 which the Company has entered into with the Joint Global Coordinators (the “Rights Issue Agreement”) provides that each of the Joint Global Coordinators may require the Company to withdraw the Offering at any time prior to the registration of the capital increase relating to the Offer Shares upon notiﬁ cation of termination of the Rights Issue Agreement. Each of the Joint Global Coordinators is entitled to terminate the Rights Issue Agreement upon the occurrence of certain exceptional and/or unpredictable circumstances, such as force majeure. The Rights Issue Agreement also contains closing conditions which the Company believes are customary for offerings such as the Offering and the closing of the Offering is dependent on compliance with all of the closing conditions set forth in the Rights Issue Agreement. If one or more closing conditions are not met, each of the Joint Global Coordinators may, at their discretion, also terminate the Rights Issue Agreement and thereby require the Company to withdraw the Offering.

15 If the Offering is not completed, the exercise of Preemptive Rights that has already taken place will automatically be cancelled, the subscription price for Offer Shares will be refunded (less any brokerage fees), all Preemptive Rights will be null and void, and no Offer Shares will be issued. However, trades of Preemptive Rights executed during the trading period for Preemptive Rights will not be affected. As a result, investors who acquired Preemptive Rights will incur a loss corresponding to the purchase price of the Preemptive Rights and any brokerage fees. Any withdrawal of the Offering will be notiﬁ ed immediately to NASDAQ OMX and announced as soon as possible in the same Danish daily newspapers in which the Offering was announced.

Share capital As of the Offering Circular Date, but prior to the Offering, the Company’s registered share capital is nominal DKK 56,567,810 and consists of 56,567,810 Shares of nominal DKK 1 each, all of which are fully paid up.

Voting rights Each Offer Share entitles the holder to one vote on all matters submitted to a vote of the Company’s shareholders. See Part III, Section 4.5 “Rights attached to the Preemptive Rights and the Offer Shares”.

Dividends The Offer Shares will be eligible for any dividend declared in respect of the ﬁ nancial year ending 31 December 2010 and subsequent years. However, the Company has not paid any dividends since its inception and does not anticipate paying any dividends in the foreseeable future. See Part I, Section 21.5 “Description of the Company’s Shares”.

Warrants As of the Offering Circular Date, there are outstanding warrants entitling the holders to subscribe for up to 5,653,008 Shares. See Part I, Section 21.2 “Warrant programmes” for a description of the Company’s warrant programmes, including the adjustments that will be made to the subscription prices applicable to warrants and the number of warrants following completion of the Offering.

Lock-up The Company, its Board of Directors and the Executive Management have entered into lock-up agreements with the Joint Global Coordinators. See Part III, Section 7.2. “Lock-up agreements in connection with the Offering”.

Applicable law and jurisdiction The Offering is subject to Danish law. Any dispute which may arise as a result of the Offering shall be brought before the Danish courts of law.

Major Shareholders The following shareholders (“Major Shareholders”) have notiﬁ ed the Company that they hold more than 5% of the Company’s registered share capital: LFI a/s, Novo A/S, and Alta Partners, which includes Alta BioPharma Partners III, L.P., Alta BioPharma Partners III, GmbH & Co. Beteiligungs KG, and Alta Embarcadero BioPharma Partners III, LLC.

Intentions of Major Shareholders, LFI a/s, Novo A/S and Alta Partners have each made an advance undertaking to exercise the the Board of Directors, the Preemptive Rights allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Executive Management or Offer Shares. the Senior Management to participate in the Offering In addition, LFI a/s and Novo A/S have made advance undertakings to subscribe for those Offer Shares that are not (i) subscribed for through the exercise of Preemptive Rights or (ii) otherwise subscribed for by shareholders and investors who, prior to the expiry of the Subscription Period, have submitted binding undertakings to the Joint Global Coordinators to subscribe for Offer Shares at the Offer Price. The advance undertakings made by LFI a/s and Novo A/S to subscribe for Remaining Shares have for effect that they will be subordinate to the other undertakings.

The advance undertakings at the Offering Circular Date are conditioned upon no fact or circumstance occurring during the Offer Period which LFI a/s, Novo A/S or Alta Partners deem likely to have a material adverse effect on the Company’s business, ﬁ nancial condition or prospects for future operations. Should any of the aforesaid occur, LFI a/s, Novo A/S and/or Alta Partners may rescind their advance subscription undertakings.

As a result of the binding advance undertakings described above, the Company will, subject to the fulﬁ lment of the condition attached to the advance undertakings and the completion of the Offering, receive total gross proceeds of DKK 475 million, equivalent to 100% of the Offering.

16 The Company has received indications from the members of the Board of Directors and the Executive Management holding shares in the Company that they will participate in the Offering by exercising all Preemptive Rights allocated to them.

Selling and transfer restrictions The Preemptive Rights and the Offer Shares will be subject to certain selling and transfer restrictions. See Part III, Section 5.14 “Jurisdictions in which the Offering will be made and restrictions applicable to the Offering”.

ISIN code Existing Shares DK0060048148

Offer Shares DK0060254985 (temporary ISIN code)

Preemptive Rights DK0060255016

Trading symbol on NASDAQ OMX “LCP”

Expected timetable of principal events

Last day of trading of Existing 1 November 2010 Shares cum Preemptive Rights:

First day of trading of Existing 2 November 2010 Shares ex Preemptive Rights:

Trading period for Preemptive 2 November 2010 Rights commences on NASDAQ OMX:

Allocation Time: 4 November 2010 at 12:30 p.m. CET through the computer system of VP Securities

Subscription Period for Offer 5 November 2010 (the day after the Allocation Time) Shares begins:

Trading period for Preemptive 15 November 2010 at 5:00 p.m. CET Rights ends:

Subscription Period for Offer 18 November 2010 at 5:00 p.m. CET Shares ends:

Publication of the results of the Not later than three Banking Days after the end of the Subscription Period (expected to be on 23 Offering: November 2010)

Completion of the Offering The Offering will only be completed if and when the Offer Shares subscribed for are issued by the Company upon registration of the capital increase with the Danish Commerce and Companies Agency which is expected to take place on 25 November 2010

Ofﬁ cial listing of and trading in 29 November 2010 (7 Banking Days after the end of the Subscription Period) Offer Shares under existing ISIN code expected to begin:

17 Summary ﬁ nancial data

The summary fi nancial data in this section has been The fi nancial data should be read in conjunction with Life- extracted from the Company’s audited consolidated fi nan- Cycle Pharma’s annual reports and interim consolidated cial statements for the years ended 31 December 2007, fi nancial statements. See also Part II that includes a cross 2008 and 2009. The audited consolidated fi nancial state- reference table. ments for the years ended 31 December 2007, 2008 and 2009 have been prepared in accordance with International Amounts in Euros have been translated for information Financial Reporting Standards (“IFRS”) as adopted by the purposes. The translation of income statement and cash EU and additional Danish disclosure requirements for fl ow statement items for the fi nancial years ended 31 fi nancial statements of listed companies. The Company’s December 2007, 2008 and 2009 is based on the average independent accountant is PricewaterhouseCoopers Stat- exchange rate that year, and the translation of balance sautoriseret Revisionsaktieselskab. sheet items is based on the exchange rate at the end of the relevant period or year. The translation of income This section also includes fi nancial data extracted from statement and cash fl ow statement items for the nine the Company’s reviewed interim consolidated fi nancial months ended 30 September 2009 and 2010 is based on statements for the nine months ended 30 September the exchange rate at the balance sheet date for the 2009 and 30 September 2010. The interim consolidated period in question. Translations in the following data fi nancial statements are prepared in accordance with should not be construed as representations that the Dan- International Accounting Standard No. 34 (IAS 34), ish Kroner amounts actually represent such Euro amounts “Interim Financial Reporting” as adopted by EU. at any specifi ed rate.

The audited consolidated ﬁ nancial statements for 2007, 2008 and 2009 and the reviewed interim consolidated ﬁ nancial statements for the nine months ended 30 Sep- tember 2009 and 2010 are incorporated by reference in Part II.

Nine months ended 30 September Year ended 31 December 2010 2009 2009 2008 2007

Average DKK/EUR exchange rate - - 7.446251 7.455974 7.450551 End of period DKK/EUR exchange rate 7.451900 7.444300 7.441500 7.450600 7.456600

Source: www.nationalbanken.dk

Income statement Nine months ended 30 September (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Revenue 1.5 2.3 0.2 0.3 Research and development costs (162.1) (164.4) (21.7) (22.1) Administrative expenses (38.8) (47.7) (5.2) (6.4) One-off restructuring cost (1) (10.9) (9.5) (1.5) (1.3)

Operating loss (210.3) (219.3) (28.2) (29.5)

Financial income 2.6 19.8 0.3 2.7 Financial expenses (3.8) (11.7) (0.5) (1.6)

Net loss for the period before tax (211.5) (211.2) (28.4) (28.4)

18 Balance sheet data 30 Sep. 31 Dec. 30 Sep. 31 Dec. (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Assets Non-current assets 20.7 27.1 2.8 3.6 Cash and cash equivalents 134.0 333.4 18.0 44.8 Current assets 143.0 352.2 19.2 47.3 Total assets 163.7 379.3 22.0 51.0

Equity & liabilities Equity 111.9 317.3 15.0 42.6 Current liabilities 41.8 47.9 5.6 6.4 Total liabilities 51.7 62.0 6.9 8.3 Total equity and liabilities 163.7 379.3 22.0 51.0

Cash ﬂ ow statement data Nine months ended 30 September (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Cash fl ow from operating activities, net (192.6) (194.4) (25.8) (26.1) Cash fl ow from investing activities, net (1.1) (10.5) (0.1) (1.4) Cash fl ow from fi nancing activities, net (4.5) 2.0 (0.6) 0.3 Cash and cash equivalents at period end 134.0 392.1 18.0 52.7

Other ﬁ nancial data (2) 30 Sep. 30 Sep. 30 Sep. 30 Sep. (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Number of fully paid shares in issue as at 30 September 56,567,810 56,567,810 - - Weighted average number of outstanding shares for the period 56,567,810 56,401,877 - - Assets/Equity at period end 1.46 1.19 - - Average number of employees for the period (full-time equivalents) 60 97 - - Earnings per share in DKK/EUR (3.76) (3.75) (0.5) (0.5) Diluted earnings per share in DKK/EUR (3.76) (3.75) (0.5) (0.5)

19 Years ended 31 December 2009, 2008 and 2007

Income statement Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Revenue 2.5 170.1 64.7 0.3 22.8 8.7 Research and development costs (210.1) (270.9) (183.6) (28.2) (36.3) (24.6) Administrative expenses (62.4) (73.3) (54.0) (8.4) (9.8) (7.3) One-off restructuring cost (1) (9.5) - - (1.3) - -

Operating loss (279.5) (174.1) (172.9) (37.6) (23.3) (23.2)

Financial income 21.4 45.5 18.6 2.9 6.1 2.5 Financial expenses (12.9) (21.2) (5.9) (1.7) (2.9) (0.8)

Net loss for the year (271.0) (149.8) (160.2) (36.4) (20.1) (21.5)

Balance sheet data As at 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Assets Non-current assets 27.1 26.5 28.8 3.6 3.6 3.9 Cash and cash equivalents 333.4 600.1 331.7 44.8 80.5 44.5 Current assets 352.2 619.8 353.1 47.3 83.2 47.4 Total assets 379.3 646.3 381.9 51.0 86.7 51.2

Equity & liabilities Equity 317.3 572.3 325.7 42.6 76.8 43.7 Current liabilities 47.9 47.4 35.8 6.4 6.4 4.8 Total liabilities 62.0 74.0 56.2 8.3 9.9 7.5 Total equity and liabilities 379.3 646.3 381.9 51.0 86.7 51.2

Cash ﬂ ow statement data Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Cash fl ow from operating activities, net (251.2) (102.6) (129.3) (33.7) (13.8) (17.4) Cash fl ow from investing activities, net (11.0) (6.6) (7.3) (1.5) (0.9) (1.0) Cash fl ow from fi nancing activities, net 0.7 373.6 3.8 0.1 50.1 0.5 Cash and cash equivalents at period end 333.4 600.1 331.7 44.8 80.5 44.5

20 Other ﬁ nancial data(2) Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Number of fully paid up shares in issue as of 31 December 56,567,810 56,287,507 31,770,705 - - - Weighted average number of outstanding shares for the year 56,443,701 49,006,500 30,875,434 - - - Assets/Equity at year end 1.20 1.13 1.17 - - - Average number of employees for the year (full-time equivalents) 93 102 64 - - - Earnings per share in DKK/EUR (4.80) (3.06) (5.19) (0.64) (0.41) (0.70) Diluted earnings per share in DKK/EUR (4.80) (3.06) (5.19) (0.64) (0.41) (0.70)

Notes: (1) One-off restructuring costs mainly comprise salary payments to employees who have been made redundant. (2) Such ﬁ nancial data is stated in accordance with the 2010 recommendations of the Association of Danish Financial Analysts.

21 Risk factors

Investors should be aware that an investment in the Pre- If the Company is unsuccessful in developing LCP-Tacro, emptive Rights and the Offer Shares involves a high either because the clinical studies fail, are delayed or are degree of risk. Before investing in the Preemptive Rights more costly than anticipated, or if commercialisation of and the Offer Shares, investors should consider carefully LCP-Tacro is not successful because of lack of market all of the following risks and uncertainties in addition to acceptance or other post-commercialisation problems, the the other information presented in this Offering Circular. Company will have spent valuable time and managerial If any of the following risks actually occurs, the Compa- and fi nancial resources on a research programme that ny’s business, results of operations or fi nancial condition ultimately does not yield a commercially viable product could be materially adversely affected. In that event, the and the Company’s remaining pipeline of product candi- value of the Offer Shares and the Preemptive Rights could dates will be, with the exception of LCP-AtorFen and LCP- decline, and investors might lose part or all of their Feno, in early stage pre-clinical development with a long investment. Although the Company believes that the risks development time and high costs to reach the market. As and uncertainties described below are the Company’s a result, the Company’s business, results of operations most material risks and uncertainties, they are not the and prospects and the value of the Company’s Shares only ones the Company faces. Additional risks and uncer- could be adversely affected. tainties not presently known to the Company or that the Company currently deems immaterial may also have a Clinical studies, which are lengthy, time consuming, material adverse effect on the Company’s business, expensive and have uncertain outcomes, must be results of operations or fi nancial condition and could neg- conducted for LCP-Tacro, or any other Company prod- atively affect the price of the Preemptive Rights and the uct candidate, before commercialisation. If clinical Offer Shares. The risk factors discussed below are not studies fail to meet their objectives, obtain positive listed in any order of priority in that it is not possible to results or if the Company fails to obtain approval for quantify the importance of the individual risk factors for commercialisation of LCP-Tacro, or any other Com- the Company, since each of the risk factors listed may pany product candidate, the Company would have to materialise fully or to a certain degree and may have curtail its product development programmes and its unforeseen consequences. business would be materially harmed.

The Company’s Phase III clinical studies and potential Risks related to the Company’s business commercialisation of LCP-Tacro, and its research and development programmes are generally expensive and The Company intends to use the proceeds of the require substantial resources. The Company has invested Offering to fund development of LCP-Tacro. If the a signifi cant portion of its time and fi nancial resources in Company is not successful in the development or the development of its product candidates, including in commercialisation of LCP-Tacro, the Company will particular LCP-Tacro. The Company must demonstrate that have expended its limited resources and not have LCP-Tacro and its other product candidates are safe and any product ready to generate revenues. effective for use in humans through clinical studies in order for them to be approved for commercial sale. Con- The Company intends to use the proceeds of the Offering ducting clinical studies is a lengthy, time-consuming and to fund the ongoing LCP-Tacro Phase III clinical studies in expensive process. The length of time may vary substan- de novo kidney transplant patients and stable kidney tially according to the type, complexity and intended use transplant patients and to support the full development of the product candidate, and can often span several programme of LCP-Tacro through NDA/MAA submission. years. As product candidates progress into late-stage clin- Because the Company has limited fi nancial and manage- ical studies, the size and complexity of such studies will rial resources, it has made a decision to focus mainly on increase. The LCP-Tacro Phase III studies are expected to its LCP-Tacro development programmes and product can- include approximately 900 de novo and stable kidney didate as the Company believes that LCP-Tacro is the transplant patients. The commencement and rate of com- most promising product candidate currently in its pipeline. pletion of clinical studies, including the Company’s Phase As a result of this business strategy, the Company will be III clinical studies for LCP-Tacro may be delayed by many diverting funds and attention from the development of factors, including: other product candidates and its development pipeline in general. The Company’s resource allocation decisions, • slow rates of patient recruitment (which is particularly including the strategy of focusing mainly on the develop- relevant for product candidates relating to organ trans- ment of LCP-Tacro, may prove to be wrong, or this strat- plants such as LCP-Tacro); egy may be executed unsuccessfully. • modifi cations to clinical trial protocols;

22 • unforeseen safety issues; required to curtail or abandon certain development programmes. In particular with respect to its Phase III clinical • inability to manufacture suffi cient quantities of quali- studies for LCP-Tacro, if the Company does not meet the fi ed current good manufacturing practices (“cGMP”) objectives of the clinical studies, it may not obtain the materials for clinical studies; regulatory approvals it needs to commercialise LCP-Tacro, may be required to abandon the LCP-Tacro development • inability to observe patients adequately after treat- programme and may never realise revenues from LCP- ment; Tacro. As a result, the Company’s business, results of operations and prospects and the value of the Company’s • change in regulatory requirements for clinical studies; Shares could be adversely affected. and Market acceptance for LCP-Tacro and any other prod- • government or regulatory delays, including delays uct candidate is uncertain. In particular, if LCP-Tacro resulting from efforts by competitors to infl uence the fails to gain market acceptance, the Company’s busi- regulatory process by actions such as petitions to alter ness will suffer signifi cantly and may never recover. approval requirements for the types of products the Company is seeking to develop. Even if LCP-Tacro meets its objectives in the Phase III clinical studies, obtains the required regulatory approvals and Even if the Company obtains positive results from preclini- is commercialised, market acceptance for the product may cal or early clinical studies, the Company may not achieve be less than estimated, and/or competitors may success- success in future studies. Furthermore, the Company’s fully obstruct commercialisation efforts. Competition in agreement with the FDA on a SPA of its Phase III clinical the pharmaceutical industry is intense, and the degree of study for LCP-Tacro in de novo kidney transplant patients market acceptance for LCP-Tacro or any other product does not ensure that the study will be carried out and candidate (if and when they are commercialised) will completed in accordance with the Company’s current depend on a number of factors, including: plans and budget nor that the Company will achieve positive results from the study that will warrant further devel- • market share of products marketed by the original opment of LCP-Tacro. manufacturers of products the Company is seeking to develop; The results of the Company’s early stage clinical studies are based on a limited number of patients and may, upon • cost-effectiveness; further review, be revised, negated or rejected by regulatory authorities or be negated by later stage clinical stud- • alternative treatment methods; ies. Historically, industry results from preclinical testing and early clinical studies have often not been predictive of • changes in physicians’ treatment preferences; results obtained in later clinical studies. A number of new drug candidates have shown promising results in earlier • reimbursement policies of government and third-party clinical studies, but subsequently failed to establish suffi - payers; and cient safety and effectiveness data to obtain necessary regulatory approvals. In addition, data obtained from pre- • marketing and distribution support for the Company’s clinical and clinical activities are susceptible to varying products. interpretations and Good Clinical Practice (GCP) documentation requirements, which may delay, limit or prevent If LCP-Tacro does not achieve signifi cant market accep- regulatory approval. Regulatory delays or rejections may tance, this would adversely affect the Company’s busi- be encountered as a result of many other factors, includ- ness, results of operations and prospects and the value ing changes in regulatory policy during the period of of the Company’s Shares. product development, or because the Company’s clinical studies may not be statistically signifi cant and suffi cient The Company may become substantially dependent to obtain the requisite regulatory approvals for product on collaboration agreements with third parties in the candidates employing the Company’s technology. The development and commercialisation of LCP-Tacro or Company’s near-term ability to generate revenues and its other product candidates. The Company may be future success depend on clinical studies and regulatory unable to enter into collaboration agreement on approval leading to the commercialisation of its product favourable terms, if at all. candidates. For LCP-Tacro, the Company intends to either seek suit- If the Company is unable to satisfactorily complete the able global or regional partners or establish its own sales necessary clinical testing, including obtaining positive and marketing capabilities in selected markets where the results, and meet certain other requirements for regula- Company believes, through such a strategy, it can maxi- tory approval, it may never realise revenues from LCP- mise its commercial potential. More generally, the Com- Tacro, or any other product candidate. It may also be pany will seek to enter into collaboration agreements with

23 pharmaceutical companies to address market opportuni- The success of any future collaboration agreements will ties that require large sales and marketing resources, depend on the efforts and activities of the Company’s large development investments and/or special expertise potential partners, who may have signifi cant discretion in as well as to share the fi nancial risks involved in drug determining how to pursue planned activities and the development and commercialisation of certain of its prod- quality and nature of the efforts and resources that they uct candidates. For many different reasons, including gen- will apply to the collaboration agreements, and who may eral market demand for particular product candidates or otherwise be unable to complete the development and therapeutic areas, results of clinical studies, market com- commercialisation of the Company’s products. The Com- petition or otherwise, the Company may be unable to pany cannot be certain that it will be able to initiate and attract partners for future collaboration agreements and/ maintain collaborations, that any collaborations will be or the terms of those collaboration agreements the Com- scientifi cally or commercially successful or that the Com- pany does enter into may not be favourable to the Com- pany will receive revenues from any collaboration agree- pany. If the Company is not successful in its efforts to ments. Factors that may affect the success of the Compa- enter into a collaboration arrangement with respect to ny’s collaborations include the following: LCP-Tacro, the Company may not have suffi cient funds to further develop and/or commercialise it internally. If the • the Company’s partners may be pursuing alternative Company does not have suffi cient funds to further technologies or developing alternative products, either develop and/or commercialise LCP-Tacro, the Company on their own or in collaboration with others, that may may not be able to bring it to market and generate reve- be competitive with products on which they are collab- nues. Even if the Company is successful in entering into orating with the Company or which could affect the collaboration agreements, such agreements may not Company’s partners’ commitment to the collaboration; result in the successful commercialisation of LCP-Tacro. The Company faces these same risks with respect to any • other products may reach the market before the Com- other product candidate. pany’s product candidate(s) subject to the collaboration agreement, rendering continued development of For example, the Company continues to pursue a collabo- the Company’s product candidate non-competitive, ration agreement with a partner to provide funding for obsolete or not economical; Phase III clinical studies of LCP-AtorFen, one of the Com- pany’s other product candidates. However, the market in • reductions in marketing or sales efforts or a discontinu- which LCP-AtorFen would compete already includes a ation of marketing or sales of the Company’s products number of product alternatives and, as a result, any by the Company’s partners would reduce any royalties potential partner would require signifi cant resources and the Company could be entitled to receive, to the extent determination to compete effectively. It has, therefore, they are based on the sales of the Company’s products proven diffi cult for the Company to fi nd a partner with by its partner; such characteristics. Without a partner, any ability to commercialise this product candidate would be adversely • the Company’s partners may terminate their collabora- impacted. In addition, the inability to enter into collaborations with the Company, which could make it diffi cult tion agreements could delay or preclude the develop- for the Company to attract new partners or adversely ment, manufacture and/or commercialisation of any other affect its reputation in the business and fi nancial com- product candidate and could have a material adverse munities; effect on the Company’s fi nancial condition and results of operations as revenues from product candidate licensing • the Company’s partners may pursue higher priority arrangements could be delayed. If so, the Company may programmes or change the focus of their development elect not to commercialise or further develop the product programmes, which could affect their commitment to candidate. the Company; and

The commercialisation of product candidates is often • business combinations or signifi cant changes in a part- dependent on the actions of the Company’s partners, ner’s business strategy may adversely affect that part- which are largely outside of the Company’s control. ner’s willingness or ability to pursue actively or even to meet its obligations under its collaboration agreement The commercialisation of product candidates, including with the Company. LCP-Tacro, is often dependent on the actions of partners which are largely outside of the Company’s control. The If the Company does not realise the contemplated bene- failure of the Company’s partners to act in accordance fi ts from its partners, its business, results of operations with their obligations under their respective collaborative and prospects and the value of the Company’s Shares agreements or to prioritise or devote suffi cient resources would be materially adversely affected. to the commercialisation of the Company’s product candidates could materially harm the Company’s business.

24 The Company has previously entered into collabora- management information and control systems in an effi - tion and licence agreements which have not been cient or timely manner and may discover defi ciencies in successful and may have diffi culty entering into existing systems and controls. In addition, the competi- other such agreements or may face risks related to tion for qualifi ed personnel in the pharmaceutical and the termination of its previous or current agree- biotechnology fi eld is intense, and the Company may ments. experience diffi culties in recruiting, hiring and retaining qualifi ed individuals. The Company has entered into collaboration and licence agreements (such as with Shionogi Pharma, Inc. (“Shion- There is no assurance that the Company will succeed in ogi”) (formerly Sciele Pharma, Inc. (“Sciele”)), Recordati marketing and commercialising LCP-Tacro, or any product S.p.A (“Recordati”) and Sandoz Inc. (“Sandoz”)) that have candidate, on its own, or that it could manage the growth not subsequently resulted in positive outcomes for the that would be necessary to do so, which could adversely Company or its partners, resulting in some cases in termi- affect its business, results of operations and prospects nation of the agreements or abandonment of the rights and the value of the Company’s Shares. and obligations thereunder. Shionogi recently gave notice to the Company of termination of the licence agreement The Company relies on third parties to conduct clini- with the Company regarding LCP-FenoChol, effective no cal studies of LCP-Tacro, and any other product can- later than February 2011. The termination of the collabo- didate. ration and licence agreements may make it diffi cult for the Company to attract an alternative partner for LCP- The Company relies to a large extent on independent clin- FenoChol or partners for its other product candidates ical investigators, contract research organisations and including LCP-Tacro. other third-party service providers such as PPD Develop- ment, LP and PPD Global Limited (together, “PPD”) to If the Company fails to enter into collaboration and conduct clinical studies of LCP-Tacro, and any other prod- licence agreements on attractive terms, its business, uct candidate. Although the Company relies on these par- results of operations and prospects and the value of the ties for high quality execution of the Company’s clinical Company’s Shares would be materially adversely affected. studies, the Company is unable to control all aspects of their activities. If these third parties do not carry out their The Company has limited sales and marketing experi- contractual duties or obligations or meet expected dead- ence. In order to commercialise any product candi- lines, if the third parties need to be replaced or if the date in-house, the Company will need to hire addi- quality or accuracy of the clinical data they obtain is com- tional employees. If the Company is unable to promised due to failure to adhere to the Company’s clini- develop adequate sales and marketing capabilities, cal protocols or for other reasons, the Company’s planned the Company may be unable to directly commercial- clinical studies, including the Phase III clinical studies for ise a product candidate which could adversely impact LCP-Tacro, may be extended, delayed or terminated. Any the Company’s ability to compete effectively. extension, delay or termination of the Phase III clinical studies for LCP-Tacro would have a signifi cant negative The Company may choose to market LCP-Tacro directly impact on the Company’s business and would compro- through its own sales and marketing force in selected mise the Company’s ability to license or commercialise geographic areas. In order to implement a strategy of LCP-Tacro. See Part I, Section 22 “Material agreements” commercialising LCP-Tacro in-house, the Company will for a description of the agreement with PPD. have to develop a sales and marketing organisation and establish distribution capability and expand the number Competition in the biotechnology and pharmaceuti- of managerial, operational, fi nancial and other employees, cal industries is intense, and, if the Company is which would be expensive and time-consuming and could unable to compete effectively, its business, results delay any product launch. The Company expects that a of operations and prospects will suffer. sales force of approximately 20-30 people for LCP-Tacro would be required to cover effectively the U.S. market. The markets in which the Company competes and intends Such an increase represents approximately half of the to compete are undergoing, and are expected to continue Company’s current workforce. If the Company’s opera- to undergo, rapid and signifi cant technological changes. tions should expand, the Company expects that it will The Company expects competition to intensify as techno- need to manage additional relationships with various logical advances are made or new drugs and biotechnol- partners, suppliers, distributors and other organisations. ogy products are introduced. New developments by com- The Company’s ability to manage its operations and petitors may render LCP-Tacro, or any other current or growth requires the Company to continue to improve its future product candidate and/or technology non-competi- operational, fi nancial and management controls, reporting tive, obsolete or not economical. The Company’s competi- systems and procedures. Such growth could place a strain tors’ products may be more effi cacious or marketed and on its administrative and operational infrastructure. The sold more effectively than LCP-Tacro, or any other future Company may not be able to make improvements to its products.

25 In particular, major pharmaceutical companies such as pany’s business, results of operations and prospects and Sandoz, Dr. Reddy’s Laboratoriums Limited (“Dr. Reddy’s”) the value of the Company’s Shares. and Watson Pharmaceuticals, Inc. (“Watson”) are active generic market participants in the immunosuppression Competition by the original manufacturers of prod- market. In addition to product-based competition, the ucts that the Company is seeking to develop is Company’s proprietary MeltDose technology faces tech- intense and may lead to high regulatory burdens and nology-based competition from several existing methods litigation, which would have an adverse impact on of enabling oral delivery of drugs with low water solubility. the Company’s business, results of operations and prospects. Many of the Company’s competitors have: Since the Company’s business strategy is the develop- • signiﬁ cantly greater ﬁ nancial, technical and human ment of proprietary equivalents containing already resources than the Company has at every stage of the approved drugs, the Company faces competition from the discovery, development, manufacturing and commer- pharmaceutical companies which are currently marketing cialisation process; such approved products. For example, if LCP-Tacro is commercialised, it will be competing with Astellas, Inc.’s • more extensive experience in preclinical testing, con- (“Astellas”) products Prograf and Advagraf. Such pharma- ducting clinical studies, obtaining regulatory approvals, ceutical companies can generally be expected to seek to commercialising drugs, challenging patents and in man- delay the introduction of competing products through a ufacturing and marketing pharmaceutical products; variety of means including:

• products that have been approved or are in late stages • ﬁ ling new pharmaceutical formulation and use patent of development; or applications on drugs whose original patent protections are about to expire; • collaborative arrangements in the Company’s target markets with leading companies and research institu- • ﬁ ling an increasing number of patent applications that tions. are more complex and costly to challenge;

If the Company successfully develops and obtains regula- • ﬁ ling suits for alleged patent infringement that may tory approval for LCP-Tacro or any other product candi- delay FDA approval; date, the Company will face competition based on many different factors, including: • developing patented controlled-release or other “next- generation” products, which often reduces demand for • the safety, efﬁ cacy and price of the Company’s prod- a new version of an existing product for which the ucts; Company is seeking approval; or

• the timing of and speciﬁ c circumstances relating to • changing and expanding product claims and product regulatory approvals for these products; labelling.

• the availability and cost of manufacturing, marketing Any one of these strategies may increase the costs and and sales capabilities; risks associated with the Company’s commercialisation of any of its product candidates and may delay or altogether • the effectiveness of the Company’s and/or its potential prevent such commercialisation, which could adversely partners’ marketing and sales capabilities; affect the Company’s business, results of operations and prospects and the value of the Company’s Shares. • the availability and amount of third-party reimbursement for the Company’s products; and If the Company fails to meet manufacturing requirements for LCP-Tacro or any other product candidate, • the strength of the Company’s patent position. or if the Company is required to contract with alternative third-party manufacturers, the Company’s The Company’s competitors may develop or commercialise development and commercialisation efforts may be products with signiﬁ cant competitive advantages in regard materially harmed. to any of these factors. In particular, LCP-Tacro will, if commercialised, be competing with a number of generic The Company relies on third parties to manufacture LCP- products and there can be no assurance that market par- Tacro and other product candidates for pivotal clinical ticipants will be willing to adopt a branded product such studies and/or commercial manufacturing. To be success- as LCP-Tacro at a price which is higher than that of gener- ful, the Company’s products and product candidates must ics. The Company’s competitors may therefore be more be manufactured in sufﬁ cient quantities in compliance successful in commercialising their products than the with regulatory requirements and at acceptable costs. The Company may be, which could adversely affect the Com- Company is aware of only a limited number of companies

26 who operate manufacturing facilities in compliance with The Company may not be successful in its efforts to such regulatory requirements. The Company cannot be identify any additional product candidates that may certain that it will be able to contract with any of these be developed based on the Company’s proprietary companies on acceptable terms, if at all, which could MeltDose technology. adversely affect the Company’s business, results of operations and prospects and the value of the Company’s An important element of the Company’s strategy is to Shares. develop, through the use of its proprietary MeltDose technology, improved versions of currently marketed The Company’s or its third-party manufacturers have in drugs. For example, LCP-FenoChol, marketed under the the past and may in the future encounter complications in brand name Fenoglide, was developed to be an improved connection with or as a result of: version of Abbott Laboratories’ (“Abbott”) product Tricor. LCP-Tacro is being developed to be a once-daily dosage • production yields; version of Astellas’ Prograf. Research programmes to identify new product candidates require substantial tech- • quality control and assurance; nical, fi nancial and human resources. These research programmes may initially show promise in identifying poten- • shortages of qualifi ed personnel; tial product candidates, yet fail to yield product candidates for clinical development for a number of rea- • compliance with the rules and regulations issued by sons, including that: FDA, EMA and the rules and regulations of other authorities; • the research methodology used may not be successful in identifying potential product candidates; or • production costs; and • potential product candidates may, on further study, • development of advanced manufacturing techniques show inadequate effi cacy, harmful side effects, undif- and process controls. ferentiated features or other characteristics suggesting that they are unlikely to be effective products. In addition, the Company and any third-party manufacturer will be required to register such manufacturing facili- If the Company is unable to develop suitable product can- ties with the FDA (and have a U.S. agent for the facility), didates through internal research programmes or other- European and other regulatory authorities. wise, the Company will not be able to generate revenues in future periods, which could harm the Company’s busi- The Company may not be able to maintain or renew its ness, results of operations and prospects and the value existing or any other third-party manufacturing arrange- of the Company’s Shares. ments on acceptable terms, if at all. If the Company is unable to establish relationships with third-party manu- The Company may face product liability claims facturers for its product candidates at an acceptable cost related to the use or misuse of products employing level, or if any supplier fails to meet the Company’s its technology which may cause the Company’s busi- requirements in relation to its product candidates for any ness to suffer. For certain risks, the Company has reason, the Company may be required to obtain alterna- decided to self-insure. tive suppliers. Any inability to obtain qualifi ed alternative suppliers, including an inability to obtain, or delay in The Company’s business exposes the Company to poten- obtaining, approval of an alternative supplier by the FDA, tial product liability risks which are inherent in research would delay or prevent the clinical development and com- and development, preclinical and clinical studies, manu- mercialisation of LCP-Tacro or any other product candi- facturing, marketing, promotion, sale and use of the Com- date, and could negatively impact the Company’s ability pany’s products. Product liability claims may be expensive to meet any supply obligations to partners for the future to defend and may result in judgements against the Com- marketing and sale of LCP-Tacro or any other product can- pany that are material. With respect to Fenoglide, the didate. Company made a business decision not to take out specifi c insurance coverage for product liability. Additionally, Furthermore, the Company’s current or potential collabor- the Company has decided not to take out insurance ative partners may be, under the terms of their agree- against certain identifi ed risks, including against crime, ments with the Company, responsible for manufacturing legal costs and damages for infringement of patents, of the Company’s products or product candidates, or such product recalls and loss of research results and material. product or product candidates licensed to them thereun- Any claims against the Company related to these risk der. Manufacturing issues encountered by the Company’s areas have the potential to materially and adversely affect collaborative partners, even though the Company may not the Company’s business, results of operations and pros- be responsible for such issues, could impact the Com- pects and the value of the Company’s Shares and the pany, damage its reputation or the reputation of the Preemptive Rights. product or product candidate and create liability.

27 The Company is required to secure certain levels of insur- ments, the Company does not expect to generate signifi - ance as a condition for the conduct of clinical studies and cant, if any, revenues from the sale of LCP-FenoChol in it also maintains liability insurance with specifi ed coverage the future. Furthermore, the Company has not generated limits per occurrence and in the aggregate. Although the signifi cant revenues to date from the sale of LCP-Feno- Company believes that its insurance coverage is appropri- Chol or any of its other product candidates. The Company ate for its business and stage of development, it cannot expects that its annual operating losses will continue over be certain that the insurance policies will be suffi cient to the next several years. To become profi table, the Com- cover all claims that may be made against it. Product lia- pany must successfully develop and obtain regulatory bility insurance is expensive, diffi cult to obtain and may approval for LCP-Tacro, or another product candidate. The not be available in the future on acceptable terms. Any Company may never generate signifi cant revenues and, such claims against the Company, regardless of merit, even if it does, it may never achieve profi tability. could adversely affect the Company’s business, results of operations and prospects and the value of the Company’s To become and remain profi table, the Company must suc- Shares and Preemptive Rights. ceed in developing and commercialising products with signifi cant market potential. This will require the Company to The Company may be subject to litigation and claims be successful in a range of activities, certain of which are that could adversely affect the Company’s business. only in the preliminary stages for the Company, including developing product candidates, obtaining regulatory From time to time, the Company may become subject to approval, and manufacturing, marketing and selling. The litigation and claims or become otherwise involved in liti- Company may never succeed in these activities and may gation, arbitration proceedings or similar disputes. In never generate revenues that are signifi cant or large addition, the Company regularly includes indemnifi cation enough to achieve profi tability. Even if the Company does provisions in its contractual arrangements and from time achieve profi tability, the Company may not be able to sus- to time, may be subject to claims by its contractual coun- tain or increase profi tability in the long term. The Compa- terparties or third parties with respect to these obliga- ny’s failure to become and remain profi table may cause tions. The Company has no reason to believe that the the market price of its Shares to decrease and could Company’s contracting partners, or other interested par- impair the Company’s ability to raise capital, expand its ties in, its agreements would raise any claims against the business, diversify its product offerings or continue its Company. However, any such claims, regardless of merit, operations. could be time consuming and expensive to defend, could divert management’s attention and resources, and could The Company may require substantial additional adversely affect the Company’s business, results of opera- funds to execute its business plan which may be dif- tions and prospects and the value of the Company’s fi cult to obtain, and, if additional capital is not avail- Shares and the Preemptive Rights. able, the Company may need to limit, scale back or cease its operations.

Risks related to fi nancial results As at 30 September 2010, the Company had cash and cash equivalents totalling DKK 134.0 million. The Com- The Company has incurred a cumulative loss since pany has already raised DKK 557 million and DKK 408 mil- inception. If the Company does not generate signifi - lion in gross proceeds, in 2006 and 2008 respectively, to cant revenues, it may never be profi table. support its operations and it will require substantial additional funds to execute its business strategy. In particular, The Company has incurred signifi cant losses since its the Company requires signifi cant additional funds to fund inception in June 2002. As at 30 September 2010, its its Phase III clinical studies of LCP-Tacro and progress this accumulated loss was DKK 1,026.5 million. Only one product candidate towards an NDA/MAA fi ling expected in product developed using the Company’s MeltDose tech- the fi rst quarter of 2013 as well as to support its general nology – LCP-FenoChol – has been approved by the FDA operations. The proceeds of the Offering are expected to for commercial sale in the U.S. under the brand name be used to fund the ongoing Phase III studies of LCP- Fenoglide. In August 2008, the Company sold to Cowen Tacro. However, if the Company elects to establish its Healthcare Royalty Partners L.P. (“Cowen”) under a pur- own sales and marketing capabilities for LCP-Tacro or chase agreement the future royalty and milestone pay- another product candidate and commercialise any ments for sales of Fenoglide in North America due to the approved drug, it will need substantial additional funding. Company from Shionogi. As part of its agreement with Because successful development of LCP-Tacro, or any Cowen, the Company also granted to Cowen an exclusive, other product candidate is uncertain, the Company is royalty-free license, with right to sub-license, to develop, unable to estimate the actual cash the Company will manufacture and sell LCP-FenoChol in the U.S., Canada, require to complete research and development and com- and Mexico, subject to the prior rights granted by the mercialise LCP-Tacro or any other product under develop- Company to Shionogi. Although the purchase agreement ment. sets out conditions for future potential milestone pay-

28 The Company’s future capital requirements may vary • the timing of future regulatory approvals, if any, for depending on the following: LCP-Tacro, or any other Company product candidate in clinical development; • the rate at which operating losses are incurred; • the amount and timing of operating costs and capital • the Company’s decision to establish its own sales and expenditures relating to the Company’s business oper- marketing capabilities for certain product candidates, ations and facilities; including LCP-Tacro; • delays in preclinical testing and clinical studies and • the Company’s and its potential partners’ efforts and changes in regulatory requirements for clinical studies, successes in developing and commercialising the Com- including in particular for LCP-Tacro; pany’s product candidates; • the timing of the commencement, completion or termi- • the time and costs involved in obtaining regulatory nation of collaboration agreements; approvals; • the introduction of new products and services by the • the costs of manufacturing, marketing and sales activi- Company, the Company’s potential partners or its com- ties, if any, and in developing such capabilities, if any; petitors;

• the continued progress in the Company’s research and • costs and expenses associated with preclinical testing development programmes, including completion of its and clinical studies; and preclinical and clinical studies and the size and complexity thereof; and • payment of licence fees and/or royalties for the right to use third-party proprietary rights. • the potential acquisition and in-licensing of other technologies, products or assets. The Company’s revenues in any particular period may be lower than the Company anticipates and, if the Company If the Company’s operating losses are greater than antici- is unable to reduce spending in that period, the Compa- pated, the Company may seek additional funding in the ny’s operating results and the value of the Company’s future and may do so through collaborative arrangements Shares will be adversely affected. Investors should not rely and public or private equity and debt ﬁ nancings. There on period-to-period comparisons of the Company’s can be no assurance that additional funds will be avail- results of operations as an indication of future perfor- able on acceptable terms, if at all, or that such funds, if mance. raised, will be sufﬁ cient to permit the Company to conduct its operations as contemplated. The Company’s fail- It is likely that in some future periods the Company’s ure to do so may adversely affect its business, results of results of operations may be below the expectations of operations and prospects and the value of the Company’s public market analysts and investors. If this occurs, the Shares. price of the Company’s Shares may decline.

Conversely, if the Company raises additional funds by issuing equity securities, the Company’s shareholders may Risks related to the Company’s intellectual experience dilution. Any debt fi nancing or additional property equity that the Company raises may contain terms that are not favourable to its shareholders or to the Company. The Company’s business model is based on develop- If the Company raises additional funds through collabora- ing proprietary equivalent products containing tion and licensing agreements with third parties, the already approved drugs, such as tacrolimus. As a Company may be required to relinquish some rights to its result, the Company may face intellectual property technologies or product candidates, including LCP-Tacro, litigation from holders claiming patent infringement or grant licences on terms that are not favourable to the in connection with LCP-Tacro, or any other of the Company. Company’s products or product candidates, forcing it to incur substantial costs and liability for damages The Company’s operating results may vary signifi - and potentially to cease some or all of its develop- cantly from period to period and these variations ment and commercialisation efforts. may be diffi cult to predict. The Company may infringe or violate the intellectual prop- The Company’s future revenues and operating results are erty rights of others by technologies, product candidates expected to vary signifi cantly from period to period due to or products that the Company or its partners seek to use, a number of factors. Many of these factors are outside of target or develop and commercialise. These third parties the Company’s control. These factors include: could bring claims against the Company or the Company’s

29 collaborative partners, which could cause the Company to ate, within a certain timeframe after submission of an incur substantial expense, and if successful, could require NDA under Section 505(b)(2) for LCP-Tacro, legal pro- the payment of substantial damages. The Company or its ceedings against the Company claiming patent infringe- partners could be forced to cease or delay research, ment, in which case, under the Hatch-Waxman Act, the development, manufacturing or sales of the product or Company could be prevented from commercialising LCP- product candidate or technology that is the subject of the Tacro until the earlier of 30 months, expiration of the pat- suit. Furthermore, as is typical in the biopharma industry ent, settlement of the lawsuit, or a decision in the lawsuit where the Company operates, the Company receives from that it is favourable to the Company, which could time to time letters alleging its unauthorized use of third adversely affect the Company’s business, results of opera- party intellectual property. tions and prospects, as well as the value of the Compa- ny’s Shares. As a result of intellectual property infringement claims, or in order to avoid potential claims, the Company or its All composition-of-matter patents on tacrolimus have partners may choose to seek, or be required to seek, a expired. However, Astellas has patent protection on cer- licence from third parties and would most likely be tain sustained-release formulations of tacrolimus at least required to pay licence fees or royalties. These licences until 2019. Under national law, a patentee may at any may not be available on acceptable terms, or at all. Even time after LCP-Tacro is marketed initiate legal proceedings if the Company or its partners were able to obtain a against the Company claiming patent infringement. Litiga- licence, the rights may be non-exclusive, which would tion often involves signifi cant expense and a court could give competitors access to the same intellectual property. issue an injunction preventing the Company from market- Ultimately, the Company could be prevented from coming LCP-Tacro in a particular jurisdiction for the remaining mercialising a product, including LCP-Tacro, or be forced term of one or more of the applicable patents relating to to cease some aspect of its business operations if, as a tacrolimus formulations. Intellectual property litigation result of actual or threatened patent infringement claims, involves many risks and uncertainties, and there is no the Company or its partners are unable to enter into assurance that the Company would prevail in any lawsuit licences on acceptable terms. This could have an adverse brought by Astellas or any other third party. In addition, effect on the Company’s business, results of operations Astellas has signifi cantly greater resources than the Com- and prospects and the value of the Company’s Shares and pany. If the Company does not prevail in any such lawsuit, the Preemptive Rights. its business, results of operations and prospects as well as the value of the Company’s Shares could be adversely The cost to the Company of any patent litigation or other affected. proceeding, even if resolved in the Company’s favour, could be substantial. Some of the Company’s competitors The Company may face intellectual property litiga- may be able to sustain the costs of such litigation or pro- tion with any applicant seeking FDA approval to man- ceedings more effectively than the Company because of ufacture and market branded and/or generic forms of their substantially greater fi nancial resources. Patent liti- LCP-FenoChol. gation and other proceedings may also absorb signifi cant management time. Uncertainties resulting from the initia- Companies that produce branded pharmaceutical products tion and continuation of patent litigation or other pro- for which there are listed patents in the FDA’s Orange ceedings could have a material adverse effect on the Book routinely bring patent infringement litigation against Company’s ability to compete in the marketplace. applicants seeking FDA approval to manufacture and market branded and/or generic forms of their branded prod- The Company may face intellectual property litiga- ucts. The Company and/or Cowen may seek to protect tion with Astellas, the NDA holder of Prograf, in con- LCP-FenoChol from generic competition by bringing patent nection with its LCP-Tacro product candidate. infringement litigation against any applicant who submits an Abbreviated New Drug Application (“ANDA”) or an NDA Although the Company believes that its activities do not under Section 505(b)(2) including a Paragraph IV certifi ca- infringe third-party intellectual property rights of which tion of the patent listed in the Orange Book for LCP-Feno- the Company is aware, there can be no assurance that Chol. Accordingly, the Company and/or its partners may the Company will actually have freedom to operate and face costly and time consuming intellectual property litiga- the Company may become involved in costly and time tion with potential applicants. Intellectual property litiga- consuming intellectual property litigation with Astellas, tion involves many risks and uncertainties, and there is no the NDA holder of Prograf in the United States, or any assurance that the Company would prevail in any lawsuit other party in connection with its LCP-Tacro product can- initiated against an ANDA or NDA Section 505(b)(2) appli- didate. cant for a generic or branded version of LCP-FenoChol.

At the date of this Offering Circular, no patents are listed For example, the Company is the co-plaintiff in a jointly in the FDA’s Orange Book for Prograf capsules. However, ﬁ led patent infringement lawsuit against Impax Laborato- if U.S. patents issue and enter the Orange Book listing for ries Ltd. (“Impax”) in response to their ANDA for a pro- Prograf capsules, Astellas and/or the patentee may initi- posed generic form of Fenoglide (fenoﬁ brate) 40 and 120

30 milligram tablets. In their ANDA, Impax requests approval important to the development of its business. The Com- to sell generic Fenoglide tablets following the approval by pany is also dependent on its licensors to enforce their the FDA. This lawsuit asserts that Impax, if permitted to patent rights. market generic Fenoglide tablets, will infringe the Compa- ny’s patent covering Fenoglide (patent number U.S. The process of identifying and seeking patent protection 7,658,944 which expires in 2024 (the “‘944 patent”)) is expensive and time consuming, and the Company or and requests that the Court enter an injunction barring partners may not be able to fi le and prosecute all neces- the sale of the Impax ANDA product until the expiration of sary or desirable patent applications at a reasonable cost the Company’s patent. The further proceedings before the or in a timely manner. The Company’s pending or future U.S. District Court have not yet been scheduled. Under applications and those of the Company’s partners may the terms of the Company’s licence agreement with not result in issued patents, or may need to be refi ned or Shionogi, Shionogi currently bears the cost of this litiga- restricted before a patent is granted. The outcome of the tion. However, the Company has recently received notice patent prosecution for biotechnology and pharmaceutical of termination of the agreement from Shionogi. Under products is generally highly uncertain, and it involves the Company’s agreement with Cowen, the Company complex legal and scientifi c questions. The standards must bear the cost of this litigation. The litigation may which patent offi ces in different countries use to grant divert management time and attention from other proj- patents, or to defi ne the subject matter or scope of allow- ects, and may require the Company to incur substantial able claims, are not always applied predictably or uni- expenses, including legal fees. In addition, there can be formly, and can change without prior notice. Except for no assurance that an injunction will be granted and/or some older U.S. patent applications that remain confi den- that the Company’s patent will prevail. Furthermore, tial for the entire time prior to issuance as a patent, pat- Impax may be found not to infringe the ‘944 patent or ent applications are typically published 18 months after the ‘944 patent may be found invalid. If either outcome the date of fi ling. Similarly, publications of discoveries in were to occur, Impax may be permitted to begin selling the scientifi c literature often lag behind actual discoveries. generic Fenoglide tablets immediately following such Neither the Company nor the Company’s partners can be decision, which may erode Fenoglide sales. Moreover, in certain that LifeCycle Pharma was the fi rst to make the the event that Impax’s ANDA is deemed complete by the inventions claimed in the Company’s pending patent FDA prior to the date on which the ‘944 patent was listed applications, or that LifeCycle Pharma was the fi rst to fi le in the Orange Book, there would be no 30-month stay of for protection of the inventions described in these patent approval of the ANDA under the Hatch-Waxman Act; in applications. such instance, upon receiving regulatory approval, Impax would be permitted to begin selling generic Fenoglide The Company has fi led four distinct families of patent tablets, which may erode Fenoglide sales. applications relating to its MeltDose technology and fi ve families of patent applications in the area of drug delivery The Company depends on its own rights and other technology. In addition, the Company is actively prosecut- rights. If the Company or its licensors cannot ade- ing 12 product-specifi c patent families. Presently, the quately protect the Company’s own rights and other Company has 85 pending national and international pat- rights, its business will suffer. ent applications, wherein essentially identical patent applications that are intended to serve only as priority The Company’s success depends in part on its ability to: applications are counted as a single patent family. To date, 15 national patents relating to its MeltDose technol- • protect trade secrets; ogy have issued, including two U.S. patents, one Euro- pean patent and 10 patents relating solely to its product • apply for, obtain, maintain and enforce patents and candidates. trademarks; In addition to patents, the Company relies on trade • operate without infringing upon the proprietary rights secrets and proprietary know-how. The Company seeks of others; and protection, in part, through confi dentiality and proprietary information clauses in agreements with its partners, • have its licensors enforce their patent rights against employees, consultants, outside scientifi c partners and third-party infringers. sponsored researchers and other advisors. These clauses may not effectively prevent disclosure of confi dential and The Company will be able to protect its proprietary rights proprietary information and may not provide an adequate from unauthorised use by third parties only to the extent remedy in the event of unauthorised use or disclosure of that such proprietary rights are covered by valid and confi dential and proprietary information. Furthermore, if enforceable patents or are effectively maintained as trade the Company’s trade secrets otherwise become known to, secrets. The Company protects its proprietary position by or are independently developed by, the Company’s com- fi ling and prosecuting international, U.S., European and petitors, the Company may not be able to successfully other national patent applications related to its proprie- assert any trade secret rights against such parties. Costly tary technology, inventions and improvements that are and time-consuming litigation may be necessary to deter-

31 mine the scope of and enforce its proprietary rights, and The biotechnology and pharmaceutical industries have the failure to obtain or maintain trade secret protection been characterised by extensive litigation regarding pat- could adversely affect the Company’s competitive busi- ents and other intellectual property rights. The defence ness position. If the Company fails to obtain and maintain and prosecution of contractual intellectual property law- patent and trade secret protection of its products or suits, U.S. Patent and Trademark Offi ce interference pro- product candidates, the Company could lose its competi- ceedings, European Patent Offi ce oppositions and related tive advantage, and the increased competition the Com- legal and administrative proceedings in the U.S., Europe pany may face could adversely affect its business, results and internationally, involve complex legal and factual of operations and prospects and the value of the Compa- questions. As a result, such proceedings may be costly ny’s Shares. and time-consuming to pursue and their outcome is uncertain. Litigation may be necessary to: The Company has also registered several trademarks, including its corporate name, LifeCycle Pharma, and the • protect and enforce the Company’s patents and future trade name MeltDose. The Company has obtained Danish, patents; European and U.S. registered trademarks for its corporate name and the trade name MeltDose. The Company may • enforce or clarify the terms of the in-licenses the Com- not be able to obtain trademark protection in other juris- pany may be granted in the future; dictions that the Company considers of signifi cant importance. Furthermore, the Company’s trademarks could be • protect and enforce trade secrets, know-how and other challenged by others. proprietary rights that the Company owns or may in- license; or If the validity of the Company’s own proprietary rights is challenged, the Company’s business may • determine the enforceability, scope and validity of the suffer. proprietary rights of third parties and defend against alleged patent infringement. The mere issuance of a patent does not guarantee that it is valid or enforceable. Even if issued, patents may be For example, the Company is currently the co-plaintiff in a challenged, invalidated or circumvented, which may limit patent infringement lawsuit against Impax in response to LifeCycle Pharma’s ability and the ability of the Company’s their ANDA for a proposed generic form of Fenoglide partners to stop competitors from marketing similar prod- (fenofi brate) 40 and 120 milligram tablets. For more infor- ucts, and may decrease the length of time of the patent mation regarding this litigation, see Part I, Section 20.3 protection afforded. In addition, LifeCycle Pharma’s pat- “Litigation”. If the Company becomes involved in any liti- ents and those of the Company’s partners may not afford gation, interference or other administrative proceedings, protection against competitors with similar technology. the Company may incur substantial expense and the Accordingly, the Company cannot predict the degree of efforts of its technical and management personnel may future protection for the Company’s current or future pro- be diverted. An adverse determination may subject the prietary rights, or the breadth of claims allowed in any Company to signifi cant liabilities or require the Company patent issued to the Company or to the Company’s part- to seek licences. Such licences may not be available from ners. third parties on commercially reasonable terms, if at all. Therefore, the Company and its partners may be restricted Furthermore, no assurance can be given that an applica- or prevented from manufacturing and selling products tion for formulation patent protection will not be employing the Company’s technology. This could have an restricted to cover only particular uses. Where LifeCycle adverse effect on the Company’s business, results of Pharma or the Company’s partners have only method-of- operations and prospects and the value of the Company’s use or process patent coverage for a product candidate, it Shares and the Preemptive Rights. may be more diffi cult to enforce such patent protection. If the Company is unable to obtain licences that the In addition, third-party patents or patent applications may Company believes are necessary to conduct its busi- confl ict with patent applications to which the Company ness on commercially reasonable terms its business has rights. Any such confl ict may substantially reduce the will suffer. The Company may infringe third party coverage of any rights that may issue from the patent rights and the Company’s own proprietary rights may applications to which the Company has rights. If third par- not be suffi cient to prevent competition. ties prepare and fi le patent applications in the U.S. that also claim the technology to which the Company has The Company seeks to obtain licences to granted and rights, the Company may have to participate in interfer- potential patent rights when, in its judgment, such ence proceedings in the U.S. Patent and Trademark Offi ce licences are necessary to conduct its business. If any to determine when the invention was made. licence is required, there can be no assurance that the Company will be able to obtain any such licence on commercially favourable terms, if at all, and if these licences are not obtained, the Company might be prevented from

32 using certain of its technologies. The Company’s failure to In 2006, the Company fi led an opposition claiming invalid- obtain a licence to any technology that the Company may ity of European patent EP-B-1273294 belonging to require may have a material adverse effect on its busi- Fournier relating to an immediate release of fenofi brate ness, fi nancial condition and results of operations. The formulation. In 2008, the patent was revoked in its Company cannot assure that its products and/or actions entirety by the Opposition Division of the European Pat- in developing or selling the Company’s products will not ent Offi ce. Fournier appealed this decision in 2009 infringe such third-party patents. Moreover, the Compa- although the appeal proceedings have not yet been ny’s owned or licensed proprietary rights may not prevent scheduled. If the Board of Appeal of the European Patent others from developing competitive products using the Offi ce decides to reverse the decision of the fi rst instance Company’s technology or other technologies. Similarly, and uphold the patent as granted, the Company may be others may obtain patents that could limit the Company’s prevented from commercialising LCP-Feno in certain Euro- ability and the ability of its licensees to use, import, man- pean countries for the lifetime of the patent, i.e. until ufacture, market or sell products or impair its competitive January 2018, since there can be no assurance the Com- position and the competitive position of the Company’s pany can obtain the necessary patent licence on a rea- licensees. As a result, the Company’s business, results of sonable basis or at all. If the Company does not have operations and prospects and the value of the Company’s freedom to operate with respect to LCP-Feno, the Com- Shares could be adversely affected. pany may not be able to fi nd a collaboration partner, obtain any revenues from LCP-Feno and may be forced to The Company may face intellectual property litiga- discontinue the programme. tion with Pfi zer, the NDA holder of atorvastatin, one of the components of LCP-AtorFen. Risks related to government regulatory and legal Although the Company believes that its activities related requirements to LCP-AtorFen do not infringe third-party intellectual property rights of which the Company is aware, there can The Company may never obtain the regulatory be no assurance that the Company will actually have free- approvals the Company needs to market its product dom to operate if it were to commercialise LCP-AtorFen, candidates. and the Company may become involved in costly and time consuming intellectual property litigation with Pfi zer, the Only one product developed using the Company’s proprie- NDA holder of atorvastatin, one of the components of tary MeltDose technology, LCP-FenoChol marketed under LCP-AtorFen, or any other party in connection with its the brand name Fenoglide, has received regulatory LCP-AtorFen product candidate. Pfi zer has composition- approval from the FDA for commercial sale in the U.S. The of-matter patents on certain atorvastatin salts and pedi- Company has neither received nor applied for any regula- atric exclusivity associated therewith that will expire in or tory approvals required for the commercial sale of Feno- before June 2011 and further U.S. patents listed in the glide in any other jurisdiction and has not yet sought reg- FDA’s Orange Book that will expire in or before January ulatory approval for the commercial sale of LCP-Tacro or 2017. After submission of an NDA under Section 505(b) any of its other product candidates in the U.S., Europe or (2) for LCP-AtorFen, Pfi zer may (as a matter of right under in any other jurisdiction. Accordingly, the Company has the Hatch-Waxman Act) initiate legal proceedings against yet to submit an NDA to the FDA, an MAA to the EMA for the Company claiming patent infringement. Litigation its product candidate LCP-Tacro, to national regulatory often involves signifi cant expense and the court could agencies in Europe or any international regulatory authori- issue an injunction preventing the Company from market- ties for any of its product candidates. Upon obtaining the ing LCP-AtorFen in the U.S. for the remaining term of one results of the Phase III LCP-Tacro studies, the Company or more of the applicable U.S. patents relating to atorvas- intends to submit an NDA to the FDA and an MAA to the tatin. In addition, Pfi zer has signifi cantly greater resources EMA. The Company has only limited experience in fi ling than the Company. Intellectual property litigation involves and pursuing applications necessary to obtain regulatory many risks and uncertainties, and there is no assurance approval or licensure, and the Company cannot ensure that the Company would prevail in any lawsuit brought by that LCP-Tacro or any other product candidate will be Pfi zer or any other third party. If the Company does not approved or licensed for marketing. The process of apply- prevail in any such lawsuit, its business, results of opera- ing for regulatory approval is expensive, often takes many tions and prospects as well as the value of the Company’s years and can vary substantially based upon the type, Shares could be adversely affected. complexity and novelty of the product candidates involved. If the LCP-Tacro product is not approved, this The Company may be prevented from commercialis- could have an adverse effect on the Company’s business, ing LCP-Feno in Europe until 2018 if the Board of results of operations and prospects and the value of the Appeal of the European Patent Offi ce reverses the Company’s Shares. decision to reject Laboratoires Fournier S.A.’s (“Fournier”) European patent EP-B-1273294.

33 If the Company is unable to fi le for regulatory approval ogy are marketed in countries outside of Europe and the with the appropriate regulatory authorities, for LCP-Tacro U.S., they will also be subject to extensive regulation by or any other product candidate or if the Company is other governments. The regulatory review and approval or required to generate additional data related to safety and licensing process, including preclinical testing and clinical effi cacy in order to obtain approval for LCP-Tacro or any studies of each product candidate, is lengthy, expensive other product candidate, the Company may be unable to and uncertain. Securing marketing approval requires the meet its anticipated development and commercialisation submission of extensive preclinical and clinical data and timelines. For example, with respect to LCP-Tacro, the supporting information to the FDA and European regula- Company has recently reached agreement with the FDA tory agencies for each indication to establish the product through an SPA as to the nature and extent of the studies candidate’s safety and effi cacy. The approval process the Company is required to conduct in order to achieve takes many years, requires substantial resources, involves approval. The timeline for submission and review of the post-marketing surveillance and may involve ongoing Company’s NDAs is based on its plan to submit the NDAs post-marketing studies. While clinical studies are designed under Section 505(b)(2) of the FDCA, wherein the Com- with scientifi c advice from regulatory authorities, such pany will rely in part on data in the public domain or prior plans must often be put in place years in advance of FDA conclusions of safety or effectiveness concerning a application for marketing approval. At the time of such drug. application, the clinical and regulatory environment may have changed signifi cantly as a result of new scientifi c If the Company is delayed in its ability to fi le for regula- discoveries, competitor product evaluations, changes in tory approval for LCP-Tacro or if regulatory approval is not medical health care policies, new technical standards and granted, the Company’s business, results of operations other factors beyond the Company’s control. and prospects and the value of the Company’s Shares may be adversely affected. Regulators can refuse marketing approval, or can require the Company or the Company’s partners to repeat previ- Safety issues with the originator drugs or other com- ous clinical studies or conduct further clinical studies. A ponents of the Company’s product candidates, or pre-approval inspection of manufacturing facilities by reg- with approved products of third parties that are sim- ulatory authorities may need to be completed before mar- ilar to its product candidates, could give rise to keting approval can be obtained, and such facilities will be delays in the regulatory approval process. subject to periodic inspections that could prevent or delay marketing approval, or require the expenditure of fi nancial The Company’s product development portfolio consists of or other resources to address. If the Company or its part- new proprietary pharmaceutical formulations of already ners do not succeed in obtaining regulatory approval, or approved and marketed drugs. Discovery of previously succeed only after delays, this could have a material unknown problems with any of these approved products effect on the Company’s ability to generate revenues. may result in restrictions on their permissible uses, Delays in obtaining regulatory approvals may: including withdrawal of the product from the market, which could have an adverse effect on the Company’s • adversely affect the successful commercialisation of business, results of operations and prospects and the any product that the Company or its partners develop; value of the Company’s Shares. • impose costly procedures on the Company or its part- Any failure or delay in commencing or completing clinical ners; studies or obtaining regulatory approvals for LCP-Tacro would delay its commercialisation and harm the Compa- • diminish any competitive advantages in the market ny’s business, results of operations and prospects and place that the Company or its partners may attain; and the value of the Company’s Shares. • adversely affect the Company’s receipt of revenues or The Company is subject to extensive and costly gov- royalties. ernment regulation. If the Company fails to obtain or maintain governmental approvals, the Company will Furthermore, companies developing pharmaceutical prod- not be able to commercialise LCP-Tacro or any other ucts are facing increased demands to publish clinical trial product candidate, and its business could suffer. results. Any such publication by the Company may, in addition to the additional cost of the publication, lead to Pharmaceutical products, including product candidates investors misinterpreting the published data due to its employing the Company’s technology, are subject to technical nature, which, in turn, may adversely affect the extensive and rigorous government regulation. The FDA, Company’s business, results of operations and prospects the EMA and other international regulatory agencies regu- and the value of the Company’s Shares. late the development, testing, manufacture, safety, effi - cacy, record-keeping, labelling, storage, approval, adver- Even after regulatory approval of a product has been tising, promotion, sale and distribution of pharmaceutical obtained, the Company remains subject to extensive regu- products. If products employing the Company’s technol- lation, which may lead to signifi cant additional costs,

34 withdrawal of approval or other negative effects which product recalls, seizure of products, operating restrictions could harm the Company’s business. Material changes to and criminal prosecution. an approved product, such as manufacturing changes or additional labelling claims, require further FDA and Euro- The Company’s ability to generate revenue from any pean regulatory agency review and approval before mar- products that the Company may develop will depend keting. Once obtained, any approvals may be withdrawn on reimbursement and drug pricing policies and regu- or revoked because of unforeseen safety, effectiveness or lations. Changes in applicable regulations limiting potency concerns or failure to comply with governmental reimbursements for LCP-Tacro or any other product regulations. Further, if the Company, its partners or its candidate would have a material adverse effect on contract manufacturers fail to comply with applicable FDA, the Company’s results of operations and business European regulatory agency and other regulatory require- condition. ments at any stage during the regulatory process, the FDA, European regulatory agencies and other regulatory Many patients may be unable to pay for any product that agencies may impose sanctions, which may include the Company may develop. The Company’s ability to refusal of the FDA and/or European or other regulatory achieve acceptable levels of reimbursement for drug agency to review pending market approval applications or treatments by governmental authorities, private health supplements to approval applications, total or partial sus- insurers and other organisations will have an effect on its pension of production, suspension or debarment from ability to successfully commercialise, and attract addi- selling FDA-regulated products to the U.S. government for tional partners to invest in the development of LCP-Tacro periods of time that vary depending on the cause of such or any other product candidate. The Company cannot be suspension or debarment, civil penalties, withdrawal or sure that reimbursement in the U.S., Europe or elsewhere revocation of previously approved marketing applications will be available for LCP-Tacro or any product that the or licences, and criminal prosecutions. Company may develop, and any reimbursement that may become available may be decreased or eliminated in the In the U.S., advertising and promotional materials for future. approved drug products must comply with FDA rules in addition to other potentially applicable federal and state In the U.S. and the other principal markets in which the laws. Application holders must obtain FDA approval for Company may in the future sell its products, there is con- product and manufacturing changes, depending on the tinued economic, regulatory and political pressure to limit nature of the change. Various other state and federal the cost of pharmaceutical products. Third-party payers laws would also apply to the Company’s sales and mar- increasingly are challenging prices charged for pharma- keting activities, if any. Within the European Union once a ceutical products and services, and many third-party pay- Marketing Authorisation is obtained, numerous post- ers may refuse to provide reimbursement or raise co-pay- approval requirements also apply. The requirements are ments for particular drugs when an equivalent generic regulated by both EU regulations (such as reporting of drug is available. Although the Company believes that any adverse events etc.) as well as national applicable regula- product that the Company may develop will represent an tions (related to e.g. prices and promotional material). improvement over the originator drugs upon which they are based and be considered unique, it is possible that a The Company’s product candidate LCP-Tacro, when third-party payer may consider the Company’s product and if approved, will be subject to extensive post- candidates and the generic originator drug as equivalents approval regulation. and only offer to reimburse patients for the generic drug. Even if the Company shows improved effi cacy or improved The governmental regulation of the development of prod- convenience of administration with its product candi- ucts and product candidates, such as LCP-Tacro, extends dates, pricing of the existing originator drug may limit the beyond clinical studies to approval required for their sale amount the Company will be able to charge for its prod- and monitoring of such products after sale. This regula- ucts. If reimbursement is not available or is available only tion, approval and monitoring is the responsibility of at limited levels, the Company may not be able to suc- numerous authorities in Denmark, the U.S., the European cessfully commercialise its product candidates, and may Union and other jurisdictions. Following any regulatory not be able to obtain a satisfactory fi nancial return on approval of a product candidate, the Company, its part- products that the Company may develop. ners and the manufacturers of the Company’s products will be subject to continuing regulatory obligations, If the Company’s manufacturing partners do not including safety reporting requirements, regulatory over- obtain or maintain cGMP, the Company may not be sight of product promotion and marketing, and good able to commercialise its product candidates. manufacturing practices. These regulations cover all aspects of manufacturing, testing, quality control and The Company depends on third parties to manufacture record keeping of its products. If the Company or its part- products employing its technology. The suppliers must ners or manufacturers fail to comply with applicable regu- comply with the applicable FDA, European, or other regulatory requirements, the Company may be subject to latory agency cGMP which include quality control and fi nes, suspension or withdrawal of regulatory approvals, quality assurance requirements as well as the mainte-

35 nance of records and documentation. Manufacturing facil- Risks related to the Company’s employees ities are subject to pre-approval and ongoing periodic inspection by the FDA, European regulatory agencies and The Company is dependent on certain key employ- other corresponding governmental agencies, including ees. The Company may have diffi culties in attracting unannounced inspections, and must be licensed before and retaining key personnel, and if the Company fails they can be used in commercial manufacturing of prod- to do so, its business may suffer. ucts employing the Company’s technology. After regulatory approvals or licensure are obtained, the subsequent The Company is highly dependent on certain key employ- discovery of previously unknown manufacturing, quality ees, the loss of whose services could adversely affect the control or regulatory documentation problems or failure to achievement of planned development objectives. In par- maintain compliance with the regulatory requirements ticular, the Company is dependent on the services of the may result in restrictions on the marketing of a product, Company’s Executive Management (Dr. William J. Polvino, revocation of the licence, withdrawal of the product from President, Chief Executive Offi cer and Peter G. Nielsen, the market, product seizures, injunctions or criminal sanc- Executive Vice President, Pharmaceutical Development tions. Furthermore, the Company may suffer reputational and CMC) and the Company’s Senior Management (Timo- harm or incur legal liability as a result of manufacturing thy C. Melkus, Senior Vice President, Development Opera- problems incurred by its manufacturing partners. The tions, Edward E. Koval, Senior Vice President, Business Company cannot ensure that such third parties will be Development and Strategic Corporate Development, Dr. able to comply adequately with the applicable regulations John Weinberg, Senior Vice President, Commercial Devel- and any failure by them to do so may adversely affect the opment and Strategic Planning and Mr. Johnny Stilou, Company’s business, results of operations and prospects Chief Financial Offi cer). Dr. Polvino and all of the Senior and the value of the Shares. Management (with the exception of one) may terminate their employment without any notice. The Company may be subject to generic competition from third parties. For the Company to expand its product development, marketing and commercialisation plans beyond LCP-Tacro, LCP-Tacro and the Company’s other product candidates the Company will need to hire additional qualifi ed scien- consist of new proprietary pharmaceutical formulations of tifi c personnel to perform research and development. already approved and marketed originator drugs. If third Also, the Company may need to hire personnel with parties are able to develop products that are the expertise in clinical testing, government regulation, manu- bioequivalent to the originator drug, then the Company’s facturing, marketing and fi nance. The Company may not product candidates could become subject to competition be able to attract and retain personnel on acceptable from generic products. Any erosion of the market for the terms, given the competition for such personnel among Company’s drug from such generic competition could biotechnology, pharmaceutical and healthcare companies, adversely affect the market for its product candidates and universities and non-profi t research institutions. Although thus adversely affect its business, results of operations the Company may be successful in attracting and retaining and prospects and the value of the Company’s Shares. suitably qualifi ed personnel, there can be no assurance that the Company will be able to attract and retain such The Company’s operations involve hazardous materi- personnel on acceptable terms given the competition for als and are subject to environmental controls and experienced scientists from numerous pharmaceutical and regulations. chemical companies, specialised biotechnology fi rms, universities and other research institutions. The Company’s As a pharmaceutical company, the Company is subject to failure to do so could adversely affect the Company’s environmental and safety laws and regulations, including business, results of operations and prospects, and the those governing the use of hazardous materials. The cost value of the Shares and the Preemptive Rights. of compliance with health and safety regulations is substantial. The Company’s business activities involve the The Company has experienced signifi cant turnover in controlled use of hazardous materials. The Company can- its Executive and Senior Management over the last not eliminate the risk of accidental contamination or several years and changes in Executive and Senior injury from these materials. In the event of an accident or Management are inherently disruptive. Furthermore, environmental discharge, the Company may be held liable the Company’s President and Chief Executive Offi cer for any consequential damage and any resulting claims for and most members of the Company’s Senior Manage- damages, which may exceed its fi nancial resources and ment were appointed recently and have had limited may adversely affect the Company’s business, results of time prior to the Offering to integrate into the Com- operations and prospects and the value of the Company’s pany. Shares and the Preemptive Rights. The Company has experienced signifi cant turnover in its Executive and Senior Management over the last several years. Changes in Executive or Senior Management are

36 inherently disruptive, and efforts to implement any new exchange rate between the local currency of the country strategic or operating goals may not succeed in the in which an investor outside Denmark is based and the absence of a long-term management team. Changes to Danish Kroner fl uctuates. strategic or operating goals with the appointment of new executives may themselves prove to be disruptive. Execu- The Company likely will be a “passive foreign invest- tive leadership transition periods are often diffi cult as the ment” company for U.S. tax purposes. new executives gain detailed knowledge of company operations and due to cultural differences and friction The Company expects that it will be a passive foreign that may result from changes in strategy and style. With- investment company (“PFIC”), for U.S. federal income tax out consistent and experienced leadership, the Company’s purposes, for the 2010 taxable year and possibly for partners, employees, creditors, stockholders and others future tax years. The Company’s status as a PFIC is deter- may lose confi dence in the Company which could mined annually, and, therefore, may be subject to change. adversely affect the Company’s business, results of opera- If the Company is a PFIC in any year during which a U.S. tions and prospects, and the value of the Shares. Holder owns its Shares or the Preemptive Rights, the U.S. Holder generally will be subject to adverse U.S. federal Furthermore, the Company’s President and Chief Execu- income tax consequences. Certain U.S. Holders may be tive Offi cer and most members of the Company’s Senior able to avoid these adverse tax consequences by making Management were appointed recently (during late 2009 a “mark to market” election or by electing to treat the or 2010) and have only had limited time prior to this Company as a “qualifi ed electing fund”. See Part III, Sec- Offering to integrate into the Company. If the Company is tion 4.11 “Taxation – U.S. Taxation Passive foreign invest- unable to successfully integrate its President and Chief ment company considerations”. U.S. investors are strongly Executive Offi cer or other key management personnel into urged to consult their own tax advisers as to the potential its business, if the Company’s President and Chief Execu- application of the PFIC rules. tive Offi cer or one or more of the Company’s new senior managers are unable to successfully perform in their posi- The Company’s interpretation and implementation of tions, establish and implement the Company’s business the tax legislation and regulations applicable to its strategy or manage the Company’s business, or if one or operations in Denmark and the United States may more other key management personnel are unable to suc- not be correct or such legislation and regulations cessfully perform in their positions or manage their func- may be modifi ed by the relevant tax authorities, tional areas, the Company’s business and operating which could have an adverse impact on the Compa- results may be adversely affected. ny’s business, results of operations and prospects and the value of the Company’s Shares.

Risks related to currency and other fi nancial The Company operates through companies in Denmark risks and the U.S. and its business operations and management, including intra-group transactions, are conducted in The majority of the Company’s current expenses are accordance with the Company’s interpretation of the cur- incurred in a different currency than its fi nancial rently applicable tax legislation, tax agreements and regu- resources. lations in the countries concerned. While the Company has obtained advice in these matters from independent The majority of the Company’s external costs are in U.S. tax advisers, its interpretation and implementation of Dollars and its internal costs in Danish Kroner. However, applicable legislation, tax agreements and regulations currently, the Company’s limited revenues and other and/or interpretation and implementation of the adminis- income, including the proceeds from this Offering, are pri- trative practice of the relevant authorities may not be cor- marily in Danish Kroner. As a result, the Company’s rect, and such legislation, agreements, regulations and/or expenses and any future investment or other income may administrative interpretations thereof or practice are sub- be subject to fl uctuations in exchange rates, particularly ject to change at any time. As a result, the Company’s tax fl uctuations in the exchange rate between Danish Kroner situation, including its future effective tax rate, may and U.S. Dollars which may have an adverse effect on the change and any adverse outcome from any examinations Company’s business and results of operations. The Com- by Danish, U.S. or other tax authorities may have an pany currently does not enter into foreign exchange con- adverse impact on the Company’s business, results of tracts to cover its exposure to exchange rate fl uctuations. operations and prospects and the value of the Company’s Shares. Shareholders outside Denmark are subject to exchange rate risk.

The Offer Shares and the Preemptive Rights are priced in Danish Kroner. Accordingly, the value of the Offer Shares and the Preemptive Rights will likely ﬂ uctuate as the

37 The prospective fi nancial information included in this erwise subscribed for by shareholders and investors who, Offering Circular may differ materially from the Com- prior to the expiry of the Subscription Period, have sub- pany’s actual results. mitted binding undertakings to the Joint Global Coordina- tors to subscribe for Offer Shares at the Offer Price. LFI The prospective fi nancial information included in Part I, a/s, Novo A/S and Alta Partners have thus made advance Section 9 “Prospective fi nancial information” and else- undertakings to subscribe for a total of 395,974,670 where in this Offering Circular are the Company’s projec- Offer Shares corresponding to total gross proceeds of tions of the results of operations for fi scal years 2010 DKK 475 million or 100% of the Offering. Accordingly, and 2011 respectively. upon issue of the Offer Shares, any Existing Shareholder who has not exercised its Preemptive Rights will experi- The projections and plans are based on a number of ence substantial dilution of its ownership interest and assumptions (including the success of the Company’s voting power. Even if an Existing Shareholder decides to business strategies), some of which may not materialise, sell its Preemptive Rights, the compensation it receives or may change. In addition, unanticipated events may may not be suffi cient to offset this dilution. See Part III, adversely affect the actual results that the Company Section 9 “Dilution” for a description of the dilution suf- achieves in future periods whether or not its assumptions fered by subscribers of Offer Shares. relating to future periods otherwise prove to be correct. Consequently, the Company’s results may vary materially Subscribers of the Offer Shares may suffer substan- from these projections and plans, see “Special notice tial dilution of their investment in connection with regarding forward-looking statements”. the exercise of warrants.

The Company and the price for the Shares, including There are 5,653,008 outstanding warrants, each confer- the Offer Shares and the Preemptive Rights, may be ring a right to subscribe for one Share at a weighted aver- negatively affected by the developments in the age exercise price of approximately DKK 13. If any of such global economic trends. warrants are exercised, subscribers of the Offer Shares will suffer further dilution. See Part I, Section 21.2 “War- The crisis that affected the fi nancial sector in the United rant programmes” for a description of the Company’s States in mid-2008, and which has since spread to the warrant programmes, including the adjustments that will rest of the world, including Denmark, has led to a sub- be made to the subscription prices applicable to warrants stantial rise in unemployment, an increase in the number and the number of warrants following completion of the of the suspension of payments and bankruptcies and also Offering. to declining health care spending, and it has become much more diffi cult for companies in the biotech sector to The Company’s Board of Directors has been authorised to gain access to equity and debt capital. The Company may issue 42,848,803 warrants to its Board members, mem- be affected directly and indirectly and there may be sev- bers of the Executive and the Senior Management and to eral negative consequences from the economic crisis. the Company’s employees, consultants and advisors. Each warrant will, upon issuance, confer the right to subscribe for one Share at no less than the market value of the Risks related to the Offering Company’s Shares on the date of issuance of the warrants. This price may be lower than the Offer Price If any Existing Shareholder does not exercise all of depending on the market price of the Shares on the date its Preemptive Rights, its ownership interest will be such warrants are granted, see Part I, Section 21.2 “War- diluted and such dilution will be substantial. rant programmes”. The issuance and exercise of such warrants may cause investors in the Offer Shares to suffer The Company is offering a total of 395,974,670 Offer further dilution. Shares for subscription. Prior to the Offering, the Compa- ny’s share capital amounted to a nominal value of DKK The Company’s Major Shareholders control a signifi - 56,567,810 divided into 56,567,810 Shares of DKK 1 cant portion of the Company’s Shares and their inter- nominal value each. If the Offering is completed, the est may confl ict with the interests of the Company’s Company’s share capital will increase signifi cantly, to a other shareholders. nominal value of DKK 452,542,480, corresponding to 452,542,480 Shares with a nominal value of DKK 1 each. As of the date of this Offering Circular, the Company’s LFI a/s, Novo A/S and Alta Partners have each made an Major Shareholders control 58.0% of the Company’s share advance undertaking to exercise the Preemptive Rights capital and voting rights and their interest may confl ict allocated to them in the Offering to subscribe for, in with the interests of the Company’s other shareholders. aggregate, 229,806,983 Offer Shares. In addition, LFI a/s LFI a/s, Novo A/S and Alta Partners have made undertak- and Novo A/S have made advance undertakings to sub- ings to subscribe for a total of 229,806,983 Offer Shares scribe for those Offer Shares that are not (i) subscribed and upon completion of the Offering, the Company’s for through the exercise of Preemptive Rights or (ii) oth- Major Shareholders will own at least 58.0% of the Com-

38 pany’s share capital. In addition, LFI a/s and Novo A/S highly volatile, subject to signifi cant fl uctuations in have each undertaken to subscribe for any Offer Shares response to various factors, some or many of which may that are not subscribed for through exercise of the Pre- be beyond the Company’s control and which may be emptive Rights or by other investors. As a result, if none unrelated to the Company’s business, operations or pros- of the Preemptive Rights are exercised by investors, other pects. Matters which could affect the price of the Shares than LFI a/s, Novo A/S and Alta Partners and none of the as well as of the Preemptive Rights include actual or Offer Shares are subscribed for by other investors, the anticipated variations in operating results, announce- Major Shareholders will own 94.8% of the Company’s ments relating to the results of clinical studies, announce- share capital upon completion of the Offering. As a result, ments of technological innovations by the Company or the Company’s Major Shareholders may have the ability the Company’s competitors, new products or services either alone or voting together as a group to determine introduced by the Company or announced by the Com- and/or signifi cantly infl uence the outcome of matters sub- pany or the Company’s competitors, conditions, or trends mitted to the Company’s shareholders for approval, or changes in the biotechnology and pharmaceutical including the election and removal of directors, payment industries, changes in the market valuations of other sim- of dividends, amendments to the Company’s Articles of ilar companies, additions or departures of key employees Association, including changes to the Company’s share and further sales of Shares by the Company. capital or any merger or acquisition. In addition, the Major Shareholders may have the ability to control the In addition, the equity market in general, and the market Company’s management and affairs. Such control and for technology companies in particular, has experienced concentration of ownership may affect the market price signifi cant price and volume fl uctuations that may be of the Shares and may discourage certain types of trans- unrelated or disproportionate to the operating perfor- actions, including those involving actual or potential mance of those companies. There has been particular vol- change of control of the Company’s business (whether atility in the market prices of securities of pharmaceutical through merger, consolidation, take-over or other busi- and life sciences companies. These general market and ness combination), which might otherwise have a positive industry factors may adversely affect the market price of effect on the market price of the Shares. the Shares as well as of the Preemptive Rights, regardless of the Company’s operating performance. There has been and may continue to be limited liquidity in the Company’s Shares. The trading price of the Shares as well as of the Preemp- tive Rights may be subject to wide fl uctuations in Following the Offering, a maximum of 42.0% of the Com- response to these factors, including the sale or attempted pany’s Shares will be held by persons other than the sale of a large number of the Shares or Preemptive Rights Major Shareholders. If none of the Preemptive Rights are into the market. exercised by investors, other than LFI a/s, Novo A/S and Alta Partners and none of the Offer Shares are subscribed The Company’s Board of Directors and Executive for by other investors, only 5.2% of the Company’s Shares Management have broad discretion in the use of the will be held by persons other than the Major Shareholders net proceeds from this Offering and may not use since LFI a/s and Novo A/S have undertaken to subscribe them effectively [from the individual shareholder’s for any Offer Shares that are not subscribed for through point of view. exercise of the Preemptive Rights or by other investors. The Company has agreed not to issue any further Shares While the Company’s Board of Directors and Executive for a period from the date hereof to 180 days following Management currently intend to use the proceeds of the the Closing Date without the consent of the Joint Global Offering for the further development of mainly LCP-Tacro Coordinators. The Company’s Board of Directors and Exec- towards NDA/MAA submission expected in the fi rst quar- utive Management have agreed not to dispose of their ter of 2013 as described under Part III, Section 3.4 “Rea- shareholdings, subject to certain exceptions, from the sons for the Offering and use of proceeds”, the Compa- date hereof until 180 days following the Closing Date, ny’s Board of Directors and Executive Management will without the consent of the Joint Global Coordinators. The have broad discretion in the application of the net pro- limited public market for the Company’s Shares may ceeds. Pending any such use, the Company’s Board of impair the ability of investors to sell their Shares at the Directors and Executive Management intend to invest the time or times they wish to do so or at an acceptable net proceeds from the Offering in cash deposits and price, and may increase the volatility of the price of the short-term, investment grade, interest-bearing securities. Shares. Such investments may not yield a favourable return to the Company’s shareholders. The failure by the Company’s The market price of the Company’s Shares and Pre- Board of Directors or Executive Management to apply emptive Rights may be highly volatile. these funds effectively could have an adverse effect on the Company’s business, results of operations and pros- The market price of the Shares as well as of the Preemp- pects, and the value of the Shares. tive Rights has been and may in the future continue to be

39 The Company may issue additional Shares or other The Company is a public limited liability company securities in the future which could have an adverse organised under the laws of Denmark, which may impact on the Share price. The Company’s Major make it difﬁ cult for Shareholders residing outside Shareholders, the Board of Directors or the Execu- Denmark to exercise or enforce certain rights. tive Management could decide to sell Shares which could have a material adverse impact on the market The rights of holders of Shares and the Preemptive Rights price of the Shares. are governed by Danish law and by the Company’s Articles of Association. These rights may differ from the typical The Company has agreed not to issue any further Shares rights of shareholders in the U.S. and other jurisdictions, for a period from the date hereof to 180 days following see Part III, Section 5 “Terms and conditions of the Offer- the Closing Date without the consent of the Joint Global ing”. It may not be possible for investors to effect service Coordinators. Following the end of this lock-up period, of process outside Denmark upon the Company, or to the Company will be free to issue Shares or other securi- enforce judgments against the Company obtained from ties, which could cause the market price of its Shares to non-Danish courts based upon applicable law in jurisdic- decline. The Company has no current plans for a subse- tions outside Denmark. In addition, shareholders outside quent public offering of its Shares. However, it is likely Denmark may face difﬁ culties exercising their rights to that the Company may decide to offer additional Shares vote. or other securities in the future. An additional offering by the Company of Shares or other securities, or a public Shareholders in jurisdictions outside Denmark may perception that an offering may occur, could have an be unable to acquire and/or exercise Preemptive adverse effect on the market price of the Shares. Rights.

The Company’s Board of Directors and Executive Manage- Holders of Shares in jurisdictions outside Denmark, such ment have agreed not to dispose of their shareholdings, as the U.S., may be unable to acquire and/or exercise any subject to certain exceptions, from the date hereof until Preemptive Rights unless the Preemptive Rights and/or 180 days following the Closing Date, without the consent the Offer Shares or any rights or other securities being of the Joint Global Coordinators. Following the end of the offered have been registered with the relevant authorities lock-up periods, the Board of Directors and the Executive in such jurisdictions or such acquisition or exercise is Management will be free to sell Shares which could cause done pursuant to an exemption from such registration. the market price of the Company’s Shares to decline. A The Company is under no obligation and does not intend sale by the Company’s Board of Directors or Executive to ﬁ le a registration statement in other jurisdictions out- Management of Shares or other securities, or a public side Denmark in respect of the Preemptive Rights or the perception that a sale may occur, could have an adverse Offer Shares, and makes no representation as to the effect on the market price of the Shares. availability of any exemption from the registration requirement under the laws of any other jurisdictions outside The Major Shareholders are not subject to any lock-up Denmark in respect of any such rights in the future. period. The Major Shareholders will be free to sell Shares. A sale by any one of the Major Shareholders, or a public There is a risk that the Offering is not completed, perception that a sale may occur, could have an adverse and it may be withdrawn in certain exceptional and effect on the market price of the Shares. unpredictable circumstances.

See Part III, Section 7.2 “Lock-up agreements in connec- In the period until registration of the capital increase with tion with the Offering” for a more detailed description of the Danish Commerce and Companies Agency, the Offer- the lock-up agreements, including exceptions hereof. ing may be withdrawn. In connection with the Offering, the Company and the Joint Global Coordinators have The Company has never paid dividends and does not entered into the Rights Issue Agreement, see Part III, Sec- anticipate paying any dividends in the foreseeable tion 5.22 “Placing”. Pursuant to this agreement, the Joint future. Global Coordinators may require the Company to withdraw the Offering at any time prior to the registration of The Company has never paid dividends or made distribu- the capital increase relating to the Offer Shares upon tions, and the Company does not at the present time notiﬁ cation of termination of the Rights Issue Agreement. anticipate paying any dividends or making any distribu- The Joint Global Coordinators are entitled to terminate the tions in the foreseeable future. The Company is a public Agreement upon the occurrence of certain exceptional limited liability company organised under the laws of and unpredictable circumstances, such as force majeure. Denmark. The rights of holders of Shares are accordingly The Rights Issue Agreement also contains closing condi- governed by Danish law and by its Articles of Association. tions which the Company believes are customary for Such rights may be substantially different to typical rights offerings such as the Offering and the closing of the of shareholders in other jurisdictions. Offering is dependent on compliance with all of the clos-

40 ing conditions set forth in the Rights Issue Agreement. If Failure to exercise Preemptive Rights by the end of one or more closing conditions are not met, the Joint the Subscription Period (18 November 2010 at 5:00 Global Coordinators may, at their discretion, also termi- p.m. CET) will result in the lapse of the holder’s Pre- nate the Rights Issue Agreement and thereby require the emptive Rights. Company to withdraw the Offering. In the event that such circumstances occur before registration of the capital If Preemptive Rights are not exercised by the end of the increase with the Danish Commerce and Companies Subscription Period (18 November 2010 at 5:00 p.m. Agency, and the Joint Global Coordinators decide to termi- CET), such holders’ Preemptive Rights to subscribe for nate the Rights Issue Agreement, the Preemptive Rights Offer Shares will lapse with no value, and the holder will will become null and void and no Offer Shares will be not be entitled to compensation. Accordingly, Existing issued, potentially causing investors who may have Shareholders and other holders of Preemptive Rights acquired Preemptive Rights and/or Offer Shares (in an off- must ensure that all required exercise instructions are market transaction, see below) to incur a loss. Any with- actually received by such Existing Shareholder’s or other drawal will be notiﬁ ed immediately to NASDAQ OMX and holder’s bank before the deadline. If an Existing Share- announced as soon as possible in the same Danish daily holder or other holder fails to provide all required exercise newspapers in which the Offering was announced. instructions or otherwise fails to follow the procedure applicable to exercising the Preemptive Rights prior to 18 If the Offering is not completed, investors who pur- November 2010 at 5:00 p.m. CET, the Preemptive Rights chase Preemptive Rights may incur a total loss on will lapse and will no longer exist. the purchase price of the Preemptive Rights. The market for the Preemptive Rights may only offer If the Offering is not completed, the exercise of the Pre- limited liquidity and, if a market does develop, the emptive Rights that has already taken place will automati- price of the Preemptive Rights may be subject to cally be cancelled, the subscription price for Offer Shares greater volatility than the price of the Shares. will be refunded (less any brokerage fees), all Preemptive Rights will be null and void, and no Offer Shares will be The trading period during which Preemptive Rights may issued. However, trades of Preemptive Rights executed be traded on the NASDAQ OMX will commence on 2 during the trading period for Preemptive Rights will not be November 2010 at 9:00 a.m. CET and close on 15 Novem- affected. As a result, investors who purchase Preemptive ber 2010 at 5:00 p.m. CET. No guarantee can be given as Rights will incur a loss corresponding to the purchase to whether a market will develop for the Preemptive price of the Preemptive Rights and any brokerage fees. Rights when they will be trading for the ﬁ rst time on the NASDAQ OMX, and if such a market does develop, the Purchasers of rights to Offer Shares prior to the Preemptive Rights may be subject to greater volatility completion of the Offering may lose their invest- than the Shares. ment if the Offering is not completed.

If the Offering is not completed, the Offer Shares will not be issued and investors who have acquired rights to Offer Shares (when issued) in an off-market transaction risk losing their investment if they are not successful in reclaiming the purchase price (and any brokerage fees) from the seller of such rights to Offer Shares.

If there is a substantial decline in the market price of the Shares, the Preemptive Rights may lose their value.

The market price of the Preemptive Rights depends on the price of the Shares. A drop in the price of the Shares could have an adverse impact on the value and market price of the Preemptive Rights.

41 General information

References in this Offering Circular to “the Company”, Prospective holders of the Preemptive Rights and pro- “LifeCycle” and “LifeCycle Pharma” are to LifeCycle spective subscribers of the Offer Shares should make an Pharma A/S. See Part I, Section 26 ”Defi nitions” and Part independent assessment as to whether the information I, Section 27 “Acronyms and glossary” for a list of scien- in this Offering Circular is relevant, and any acquisition or tifi c and medical terms and defi nitions of frequently used exercise of the Preemptive Rights and any subscription of and important terms. References to persons comprise ref- the Offer Shares should be based on the information that erences both to individuals and to legal entities. The the holder or subscriber in question may deem necessary. Company has registered the MeltDose® and LifeCycle Pharma® trademarks in Denmark, Europe and the United In addition to their own examination of the Company and States. Fenoglide™ is a trademark owned by Sciele. This the terms of the Offering, including the merits and risks Offering Circular also includes references to trademarks involved, investors should rely only on the information owned by other companies, in particular Prograf®, a contained in this Offering Circular, including the risk fac- trademark owned by Astellas. tors described herein, and any notices required under Executive Order no. 220 of 10 March 2010 issued by the No person is authorised to give any information or to Danish Financial Supervisory Authority on issuers’ duties make any representation not contained in this Offering to disclose information, and the rules of NASDAQ OMX Circular in connection with the Offering and any informa- that are published by the Company and expressly amend tion or representation not so contained must not be this Offering Circular. relied upon as having been authorised by or on behalf of the Company or on behalf of the Joint Global Coordina- Danske Markets (division of Danske Bank) (“Danske Mar- tors. kets”) and Handelsbanken Capital Markets (business unit of Svenska Handelsbanken AB (publ)) (“Handelsbanken This Offering Circular is not intended to provide the basis Capital Markets”) are Joint Global Coordinators in connec- of any credit or any other evaluation and should not be tion with the Offering and will, in that connection, receive considered as a recommendation by the Company or the fees from the Company. In connection with Danske Mar- Joint Global Coordinators that any recipient of this Offer- kets’ and Handelsbanken Capital Markets’ usual business ing Circular should acquire or exercise Preemptive Rights activities, Danske Markets and/or Handelsbanken Capital or subscribe for any Offer Shares. Each prospective inves- Markets and/or certain companies affi liated therewith tor should determine for itself the relevance of the infor- may have provided and may in the future provide invest- mation contained in this Offering Circular and its subscrip- ment banking advice and carry on normal banking busi- tion of Offer Shares or its acquisition or exercise of ness with the Company and its subsidiary, see Part I, Sec- Preemptive Rights should be based upon such information tion 5.10 “Transactions with fi nancial advisers”. as it deems necessary. The Joint Global Coordinators do not make any direct or Investors are authorised to use this Offering Circular solely indirect representation with respect to, and do not for the purpose of considering the acquisition or exercise assume responsibility for, the accuracy and completeness of the Preemptive Rights and subscription of the Offer of the information contained in this Offering Circular. Shares described in this Offering Circular. The Company and other sources identifi ed herein have provided the Neither the delivery of this Offering Circular nor the information contained in this Offering Circular. The Joint acquisition or exercise of Preemptive Rights or the sub- Global Coordinators make no warranty, expressed or scription of the Offer Shares shall create any implication implied, as to the accuracy or completeness of such infor- that the information contained in this Offering Circular is mation, and nothing contained in this Offering Circular is, correct as at any time subsequent to the Offering Circular or shall be relied upon as, a promise or representation by Date or that there have been no changes in the affairs of the Joint Global Coordinators. Investors may not repro- the Company since the date hereof. Any material change duce or distribute this Offering Circular, in whole or in as compared with the contents of this Offering Circular part, and investors may not disclose any of the contents will be published as a supplement pursuant to applicable of this Offering Circular or use any information herein for laws, rules and regulations. any purpose other than considering the acquisition or exercise of Preemptive Rights and the subscription of Offer Shares. Investors agree to the foregoing by accepting delivery of this Offering Circular.

42 This Offering Circular may not be forwarded, reproduced ity of judgments rendered in connection with civil and or in any other way redistributed by anyone but the Joint commercial disputes and, accordingly, that a fi nal judg- Global Coordinators and the Company. The Preemptive ment rendered by a U.S. court based on civil liability Rights and the Offer Shares may be subject to restrictions would not be enforceable in Denmark. Considerable on transferability and resale under applicable securities uncertainty exists whether Danish courts would allow legislation in certain jurisdictions and may not be actions to be predicated on the securities laws of the U.S. acquired, transferred, exercised or resold unless permitted or other jurisdictions outside Denmark. Awards of punitive under applicable securities legislation. Persons into whose damages in actions brought in the U.S. or elsewhere may possession this Offering Circular may come undertake to be unenforceable in Denmark. inform themselves about and to observe such restrictions. Neither the Company nor either of the Joint Global Coor- dinators assumes any legal responsibility for any violation Presentation of fi nancial and certain other of these restrictions by any person, irrespective of information whether such person is a potential holder of the Preemp- tive Rights or a potential subscriber of the Offer Shares. The audited fi nancial statements as at and for the years ended 31 December 2007, 2008 and 2009 incorporated Prospective holders of the Preemptive Rights and pro- by reference in this Offering Circular have been prepared spective subscribers of the Offer Shares should make in accordance with IFRS as adopted by the EU and the their own individual assessment of the legal basis of and additional Danish disclosure requirements for fi nancial consequences of the Offering, including possible tax con- statements of listed companies. sequences and possible foreign exchange restrictions which may apply before deciding whether to invest in the Financial information set forth in a number of tables in Preemptive Rights and the Offer Shares. this Offering Circular has been rounded. Accordingly, in certain instances, the sum of the numbers in a column or Potential acquirers of Preemptive Rights and subscribers row may not conform exactly to the total fi gure given for of Offer Shares shall comply with all applicable laws and that column or row. In addition, certain percentages pre- provisions in countries or regions in which they acquire, sented in the tables in this Offering Circular refl ect calcu- subscribe, offer, sell or exercise the Preemptive Rights or lations based upon the underlying information prior to the Offer Shares or possess or distribute this Offering Cir- rounding and, accordingly, may not conform exactly to the cular and shall obtain consent, approval or permission, as percentages that would be derived if the relevant calcula- required, for the acquisition of the Preemptive Rights or tions were based upon the rounded numbers. subscription for the Offer Shares. In this Offering Circular all references to “Danish Kroner”, “kroner”, or “DKK” are to the currency of the Kingdom of Enforceability of judgements Denmark, all references to “U.S. dollars”, “U.S. Dollars”, “US$”, “USD”, or “$” are to the currency of the U.S., and The Company is organised under the laws of Denmark, all references to “euro”, “EUR”, “EURO” or “€” are to the with domicile in the municipality of Rudersdal, Denmark. common European currency.

Some of the members of the Board of Directors and the Executive Management named herein are residents of Foreign currency presentation Denmark or other jurisdictions outside the U.S. All or a substantial portion of the Company’s and such persons’ The Company publishes its fi nancial statements in Danish assets are located in Denmark or other jurisdictions out- Kroner. The fi nancial statements incorporated by reference side the U.S. As a result, it may not be possible for inves- and certain fi nancial information included in this Offering tors to effect service of process upon such persons or the Circular contain conversions of certain Danish Kroner Company with respect to litigation that may arise under amounts into Euros at specifi ed rates. These conversions U.S. federal securities law or to enforce against them or should not be construed as representations that the Dan- the Company judgments obtained in U.S. courts, whether ish Kroner amounts actually represent such Euro amounts or not such judgments were made pursuant to civil liabil- or could be converted into Euros at the rates indicated or ity provisions of the federal or state securities laws of the at any other rate. In addition, certain additional informa- U.S. or any other laws of the U.S. tion herein has been presented in U.S. dollars. The conversions in the Offering Circular of fi nancial information The Company has been advised by its Danish legal advis- into Euros have been made using the rates disclosed ers, Mazanti-Andersen, Korsø Jensen & Partnere, that therein. there is not currently a treaty between the U.S. and Den- mark providing for reciprocal recognition and enforceabil-

43 Market and industry information

This Offering Circular contains historical market data and industry forecasts, including information related to the sizes of the markets in which the Company participates or parts thereof, diseases targeted by the Company’s product candidates and the number of people affected by such diseases. This information has been obtained from a variety of sources, including professional data suppliers, such as Business Insights, IMS Health Inc. (“IMS”, a company listed on the New York Stock Exchange providing business intelligence products and services to the pharmaceutical industry), Datamonitor Inc., pharmaceutical specialist literature and articles, company websites and other publicly available information as well as the Compa- ny’s knowledge of the markets. The professional data suppliers state that the historical information they provide has been obtained from sources, and through methods, believed to be reliable, but that they do not guarantee the accuracy and completeness of this information. Simi- larly, industry forecasts and market research, while believed to be reliable, have not been independently veri- ﬁ ed by LifeCycle Pharma. Neither LifeCycle Pharma nor either of the Joint Global Coordinators represents that this historical information is accurate. Industry forecasts are, by their nature, subject to signiﬁ cant uncertainty. There can be no assurance that any of the forecasts will materialise.

The Company conﬁ rms that information sourced from third parties has been accurately reproduced and that to the best of the Company’s knowledge and belief, and so far as can be ascertained from the information published by such third party, no facts have been omitted which would render the information provided inaccurate or misleading.

Market statistics are inherently subject to uncertainty and are not necessarily reﬂ ective of actual market conditions. Such statistics are based on market research which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transaction should be included in the relevant market/market segment deﬁ nitions.

44 Special notice regarding forward-looking • the ability to enforce and protect the Company’s pat- statements ents and other proprietary rights;

Certain statements in this Offering Circular are based on • potential intellectual property or other litigation over the beliefs of the Board of Directors and the Executive Fenoglide, the Company’s product candidates including Management, as well as assumptions made by and infor- LCP-Tacro, or agreements related thereto; mation currently available to the Board of Directors and the Executive Management, and such statements may • the ability to obtain additional patents to the Compa- constitute forward-looking statements. These forward- ny’s proprietary technology, including the MeltDose looking statements (other than statements of historical technology; fact) regarding the future results of operations, fi nancial condition, cash fl ows and business strategy, and the plans • impact of new or amended patent regulations and leg- and objectives of the Board of Directors and the Executive islation; Management for future operations can generally be identifi ed by terminology such as “targets”, “believes”, • diffi culties relating to enforcement of the Company’s “expects”, “aims”, “intends”, “plans”, “seeks”, “will”, patent rights, including, but not limited to, the Melt- “may”, “anticipates”, “would”, “could”, “continues” or sim- Dose technology; ilar expressions or the negatives thereof. • inability to enter into collaborations relating to devel- Such forward-looking statements involve known and opment or commercialisation of LCP-Tacro or generally; unknown risks, uncertainties and other important factors that could cause the actual results, performance or • changes and developments in technology which may achievements, or industry results, to differ materially from render the Company’s products obsolete; any future results, performance or achievements expressed or implied by such forward-looking statements. • the impact of pharmaceutical industry regulation and Such risks, uncertainties and other important factors any future legislation that could affect the pharmaceu- include, among others: tical industry;

• the ability to successfully develop and commercialise • the diffi culty of predicting FDA, EMA and other regula- pharmaceutical products, including in particular LCP- tory authority approvals; Tacro; • the regulatory environment and changes in the health • completion of and the actual outcome of ongoing and policies and structures of various countries; future clinical studies, including the Company’s ongoing Phase III clinical studies of LCP-Tacro in stable kid- or other factors referenced in this Offering Circular. Should ney transplant patients and the Company’s planned one or more of these risks or uncertainties materialise, or Phase III clinical studies of LCP-Tacro in de novo kidney should any underlying assumptions prove to be incorrect, transplant patients, including the rate of patient the Company’s actual fi nancial condition or results of recruitment to the clinical studies; operations could differ materially from that described herein as anticipated, believed, estimated or expected. • potential, unforeseen safety issues resulting from the Investors are urged to read the section of this Offering administration of the Company’s products in patients; Circular entitled “Risk factors”, for a more complete discussion of the factors that could affect the Company’s • the ability to secure product manufacturing; future performance and the industry in which the Com- pany operates. • competition from companies in the pharmaceutical and biopharmaceutical industries; The Company does not intend, and does not assume, any obligation to update any forward-looking statements con- • the level of market acceptance of the Company’s prod- tained herein, except as may be required by law. All sub- ucts candidates, including in particular LCP-Tacro; sequent written and oral forward-looking statements attributable to the Company or to persons acting on the • the ability to manage any necessary or desired growth Company’s behalf are expressly qualifi ed in their entirety of development of sales and marketing operations in by the cautionary statements referred to above and con- particular relating to LCP-Tacro; tained elsewhere in this Offering Circular.

• the ability to attract and retain suitably qualiﬁ ed personnel;

45 I. Description of the Company 1. Persons responsible

See “Responsibility and statements” included elsewhere in the Offering Circular.

47 2. Statutory auditors

LifeCycle Pharma’s independent accountant is:

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab DK-2900 Hellerup Denmark

PricewaterhouseCoopers Statsautoriseret Revisionsakties- elskab is represented by Torben Jensen, State Authorised Public Accountant. Torben Jensen is member of the Insti- tute of State Authorised Public Accountants in Denmark (Foreningen af Statsautoriserede Revisorer, FSR).

PricewaterhouseCoopers has audited the consolidated annual reports for 2007, 2008 and 2009. The annual report for 2007 and 2008 was signed by Lars Holtug and Claus Køhler Carlsson, State Authorised Public Accoun- tants, both members of the Institute of State Authorised Public Accountants in Denmark (Foreningen af Statsauto- riserede Revisorer, FSR). The annual report for 2009 was signed by Lars Holtug, State Authorized Public Accoun- tant. The change of auditors was effected due to the applicable Danish rules on auditor rotation.

48 3. Selected ﬁ nancial information

Reference is made to Part I, Section 10 “Review of operations and ﬁ nancial statements”.

49 4. Risk factors

Reference is made to the section entitled “Risk factors”.

50 5. Information about the Company

5.1 Name, registered ofﬁ ce, etc. 5.5 Financial year and ﬁ nancial reporting

The Company’s name is LifeCycle Pharma A/S. The Company’s fi nancial year runs from 1 January to 31 December. The Company publishes interim reports for the The Company’s registered offi ce is Kogle Allé 4, fi rst, second and third quarters of the fi nancial year and a DK-2970 Hørsholm, Denmark. full-year report. Annual reports and interim reports are published in both Danish and English. The Company’s telephone number is +45 70 33 33 00.

The Company’s registration number (“CVR”) is 26527767. 5.6 Objects and purposes

The Company is domiciled in the municipality of Rudersdal. The Company’s object, as set out in article 3 of the Arti- cles of Association, is to engage in medical research, pro- The Company’s wholly-owned subsidiary, LifeCycle duction and the sale of medical products and related Pharma, Inc. has its address at 499 Thornall Street, business. 13th Floor, Edison, NJ 08818, New Jersey, U.S.

LifeCycle Pharma A/S and LifeCycle Pharma, Inc. together 5.7 Principal bank make up the LifeCycle Pharma Group (the “Group”). The Company’s principal bank is Danske Bank A/S.

5.2 ISIN code 5.8 Issuing agent The Company’s Existing Shares are listed on NASDAQ OMX under the ISIN code DK0060048148. The Company’s issuing agent is:

Danske Bank A/S 5.3 Date of incorporation and governing law Holmens Kanal 2-12 DK-1092 Copenhagen K The Company was incorporated with limited liability under Denmark the laws of Denmark on 21 March 2002.

5.9 Share registrar 5.4 Financial calendar The Company’s share registrar is: Publication of the annual report for 2010 1 March 2011 Interim report for the three-month period Computershare A/S ended 31 March 2011 10 May 2011 Kongevejen 418 Interim report for the six-month period DK-2840 Holte ended 30 June 2011 17 August 2011 Denmark Interim report for the nine-month period ended 30 September 2011 9 November 2011

The Company’s next Annual General Meeting is expected to be held on 12 April 2011.

The Company’s most recent Annual General Meeting was held on 21 April 2010, and the Company’s most recent extraordinary meeting was held on 25 October 2010.

51 5.10 Transactions with fi nancial advisers technology. In August 2007, the FDA approved Fenoglide for dyslipidemia in the U.S. In October 2007, the Company The Joint Global Coordinators may in the past have per- announced positive interim results from its Phase II clini- formed, currently perform, and may in the future, at any cal trial for LCP-Tacro for the treatment of kidney trans- time, perform banking services for the Company, for plant patients demonstrating a superior profi le of LCP-Tacro which they have received, are receiving, and may in the compared with Prograf. In November 2007, the Company future receive fees and commissions. announced positive results from its Phase I head-to-head clinical trial comparing LCP-Tacro to Advagraf. The Company has entered into a market maker agreement with Danske Bank according to which Danske Bank will act Main events in 2008 as market maker for the Company’s Shares. Positive interim results from the Company’s Phase II clini- In connection with the Offering, the Joint Global Coordina- cal studies of LCP-Tacro in liver transplant patients were tors or their respective affi liates acting as investors for announced in January 2008. In February 2008, Shionogi their own account, may sell, acquire or exercise Preemp- launched Fenoglide in the U.S. In March 2008, the Com- tive Rights and offer, sell and subscribe for Offer Shares in pany announced positive results from the Phase II clinical the Offering. They may in this capacity for their own studies of LCP-Tacro in kidney transplant patients. account hold, buy or sell such securities and any other of the Company’s securities and any investments related In March 2008, Mr. Hans Christian Teisen replaced Mr. thereto, and they may offer or sell such securities or Michael Wolff Jensen as EVP and CFO of the Company. other investments in contexts other than in connection with the Offering. References in this Offering Circular to The Company completed a rights issue of 23,987,771 the Preemptive Rights being allocated, acquired or sold Shares at a price of DKK 17 per share raising gross pro- and the Offer Shares being subscribed for, offered, sold or ceeds of DKK 408 million in April 2008. acquired should therefore be considered to comprise such offers or placements of securities to the Joint Global In May 2008, the Company completed its LCP-AtorFen Coordinators or their respective affi liates. The Joint Global Phase II clinical study reporting positive data. However, Coordinators do not intend to disclose the extent of any also in May 2008 the Company discontinued development such investments or transactions other than in compli- activities involving a novel version of Recordati’s lercanid- ance with legal or regulatory requirements to do so. ipine as well as a feasibility study agreement pertaining to a product in preclinical development with Sciele.

5.11 The Company’s history and development The Company’s president and CEO Flemming Ørnskov resigned in July 2008 to pursue other opportunities. Also Main events in 2002 - 2006 in July 2008 the Company announced positive topline results from a completed Phase II clinical study of LCP- LifeCycle Pharma commenced operations in June 2002 as Tacro tablets in stable liver transplant patients. a spin-off from H. Lundbeck A/S of the MeltDose technology. Following a number of private placements raising In August 2008, the Company sold its royalty stream in DKK 353 million and the submission of an NDA applica- North America related to Fenoglide to Cowen for a total tion to the FDA in October 2006 for the ﬁ rst product can- payment of up to USD 105 million (DKK 551 million) didate developed using the Company’s MeltDose technol- based on certain sales milestones, including an upfront ogy – Fenoglide, the Company was listed on NASDAQ payment of USD 29 million (DKK 152 million). OMX on 13 November 2006. Through the initial public offering of shares in the Company, it successfully raised In September 2008, the Company announced that Dr. DKK 500 million in net proceeds. Michael Beckert had decided to resign as EVP and CMO effective 31 December 2008 to be replaced by Dr. Karin Main events in 2007 Hamberg who was promoted in the Company. In October 2008, the Company appointed Dr. Jim New as president In January 2007, the Company established LifeCycle and CEO, and announced that Mr. Hans Christian Teisen Pharma, Inc., its wholly-owned U.S. subsidiary. In February had resigned as EVP and CFO. 2007, the Company announced positive results from the Company’s Phase I clinical programme with LCP-AtorFen. In December 2008, the Company enrolled the ﬁ rst patient In May 2007, the Company entered into an exclusive in the Company’s Phase III clinical study for LCP-Tacro in licence agreement with Shionogi (formerly Sciele) to mar- the prevention of organ rejection in stable kidney trans- ket Fenoglide in the U.S., Canada, and Mexico, and plant patients. announced the issuance of a U.S. patent for the MeltDose

52 Main events in 2009 On 25 October 2010, the Company held an extraordinary general meeting whereby the Board of Directors was In April 2009, the Company announced positive interim authorised to increase the Company’s share capital by up results of its Phase II clinical study of LCP-Tacro for the to 475,000,000 shares intended for the Offering. prevention of organ rejection in de novo kidney transplant patients. Also in April 2009, the Company announced that Dr. Karin Hamberg had decided to resign as EVP and CMO 5.12 Investments in order to pursue other opportunities outside the Com- (million) 2009 2008 2007 pany. DKK DKK DKK

In May 2009, the Company announced positive results in Investments in property, its Phase II clinical extension study for LCP-AtorFen. plant and equipment 11.0 6.6 5.9

In August 2009, the Company announced plans to reduce the organisation by 20-25 employees with a view to The majority of the investments in 2007 relate to furni- obtain effi ciencies. The reduction was subsequently ture and offi ce equipment for use in the Company’s prem- implemented. Also, Dr. Jim New resigned in August 2009 ises. In June 2007, the Company entered into an addi- as the Company’s president and CEO. The Company’s cur- tional lease of offi ce space in Hørsholm, Denmark. This rent President and Chief Executive Offi cer Dr. William J. additional lease has been terminated effective end of Polvino joined the Company in August 2009 as its Chief June 2010. Further, the Company established a subsidiary Operating Offi cer. in the U.S. in 2007 and entered into a lease of offi ce space in New York. In September 2009, the Company announced positive results from a completed 12 month extension phase of The investments in 2008 and 2009 primarily relate to pro- the Phase II clinical study of LCP-Tacro tablets in stable cess plant and machinery for use in the Company’s labo- liver transplant patients. ratories in Denmark.

In December 2009, Dr. Polvino was promoted to his cur- The Company has fi nanced its investments in property, rent position as President and Chief Executive Offi cer. plant and equipment through the Company’s own fi nancial resources. Main events in 2010 The Company has no material current investments and As a consequence of LCP-Tacro having completed early has made no commitments to effect material future development, the Company announced in January 2010 investments. that it was planning to reduce its organisation by up to 30 employees in the area of CMC (Chemistry, Manufactur- ing and Control) and in administrative functions. The reduction was subsequently implemented.

In July 2010, the Company announced positive topline results of its Phase II clinical studies of LCP-Tacro in de novo kidney transplant patients comparing LCP-Tacro tablets administered once daily versus Astellas Pharma’s Pro- graf (tacrolimus) capsules administered twice daily in de novo kidney transplant patients.

In August 2010, the Company obtained agreement with the FDA on a SPA of its pivotal Phase III study for LCP- Tacro in de novo kidney transplant patients. Also in August 2010, Shionogi gave notice to the Company of termination of the licence agreement concerning LCP- FenoChol, effective no later than February 2011.

In October 2010, the Company announced dosing of the ﬁ rst patient with LCP-Tacro in its Phase III study for the treatment of de novo kidney transplant patients.

53 6. Business

LifeCycle Pharma A/S • Proprietary MeltDose technology with proven track record. LifeCycle Pharma’s proprietary MeltDose OVERVIEW technology has been validated in a number of clinical studies and has received regulatory acceptance LifeCycle Pharma is a speciality pharmaceutical company through the FDA approval of Fenoglide (LCP-FenoChol) currently focused on the development of pharmaceutical for sale in the U.S. products in the immunosuppression and cardiovascular therapeutic areas. • Development strategy which potentially reduces costs and development timelines. Compared with The Company uses its proprietary MeltDose technology product candidates developed through the traditional which has been validated especially in clinical studies pharmaceutical development process, LifeCycle Pharma through U.S. Food and Drug Administration (“FDA”) believes that using known active ingredients in combi- approval of LCP-FenoChol (now on the market), to create nation with the Company’s proprietary MeltDose tech- new, potentially best-in-class, versions of existing mar- nology may reduce the risk of product development keted drugs by enhancing the bioavailability of com- failure and may shorten development timelines and pounds with low water-solubility and allowing for a con- reduce overall development cost. LifeCycle Pharma trolled or modifi ed release plasma profi le. believes that this enables the Company to advance its product candidates through late-stage clinical studies The Company has a pipeline with one Phase III programme and/or regulatory approval at a faster rate. (LCP-Tacro for de novo and stable kidney transplant patients), one Phase II programme (LCP-Tacro for liver • Experienced management and employees. LifeCycle transplant patients), one completed Phase II programme Pharma has internationally experienced management (LCP-AtorFen for dyslipidemia), one completed Phase I and key employees consisting of biopharmaceutical programme (LCP-Feno for dyslipidemia) and fi ve com- executives and recognised experts who offer diverse pounds in early stage pre-clinical development. Following backgrounds and complementary skill-sets in research, encouraging results from LCP-Tacro Phase II clinical stud- development, drug approval, commercialisation and ies, the Company has decided to focus its development fi nance. The Company’s Executive Management and efforts on LCP-Tacro for the treatment of kidney trans- Senior Management draw from experience gained at plant patients. LCP-Tacro is a once-daily dosage version of leading pharmaceutical and biotech companies such as tacrolimus, the market-leading primary immunosuppres- Novartis, Novo Nordisk, and Wyeth (now Pfi zer). sant in the transplant space and is currently in Phase III clinical studies for treatment of stable and de novo kidney transplant patients. Business strategy

The Company seeks to raise net proceeds of approxi- The primary goal of LifeCycle Pharma is to build a clinical mately DKK 442 million primarily to support the comple- and market-stage pharmaceutical business around the tion of its Phase III clinical studies for LCP-Tacro in kidney Company’s key, late stage transplant immunosuppression transplant patients through to NDA/MAA submission in product candidate LCP-Tacro and its other pipeline prod- the United States and the European Union, respectively, uct candidates as well as to continue to look for and eval- expected in the fi rst quarter of 2013. uate opportunities to apply the Company’s proprietary MeltDose technology in other major therapeutic areas KEY STRENGTHS with established commercial potential. The key elements of LifeCycle Pharma’s business strategy are as follows: • One product candidate in late stage development. LifeCycle Pharma’s product candidate LCP-Tacro is in • Advance LCP-Tacro through clinical studies within Phase III clinical studies for treatment of kidney trans- the organ transplantation area. LCP-Tacro (once- plant patients with NDA/MAA submission in the United daily dosage) has received positive Phase II clinical States and European Union respectively expected in data in kidney transplant patients demonstrating a the fi rst quarter of 2013. In Phase II clinical studies in potential best-in-class profi le when compared head-to- kidney transplant patients, LCP-Tacro demonstrated a head with Prograf (twice-daily dosage), the only tac- once-a-day profi le as well as improved bioavailability rolimus product currently available on the U.S. market. and reduced variability as compared with Prograf, the In addition, the Company has received positive Phase II only branded tacrolimus product currently marketed in data for LCP-Tacro in liver transplant patients indicating the U.S. a potential best-in-class profi le when compared head- to-head with Prograf (twice-daily dosage).

54 The Company has elected to focus its development • Partner strategically to enhance the commercial efforts on pursuing LCP-Tacro for treatment of kidney potential of the Company’s product candidates. transplant patients, given the larger potential patient For products that serve very large markets or those population and demand. that may be widely distributed geographically, such as the Company’s cardiovascular product candidates, the • Maximise the full value of the LCP-Tacro pro- Company seeks to enter into commercialisation and gramme by funding in-house through the comple- marketing licences with pharmaceutical companies. It tion of Phase III and to NDA/MAA submission. The intends to continue this partnering strategy for such Company initiated Phase III clinical studies for LCP- product candidates in major therapeutic markets in Tacro in the second half of 2008 in stable kidney which the expanded marketing capabilities of potential transplant patients and in de novo kidney transplant partners may signiﬁ cantly increase the market penetra- patients in the fourth quarter of 2010. The de novo tion of its products. transplant study protocol received a SPA from the FDA, which deﬁ ned the parameters of this Phase III clinical study protocol. 6.1 Product portfolio

Following successful completion of the Offering, the Transplant immunosuppression – LCP-Tacro Company will be positioned to fund the full research and development programme through NDA/MAA sub- TRANSPLANTATION HISTORY mission, enabling the Company to maximise the full value of the programme and either facilitate high-value Transplantation in humans has a relatively short history, partnering through suitable global or regional partners spanning just over 50 years. The fi rst successful human or establish its own sales and marketing capabilities in kidney transplant was performed in 1954. Since then, the selected markets where the Company believes, through development of effective immunosuppression drugs, cou- such a strategy, it can maximise its commercial poten- pled with advances in immunology, surgical techniques, tial. Given the special characteristics of the organ donor selection and postoperative care have all contrib- transplant market, the fi eld force required to market uted to improved outcomes for solid organ transplants, successfully in the transplant space is relatively small which is now an established treatment for organ failure of and, for example, the U.S. market can be covered the kidney, pancreas, liver, heart or lung. The fi rst major effectively with 20-30 sales representatives. See advance in graft survival followed the discovery of the “Transplantation market overview – Market structure” anti-proliferative agent azathioprine which, in combina- for more information. Consequently, the Company will tion with corticosteroids, became the dominant regimen retain the fl exibility to establish its own sales force if in the 1960s and 1970s. However, it was only after the so desired and depending on the strength of the Phase launch of Novartis’s calcineurine inhibitor (CNI) III data. cyclosporine (Sandimmune) in 1983 that graft survival rates improved suffi ciently to enable a widespread clinical • Continue to leverage the Company’s proprietary application of transplantation. The combination of MeltDose technology in additional therapeutic cyclosporine with corticosteroids and azathioprine was areas with established commercial potential. The found to be the most effective approach to immunosup- Company believes that its proprietary MeltDose tech- pression for organ transplantation patients during the nology has broad applicability across multiple existing 1980s and early 1990s. drugs and disease areas. The Company intends to further maximise the commercial value of the MeltDose technology by applying it to products across a broad range of therapeutic indications where the Company believes it can retain signifi cant commercial rights to its products and maximise their commercial potential.

55 Tacrolimus is the most recent drug in the CNI family, and was introduced to the market by Astellas in the form of Pro- graf in the late 1990s.

LCP-Tacro – kidney and liver transplantation

Product Disease Indications Status Marketing Rights

Phase III clinical studies ongoing: - Stable kidney transplant patients Worldwide – 1. LCP-Tacro Organ transplant–Kidney - De novo kidney transplant patients LifeCycle Pharma

Phase II clinical studies ongoing: Worldwide – 2. LCP-Tacro Organ transplant–Liver - De novo liver transplant patients LifeCycle Pharma

LCP-Tacro is being developed as a once-daily dosage ver- transplants, in March 2008 (for the prevention of organ sion of tacrolimus for the treatment of kidney and liver rejection in kidney transplants) and May 2008 (for the transplant patients. Compared with Astellas’ Prograf, a prevention of organ rejection in liver transplants), twice-daily dosage version of tacrolimus, and Advagraf, a although at the date of this Offering Circular, the product once-daily dosage version of tacrolimus for organ trans- has not yet been approved for sale in the United States. plants which was approved by the EMA in mid-2007, Life- Cycle Pharma believes that LCP-Tacro would have the fol- In total, more than 600 patients and volunteers have lowing potential beneﬁ ts: been tested with LCP-Tacro, and LifeCycle Pharma believes that a satisfactory safety proﬁ le has been demonstrated • improved systemic absorption and reduced variability; in the studies so far.

• improved bioavailability and thus a lower dose of tac- LCP-Tacro has been through Phase II clinical studies and rolimus; the Company has had detailed discussions with the FDA regarding the Phase III programme in de novo kidney • improved side effect profi le; transplant patients. These discussions have yielded a SPA agreement with the FDA to assist the Company in defi n- • limited variability in the concentration of tacrolimus in ing, together with the FDA, the parameters of this Phase the blood (“peak-to-trough” fl uctuation); III clinical study protocol.

• once-daily dosing. Transplant patients need to maintain a minimum level of tacrolimus in the blood in order to prevent organ rejection. Thus, LifeCycle Pharma believes that branded LCP-Tacro On the other hand, if too much tacrolimus is administered, may result in better patient outcomes. LifeCycle Pharma there is an increased risk of serious side effects such as furthermore believes that physicians will have a prefer- kidney damage. Since tacrolimus is a “narrow therapeutic ence for LCP-Tacro’s once-daily dosing given the ease of index” drug, its concentration and dosing must be carefully compliance for patients and physicians’ preference for managed, typically requiring transplant patients to visit the branded products, especially for products with a narrow hospital for monitoring and dose adjustments for several therapeutic index. months after receiving a new organ. The ability to manage the tacrolimus levels is complicated by the relatively low LifeCycle Pharma has carried out a signifi cant number of and unpredictable bioavailability of Astellas’ two products clinical studies with LCP-Tacro for various indications. The Prograf and Advagraf. In Phase I and II clinical studies, LCP- Phase II programme includes in total six Phase II clinical Tacro has demonstrated improved and higher bioavailability studies, including ongoing studies with a total of 300 when compared with Prograf, results which are expected to patients. For transplantation, LifeCycle Pharma has suc- be confi rmed in the Phase III clinical studies. LCP-Tacro cessfully completed Phase II clinical studies in stable uses the Company’s MeltDose technology and through this patients. In addition to the Phase II studies, LifeCycle technology, the Company has optimised the delivery kinet- Pharma has conducted nine Phase I clinical studies with ics of LCP-Tacro to provide “fl at” pharmacokinetics, avoid- LCP-Tacro including a head-to-head clinical study in ing the peaks and valleys associated with traditional imme- healthy volunteers. Clinical data confi rmed that LCP-Tacro, diate-release tacrolimus. This improved pharmacokinetic when compared with Advagraf, demonstrated approxi- profi le enables once-daily dosing and the potential to avoid mately 50% higher bioavailability. LCP-Tacro also showed unwanted side effects associated with high peak concen- a fl atter pharmacokinetic profi le/decreased variability and trations in a branded product offering such as Astellas’ Pro- a potential for administration at lower daily doses when graf or Advagraf. The Company believes that LCP-Tacro will compared with Advagraf. Astellas received, with respect to offer transplant physicians the desired consistent pharma- Advagraf, approvable letters from the FDA in January 2007 cokinetic profi le and effi cacy and reliability of performance for the prevention of organ rejection in kidney and liver from one prescription refi ll to the next.

56 DEVELOPMENT STRATEGY AND STATUS mates that it will require approximately three to four months to consolidate and analyse the study results for LCP-Tacro is in ongoing Phase III clinical studies for submission of an NDA and an MAA to regulatory agencies patients who have undergone a kidney transplant and is in the United States and the European Union, respectively, completing Phase II clinical studies for patients who have currently anticipated for the ﬁ rst quarter of 2013. undergone a liver transplant. Kidney – Phase II clinical studies Kidney – Phase III clinical studies The Phase II programme included clinical studies that A Phase III programme in kidney transplant patients was were designed as conversion studies in stable kidney initiated in the second half of 2008. The programme con- transplant patients, with patients being switched to LCP- sists of one conversion (switch) study in stable kidney Tacro (once-daily dosage) from Prograf (twice-daily dos- transplant patients with Prograf as comparator, as well as age) at least six months after transplantation as well a one de novo kidney transplant study versus Prograf. Ulti- Phase II study in de novo kidney transplant patients with mately, these combined Phase III clinical studies are patients being treated with LCP-Tacro (once-daily dosage) expected to have a total of nearly 900 patients. versus Prograf (twice-daily dosage) immediately after their kidney transplant. As of the date of this Offering Circular, the Phase III open label conversion study has fully enrolled 326 stable kidney The Phase II clinical studies in stable kidney transplant transplant patients, with patients being switched from patients were performed in 13 clinical centres in the Prograf (twice-daily dosage) to LCP-Tacro (once-daily dos- United States. The end-points of the studies were suc- age, representing a 30% lower dose than Prograf) at least cessful switching, conversion rates, bioavailability and three months after transplantation once their transplant pharmacokinetic parameters. In the studies patients were is considered stable. Topline results from this study are treated with Prograf (twice-daily dosage) for seven days expected in mid-2011. The primary endpoint for the study after which the patients were treated with LCP-Tacro will be a comparison of the traditional non-inferiority (once-daily dosage) for 14 days. The Phase II clinical stud- composite endpoint of: biopsy-proven acute rejection ies showed that the following end-points were success- (“BPAR”), graft loss, death and/or loss to follow-up. Sec- fully met: ondary endpoints will include assessments of pharmacokinetics and safety/tolerability measures such as new • out of the 47 patients that completed the studies, 46 onset diabetes, renal function and tremors. Patients will patients were successfully switched from Prograf be evaluated on treatment every few months over a (twice-daily dosage) to LCP-Tacro (once-daily dosage) 12-month treatment duration plus a safety follow-up visit for the full period; at month 13. • the dosage conversion between Prograf (twice-daily The Phase III clinical study in de novo kidney transplant dosage) to LCP-Tacro (once-daily dosage) was 0.66 – patients will include approximately 540 patients being 0.80 (mg. LCP-Tacro/mg. Prograf); treated with LCP-Tacro (once-daily dosage) versus Prograf (twice-daily dosage) immediately after they receive their • approximately 40% higher bioavailability compared to kidney transplant. Enrolment in the study was recently Prograf; and commenced and the Company expects that recruitment of all 540 patients will take approximately one year to com- • lower Cmax (at peak) and a reduced peak-to-trough plete, i.e., by the fourth quarter of 2011. This study has ratio. been elaborated with comments from the FDA as part of the SPA approval process. The Company and the FDA have There were no serious adverse effects related to LCP- agreed that this Phase III study will be a multicenter, ran- Tacro reported in the studies. domised, double-blind, double-dummy study comparing Prograf to LCP-Tacro. The primary endpoint will be the tra- The Phase II clinical study in de novo kidney transplant ditional, non-inferiority comparative endpoint of: BPAR, patients was performed in 11 clinical centres in the U.S. graft loss, death and/or loss to follow-up. The study dura- and was successful in demonstrating the desired once- tion will be 12 months with a 12-month extension to fol- daily pharmacokinetics. In this study, patients were low. Secondary endpoints will include assessments of treated with Prograf (twice-daily dosage) immediately pharmacokinetics and safety/tolerability measures such as after their kidney transplant or were treated with LCP- new onset diabetes, renal function and tremors. Patients Tacro (once-daily dosage) immediately after their kidney will be evaluated on treatment every few months. Approx- transplant. The Phase II de novo clinical study generated imately 100 centres will be activated throughout the the successful results set out in Table 1 below: United States, Europe, and selected countries in the rest of the world. Topline results from the study are expected by the end of 2012. Following completion of the 12-month primary endpoint study, the Company esti-

57 Table 1. Results of Phase II clinical study in de novo kidney transplant patients

LCP-Tacro (N=32) Prograf (N=31)

n (%) n (%) Death 0 0 Graft failure 0 0 BPAR 1 (3.13%) 2 (6.45%) Loss to follow-up 1 (3.13%) 1 (3.23%) Treatment failure 2 (6.25%) 3 (9.68%)

Based on the above results, and as shown in Figure 1 The data from these Phase II clinical studies in liver trans- below, LifeCycle Pharma believes that LCP-Tacro may be plant patients confi rmed a once-daily dosage treatment safely and effi caciously used in stable or de novo kidney profi le and demonstrated improved pharmacokinetics and transplant patients as a once-daily treatment with a lower higher bioavailability when compared with Prograf. The effective dosage as compared with Prograf. Phase II clinical studies of LCP-Tacro in stable liver transplant patients were completed in the second quarter Figure 1. Mean dose uncorrected whole blood 2008. The 12-month follow-up data from the Phase II concentrations of tacrolimus in patients on days clinical study of LCP-Tacro in de novo liver transplant 7, 14 and 21 [linear (upper panel) and semi- patients is expected by the end of 2010. logarithmic (lower panel) scales] (study # 109386, n = 47) However, at this stage, the Company has elected to focus its development efforts on pursuing LCP-Tacro for the treatment of kidney transplant patients, given the larger potential patient population and demand.

18 Whole blood concentration (ng/ml) Helblodskoncentration (ng/ml) 16

14 TRANSPLANTATION MARKET OVERVIEW

12 Market size 10

8 In 2009, the immunosuppression market for transplant 6 patients in the U.S., Japan, the United Kingdom, France, 4 Germany, Italy and Spain totalled USD 4.4 billion (source: TimeTid (timer) (hours) 2 Business Insights August 2010; IMS Health; all rights 0 reserved). CNIs, the leading class to which LCP-Tacro 0 4 8 12 16 20 24 belongs, had a 55% share of global sales at USD 2.4 bil- Day 7, Prograf capsules Day 14, LCP-Tacro tablets lion, followed by anti-metabolites (USD 1.4 billion, 31% Day 21, LCP-Tacro tablets market share) and mTOR inhibitors (USD 321 million, 7% market share) (source: Business Insights). The top-selling Liver – Phase II clinical studies product was Astellas’ Prograf (tacrolimus), which sold just over USD 1.5 billion, which represented approximately The Phase II clinical studies for liver transplants were one-third (1/3) of the total sales of immunosuppression designed as either: drugs for transplantation, followed by Roche Holding AG’s (“Roche”) CellCept (mycophenolate mofetil, USD 1.1 bil- • conversion studies in liver transplant patients, with lion) and Novartis’s Neoral (cyclosporine, USD 585 mil- patients being switched to LCP-Tacro (once-daily dos- lion) (source: Business Insights August 2010). These age) from Prograf (twice-daily dosage), at least six three products, which represent the cornerstones of mod- months after transplantation; or ern immunosuppressant regimens, accounted for 76% of sales in the transplantation market in 2009 and underline • a de novo liver transplant study with patients being the current dominance of the transplantation market by treated with LCP-Tacro (once-daily dosage) versus Pro- three multinational drug companies – Astellas, Novartis graf (twice-daily dosage) immediately after their liver and Roche. transplant. In 2009, worldwide sales of Prograf were approximately USD 2 billion (Astellas Annual Report FY 2009).

58 Market structure Over the past 15 years, a variety of new immunosuppression medications have been approved, substantially The transplant marketplace in the United States is ideally increasing the number of options available and facilitating suited for a very small and well-focused selling effort. The a noticeable evolution in therapeutic protocols. While CNIs clinical practice of transplant medicine leads to a unique continue to be used for maintenance immunosuppression commercialisation opportunity. Transplants are generally in most patients, there has been a change in the prefer- performed at a small number of highly specialised cen- ence of CNI used, from cyclosporine to Astellas’ tacroli- tres. For example, in the entire United States, only about mus (Prograf). 250-300 centres perform transplants. Patients waiting for a transplant will often travel considerable distances for Immunosuppression can be achieved with many different transplant at one of these few centres. As such, a limited drugs, including steroids, targeted antibodies and CNIs number of sales representatives can cover the majority of like tacrolimus. Of these immunosuppressants, tacrolimus the centres. With a fi eld force of 20-30 sales representa- is one of the most potent in terms of suppression of the tives, centres can be triaged into “high priority” high vol- immune system. Tacrolimus for systemic use is currently ume centres performing the majority of transplants. available worldwide as a twice-daily dosage formulation, These centres are covered with a higher calling frequency Prograf (Astellas), and in Europe, since June 2007, has than are the lower priority centres. During a call, a repre- also been available as a once-daily dosage formulation, sentative can effectively call upon the professionals Advagraf (Astellas). Advagraf attained EUR 27 million in involved in the transplant process including surgeons, sales in the fi rst quarter of 2010 (Astellas 1Q/2010 Finan- nephrologists, infectious diseases specialists and pharma- cial Results). cists. On a targeted basis, community nephrologists with large numbers of transplant patients would also be A second change is seen in the choice of anti-metabolite, included. from azathioprine to Roche’s mycophenolate mofetil (MMF, brand name CellCept), which is currently the most The practice patterns in the European market are compa- commonly administered adjunctive maintenance immuno- rable to those seen in the United States. suppressive agent in solid organ transplantation (source: Business Insights, August 2010). The launches of Wyeth’s Disease and treatments (now Pfi zer) Rapamune (sirolimus/rapamycin) and Novar- tis’s Certican (everolimus), which inhibit growth factor Organ transplant is generally considered for all patients signal transduction by blocking the serine-threonine with end-stage organ failure. Such a condition typically kinase mammalian TOR (mTOR), have enabled the devel- follows severe disease progressions like those indicated in opment of regimens designed to limit or eliminate CNIs in Table 2 below. order to enhance long-term graft survival without compro- mising immunologic protection. In 2009, over 50,000 organ transplants were conducted in the U.S., Japan, the United Kingdom, France, Germany, Italy and Spain.

Table 2. Conditions leading to end-stage organ failure

Kidney Liver Heart

Diabetic nephropathy Chronic viral hepatitis Ischemic cardiomyopathy Hypertensive nephroangiosclerosis Biliary cirrhosis Congestive heart failure Glomerulonephritis Biliary atresia Polycystic kidney disease (PKD) Autoimmune hepatitis

59 The most prescribed immunosuppressants are currently summarises the pharmacological characteristics of each Prograf, CellCept, Rapamune, Neoral and Myfortic. Table 3 of these drugs.

Table 3. Overview of major immunosuppressants in the U.S., Japan, the United Kingdom, France, Germany, Italy and Spain

Brand Name Prograf/Advagraf Neoral CellCept Rapamune Myfortic

Generic name Tacrolimus Cyclosporine mycophenolate mofetil Sirolimus mycophenolic acid Market share 37% 13% 25% 6% 5% Maker Astellas Novartis / Generic Roche Wyeth (now Pﬁ zer) Novartis Mechanism calcineurin inhibitor calcineurin inhibitor anti-proliferative mTOR inhibitor anti-proliferative Approved Indications kidney, liver, heart kidney, liver, heart kidney, liver, heart kidney kidney Immunosuppression Primary Primary Secondary Secondary Secondary

Source: Business Insights August 2010

The current product of choice appears to be Prograf, but COMPETITION since single-agent use of immunosuppressants is generally unable to prevent rejection without unacceptable tox- LCP-Tacro icities, immunosuppressants are usually used in combination. For instance, CNIs like Prograf are usually used in LCP-Tacro, when marketed, would face competition from combination with azathioprine, CellCept or corticosteroids, Astellas’ Prograf (twice daily) or generic equivalent tac- with Prograf in combination with CellCept and/or corticos- rolimus products, as well as from Astellas’ Advagraf (once teroids being the most commonly prescribed combination daily), which is currently marketed outside the United regimen. In addition, induction therapy with a monoclonal States and would likely be a key competitive product to antibody like basiliximab is used (source: Business LCP-Tacro in, for example, the European Union. In particu- Insights, August 2010). lar, major pharmaceutical companies such as Sandoz, Dr. Reddy’s, Mylan Laboratories, Inc. (“Mylan”) and Watson LifeCycle Pharma believes that both Prograf and are active generic market participants in the immunosup- cyclosporine, despite being among the most frequently pression market. prescribed immunosuppressants, show a high inter- and intra-individual variability, and both drugs have a narrow At present, there is no once-daily version of tacrolimus therapeutic index. These factors require drug level moni- available in the United States. Generic versions of Prograf toring to optimise treatment. Furthermore, LifeCycle became available in the United States in 2009 and in the Pharma believes that the twice-daily dosing is often a European Union in 2010. Generics have attained 47% TRx compliance nuisance for patients. share of the tacrolimus market in the U.S. as of 16 July 2010 (source: Astellas 1Q/2010 Financial Results) but The issue of non-compliance has been investigated in a have historically had slow penetration into the immuno- wide range of studies, and the frequency of medication suppression market, presumably because physicians are non-adherence after organ transplantation has been esti- reluctant to incur any kind of risk of switching without mated to range from 5% to 43% (source: Vasquez EM, et substantial data on the speciﬁ c formulation and knowl- al. Am J Health-Syst Pharmacy 2003; 60(3):266-9. Green- edge that a patient is being switched. As a result, if and stein S, et al. Transplant Proc 1999; 68:5155). A large when it reaches the market, LCP-Tacro will not be an AB prospective study documented a 3.2-fold increase in late rated generic equivalent of tacrolimus. Therefore generics acute rejection, that was associated with reduced kidney of tacrolimus cannot automatically substitute for LCP- allograft function, in patients who were non-adherent to Tacro. For risks relating to competition, see “Risk factors immunosuppressive regimens as compared to adherent – Risks related to the Company’s business”. patients (Source: Vlaminck H, et al. Am J Transplant 2004; 4(9):1509-13). Thus, there is an established correlation between non-adherence and morbidity.

60 Pipeline competition LCP-Tacro once daily was fi led on 30 May 2008 and published on 4 December 2008 with the publication number Several novel agents intended for chronic administration and title: WO2008/0145143: Once-Daily Oral dosage for the prevention of rejection are currently in develop- Form Comprising Tacrolimus. A further PCT application ment. These include: relating to LCP-Tacro once daily was fi led on 7 July 2009 and published on 14 January 2010 with the publication • Belatacept (LEA29Y, BMS), a selective co stimulation number and title: WO2010/005980: Tacrolimus for blocker that binds surface co stimulatory ligands (CD80 Improved Treatment of Transplant Patients. A priority- and CD86) on antigen-presenting cells. Belatacept is establishing patent application relating to LCP-Tacro was currently under review with the FDA, as well as the fi led on 17 February 2010 in Denmark (App. No. PA 2010 EMA, for use in adult patients receiving kidney trans- 00137; unpublished) and on 18 February 2010 in the U.S. plants. On 1 May 2010, Bristol-Myers Squibb received a (U.S. Provisional No. 61/305,941; unpublished). complete response letter from the FDA requesting 36-month data from the ongoing Phase III studies to At present, four patents relating to LCP-Tacro have issued: further evaluate the long-term effect of belatacept. Australian Patent AU 2004267909, European Patent EP 1663217 and Indian Patents IN 234522 and IN 234120. • ISA247 (Isotechnika) is a calcineurin inhibitor created National/regional phase applications derived from one or by molecular modifi cation of cyclosporine. Preliminary more of the above-mentioned PCT applications are pend- results from Phase II studies show comparable effi cacy ing in the U.S., Canada, Mexico, Brazil, Europe, Norway, and safety with tacrolimus when combined with Cell- Australia, India, China, Hong Kong and Japan. The pending Cept and corticosteroids (Source: Busque S, et al. patent applications are currently subject to examination American Transplant Congress 2007 (abstract)). by the respective patent authorities except for the applications in Brazil and Norway, where prosecution has not • Sotrastaurin (AEB071, Novartis) is a small-molecule yet started. inhibitor of protein kinase C. This agent is currently in Phase II studies in kidney transplantation (source: Busi- The Company believes that it has freedom to operate for ness Insights, August 2010). the Company’s tablet formulation of tacrolimus, LCP- Tacro. LifeCycle Pharma has in 2010 obtained two posi- • Tasocitinib (CP-690,550, Pfi zer) is a small-molecule tive freedom-to-operate opinions, one from a U.K. patent inhibitor of Janus-3 kinase. Phase II studies show com- law fi rm and another from a U.S. law fi rm. However, there parable effi cacy, improved renal function but increased can be no assurance that the Company will actually have infections and myelosuppression when compared to freedom to operate. Furthermore, in the event that the cyclosporine when combined with CellCept and corti- Company does not have freedom to operate, there can be costeroids (Source: Busque S. et al. and Tedesco-Silva no assurance that a licence relevant to any third party H, et al. International Congress of the Transplantation patent(s) will be available on a reasonable basis or avail- Society 2010 (abstracts)). able at all. See “Risk factors – Risks related to the Compa- ny’s intellectual property”. LEGAL/IP MATTERS

LCP-Tacro Cardiovascular – LCP-FenoChol, LCP-AtorFen, and LCP-Feno Astellas’ composition-of-matter patents on tacrolimus have expired and no patents are listed in the FDA’s Within the cardiovascular area, one product, LCP-FenoChol Orange Book for Prograf capsules. However, Astellas has marketed as Fenoglide), developed using the Company’s patent protection on certain sustained-release formula- proprietary MeltDose technology has received approval tions of tacrolimus at least until 2019. By switching from the FDA for commercial sale in the U.S. for the treat- patients to a new sustained-release formulation, Astellas ment of dyslipidemia (which includes hypertriglyceri- may be able to limit generic competition at least until demia, mixed dyslipidemia and hypercholesterolemia). In 2019. LifeCycle Pharma has identifi ed alternative sus- addition, the Company has two product candidates: LCP- tained-release formulations and has fi led patent applica- AtorFen, a fi xed dose combination tablet of fenofi brate tions relating to optimal combination of improved bio- and atorvastatin, as well as LCP-Feno, a generic 145 mg availability and controlled release of tacrolimus. fenofi brate tablet. While these two product candidates are not in the active stage of development, the Company Two Patent Cooperation Treaty (“PCT”) applications relat- continues to pursue possible partnership opportunities. ing to LCP-Tacro were fi led by LifeCycle Pharma on 30 August 2004 and published on 10 March 2005 with the LCP-FenoChol following publication numbers and titles: WO2005/020993: Modifi ed Release Compositions Com- On 10 August 2007, the FDA approved LCP-FenoChol for prising Tacrolimus; and WO2005/020994: Solid Disper- the treatment of dyslipidemia in the U.S. LifeCycle Pharma sions Comprising Tacrolimus. A PCT application relating to outlicensed the marketing of LCP-FenoChol for the U.S.,

61 Canada and Mexico to Shionogi (formerly Sciele ) which Delaware, a patent infringement lawsuit against Impax launched the product under the brand name Fenoglide in under the U.S. Hatch-Waxman Act. The lawsuit asserts the U.S. in February 2008. In August 2008, the Company that Impax, if permitted to market generic Fenoglide tab- sold to Cowen under a purchase agreement, the future lets following a potential approval of the ANDA, will royalty and milestone payments for sales of Fenoglide in infringe the ‘944 patent. The outcome of this litigation is North America due to it from Shionogi. As part of its uncertain and Impax may be found not to infringe the agreement with Cowen, the Company also granted to ‘944 patent or the `944 patent may be found to be Cowen an exclusive, royalty-free license, with right to invalid. If either outcome were to occur, Impax may be sub-license, to develop, manufacture and sell LCP-Feno- permitted to begin selling generic Fenoglide, which may Chol in the U.S., Canada, and Mexico, subject to the prior erode Fenoglide sales. Moreover, in the event that rights granted by the Company to Shionogi. Shionogi Impax’s ANDA is deemed complete by the FDA prior to the recently gave notice to the Company of termination of date on which the ‘944 patent was listed in the Orange the licence agreement with the Company, effective no Book, there would be no 30-month stay of approval of later than from February 2011. The Company will work the ANDA under the Hatch-Waxman Act; in such instance, together with Cowen to re-partner LCP-FenoChol in North upon receiving regulatory approval, Impax would be per- America. Although the purchase agreement sets out con- mitted to begin selling generic Fenoglide tablets, which ditions for future potential milestone payments, the Com- may erode Fenoglide sales. See Part I, Section 20.3 “Liti- pany does not expect to generate signifi cant, if any, reve- gation” for information regarding this litigation and “Risk nues from the sale of LCP-FenoChol in the future. For factors – Risks related to the Company’s intellectual prop- more information regarding the Company’s agreement erty” for risks related thereto. with Cowen, see Part I, Section 22 “Material agreements”. Any patent holder may at any time initiate legal proceed- The composition-of-matter patents on the chemical com- ings against LifeCycle Pharma and the Company’s compound fenofi brate expired in 2002. However, other commercialisation partner claiming patent infringement by panies, including Abbott, Elan Corporation, plc (“Elan”) Fenoglide. See the section entitled ‘‘Risk factors” for and Fournier, hold a number of formulation patents and more information. patent applications relating to fenofi brate formulations and certain salts of fi bric acid. LCP-AtorFen

The Company believes that it has freedom to operate for LCP-AtorFen, which has completed Phase II clinical studies the Company’s tablet formulation of fenofi brate, LCP- for the treatment of dyslipidemia, is a combination ther- FenoChol. LifeCycle Pharma has obtained positive free- apy based on a fi xed-dose combination of atorvastatin dom-to-operate opinions in respect of LCP-FenoChol from (the active ingredient in Lipitor) and a low dose of fenofi - a Danish patent law fi rm and from a U.S. law fi rm in 2008. brate without food effect. Thus, the product candidate is LifeCycle Pharma has also obtained non-infringement designed to combine in a small tablet a proven statin and opinions, prepared by a U.S. law fi rm in 2008, relating to a fenofi brate in a treatment that addresses all three ath- the U.S. patents for which the Company has fi led Para- erosclerosis risk parameters: Elevated LDL-C, elevated graph IV certifi cations with the FDA. However, there can triglycerides and low HDL-C. be no assurance that the Company will actually have freedom to operate. Furthermore, in the event that the Com- LCP-AtorFen has completed Phase II clinical studies. While pany does not have freedom to operate, there can be no not in the active stage of development, the Company con- assurance that a licence relevant to any third party tinues to pursue potential partnership opportunities for patent(s) will be available on a reasonable basis or avail- LCP-AtorFen, which would include Phase III studies. See able at all. See “Risk factors – Risks related to the Compa- Part I, Section 12.2 “Patents and other intellectual prop- ny’s intellectual property”. erty rights” for a description of the intellectual property related to LCP-AtorFen. At present, three patents relating to LCP-FenoChol have issued in the U.S. (US 7,658,944), in China and in Hong LCP-Feno Kong, and national patent applications are pending. See Part I, Section 12.2 “Patents and other intellectual prop- LCP-Feno is designed to be an AB-rated, substitutable erty rights”. version of Tricor 145 mg currently marketed in the U.S. by Abbott and in Europe by Solvay Pharmaceuticals S.A. The ‘944 patent is listed in FDA’s Orange Book for Feno- (“Solvay”) under the name Lipanthyl, for the treatment of glide. In March 2010, LifeCycle Pharma received a notifi ca- dyslipidemia. tion from Impax of their notice of a paragraph IV certifi cation in respect of the ‘944 patent following its submission of an ANDA to the FDA for a proposed generic version of Fenoglide. In April 2010, LifeCycle Pharma and Shionogi jointly fi led, in the U.S. District Court for the district of

62 The Company had previously sought to develop, manufac- versions of marketed drugs, and has been validated in ture and commercialise LCP-Feno in the United States clinical studies and received regulatory acceptance through an agreement with Sandoz Inc., which has now through the FDA approval of Fenoglide for sale in the been terminated. Under the terms of the now terminated United States. agreement, if the Company commercialises LCP-Feno in the United States, it shall be obligated to pay Sandoz cer- Independent studies have shown that approximately 30% tain royalties on its net sales until Sandoz has recovered of existing drugs have suboptimal uptake and absorption certain expenses and milestones paid to the Company. due to low water solubility (source: Technology Catalysts The Company has an exclusive licence agreement with International; Delivery of Poorly Soluble or Poorly Perme- respect to LCP-Feno with Mylan in Europe. able Drugs, 4 ed.). LifeCycle Pharma believes that a large number of these drugs may be suitable candidates for the See Part I, Section 12.2 “Patents and other intellectual Company’s proprietary MeltDose technology. MeltDose property rights” for a description of the intellectual prop- may also be of value for new chemical entities (“NCEs”) erty related to LCP-Feno and Section 20.3 “Litigation” for which low absorption of a particular drug presents a with respect to ongoing administrative proceedings signiﬁ cant barrier to its ﬁ nal formulation, and ultimately regarding LCP-Feno intellectual property. its development as an actual drug.

The fundamental limiting factor for oral absorption of 6.2 MeltDose technology drugs with low water solubility is the transfer of drug substance particles to dissolved molecules that can pene- OVERVIEW trate the epithelium of the gastrointestinal tract and enter into the bloodstream. MeltDose, LifeCycle Pharma’s proprietary technology for enhancing the bioavailability of compounds with low Figure 2 below illustrates the solubility and permeability water solubility, allows the Company to create improved considerations for oral absorption of drugs.

Figure 2. Solubility and permeability considerations for oral absorption of drugs

Gl barrier cells Drug in systemic circulation

Liver metabolism

Permeability

Dissolution of drug substance

Dosage form

Drug molecules

Passage through the GI tract

63 The majority of conventional drug delivery technologies Potential clinical beneﬁ ts of the Company’s proprie- aimed at increasing bioavailability of compounds with low tary MeltDose technology water-solubility rely on reduction of the particle size of the drug substance – thereby increasing the surface area LifeCycle Pharma believes that application of the Compa- available for the dissolution process. Figure 3 below ny’s proprietary MeltDose technology to low water-solu- shows a comparison of different formulation technologies ble drugs may offer several meaningful clinical beneﬁ ts, in terms of particle size. including but not limited to:

LifeCycle Pharma believes that the Company’s proprietary • Decreased inter- and intra-individual variability: MeltDose technology provides a novel drug formulation LifeCycle Pharma believes that by enhancing bioavail- technology as the Company is capable of obtaining ability, variability can be reduced leading to improved improved bioavailability of compounds with low water- effi cacy/side-effect profi les of compounds with a nar- solubility by solubilising them and incorporating the drug row therapeutic index. In some cases, the therapeutic substance into a melted vehicle which is then sprayed window is very narrow and minimal variability is man- onto a carrier. The result of this process is a granulate in datory. LifeCycle Pharma believes that reduction in the which the drug substance is found in solid solution. Com- intra-subject variability will improve the effi cacy and pared with technologies relying on decreasing particle reduce the number of adverse events. Furthermore, a size, LifeCycle Pharma expects to show a signifi cant decrease in the inter-subject variability may improve advantage using the Company’s MeltDose technology the dosing schedule and reduce the need for individual when developing a formulation based on a solid solution titration and/or for control visits by the patient to the method. physician.

The drug substances are solubilised in low-melting vehi- • Reduction of food effect: The effi cacy of many ther- cles such as PEG, poloxamers or lipids; all of which are apeutic products is decreased by food interaction. By so-called GRAS (generally recognised as safe). This pro- reducing the fed/fasted effect, patient convenience is cess can be conducted under controlled atmosphere likely to improve, as patients will no longer have to (nitrogen) in order to avoid degradation processes such take their drug together with meals. as oxidation. The solubilised drug in this melted vehicle is transformed into solid particles by being sprayed under Through the development of Fenoglide and the Com- controlled conditions onto an inert carrier in a fl uid bed. pany’s product candidates, the Company’s proprietary From the resulting granulate–known as a solid solution or MeltDose technology has shown the ability to create solid dispersion–tablets can be manufactured by way of new product candidates without any signifi cant food direct compression. effect.

Figure 3. Comparison of drug particle size

Typical drug Micron Nano MeltDose® particle size technology technology Technology

>10μm 1-10μm 0.5-1μm Solid particles particles particles Solution

Improved bioavailability

64 • Reduction in peak-to-trough ratio: Drugs often applications in other countries and regions are still pend- exhibit high peak (Cmax) and low trough (Cmin) plasma ing. There can be no assurance that more patents cover- levels that may severely affect the clinical profi le of the ing the Company’s MeltDose technology will be issued, or drug. This is particularly problematic since severe side that the scope of any fi led patent claims will not be sub- effects may be induced at high Cmax values, and lack stantially restricted in the course of examination, or that of clinical effect may occur at low trough levels. A solu- the Company is able to enforce its issued patents. See tion to this pharmacokinetic profi le problem may be “Risk factors – Risks related to the Company’s intellectual the development of a controlled-release formulation property” for risks related thereto. such as the Company’s MeltDose technology allowing a benefi cial combination of an increase in bioavailability Other drug delivery technologies and a controlled or modifi ed release plasma profi le. The Company is currently performing research on several Through LCP-Tacro, the Company’s proprietary Melt- projects using its MeltDose and porous tablet technolo- Dose technology has shown the ability to create a gies in order to advanced suitable projects into clinical product candidate with reduction of Cmax and development and increase the commercial potential of its increased bioavailability. technologies and holds, at the Offering Circular Date, two issued patents relating to the porous tablet technology, • Reduction of administration frequency: In order to one (1) in Russia and one (1) in China and has further improve compliance, it may be benefi cial to reduce national patent applications pending. daily dosing frequency, for example, from three times a day to once daily. This may be achieved by a controlled-release formulation, and as described above, 6.3 The Company’s drug development process Lifecycle Pharma believes that the Company’s proprietary MeltDose technology may solve this problem as it DEVELOPMENT AND REGULATORY ENVIRONMENT combines an increase in bioavailability with a controlled- or modifi ed-release profi le. LifeCycle Pharma believes that the development process based on the Company’s proprietary MeltDose technology Through the development of LCP-Tacro, the Company’s has several advantages over the traditional pharmaceuti- proprietary MeltDose technology has shown the ability cal development process. Generally, the Company believes to create a product candidate with a once daily admin- that the pharmaceuticals developed through LifeCycle istration schedule compared with the twice daily Pharma’s drug development process as compared with administration schedule of the currently marketed pharmaceuticals that are developed through the tradi- drug, Prograf. tional development process have a shorter time to market, lower development costs and lower development The Company is currently performing research using its risks. The differences between the two development pro- MeltDose and porous tablet technologies in order to cesses are summarised and further explained below. advance suitable projects into clinical development and increase the commercial potential of its technologies. PRODUCT DEVELOPMENT THROUGH REFORMULATION OF TRADITIONAL DRUGS This research includes fi ve compounds in early stage preclinical development targeting areas such as dyslipidemia, Overview pain/infl ammation, metabolic, endocrine and antifungal. Because traditional drug discovery and development is a Legal/IP matters lengthy, expensive and risky process, pharmaceutical companies often seek to improve the sub-optimal therapeutic As of the Offering Circular Date, fi fteen (15) patents characteristics of well-documented active compounds that related to the Company’s MeltDose technology have have already received regulatory approval. In doing so, issued: U.S. Patent No. US 7,217,431, South Africa Patent these companies are able to utilise the signifi cant existing No. ZA 2004/0044, Australian Patent No. AU knowledge about the safety and effi cacy of the active 2002325192, Chinese Patent No. CN 100579514C, Rus- compound as a basis for the documentation for the new sian Patent No. RU 2330642, Indian patent No. IN formulation. This enables these companies to develop 242657 and Japanese Patent No. JP 4570357 to the con- new, proprietary pharmaceuticals more quickly, at sub- trolled agglomeration process, i.e. the MeltDose process; stantially lower costs and with lower development risks U.S. Patent No. US 7,252,247, European Patent No. EP compared with traditional drug discovery and develop- 1497034, Canadian Patent No. CA 2,511,150, Chinese ment. In particular, pharmaceutical companies utilising Patent No. CN 100415383C, Indian Patent No. IN 221724 reformulation technologies will seek to improve the thera- and Japanese Patent No. JP 4330539 to “A self-cleaning peutic potential of products and the formulation of the spray nozzle” as well as Chinese Patent No. CN 1758901B active compound to improve its therapeutic characteris- and Indian Patent No. IN 229384 to “Use of a silica deriv- tics. It is not necessary to perform costly research of the ative as a sorption material”. The corresponding patent compounds used to discover targets and develop new

65 active compounds, as they are already known. Once new procedure affords the potential to save time and costs for formulations have been designed and optimised in rela- the entire product development. Since the drugs are well tion to desired characteristics, the product candidate is known by the regulatory agencies, the review and the validated and documented in the clinical phase. In addi- approval process will generally be shorter than for the tion, a company developing an improved pharmaceutical assessment of an NCE. formulation has access to all public regulatory documentation for the active compound in addition to the proprietary information generated in connection with the devel- 6.4 Regulatory matters opment of the new formulation. OVERVIEW The Company’s product development strategy The research, development, testing, manufacture, distri- The Company’s strategy is to capitalise on available public bution and marketing of products employing the Compa- domain data on approved reference drugs to design and ny’s technology are subject to regulation for safety and perform a focused clinical development programme with effi cacy by national legislation and numerous governmen- the aim of demonstrating clinical benefi ts of the new for- tal authorities in the U.S., Europe and other countries. mulation compared with the reference drug. Each of the Product development and approval within this regulatory Company’s clinical development programmes will be scheme, if successful, takes a number of years and designed to demonstrate differentiation of the Company’s involves the expenditure of substantial resources. new product compared with the marketed product in terms of clinical performance in order to secure rapid reg- LifeCycle Pharma is developing global regulatory strategies istration, optimal pricing and patent protection. for all of the Company’s product candidates entering development programmes, focusing on regulatory stan- As a fi rst step–and to avoid extensive preclinical testing dards defi ned by government regulations of the territories and conducting long-term safety and effi cacy studies– where LifeCycle Pharma intends to market its products. careful evaluation of existing technical, preclinical, and clinical data of the proposed drug is required. Where Drug development is a highly structured process divided appropriate, an animal model will be used to evaluate the into two major stages, preclinical and clinical. In the pre- pharmacokinetic properties of the Company’s formulation clinical stage, the toxicology and mode of action of an compared with the approved drug. active compound is evaluated. The clinical stage is designed to prove the safety of any new pharmaceutical, However, in contrast to the NCE development process, the determine dosage requirements and, predominantly in the safety of the drug is already known from the literature, later phases, prove its effi cacy. This stage is carried out in thus allowing the Company to go directly into human three phases, which, as a developer moves through the Phase I pharmacokinetic testing without conducting pre- phases, require increasingly large, complex, expensive and clinical toxicology and mode of action studies with an time-consuming clinical studies. During Phase I, the prod- uncertain outcome. Normally, such a Phase I pharmacoki- uct candidate is initially given to a small number of netic study, which is conducted in 16-24 healthy volun- healthy human subjects or patients and tested for safety, teers, takes three to four months. tolerance, absorption, metabolism, distribution and excre- tion. During Phase II, additional studies are conducted in a After having obtained pharmacokinetic data and a clear larger, but still relatively limited, patient population to ver- understanding of the potential of the improved formula- ify that the product candidate has the desired effect and tion/product, the next step is to proceed directly to piv- identify optimal dosage levels. Furthermore, possible otal studies for regulatory submission. These studies adverse effects and safety risks are identifi ed. The effi cacy could be either bioequivalence or food-effect studies in of the product candidate for specifi c targeted diseases is healthy volunteers for approved drugs within the current also studied in more depth. During Phase III, studies are label and dosing regimen. Alternatively, if the drug is undertaken to further evaluate dosage, to provide statisti- intended for a new indication, a Phase III pivotal clinical cally signifi cant evidence of clinical effi cacy and to further programme in patients will be started. The entire study the safety in an expanded patient population at bioequivalence/food effect study programme can be con- multiple clinical study sites. Phase III studies may require ducted in less than six months. Pivotal Phase III studies several hundreds or thousands of patients and are there- for new indications are dependent on the expected label fore the most expensive and time-consuming to conduct. and can last from 18 months to three years. At any time during one of the phases a study may produce a negative result, in which case the developer may In compliance with FDA and EMA guidelines, LifeCycle choose to end the development project. Pharma will conduct the pivotal clinical studies in most of the cases in a “confi rmatory study design”. This means Following completion of the Phase III studies, the devel- that the data from the European arm of development oper submits all the preclinical and clinical study docu- (“EU trial”) will be supportive for the U.S. submission and mentation to the regulator to seek approval to market the vice versa, leading to a robust database for approval. This formulation as a pharmaceutical. The regulator reviews all

66 the information related to the safety of the active com- part on the FDA’s conclusion about the safety and effec- pound, and whether the pharmacological effect claimed tiveness of previously approved drugs is to submit a more by the developer on the proposed label can be substanti- limited NDA described in Section 505(b)(2) of the FDCA. ated by the results of the clinical studies. The regulator The fi nal route is the submission of an ANDA for products has the option to decide to approve the application as that are shown to be therapeutically equivalent to previ- requested, ask for changes to the claims made by the ously approved drug products as permitted under Section developer, ask for more information or clinical studies, or 505(j) of the FDCA. refuse to approve the formulation for sale. Both Section 505(b)(1) and Section 505(b)(2) applica- The Company’s regulatory strategy integrates internation- tions are required by the FDA to contain full reports of ally recognised requirements for quality, safety and effi - investigations of safety and effectiveness. However, in cacy, the technical criteria developed under the Interna- contrast to a traditional NDA submitted pursuant to Sec- tional Conference on Harmonisation (“ICH”), in order to tion 505(b)(1) in which the applicant submits all of the support successful and fast approvals of new therapeutic data demonstrating safety and effectiveness, an applica- products and their placing on the market worldwide. tion submitted pursuant to Section 505(b)(2) can rely upon fi ndings by the FDA that the parent drug is safe and The goal of the Company’s strategy is to fi le registration effective in that indication. As a consequence, the preclin- applications in the Company’s key market regions within a ical and clinical development programmes leading to the short time frame, particularly in the U.S., the European submission of an NDA under Section 505(b)(2) may be Union and Canada and other countries on a selective less expensive to carry out and can be concluded in a basis. These strategies also include pre-approval and shorter period of time than programs required for a Sec- post-licensing activities relating to registration and com- tion 505(b)(1) application. In its review of any NDA sub- pliance auditing as well as safety and pharmacovigilance. missions, however, the FDA has broad discretion to require an applicant to generate additional data related to Possible changes in the regulatory environment and prac- safety and effi cacy, and it is impossible to predict the tices may strongly infl uence product development. As the number or nature of the studies that may be required regulatory environment is constantly evolving, the Com- before the FDA will grant approval. pany actively monitors the regulatory requirements of the territories where the Company intends to market its prod- Notwithstanding the approval of many products by the ucts. See “Risk factors” generally, and in particular, “Risk FDA pursuant to Section 505(b)(2), over the last few factors – Risks related to government regulatory and legal years certain brand-name pharmaceutical companies and requirements”. others have objected to the FDA’s interpretation of Sec- tion 505(b)(2). If the FDA changes its interpretation of Since the Company’s drug development strategy is to cre- Section 505(b)(2), this could delay or even prevent the ate improved versions of existing marketed drugs, it has FDA from approving certain Section 505(b)(2) NDA sub- several different regulatory options depending on the missions. substance, indication and proposed label. To the extent that a Section 505(b)(2) NDA relies on U.S. REGULATION studies conducted for a previously approved drug product, the applicant is required to certify to the FDA concerning In the U.S., therapeutic drug products are subject to any patents listed for the approved drug in the Orange extensive rigorous federal regulation including the require- Book. Specially, the applicant must certify that: ment of approval by the FDA before marketing may begin and, to a lesser extent, state regulation. The U.S. Federal 1. the required patent information has not been fi led; Food, Drug, and Cosmetic Act (“FDCA”), as amended, and the regulations promulgated thereunder, and other fed- 2. the listed patent has expired; eral and state statutes and regulations govern, among other things, the testing, manufacture, safety, effi cacy, 3. the listed patent has not expired, but will expire on a labelling, distribution, storage, record keeping, approval, particular date and approval is sought after patent advertising and promotion of the Company’s products. expiration; or

The results of preclinical studies and clinical studies, 4. the listed patent is invalid, unenforceable or will not be together with detailed information on the manufacture infringed by the new product. A certiﬁ cation that the and composition of the product, are submitted to the FDA new product will not infringe the already approved in the form of an NDA requesting approval to market the product’s listed patents or that such patents are invalid product. Generally, regulatory approval of a new drug by or unenforceable is known as a Paragraph IV certiﬁ ca- the FDA may follow one of three routes. The most tradi- tion. tional of these routes is the submission of a full NDA under Section 505(b)(1) of the FDCA. A second route, which is possible where an applicant chooses to rely in

67 If the applicant does not challenge the listed patents, the The Hatch-Waxman Act provides incentives for generic Section 505(b)(2) application will not be approved until all pharmaceutical manufacturers to challenge patents on the listed patents claiming the referenced product have branded pharmaceutical products and/or their methods of expired. The Section 505(b)(2) application also will not be use, as well as to develop products comprising non- approved until any pertinent non-patent exclusivity, such infringing forms of the patented drugs. The Hatch-Wax- as exclusivity for obtaining approval of a new chemical man legislation offers the opportunity for signifi cant entity, listed in the Orange Book for the referenced prod- fi nancial reward if the challenge is successful. uct, has expired. If there is a patent listed for the branded drug in the If the applicant has provided a Paragraph IV certifi cation Orange Book at the time of submission of the ANDA or at to the FDA, the applicant must also send notice of the any time before the ANDA is approved and the generic Paragraph IV certifi cation to the NDA and patent holders company intends to market the generic equivalent prior to once the NDA has been accepted for fi ling by the FDA. the expiration of that patent, the generic company The NDA and patent holders may then initiate a legal includes a Paragraph IV certifi cation asserting that the challenge to the Paragraph IV certifi cation. Under the patent is invalid, unenforceable and/or not infringed. If FDCA, the fi ling of a patent infringement lawsuit by the the applicant has provided a Paragraph IV certifi cation to patent holders within 45 days of their receipt of a Para- the FDA, the applicant must also send notice of the Para- graph IV certifi cation automatically prevents the FDA from graph IV certifi cation to the NDA and patent holders once approving the Section 505(b)(2) NDA until the earlier of the ANDA has been accepted for fi ling by the FDA. The 30 months, expiration of the patent, settlement of the NDA and patent holders may then initiate a legal chal- lawsuit, or a decision in the lawsuit that is favourable to lenge to the Paragraph IV certifi cation. Under the FDCA, the Section 505(b)(2) applicant. Thus, the Section 505(b) the fi ling of a patent infringement lawsuit within 45 days (2) applicant may invest a signifi cant amount of time and of their receipt of a Paragraph IV certifi cation automati- expense in the development of its products only to be cally prevents the FDA from approving the Section 505(j) subject to signifi cant delay and patent litigation before its ANDA until the earlier of 30 months, expiration of the products may be commercialised. Alternatively, if the patent, settlement of the lawsuit, or a decision in the listed patent holder does not fi le a patent infringement lawsuit that is favourable to the Section 505(j) applicant. lawsuit within the required 45-day period, the applicant’s NDA will not be subject to the 30-month stay. Under the Hatch-Waxman Act, any developer of a generic drug that is considered fi rst to have its ANDA accepted for Section 505(j) - ANDA the review by the FDA, and whose fi ling includes a Para- graph IV certifi cation, may be eligible to receive a 180-day The Hatch-Waxman Act established abbreviated FDA period of generic market exclusivity. This period of market approval procedures for drugs that are shown to be exclusivity may provide the patent challenger with the equivalent to drugs previously approved by the FDA opportunity to earn a return on the risks taken and its through its NDA process. Approval to market and distrib- legal and development costs and to build its market share ute these drugs is obtained by submitting an ANDA with before other generic competitors can enter the market. If the FDA. An ANDA is a comprehensive submission that the ANDA of the fi rst applicant accepted for fi ling is with- contains, among other things, data and information per- drawn, the 180-day exclusivity period is forfeited and taining to the active pharmaceutical ingredient, drug unavailable to any other applicant. product formulation, specifi cations and stability of the generic drug, as well as analytical methods, manufactur- US regulatory strategy ing process validation data, and quality control procedures. LifeCycle Pharma anticipates that most of the Company’s product candidates will be subject to Section 505(b)(2) of Pre-market applications for generic drugs are termed the FDCA, and some selected product candidates will be abbreviated because they generally do not include pre- subject to Section 505(j) of the FDCA. LifeCycle Pharma clinical and clinical data to demonstrate safety and effec- does not expect any of the Company’s existing product tiveness. Instead, to gain approval from the FDA for an candidates to be submitted under Section 505(b)(1), but ANDA, an applicant must establish that its product is LifeCycle Pharma may choose to follow this approval route bioequivalent to an existing approved drug and that it is for the Company’s product candidates in the future. identical to the approved drug with respect to the active ingredient(s), route of administration, dosage form, A 505(b)(2) NDA submission will be the Company’s pre- strength, and conditions of use recommended on the ferred regulatory submission strategy for its immunosup- product’s labelling. A product is considered bioequivalent pression. LifeCycle Pharma believes this will eliminate to an existing approved drug if testing demonstrates that unnecessary testing of drugs in animals and patients, the rate and extent of absorption of the proposed generic resulting in shorter timelines and lower costs for develop- drug is not signifi cantly different from the rate and extent ment, and will be ethical and environmentally friendly. of absorption of the existing approved drug when admin- Compared with a full NDA, LifeCycle Pharma believes that istered under similar experimental conditions. this strategy will save signifi cant time and costs. However,

68 regulatory requirements and regulatory authorities’ inter- POST-APPROVAL REQUIREMENTS pretations thereof are subject to periodic change. See “Risk factors – Risks related to government regulatory and Even after initial health authority approval has been legal requirements”. obtained, further studies, including Phase IV post- approval safety studies (“PASS”), may be required to pro- EUROPEAN UNION REGULATION vide additional data on safety and will be required to gain approval for the use of a product as a treatment for clini- In the European Union, a centralised procedure and cal indications other than those for which the product national procedures for marketing authorisation exist. was initially tested. In addition, regulatory authorities require post-marketing reporting to monitor the adverse The centralised procedure is compulsory for specifi ed effects of the product. Results of post-approval pro- types of pharmaceuticals and available at the request of grammes may limit or expand the further marketing of companies for other innovative new products. Applica- the products. Further, if there are any modifi cations to tions are submitted directly to EMA in London. At the con- the product, including changes in indication, manufactur- clusion of the EMA’s internal scientifi c evaluation, the ing process or labelling or a change in manufacturing result of the evaluation is transmitted to the European facility, an application seeking approval of such changes Commission, the approval of which will form the basis of must be submitted to the relevant regulatory authority, one single market authorisation applying to the whole before the modifi ed product can be commercialised. European Union. MANUFACTURING REQUIREMENTS Under the national procedures, which apply the same substantive criteria as the centralised procedure, two LifeCycle Pharma and third-party manufacturers must options exist for introducing a product to various Euro- comply with applicable FDA and European regulations pean markets. Either a marketing authorisation is fi led for relating to cGMP. The cGMP regulations include require- and obtained fi rst in one member state, recognition of ments relating to organisation of personnel, buildings and which is then requested by the applicant in other desig- facilities, equipment, control of components and drug nated member states (“Mutual Recognition Procedure”). product containers and closures, production and process Or, a marketing authorisation is fi led for in parallel in vari- controls, packaging and labelling control, holding and dis- ous member states of the European Union (each, a tribution, laboratory controls, records and reports, and “member state”), designating one member state as refer- returned or salvaged products. A failure to comply with ence member state, who is then in the lead for the these regulations could result in sanctions being imposed review of the application (“De-centralised Procedure”). In on the manufacturer, including fi nes, injunctions, civil case of disputes between national authorities, the points penalties, suspension or withdrawal of FDA and/or Euro- in dispute are submitted to EMA’s scientifi c committee for pean approvals, seizures or recalls of products, operating arbitration. restrictions, and criminal prosecutions. While the Com- pany periodically monitors the FDA and/or European regu- European regulatory strategy lation compliance of third-party manufacturers, the Com- pany cannot be certain that present or future third-party Currently, no products employing the Company’s technol- manufacturers will be able to comply with the cGMP regu- ogy have been approved for sale in the European Union. lations and other ongoing FDA and/or European regulatory requirements. The Company intends to submit a marketing application for LCP-Tacro via the centralised procedure, for a single REIMBURSEMENT AND PRICING CONTROL marketing authorisation valid in the entire European Union. The Company believes that such application meets While a marketing authorisation for a product is generally the requirement of a “signifi cant technical innovation” a precondition for reimbursement by public health care due to LCP-Tacro’s utilisation of the MeltDose system. systems or private health care plans, it does not lead to automatic reimbursement approval. Such approval is Should the centralised procedure be denied, the alterna- sought from separate authorities or bodies subsequent to tive route would be to seek approval by Mutual Recogni- regulatory marketing authorisation. See “Risk factors – tion Procedure (“MRP”). Starting with a “national” Risks related to government regulatory and legal require- approval in a country where a drug with the same active ments” for risks associated with reimbursement and pric- compound is already approved and the likelihood for ing controls. acceptance of their assessment by other countries is high, the MRP will be spread to all relevant countries for this product. LifeCycle Pharma believes that MRP provides the Company with the opportunity to market the product already approved in the fi rst countries while still seeking approvals in others.

69 U.S.

There is no national reimbursement system in the U.S. For patients covered by Medicare and Medicaid, prices are negotiated. Some private healthcare plans follow the lead of Medicare and Medicaid, while others negotiate prices independently. For those patients who do not have health care plans with pharmaceutical reimbursement beneﬁ ts, the pricing is market based.

European Union

Reimbursement and pricing control is not harmonised in the European Union. There exists a high variety of systems in the member states. They rely on direct and/or indirect price control, and/or determined or negotiated reimbursement rates. Achieving reimbursement approval may take up to a year following marketing authorisation.

70 7. Organisational structure

LifeCycle Pharma A/S is the parent company of LifeCycle PHARMACEUTICAL DEVELOPMENT Pharma, Inc., of which it owns 100% of the share capital. LifeCycle Pharma, Inc. was established in January 2007. Pharmaceutical Development consists of Analytical Devel- opment, Formulation Development, Manufacturing and LifeCycle Pharma A/S has its address at Kogle Allé 4, Intellectual Property. Analytical Development and Formula- DK-2970 Hørsholm, Denmark. tion Development support product development from early-stage development to fi nal regulatory submission of LifeCycle Pharma, Inc, has its address at 499 Thornall the dossiers. Street, 13th Floor, Edison, NJ 08818, New Jersey, U.S. • Analytical Development is actively involved in pre- The Company operates from sites in Hørsholm (just north formulation and early phase development studies of Copenhagen, Denmark) and in Edison, New Jersey, U.S. including compatibility, solubility and miscibility screen- The Company’s Hørsholm operations serve as headquar- ing and forced degradation studies and is responsible ters and focus on coordination and execution of the drug for the control strategy for active pharmaceutical ingre- development process and on the conduct of preclinical dients, formulated products and raw materials and the and clinical studies and administration. The U.S. site is elucidation of degradation pathways. Analytical Devel- focused on the conduct of clinical studies in the U.S. and opment partners with qualifi ed third party organisa- Canada as well as business development. tions in this fi eld of investigation.

• Formulation Development works on the formulation 7.1 Functional structure and process development for converting active pharmaceutical ingredients into solid oral dosage forms. As of the Offering Circular Date, the Company and its This includes the application of both the proprietary wholly-owned subsidiary LifeCycle Pharma, Inc. employed MeltDose technology and more conventional technolo- a total of 50 full time employees. gies.

CORPORATE • Manufacturing ensures internal and external manufacture of clinical trial material for all clinical development Corporate is comprised of Finance, Legal Affairs, Investor phases. LifeCycle Pharma has its own facility for manu- Relations/Public Relations, Human Resources and Informa- facture of clinical trial material for the early develop- tion Technology. ment stages. For the late stage development and

Figure 4. Functional structure of the Group

Pharmaceutical Corporate Development Operations Commercial Operations Development

Finance Analytical Development Regulatory Affairs Commercial Development

Legal Affairs Formulation Development Quality Assurance Business Development

Research & Clinical Investor Relations Manufacturing Development

Human Resources Intellectual Property

Information Technology

71 commercialisation, the manufacture is done externally • Research and Clinical Development is responsible at contract manufacturing organisations (“CMOs”). for planning, conducting and reporting of clinical stud- Manufacturing handles every aspect of manufacturing, ies, from Phase I (pharmacokinetics) to Phase IV (post from sourcing of raw materials to technology transfer approval) and operates both in Denmark and the U.S. for commercial scale manufacture. in order to cover individual and regional clinical product development needs. • Intellectual Property ensures all aspects of intellectual property protection from evaluating existing intel- COMMERCIAL OPERATIONS lectual property rights to actively seeking to obtain a wide range of intellectual property rights relating to • Commercial Development is responsible for evaluat- the Company’s technology and products. ing market potential in all relevant markets and regions. DEVELOPMENT OPERATIONS • Business Development is responsible for overseeing • Regulatory Affairs is responsible for global oversight, all current partner agreements along with actively pur- strategy and implementation of all regulatory country suing partnering opportunities within areas which the interactions, from development to commercialisation Company ﬁ nds attractive to further develop the Com- and handles registration activities and post-approval pany and secure best possible value creation. commercial compliance.

• Quality Assurance is responsible for overseeing the quality assurance operations and is responsible for approving the manufacturing and controls for clinical supplies used in relation to the clinical studies sponsored by the Company. Quality Assurance is also responsible for the documentation system and documentation structure.

72 8. Property, plant, equipment, etc.

8.1 Facilities 8.3 Environmental issues

The Company’s main operations are located in the DTU- The Company has no signifi cant production facilities, and Science Park in Hørsholm, Denmark, situated just north of the Company’s consumption of energy and other natural Copenhagen. The Company’s U.S. operations are located resources and its discharges of substances into the air in Edison, New Jersey, U.S. and water are relatively limited. The Company routinely works with chemical substances which place stringent In Denmark, the Company leases approximately 2,460 demands for comprehensive environmental and safety square meters of combined offi ce and laboratory space. efforts to minimise adverse effects on the environment The lease can be terminated by the Company and by les- and human health. There are no pending environment- sor with a notice of 12 months to the end of a month; related issues of signifi cance to the Company’s opera- provided, however, that the lease is non-terminable by tions. both the Company and the lessor until October 2013, at which time it can be terminated with effect as of October 2014. The aggregate lease commitment over the remainder of the lease term is approximately DKK 25.4 million. The Company is entitled to certain maintenance services provided by the lessor.

In the U.S., LifeCycle Pharma, Inc. leases approximately 5,283 square feet of ofﬁ ce space located at 499 Thornall Street, 13th Floor, Edison, NJ 08818, New Jersey, U.S. The lease expires on 30 September 2013. The minimum lease commitments over the remainder of the lease term are approximately USD 0.4 million (DKK 2.0 million).

8.2 Insurance

The Company believes that it maintains the insurance coverage appropriate for its business and stage of development. Its insurances include coverage in respect of per- sonal injury, chattel damage, business interruption, as well as for pollution up to certain levels. The Company also maintains directors’ and offi cers’ liability insurance coverage for members of the Board of Directors and the Executive Management. In addition, the Company has taken out product liability insurances for the product candidates currently in clinical studies up to certain specifi ed coverage limits per occurrence and in the aggregate. The Company intends to seek additional appropriate product liability insurance coverage in all future clinical studies that it performs and for which the Company is liable. With respect to Fenoglide, the Company has, after careful consideration of the potential risks involved, including the fact that manufacturing of the product is performed by third parties and indemnifi cation undertakings made by Shionogi, made a business decision not to take out specifi c insurance cover for product liability. Additionally, the Company has decided not to take out insurance against certain identifi ed risks, including against crime, legal costs and damages for infringement of patents, product recalls and loss of research results and material.

73 9. Prospective consolidated ﬁ nancial information

STATEMENT BY THE BOARD OF DIRECTORS AND THE EXECUTIVE MANAGEMENT

The Board of Directors and the Executive Management have presented their forecast for 2010 and 2011 in the sub- heading “Prospective fi nancial information for 2010 and 2011” below. The information was prepared applying the accounting policies incorporated by reference in Part II. The prospective fi nancial information was prepared for use herein. The Board of Directors and the Executive Management believe that the material assumptions on which the prospective consolidated fi nancial information is based are described in this Offering Circular, and that the assumptions have been consistently applied in the preparation of the information.

The prospective consolidated fi nancial information is based on a number of assumptions, some of which are within the Board of Directors’ and the Executive Management’s control, whilst others are beyond their control. The methods used in the preparation of the prospective fi nancial information and the underlying assumptions on which the information is based are stated in “Prospective fi nancial information for 2010 and 2011”, below.

This prospective consolidated fi nancial information represents the Board of Directors’ and the Executive Management’s best estimate of LifeCycle Pharma’s revenue, research and development costs, administrative expenses and results of operations for the fi nancial years 2010 and 2011. The prospective fi nancial information contains forward-looking statements concerning LifeCycle Pharma’s fi nancial position that are subject to considerable uncertainty. The actual results may differ materially from those contained in such statements.

Hørsholm, 29 October 2010

LifeCycle Pharma A/S

Board of Directors

______Paul Edick Thomas Dyrberg Jean Deleage (Chairman) (Deputy Chairman)

______Kurt Anker Nielsen Dr. Gérard Soula Anders Götzsche

______Mette Kirstine Agger

Executive Management

______William J. Polvino Peter G. Nielsen President and Chief Executive Ofﬁ cer. Executive Vice President of Pharmaceutical Development and CMC.

74 Independent Auditor’s Report on prospective ﬁ nancial information for 2010 and 2011

TO THE READERS OF THIS OFFERING CIRCULAR:

We have examined the prospective consolidated fi nancial information for 2010 and 2011. The prospective consolidated fi nancial information is prepared on the basis of the material assumptions in the section “Methodology and Assump- tions” and the accounting policies described in Part I, Section 10 “Review of operations and fi nancial statements – Criti- cal accounting estimates and judgments”. The accounting policies applied are in accordance with the recognition and measurement principles of IFRS as adopted by the EU.

The Board of Directors and the Executive Management are responsible for the prospective consolidated ﬁ nancial information including the assumptions on which it is based. Our responsibility is, based on our examination, to provide a conclusion on the prospective consolidated ﬁ nancial information.

EXAMINATION PERFORMED

We conducted our examinations in accordance with the International Standard on Assurance Engagements applicable to the examination of prospective ﬁ nancial information (ISAE 3400). This standard requires that we plan and perform our examinations in order to obtain limited assurance that the applied assumptions are well-founded and do not contain material misstatements and reasonable assurance that the prospective consolidated ﬁ nancial information has been prepared on the basis of the assumptions stated consistent with LifeCycle Pharma’s accounting policies.

Our examinations comprise a review of the prospective consolidated fi nancial information for 2010 and 2011 with a view to assess whether the assumptions set forth by the Board of Directors and the Executive Management are documented, well-founded and complete. In addition, we have tested whether the prospective consolidated fi nancial information for 2010 and 2011 has been prepared on the basis of the Board of Directors’ and the Executive Management’s assumptions and has been presented in accordance with LifeCycle Pharma’s accounting policies. Furthermore, we have tested the relationship in terms of fi gures in the prospective consolidated fi nancial information.

We believe that our examination provides a reasonable basis for our conclusion.

CONCLUSION

Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the prospective consolidated ﬁ nancial information for 2010 and 2011. Further, in our opinion the prospective consolidated ﬁ nancial information for 2010 and 2011 has been properly prepared on the basis of the assumptions consistent with the accounting policies of Life- Cycle Pharma.

EMPHASIS OF MATTER

Actual results are likely to be different from the prospective consolidated ﬁ nancial information since anticipated events frequently do not occur as expected. The variation may be material.

Copenhagen, 29 October 2010

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab

Torben Jensen State Authorised Public Accountant

75 Prospective ﬁ nancial information for 2010 tember 2010 and the budget for the three months ended and 2011 31 December 2010.

The prospective consolidated fi nancial information for the ASSUMPTIONS FOR 2010 fi nancial years 2010 and 2011 has been prepared in accordance with Danish law. The prospective consolidated • No material revenue is expected. fi nancial information is inherently based on a number of assumptions and estimates which while presented with • The activities in connection with the two Phase III LCP- numerical specifi city and considered reasonable by LifeCy- Tacro studies in de novo kidney transplant patients and cle Pharma, are inherently subject to signifi cant business, in stable kidney transplant patients proceed in accor- operational and economical uncertainties, many of which dance with the expected timeline including that no are beyond LifeCycle Pharma’s control and upon assump- change to the scope of the studies occurs and that the tions with respect to future business decisions that are cost per patient enrolled does not materially change. subject to change. The most important of these assumptions are described in “Methodology and Assumptions” • The number of employees will be approximately 50. below. The prospective consolidated fi nancial information has been prepared in accordance with LifeCycle Pharma’s ASSUMPTIONS FOR 2011 accounting policies, which are in accordance with the recognition and measurement regulations of IFRS as adopted • No material revenue is expected. by the EU. • The number of employees will be in the range of METHODOLOGY AND ASSUMPTIONS 50-60.

LifeCycle Pharma’s prospective consolidated fi nancial • A DKK/USD exchange rate of 5.46, the Danish National information for the fi nancial years 2010 and 2011 refl ects Bank exchange rate as at 30 September 2010. the Board of Directors’ and the Executive Management’s estimates and forecasts for 2010 and 2011. These esti- • The Phase III clinical study in stable kidney transplant mates for 2010 and 2011 have been prepared in accor- patients is expected to complete through topline dance with LifeCycle Pharma’s normal budgeting proce- results in mid-2011. dures in which focus is on the income statement and expected cash fl ow performance. • The activities in connection with the Phase III LCP-Tacro study in de novo kidney transplant patients proceeds LifeCycle Pharma’s estimates of research and develop- in accordance with the expected timeline including that ment costs are based on the budgeted costs of further the recruitment of all 540 patients will be completed development of LifeCycle Pharma’s product candidates. by the fourth quarter of 2011, that no change to the See Part III, Section 3.4 “Reasons for the Offering and use scope of the studies occurs and that the cost per of proceeds”. patient enrolled does not materially change. Cost per patient is based on the Company’s knowledge and The forecasts are based on the assumption of a success- experience from similar studies in the past. ful implementation of LifeCycle Pharma’s strategy as planned. See Part I, Section 6 “Business”. The success of • LifeCycle Pharma will continue to conduct clinical stud- this strategy is subject to uncertainties and contingencies ies for all product candidates through CROs as well as which are, at least in part, beyond LifeCycle Pharma’s produce all product candidates through CMOs. control and no assurance can be given that the strategy will be effective or that the anticipated benefi ts from the PROSPECTIVE FINANCIAL INFORMATION FOR 2010 strategy will be realised in the periods for which forecasts have been prepared, or at all. Accordingly, LifeCycle An operating, and net, loss of DKK 260 million to DKK Pharma cannot provide any assurance that these results 290 million is expected. will be realised. The prospective fi nancial information may differ materially from the actual results. Prospective inves- As at 31 December 2009, the Company’s cash position tors are cautioned not to place undue reliance on this equalled DKK 333.4 million, and as at 31 December 2010, information. the Company’s cash position is expected to be in the range of DKK 500 million to DKK 550 million, including Prospective fi nancial information for 2010 and 2011 is proceeds from the Offering. based, among other things, on the following key assumptions, which are, at least in part, beyond LifeCycle Phar- PROSPECTIVE FINANCIAL INFORMATION FOR 2011 ma’s control. Prospective consolidated fi nancial information for the remainder of 2010 is based on the realised An operating, and net, loss of DKK 250 million to DKK results of operations for the nine month ended 30 Sep- 280 million is expected.

76 10. Review of operations and ﬁ nancial statements

The fi nancial data in this section has been extracted from The fi nancial data should be read in conjunction with Life- the Company’s audited consolidated fi nancial statements Cycle Pharma’s annual reports and interim consolidated for the years ended 31 December 2007, 2008 and 2009. fi nancial statements. See also Part II that includes a cross The audited consolidated fi nancial statements for the reference table. years ended 31 December 2007, 2008 and 2009 have been prepared in accordance with IFRS as adopted by the Amounts in Euros have been translated for information EU and additional Danish disclosure requirements for purposes. The translation of income statement and cash fi nancial statements of listed companies. The Company’s fl ow statement items for the fi nancial years ended 31 independent accountant is PricewaterhouseCoopers Stat- December 2007, 2008 and 2009 is based on the average sautoriseret Revisionsaktieselskab. exchange rate that year, and the translation of balance sheet items is based on the exchange rate at the end of This section also includes fi nancial data extracted from the relevant period or year. The translation of income the Company’s reviewed interim consolidated fi nancial statement and cash fl ow statement items for the nine statements for the nine months ended 30 September months ended 30 September 2009 and 2010 is based on 2009 and 30 September 2010. The interim consolidated the exchange rate at the balance sheet date for the fi nancial statements are prepared in accordance with period in question. Translations in the following data International Accounting Standard No. 34 (IAS 34), should not be construed as representations that the Dan- “Interim Financial Reporting” as adopted by EU. ish Kroner amounts actually represent such Euro amounts at any specifi ed rate. The audited consolidated fi nancial statements for 2007, 2008 and 2009 and the reviewed interim consolidated fi nancial statements for the nine months ended 30 Sep- tember 2009 and 2010 are incorporated by reference in Part II.

Nine months ended 30 September Year ended 31 December 2010 2009 2009 2008 2007

Average DKK/EUR exchange rate - - 7.446251 7.455974 7.450551 End of period DKK/EUR exchange rate 7.451900 7.444300 7.441500 7.450600 7.456600

Source: www.nationalbanken.dk

Income statement Nine months ended 30 September (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Revenue 1.5 2.3 0.2 0.3 Research and development costs (162.1) (164.4) (21.7) (22.1) Administrative expenses (38.8) (47.7) (5.2) (6.4) One-off restructuring cost (1) (10.9) (9.5) (1.5) (1.3)

Operating loss (210.3) (219.3) (28.2) (29.5)

Financial income 2.6 19.8 0.3 2.7 Financial expenses (3.8) (11.7) (0.5) (1.6)

Net loss for the period before tax (211.5) (211.2) (28.4) (28.4)

77 Balance sheet data 30 Sep. 31 Dec. 30 Sep. 31 Dec. (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Assets Non-current assets 20.7 27.1 2.8 3.6 Cash and cash equivalents 134.0 333.4 18.0 44.8 Current assets 143.0 352.2 19.2 47.3 Total assets 163.7 379.3 22.0 51.0

Equity & liabilities Equity 111.9 317.3 15.0 42.6 Current liabilities 41.8 47.9 5.6 6.4 Total liabilities 51.7 62.0 6.9 8.3 Total equity and liabilities 163.7 379.3 22.0 51.0

Cash ﬂ ow statement data Nine months ended 30 September (million) 2010 2009 2010 2009 DKK DKK EUR EUR

Other ﬁ nancial data (2) 30 Sep. 30 Sep. 30 Sep. 30 Sep. (million) 2010 2009 2010 2009 DKK DKK EUR EUR

78 Years ended 31 December 2009, 2008 and 2007

Income statement Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Operating loss (279.5) (174.1) (172.9) (37.6) (23.3) (23.2)

Financial income 21.4 45.5 18.6 2.9 6.1 2.5 Financial expenses (12.9) (21.2) (5.9) (1.7) (2.9) (0.8)

Net loss for the year (271.0) (149.8) (160.2) (36.4) (20.1) (21.5)

Balance sheet data As at 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

Cash ﬂ ow statement data Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

79 Other ﬁ nancial data2) Year ended 31 December (million) 2009 2008 2007 2009 2008 2007 DKK DKK DKK EUR EUR EUR

OVERVIEW FACTORS AFFECTING THE COMPANY’S RESULTS OF OPERATIONS LifeCycle Pharma is a speciality pharmaceutical company currently focused on the development of pharmaceutical Revenue. Revenue comprises milestone payments, royal- products in the immunosuppression and cardiovascular ties and cost reimbursement from research and develop- therapeutic areas. ment and commercialisation agreements.

The Company uses its proprietary MeltDose technology For the periods presented, the Company’s revenues were which has been validated in clinical studies and through derived primarily from payments related to the sale to FDA approval of Fenoglide, to create new, potentially Cowen of the rights related to the commercialisation of best-in-class, versions of existing marketed drugs by LCP-FenoChol. Until 2013 the Company does not expect enhancing the bioavailability of compounds with low to generate signifi cant revenue unless the Company water-solubility and allowing for a controlled or modifi ed enters into a collaboration agreement with a partner. Lon- release plasma profi le. ger-term, the Company expects the majority of revenues to be derived from licence fees, milestone payments, roy- The Company has a pipeline with one Phase III programme alties on sales of products by the Company’s partners and (LCP-Tacro for de novo and stable kidney transplant revenues generated from its own sales of products. patients), one Phase II programme (LCP-Tacro for liver transplant patients), one completed Phase II programme Research and Development Costs. Research and devel- (LCP-AtorFen for dyslipidemia), one completed Phase I opment costs comprise licence costs, manufacturing programme (LCP-Feno for dyslipidemia) and fi ve com- costs, pre-clinical and clinical trial costs, salaries and pounds in early stage pre-clinical development. Following other staff costs including pensions, and other costs encouraging results from LCP-Tacro Phase II clinical stud- including cost of premises, depreciation and amortisation ies, the Company has decided to focus its development related to research and development activities. efforts on LCP-Tacro for the treatment of kidney transplant patients. LCP-Tacro is a once-daily dosage version of The Company’s research and development costs vary from tacrolimus, the market-leading primary immunosuppres- period to period depending on the phase of development sant in the transplant space and is currently in Phase III of its product candidates. For the periods presented, clinical studies for treatment of stable and de novo kid- research and development costs were mainly affected by ney transplant patients. the Phase II and Phase III clinical studies performed by the Company. Until 2013, research and development costs will The Company seeks to raise net proceeds of approxi- mainly be affected by the Phase III clinical studies in rela- mately DKK 442 million primarily to support the completion to LCP-Tacro. tion of its Phase III clinical studies for LCP-Tacro in kidney transplant patients through to NDA/MAA submission in the United States and the European Union, respectively, expected in the fi rst quarter of 2013.

80 Administrative expenses. Administrative expenses com- Such an intangible asset shall be recognised if it can be prise salaries and other staff costs including pensions, documented that the future income from the develop- offi ce supplies, cost of premises, and depreciation and ment project will exceed the aggregate cost of develop- amortisation related to administrative activities and fl uctu- ment, production, sale and administration of the product. ate mainly based on changes in the number of employees. Executive Management believes that future income from The discussion in this Offering Circular contains forward- the development projects cannot be determined with suf- looking statements that involve risks and uncertainties, fi cient certainty until the development activities have such as statements of plans, objectives, expectations and been completed and the necessary approvals have been intentions. The cautionary statements made in this Offer- obtained. Accordingly, Executive Management has decided ing Circular should be read as applying to all related for- not to recognise such internally generated intangible ward-looking statements wherever they appear in this assets at this time. Offering Circular. Actual results could differ materially from those discussed herein. Factors that could cause or con- Joint ventures/collaboration agreements. Collaboration tribute to these differences include those discussed in agreements within the Company’s industry are often “Risk factors”, as well as those discussed elsewhere. structured so that each party contributes its respective Investors should read the section entitled “Risk factors” skills in the various phases of a development project. No and the section entitled “Special notice regarding for- joint control exists for such collaborations and the parties ward-looking statements”. do not have any fi nancial obligations on behalf of each other. Accordingly, the collaborations are not considered ACCOUNTING POLICIES to be joint ventures as defi ned in IAS 31, “Financial Reporting of Interests in Joint Ventures”. A full description of the Company’s accounting policies is provided in the audited consolidated fi nancial statements Nine months ended 30 September 2009 and for 2007, 2008 and 2009, which are incorporated by ref- 30 September 2010 erence in Part II. RESULTS OF OPERATIONS CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS Revenues were DKK 1.5 million for the nine months In preparing fi nancial statements under IFRS, certain rules ended 30 September 2010 compared to DKK 2.3 million and standards require Executive Management’s judg- for the nine months ended 30 September 2009. Revenue ments. Such judgments are considered important to consists of payments under the Company’s collaboration understanding the accounting policies and LifeCycle Phar- agreements. ma’s compliance with standards. The following summarises the areas involving a higher degree of judgment Research and development costs totalled DKK 162.1 mil- or complexity, or areas where assumptions and estimates lion for the nine months ended 30 September 2010 com- are signifi cant to the fi nancial statements. pared to DKK 164.4 million for the nine months ended 30 September 2009. The decrease was mainly due to the Revenue recognition. IAS 18, “Revenues” prescribes the reduction in the number of employees that took place in criteria to be fulfi lled for revenue being recognisable. Eval- August 2009 and January 2010, partially offset by uating the criteria for revenue recognition with respect to increased research and development costs related to the LifeCycle Pharma’s research and development and com- Phase III clinical study for LCP-Tacro in stable kidney trans- mercialisation agreements requires Executive Manage- plant patients. ment’s judgment to ensure that all criteria have been fulfi lled prior to recognising any amount of revenue. All the Administrative expenses were DKK 38.8 million for the Company’s revenue generating transactions are analysed nine months ended 30 September 2010 compared to DKK by Executive Management to ensure recognition in accor- 47.7 million for the nine months ended 30 September dance with IFRS. 2009. The reduction in cost is attributable to the continued focus of reducing overall cost, combined with the Capitalisation of development costs. IAS 38 “Intangi- effect of the reduction in the number of employees that ble assets” prescribes that intangible assets arising from took place in August 2009 and January 2010. development projects must be recognised in the balance sheet if the criteria for capitalisation are met. That means Net fi nancial items were a negative DKK 1.2 million for (1) that the development project is clearly defi ned and the nine months ended 30 September 2010 compared to identifi able; (2) that technological feasibility, adequate DKK 8.0 million for the nine months ended 30 September resources to complete and a market for the product or an 2009. This decrease was primarily related to a signifi cantly internal use of the project can be documented; and (3) lower cash position. that the Company’s Executive Management has the intent to produce and market the product or use it internally.

81 LIQUIDITY AND CAPITAL RESOURCES Years ended 31 December 2007, 2008 and 2009

As of 30 September 2010, LifeCycle Pharma had cash and RESULTS OF OPERATIONS cash equivalents of DKK 134.0 million as compared with cash and cash equivalents of DKK 392.1 million as of 30 Revenues were DKK 2.5 million in 2009, DKK 170.1 mil- September 2009. This decrease refl ects the expenditures lion in 2008 and DKK 64.7 million in 2007. The revenues associated with the Company’s business activities, includ- in 2009 consisted of payments under LifeCycle Pharma’s ing costs related to the progression of current and collaboration agreements. The revenues in 2008 arose planned clinical studies for the Company’s product candi- mainly from an upfront payment of USD 29 million (DKK dates. For additional information regarding liquidity and 152 million) from Cowen, in connection with sale of the capital resources, see Part III, Section 3.1 “Working future royalty stream from Fenoglide in North America, capital”. and also to a much lesser extent, included payments for services provided under the Company’s other collabora- CASH FLOWS tion agreements. The revenues in 2007 consisted primarily of milestone payments received under the licences Net cash fl ow from operating activities. Net cash fl ow agreement with Shionogi upon the approval by the FDA of from operating activities amounted to an outfl ow of DKK Fenoglide, but also included payments for services pro- 192.6 million for the nine months ended 30 September vided under other collaboration agreements. 2010 compared to an outfl ow of DKK 194.4 million for the nine months ended 30 September 2009. Net cash Research and development costs totalled DKK 210.1 mil- fl ow from operating activities is attributable primarily to lion, DKK 270.9 million and DKK 183.6 million for the the initiation and progression of clinical development years ended 31 December 2009, 2008 and 2007, respec- activities, as well as administrative expenses. The period- tively. The increase in research and development costs to-period decrease is primarily due to the reduction in the from 2007 to 2008 refl ected the additional costs incurred number of employees that took place in August 2009 and in connection with the expansion of the Company’s busi- January 2010, partially offset by increased research and ness activities, including the expansion and advancement development costs related to the Phase III clinical study of clinical studies with respect to several product candi- for LCP-Tacro in stable kidney transplant patients. dates. The decrease from 2008 to 2009 was mainly due to the reduction in the number of employees that took Net cash fl ow from investing activities. Net cash out- place in August 2009, partially offset by increased fl ow from investing activities amounted to DKK 1.1 million research and development costs related to the Phase III for the nine months ended 30 September 2010 compared clinical study for LCP-Tacro in stable kidney transplant to DKK 10.5 million for the nine months ended 30 Sep- patients. tember 2009. Net cash fl ows from investing activities comprise net addition of plant and equipment. Administrative expenses were DKK 62.4 million in 2009, DKK 73.3 million in 2008 and DKK 54.0 million in 2007. Net cash fl ow from fi nancing activities. Net cash fl ow The decrease in expenditures in 2009 compared with from fi nancing activities amounted to an outfl ow of DKK 2008 was primarily attributable to the reduction in 4.5 million for the nine months ended 30 September employees that took place in August 2009 and the inter- 2010 compared to an infl ow of DKK 2.0 million for the nal focus of reducing overall cost. The increase in expen- nine months ended 30 September 2009. Net cash fl ow ditures in 2008 compared with 2007 was primarily attrib- from fi nancing activities was primarily attributable to net utable to the development of administrative functions to proceeds in connection with the issue of shares upon refl ect the expansion of operations. exercise of warrants. Net fi nancial items were DKK 8.5 million in 2009, DKK CAPITAL EXPENDITURES 24.3 million in 2008 and DKK 12.7 million in 2007. The decrease in fi nancial items from 2008 to 2009 was pri- Capital expenditures totalled DKK 1.0 million for the nine marily related to a signifi cantly lower cash position. The months ended 30 September 2010 compared to DKK 10.6 increase in fi nancial items from 2007 to 2008 was mainly million for the nine months ended 30 September 2009. In driven by the proceeds received in connection with the each period, the expenditures consisted primarily of the rights issue in April 2008. purchase of laboratory equipment and the establishment of offi ce facilities, including leasehold improvements.

82 LIQUIDITY AND CAPITAL RESOURCES ties in 2009 and 2007 relates to net proceeds from the exercise of employee warrants. Since its inception, LifeCycle Pharma has fi nanced the operations primarily through the issuance of Shares, and CAPITAL EXPENDITURES to a lesser extent from licence fees, up-front and milestone payments. As at the Offering Circular Date and Capital expenditures totalled DKK 11.0 million, DKK 6.6 since inception, the Company has raised DKK 1,332 mil- million and DKK 5.9 million for the years ended 31 lion, net, through the issuance of Shares. December 2009, 2008 and 2007, respectively. In each year, the expenditures consisted primarily of the purchase As at 31 December 2009, LifeCycle Pharma had cash and of laboratory equipment and the establishment of offi ce cash equivalents of DKK 333.4 million as compared with facilities, including leasehold improvements. cash and cash equivalents of DKK 600.1 million as at 31 December 2008 and cash and cash equivalents of DKK FOREIGN CURRENCY RATE FLUCTUATIONS 331.7 million as at 31 December 2007. For additional information regarding liquidity and capital resources, see The functional currency of the Company is Danish Kroner Part III, Section 3.1 “Working capital”. (DKK). Foreign currency transactions are translated at the exchange rate prevailing on the transaction date. Receiv- CASH FLOWS ables, payables and other monetary items denominated in foreign currencies that have not been settled at the bal- Net cash fl ow from operating activities. Net cash fl ow ance sheet date are translated using the exchange rate from operating activities amounted to DKK (251.2) million prevailing on the balance sheet date. Exchange rate differ- in 2009, DKK (102.6) million in 2008 and DKK (129.3) ences that arise between the rate at the transaction date million in 2007. Changes in net cash fl ow from operating and the rate at the settlement date are recognised in the activities were attributable primarily to the initiation and fi nancial statement as fi nancial income or fi nancial completion of clinical development activities, as well as expenses. See section “Risk factors – Risks related to cur- administrative expenses and revenue. The net cash fl ow rency and other fi nancial risks”. from operating activities for 2008 and 2007 was posi- tively affected by revenue received as described above. OFF-BALANCE SHEET OBLIGATIONS

Net cash fl ow from investing activities. Net cash out- Beyond the purchase obligations and operating lease obli- fl ow from investing activities amounted to DKK 11.0 mil- gations described below, LifeCycle Pharma does not have lion in 2009, DKK 6.6 million in 2008 and DKK 7.3 million any material off-balance sheet obligations. in 2007. Net cash fl ow from investing activities comprised net addition of plant and equipment. CONTRACTUAL OBLIGATIONS

Net cash fl ow from fi nancing activities. Net cash fl ow Contractual obligations relate primarily to fi nance leases from fi nancing activities amounted to DKK 0.7 million in and operating leases. 2009, DKK 373.6 million in 2008 and DKK 3.8 million in 2007. Net cash fl ow from fi nancing activities was primarily The following table summarises the contractual obliga- attributable to net proceeds in connection with the issue tions as of 31 December 2009 (measured at present of Shares. The increase in 2008 refl ected primarily the value) and the effect such obligations are to have on the cash infl ow from the completion of the rights issue in liquidity and cash fl ows in future periods. April 2008 resulting in net proceeds to the Company of DKK 375 million. The net cash fl ow from fi nancing activi-

Payments due by period(1) (million) Within 1 year From 1 to 5 years After 5 years Total DKK DKK DKK DKK

Finance lease commitments 5.4 14.1 - 19.5 Operating lease commitments 10.6 24.5 - 35.1

Total contractual commitments 16.0 38.6 - 54.6

Note (1) As of 31 December 2009 and as of the Offering Circular Date, the Company does not have any obligations for the payment of licence fees, milestone payments or royalties related to current product candidates.

83 11. Capital Resources

LifeCycle Pharma’s capital resources currently consist of term deposit accounts. Due to the short-term nature of cash and cash equivalents. As of 30 September 2010, the these deposits, the Company believes it has no material Company’s capital resources totalled DKK 134.0 million. exposure to interest rate risk arising from these invest- The adjusted capital resources as of 30 September 2010 ments. In terms of assessment of the credit risk, the totalled DKK 576 million, refl ecting the issue of Company’s bank has a Moody’s rating of Aa3. 395,974,670 Offer Shares corresponding to net proceeds of approximately DKK 442 million. For a description of the LifeCycle Pharma believes that the capital resources, Company’s cash fl ows see Part I, Section 10 “Review of including the proceeds from the Offering, corresponding operations and fi nancial statements–Cash fl ows”. to total net proceeds of approximately DKK 442 million, together with existing cash balances, will be suffi cient to The Company is presently fi nanced through equity and fund the Company’s operations until the fi rst quarter of does not have any material interest-bearing debt. The 2013. Company also expects, in the future, to generate cash fl ow from licence fees, up-front and milestone payments, Any cash fl ow LifeCycle Pharma may generate in the from existing as well as potentially new partners, future future from licence fees, up-front and milestone payments product sales, future royalty payments and other sources, or other sources will provide the Company with additional if any, as well as capital resources accessed through capital which may give the Company the opportunity to equity or debt fi nancing, as required. accelerate the current activities or initiate new activities.

The Company’s capital resources are not subject to any The Company’s expectations are based on the assumption restrictions that materially affect or could materially affect that the LCP-Tacro Phase III studies progress as sched- its operations. The Company invests its free cash in cash uled, although actual results may differ materially. For a deposits and short-term, investment grade, interest-bear- discussion of risks related to future income, cash ﬂ ows, ing securities. ﬁ nancing and business activities, see “Risk factors”.

The Company aims to preserve capital while at the same time maximising the income received from investments without signiﬁ cantly increasing risk. The Company currently maintains its cash reserves by placing them in short

84 12. Research and development, patents and licences

12.1 Research and development granted. The outcome of the patent prosecution for biotechnology and pharmaceutical products is generally The Company is primarily a research and development highly uncertain, and it involves complex legal and scien- company, and, therefore, substantially all its operating tifi c questions. The standards which patent offi ces in dif- costs are incurred to support research and development ferent countries use to grant patents, or to defi ne the activities. subject matter or scope of allowable claims, are not always applied predictably or uniformly, and can change without prior notice. Except for some older U.S. patent Table 4. Total Operating Costs applications that remain confi dential for the entire time prior to issuance as a patent, patent applications are typi- DKK million 2009 2008 2007 cally published 18 months after the date of fi ling. Simi- larly, publications of discoveries in the scientifi c literature Research and development costs 210.1 270.9 183.6 often lag behind actual discoveries. Neither the Company Administrative expenses 62.4 73.3 54.0 nor the Company’s partners can be certain that LifeCycle One-off restructuring costs (1) 9.5 0.0 0.0 Pharma was the fi rst to make the inventions claimed in Total operating costs 282.0 344.2 237.6 the Company’s pending patent applications, or that Life- Cycle Pharma was the fi rst to fi le for protection of the (1) One-off restructuring costs mainly comprise salary payments to employees inventions described in these patent applications. who have been made redundant.

The mere issuance of a patent does not guarantee that it For additional information, see Part I, Section 10 “Review is valid or enforceable. Even if issued, patents may be of operations and fi nancial statements”. challenged, invalidated or circumvented, which may limit LifeCycle Pharma’s ability and the ability of the Company’s partners to stop competitors from marketing similar prod- 12.2 Patents and other intellectual property ucts, and may decrease the length of time of the patent rights protection afforded. In addition, LifeCycle Pharma’s patents and those of the Company’s partners may not afford PATENT STRATEGY protection against competitors with similar technology. Accordingly, the Company cannot predict the degree of LifeCycle Pharma’s patent strategy is to secure intellectual future protection for the Company’s current or future pro- property rights that underpin the Company’s drug devel- prietary rights, or the breadth of claims allowed in any opment programs and to actively defend the technolo- patent issued to the Company or to the Company’s part- gies, inventions and improvements to inventions that are ners. commercially important to the development of the Com- pany’s business. LifeCycle Pharma fi les patent applications The most important form of patent protection for biop- initially in the U.S. or in Denmark with subsequent inter- harmaceutical companies is generally in the form of drug national applications (referred to as a PCT application) substance patents also referred to as composition-of- designating all PCT member states followed by national matter patents, which prevent third parties from any use phase applications in relevant countries and jurisdictions. of the patented compound; as opposed to formulation European patent applications are fi led with the European patents, which prevent third parties from using only par- Patent Offi ce and subject to examination under the Euro- ticular formulations of a given compound, and use pat- pean Patent Convention. ents (known as method-of-use patents in the U.S. and second medical indication patents in Europe), which pre- The success will depend upon LifeCycle Pharma’s ability, vent third parties only from using a given formulation for and upon the ability of partners, to obtain protection for a specifi c use, such as a new medical indication. In addi- innovative technologies incorporated into the Company’s tion, patents may be granted on processes for manufac- products or product candidates in Europe, the U.S. and turing drug substances and formulations (also known as other countries. The process of identifying and seeking process patents). No assurance can be given that an patent protection is expensive and time consuming, and application for formulation patent protection will not be the Company or partners may not be able to fi le and restricted to cover only particular uses. Where LifeCycle prosecute all necessary or desirable patent applications at Pharma or the Company’s partners have only method-of- a reasonable cost or in a timely manner. The Company’s use or process patent coverage for a product candidate, it pending or future applications and those of the Compa- may be more diffi cult to enforce such patent protection. ny’s partners may not result in issued patents, or may need to be refi ned or restricted before a patent is

85 In addition to patents, LifeCycle Pharma relies on trade LifeCycle Pharma has also obtained positive non-infringe- secrets to protect the Company’s business model and ment opinions, prepared by a U.S. law fi rm in 2008 and approach, especially where patent protection is believed earlier, relating to the U.S. patents for which the Company not to be appropriate or obtainable. LifeCycle Pharma has fi led Paragraph IV certifi cations with the FDA for the possesses trade secrets and copyrights in the proprietary patents stated in the opinions. LifeCycle Pharma has also process, including algorithms and user interfaces associ- obtained positive non-infringement opinions, prepared by ated with the process, for evaluating clinical and scientifi c a U.S. law fi rm in 2008 and earlier, relating to the Compa- data and identifying drugs and drug candidates of poten- ny’s fenofi brate formulation in relation to U.S. patents tial application to the Company’s business. LifeCycle listed in the Orange Book for Tricor. However, there can Pharma also possesses important trade secret informa- be no assurance that the Company will actually have free- tion in the output of that proprietary process. However, dom to operate. Furthermore, there can be no assurance trade secrets are diffi cult to protect. LifeCycle Pharma that a licence relevant to any third party patent(s) will be attempts to protect the Company’s technology, in part, available on a reasonable basis or available at all. See with confi dentiality agreements with employees, consul- “Risk factors – Risks related to the Company’s intellectual tants and partners. These confi dentiality agreements may property”. not provide meaningful protection and may be breached. In addition, the Company’s trade secrets may become With respect to LCP-Feno in Europe, the Company fi led an known or independently developed by a third party, or opposition in July 2006 against European patent EP-B- misused by any collaborator to whom LifeCycle Pharma 1273294 belonging to Fournier and claiming an immedi- discloses such information. ate release of the fenofi brate formulation. In October 2008, the Opposition Division revoked the patent in its LifeCycle Pharma’s commercial success will depend in part entirety. The decision was appealed by Fournier. The on not infringing upon the proprietary rights of third par- appeal proceedings are not yet scheduled. If the appeal is ties. LifeCycle Pharma is not aware of any valid third party successful, the patent could be reinstated and the Com- patent rights that would be infringed by the Company’s pany could be prevented from selling certain fenofi brate MeltDose process or by its product candidates. However, products in certain European countries for the life of the no assurance can be given that no third-party patents patent, i.e., until January 2018. The Company believes exist or might issue that would require the Company to that it has freedom to operate for the Company’s combi- alter the development or commercial strategies or the nation tablet formulation of fenofi brate and atorvastatin, products or processes, obtain licences, or cease certain LCP-AtorFen. LifeCycle Pharma has obtained a positive activities. The issuance of a patent covering the Compa- freedom-to-operate opinion from a Danish patent law fi rm ny’s MeltDose process does not necessarily mean that in 2008. However, there can be no assurance that the such process does not infringe any third party patents. Company will actually have freedom to operate. Further- Furthermore, there can be no assurance that particular more, there can be no assurance that a licence to any rel- products made by such process would not infringe the evant third party patent(s) will be available on a reason- patent rights of others. LifeCycle Pharma’s failure to able basis or available at all. See “Risk factors – Risks obtain a licence to patents or technology that the Com- related to the Company’s intellectual property”. pany may require in order to develop or commercialise future products may have a material adverse impact on Third-party patents or patent applications may confl ict the Company. See “Risk factors – Risks related to the with patent applications to which the Company has rights. Company’s intellectual property”. Any such confl ict may substantially reduce the coverage of any rights that may issue from the patent applications to The Company believes that it has freedom to operate for which the Company has rights. If third parties prepare and the Company’s tablet formulation of tacrolimus, LCP- fi le patent applications in the U.S. that also claim the Tacro. LifeCycle Pharma has in 2010 obtained a positive technology to which the Company has rights, the Com- freedom-to-operate opinion from a U.K. patent law fi rm pany may have to participate in interference proceedings and a positive freedom-to-operate opinion from a U.S. in the U.S. Patent and Trademark Offi ce to determine law fi rm. However, there can be no assurance that the when the invention was made. Company will actually have freedom to operate. Further- more, there can be no assurance that a licence relevant PATENT AND PATENT APPLICATION PORTFOLIO to any third party patent(s) will be available on a reasonable basis or available at all. See “Risk factors – Risks As of the Offering Circular Date, LifeCycle Pharma has a related to the Company’s intellectual property”. total of 27 issued patents and 85 pending patent applications (wherein essentially identical patent applications The Company also believes that it has freedom to operate that are intended to serve only as priority applications are for the Company’s tablet formulations of fenofi brate (LCP- counted as single patent applications) covering: FenoChol and LCP-Feno). LifeCycle Pharma obtained positive freedom-to-operate opinions in respect of the Com- • the technology platform including the Company’s Melt- pany’s fenofi brate/LCP-FenoChol formulation from a Dose and Porous Tablet (Liquid Loadable Tablet) tech- Danish patent law fi rm and from a U.S. law fi rm in 2008. nology platforms (17 issued patents and 35 patent applications pending); and

86 • Porous tablets as carriers for liquid formulations (pub- • the product and product candidates (10 issued patents lished as WO 2006/000229); and 50 patent applications pending). • Unpublished ﬁ rst patent applications (priority-estab- Fifteen (15) patents relating to the Company’s MeltDose lishing) (US provisional patent application no. technology and two (2) patents relating to the Company’s 61/322,086, DK patent application nos. PA 2010 Porous Tablet technology have issued. 00277, PA 2010 00506, PA 2010 00508) ; and

PATENT AND PATENT APPLICATION PORTFOLIO ON • Disintegrating tablets (published as WO 2007/076874). TECHNOLOGY PLATFORM As of the Offering Circular Date, two patents related to The Company has established intellectual property protec- the Company’s Porous Tablet technology have issued: tion around the Company’s core technology through Euroasian Patent No. EA 013632 (validated in Russia) and claims addressing different angles of the technology plat- Chinese Patent Publication No. CN 101001613B. form: the process itself, choice of meltable carrier, concentration of carrier and choice of active compound and PATENT AND PATENT APPLICATION PORTFOLIO ON equipment. PRODUCTS AND PRODUCT CANDIDATES

The following patent families related to the MeltDose LifeCycle Pharma regularly seeks patent protection for technology are pending: new product opportunities and for value-added improvements related to pharmacokinetics, efﬁ cacy, safety and • Controlled agglomeration (published as WO Adverse Drug Reaction (“ADR”), treatment regimens, and 03/004001); novel indications and drug combinations.

• A self-cleaning spray nozzle (published as WO LifeCycle Pharma is actively prosecuting 12 product-spe- 2004/056487); cifi c patent families, including 50 pending national/PCT national phase patent applications in the following prod- • Modifi ed-release pharmaceutical composition based on uct/therapeutic areas: a controlled agglomeration technique (published as WO 2005/032525); and Figure 5. LifeCycle Pharma Patent Applications • Use of a silica derivative as sorption material (published as WO 2004/073689). Number Number of of patent pending patent As of the Offering Circular Date, fi fteen (15) patents Product/therapeutic area families applications related to the Company’s MeltDose technology have issued: U.S. Patent No. US 7,217,431, South Africa Patent Tacrolimus/ No. ZA 2004/0044, Australian Patent No. AU organ transplant 2002325192, Chinese Patent No. CN 100579514C, Rus- immunosuppression 5 25 sian Patent No. RU 2330642, Indian patent No. IN Fenofi brate/cardiovascular 6 24 242657 and Japanese Patent No. JP 4570357 to the con- Other areas 1 1 trolled agglomeration process; U.S. Patent No. US 7,252,247, European Patent No. EP B 1497034, Canadian Patent No. CA 2,511,150, Chinese Patent No. CN TACROLIMUS 100415383C, Indian Patent No. IN 221724 and Japanese Patent No. JP 4330539 to “A self-cleaning spray nozzle” Two PCT applications relating to LCP-Tacro were fi led on as well as Chinese Patent No. CN 1758901B and Indian 30 August 2004 and published on 10 March 2005 with Patent No. IN 229384 to “Use of a silica derivative as a the following publication numbers and titles: sorption material”. The corresponding patent applications WO2005/020993: Modifi ed Release Compositions Com- in other countries and regions are still pending. There can prising Tacrolimus; and WO2005/020994: Solid Disper- be no assurance that more patents covering the Compa- sions Comprising Tacrolimus. A PCT application relating to ny’s MeltDose technology will be issued, or that the LCP-Tacro once daily was fi led on 30 May 2008 and pub- scope of any issued claims will not be substantially lished on 4 December 2008 with the publication number restricted in the course of examination. and title: WO2008/145143: Once Daily Oral dosage Form Comprising Tacrolimus. A further PCT application relating In addition, the following patent families related to the to LCP-Tacro once daily was fi led on 7 July 2009 and pub- Company’s Porous Tablet (Liquid Loadable Tablet) plat- lished on 14 January 2010 with the publication number form technology are pending: and title: WO2010/005980: Tacrolimus for Improved

87 Treatment of Transplant Patients. A priority-establishing In connection with the Company’s LCP-AtorFen product patent application relating to LCP-Tacro was fi led on 17 candidate and in addition to the Company’s patents and February 2010 in Denmark (App. No. PA 2010 00137; patent applications relating to fenofi brate, three patents unpublished) and on 18 February 2010 in the U.S. (U.S. have issued: U.S. Patent No. 7,772,273, Australian Patent Provisional No. 61/305,941; unpublished). No. 2004279661 and Russian Patent No. RU 2343905. The Company has national/regional phase patent applica- At present, four patents relating to LCP-Tacro have issued: tions pending in selected countries and subject to exami- Australian Patent AU 2004267909, European Patent EP nation by the respective patent authorities derived from 1663,217 and Indian Patents IN 234522 and IN 234120. one of the PCT applications with the following publica- National/regional phase applications derived from one or tion/application numbers and publication dates and titles: more of the above-mentioned PCT applications are pend- PCT/DK2004/000668 published on 21 April 2005 as ing in the U.S., Canada, Mexico, Brazil, Europe, Norway, WO2005/034908 A1: A Solid Dosage Form Comprising a Australia, India, China, Hong Kong and Japan. The pending Fibrate and a Statin; or PCT/DK2005/050001 published on patent applications are currently subject to examination 13 April 2006 as WO2006/037344 A1:Pharmaceutical by the respective patent authorities except for the appli- Compositions Comprising Fenofi brate and Atorvastatin. cations in Brazil and Norway, where prosecution has not Also pending are national/regional phase applications yet started. including in the U.S. and South Korea derived from PCT/ DK2006/050004 published on 17 August 2006 as FENOFIBRATE (LCP-FENOCHOL, LCP-ATORFEN, LCP-FENO) WO2006/084474: A Stable Pharmaceutical Composition Comprising a Fixed Dose Combination of Fenofi brate and Two PCT applications relating to fenofi brate formulations an HMG-CoA Reductase Inhibitor, as well as a pending were fi led, the fi rst on 1 October 2004 and the second on European patent application EP 07102107.5 published as 12 April 2006, with the following respective publication/ EP1818049 relating to a formulation of atorvastatin. application numbers and publication dates and titles: PCT /DK2004/000667 published on 21 April 2005 as TRADEMARKS WO2005/034920 A1; A Solid Dosage Form Comprising a Fibrate, and PCT/DK2006/050014, published on 17 LifeCycle Pharma has obtained Danish, European and U.S. August 2006 as WO2006/084475; A Tablet Comprising a trademarks for “MELTDOSE”, the Company’s corporate Fibrate. At present, three patents relating to LCP-FenoChol name “LIFECYCLE PHARMA” and company logo; Danish have issued: U.S. Patent No. US 7,658,944, Chinese Pat- and U.S. trademarks for “ACLIMAY”, “NYTACRO”, “RALA- ent Publ. No. CN 100551363C and HongKong patent No. CRO”, “IMVREE”, and Danish trademarks for “FENOGLIDE”, HK 1096034. The U.S. Patent is listed in the FDA’s Orange “FENLOR”, “FENLEST” and “COLTRIVA”. All marks are regis- Book for Fenoglide. The Company has national/regional tered trademarks (®). See the section entitled ‘‘Risk fac- phase applications including divisional patent applications tors”, for a discussion of certain issues in relation to pat- pending in selected countries; all are currently subject to ents, trademarks and related matters relevant to the examination by the respective patent authorities. Company’s business.

88 13. Trend information

LifeCycle Pharma is a specialty pharmaceutical company focused on the immunosuppression market and certain cardiovascular indications. LifeCycle Pharma does not have any in-house commercial-scale production facilities or operations and only recently launched a product on the market. Consequently, LifeCycle Pharma is not directly affected by new trends within production.

There is a continuous focus on reducing the rate of increase in health care costs, which has resulted in price pressure in recent years within certain areas of the pharmaceutical market. The Company expects this trend to be unchanged in the years ahead. However, it is believed that demographic developments, increased treatment penetration, especially in newly industrialised countries, and better diagnostic tools will result in continuing high growth in global sales of therapeutic products.

89 14. Board of Directors, Executive Management and Senior Management

14.1 Board of Directors Before Ganic, he was with MedPointe Healthcare Inc., fi rst as President (2002-2006) and then as CEO (2006-2008). The Company’s Board of Directors currently consists of Medpointe Healthcare, Inc. was a U.S. based specialty the seven members listed in Table 5 below, which sets pharmaceutical company located in Somerset, New Jersey. forth name, year of birth and position of the Board mem- Mr. Edick negotiated the sale of MedPointe in 3Q 2007 to bers. The business address for the current members of Meda AB, Sweden. Between 1994 and 2002, he held a the Board of Directors is LifeCycle Pharma A/S, Kogle Allé series of positions at G. D. Searle LLC and its acquirer, 4, DK-2970 Hørsholm, Denmark. Pharmacia Corporation. There he led Searle’s U.S. managed care organisation (1994-95), its U.S. marketing The Company believes that all members of the Board of organisation (1995-96), and its Global Pain & Infl amma- Directors possess the professional and international expe- tion Business, including the development of the launch rience required to serve as a Board member. strategy for Celebrex® (1996-97). In 1998, Mr. Edick was named Searle’s VP-Canada & Latin America. In 1999, Mr. PAUL EDICK – BOARD MEMBER (CHAIRMAN) Edick became President of Asia Pacifi c, Canada & Latin America. In 2000, upon Pharmacia’s acquisition of Searle, Paul Edick has been a Board member since April 2008 and Mr. Edick was named Group Vice President and President, Chairman of the Board of Directors since April 2009. He is Asia Pacifi c/Latin America at Pharmacia. Mr. Edick holds a Chief Executive Offi cer of Durata Therapeutics, Inc., a B.A. in Psychology from Hamilton College, Clinton, New development stage Biotech start-up, backed by a syndi- York. Mr. Edick is also a Director of two private U.S. com- cate of leading venture capital fi rms. He was previously panies, Informed Medical Communications, a U.S. medical CEO of Ganic Pharmaceuticals, Inc., an investment vehicle education company, and Amerita Inc., a U.S. Home Infu- backed by the private equity fi rm, Warburg Pincus LLC. sion Therapy company.

Table 5. Board of directors

Name Year of Birth Member Since Term Expires Position

Paul Edick 1955 2008 2011 Chairman of the Board of Directors(1) Dr. Thomas Dyrberg 1954 2003 2011 Deputy Chairman of the Board of Directors(1)(3) Dr. Jean Deleage 1940 2005 2011 Board member (1)(3) Kurt Anker Nielsen 1945 2006 2011 Board member (2)(3) Dr. Gérard Soula 1945 2005 2011 Board member Anders Götzcshe 1967 2008 2011 Board member (2) Mette Kirstine Agger 1964 2010 2011 Board member (1)(3)

Notes: (1) Member of the Compensation Committee. (2) Member of the Audit Committee. (3) Has direct interests in/is employed with Major Shareholder.

90 DR. THOMAS DYRBERG – BOARD MEMBER Institut d’Administration d’Enterprises, Aix-Marseille and (DEPUTY CHAIRMAN) his Ph.D. from the University of Marseille. Other than the positions referred to above, Dr. Gérard Soula has not held Thomas Dyrberg has been a Board member since Septem- any managerial positions within the past fi ve years. ber 2003 and Deputy Chairman of the Board of Directors since August 2009. Dr. Dyrberg has since December 2000 KURT ANKER NIELSEN – BOARD MEMBER served as a Partner at Novo Ventures, Novo A/S, a Danish fi rm that provides capital for life science companies. Prior Kurt Anker Nielsen has been a Board member since Sep- to joining Novo A/S, he served in various positions at tember 2006. Mr. Nielsen is a former CFO and deputy CEO Novo Nordisk A/S, a healthcare company specialising in of Novo Nordisk A/S (1989 to 2000) and co-CEO of Novo the treatment of diabetes and before that in research A/S (2000 to 2003). From 1997 to October 2010, Kurt positions at the Hagedorn Research Institute, Gentofte, Anker Nielsen was chairman of the board of directors of Denmark and the Scripps Research Institute, La Jolla, Cali- ZymoGenetics, Inc. From November 1996 to October 2003 fornia. Dr. Dyrberg received both an M.D. and a D.M.Sc. Kurt Anker Nielsen was chairman of the board of directors degree from the University of Copenhagen. He currently of Novo Ventures 1 A/S. From December 1997 to Decem- serves on the Board of Directors of Lux Biosciences, Inc, ber 2005, Kurt Anker Nielsen was a member of the board Ophthotech Corp, and Allocure Inc. Dr. Dyrberg was previ- of directors of Coloplast A/S. From April 2003 to February ously member of the board of directors of Sapphire Ther- 2006, Kurt Anker Nielsen was a member of the board of apeutics Inc. (until 2007), Gloucester Pharmaceuticals, directors of TDC A/S. From October 2003 to May 2006, Inc. (until end of 2009), Biomimetic Therapeutics, Inc Kurt Anker Nielsen was a member of the board of direc- (until 2007) and Hemofocus ApS (until June 2010). tors of Novo A/S. From May 2005 to June 2007, Kurt Hemofocus ApS is under solvent liquidation. Anker Nielsen was a member of the board of directors of Harno Invest A/S. From 2007 to April 2009, Kurt Anker DR. JEAN DELEAGE – BOARD MEMBER Nielsen was a member of the board of directors of Sta- toilHydro ASA (now Statoil ASA) where he also served as Jean Deleage has been a Board member since June 2005. chairman of the Audit Committee. From 2004 to 2007, He is a founder and managing director of Alta Partners, a Kurt Anker Nielsen was a member of the board of direc- venture capital fi rm founded in 1996 and investing in life tors of Norsk Hydro ASA. He currently serves as chairman science companies. In 1979, Dr. Deleage was a founder of the board of directors of Reliance A/S, board member and a managing partner of Burr, Egan, Deleage & Co., a of the Novo Nordisk Foundation, vice chairman of the venture capital fi rm in San Francisco and Boston. In 1971, board of directors of Novozymes A/S, Novo Nordisk A/S he became a member of the initial team of Sofi nnova, a and Vestas Wind Systems A/S. In the three last-mentioned venture capital organisation in Paris, and in 1976 formed companies, Mr. Nielsen is also elected as Audit Committee Sofi nnova, Inc. (the U.S. subsidiary of Sofi nnova). He chairman. Mr. Nielsen is also designated as audit commit- received a Master’s Degree in Electrical Engineering from tee fi nancial expert for Novo Nordisk A/S. He is also chair- Ecole Superieure d’Electricite in 1962 and a Ph.D. in Eco- man of the board of directors of Collstrup’s Mindelegat. nomics from the Sorbonne in 1964. In 1984, he was Mr. Nielsen is a registered manager of KAN ApS. Mr. Nielsen awarded the Ordre National du Merite, and in 1993, he received his Master’s of Commerce and Business Adminis- was awarded the Legion of Honor from the French gov- tration from the Copenhagen Business School in 1972. ernment in recognition of his career accomplishments. Jean Deleage is a member of the board of directors of ANDERS GÖTZSCHE – BOARD MEMBER 7TM A/S, Adocia SAS, Gendata AG, Innate Pharma Sa, Nereus Pharmaceuitcals, Inc., Plexxikon, Inc. and Rigel Anders Götzsche has been a Board member since April Pharmaceutical, Inc. During the past fi ve years, Jean Dele- 2008. Mr. Götzsche is Executive Vice President and Chief age has been a member of the board of directors of AGY Financial Offi cer at H. Lundbeck A/S. After fi nishing his Therapeutics, Inc., IDM Pharma Inc., Intercia Therapeutics, education in 1991 he joined PriceWaterhouseCoopers in Inc., Kosan Bioscienses Incorporated, PamGene B.V., Tor- Denmark. From 1998 through 2001, Mr. Götzsche was a rey Pines Therapeutics, Inc., U3 Pharma AG, Xantos Bio- Sales Manager with the SAS Institute. In 2001-2006, he medicine AG and Xcyte Therapies, Inc. was Director of Group Accounting and Reporting in Group 4 Falck (now Group 4 Securicor). Before joining H. Lund- DR. GÉRARD SOULA – BOARD MEMBER beck A/S in September 2007, Mr. Götzsche held the position of Chief Financial Offi cer for the Berlingske Offi cin (as Gérard Soula has been a Board member since November position he held since April 2005). In his capacity as Chief 2005. Dr. Soula founded in December 2005, and is pres- Financial Offi cer for the Berlingske Offi cin, Mr. Götzsche ently the President and CEO of Adocia SAS. He was the held a number of managerial positions in companies President and Chief Executive Offi cer of Flamel Technolo- within the Berlingske Offi cin group, see below. Anders gies from its inception in 1990 to 2005. Prior to founding Götzsche was a member of the board of directors of OL Flamel Technologies, Dr. Soula served in various positions Holding A/S from November 1999 to February 2009, Ros- at Rhone Poulenc Group (now known as Aventis) from borg Møbler A/S from June 1999 to July 2007 and Lund- 1973 to 1990. Dr. Soula received his M.B.A. from the beck Insurance A/S (chairman) from February 2008 to

91 March 2009. Mr. Götzsche holds a Master of Science in through a merger in July 2007). Mr. Götzsche was Manag- Accounting from University of Southern Denmark (1991) ing Director of Orkla (DK) A/S and Idun (DK) A/S from May and became a state authorised public accountant in 1997. 2006 to February 2007.

Managerial positions related to the position as Chief METTE KIRSTINE AGGER - BOARD MEMBER Financial Offi cer for the Berlingske Offi cin: Mr. Götzsche was managing director and board member of ÅST A/S Mette Kirstine Agger has been a Board member since April from May 2006 (dissolved through a merger in July 2007), 2010. Ms. Agger is an Executive Director and Head of LFI managing director and board member of Jydske Tidende Life Science Investments at LFI a/s which she joined on 1 A/S from May 2006 (dissolved through a merger in July September 2009. Prior to this, Ms. Agger was CEO of 7TM 2007), Chief Financial Offi cer and board member in De A/S, which she co-founded late 2000, and from 1996 Berlingske Dagblade A/S from October 2005 (dissolved –2000 she was part of the management team at Neuro- through a merger in July 2007), member of the board of Search A/S, responsible for business development and directors of Berlingske Supporting Services DK A/S from licensing. Prior to this she worked with business develop- April 2005 (Chairman from October 2006) (dissolved ment and as a patent agent. From March 2006 to April through a merger in July 2007) and managing director in 2010 Ms Agger was board member at Symbion Manage- the same company during May 2006. Mr. Götzsche has ment A/S and Symbion A/S. From April 2007 to May 2008 been board member of Grenaa Bladet A/S from April 2005 Ms. Agger was chairman of the board of directors at Cobis to December 2007, Berlingske Pensionskasse (afvikling- A/S. From December 2007 to January 2008 Ms. Agger was skasse) from May 2006 to June 2007, A/S Bladkompagniet chairman of the board of directors at Klifo Holding A/S from August 2005 to September 2007, komplementarsel- and thereafter, she became Chairman of the board of skabet Syddanske Medier A/S from September 2006 to Directors of Klifo A/S. Ms. Agger is further a member of September 2007, Syddanske Medier K/S from September the Board of Directors of Harboes Bryggeri A/S, Statens 2005 to September 2007, DDB 10.10.06 A/S from Serum Institute and Epitherapeutics ApS. Ms. Agger has a November 2006 (dissolved through a merger in 2007), Master of Science in Biology from Copenhagen University Weekendavisen A/S from October 2005 to January 2008, and an MBA from Henley, UK. BT A/S (dissolved through a merger in 2007 ) from Sep- tember 2006, Berlingske Tidende A/S from January 2007 (dissolved through a merger in July 2007), Erhvervsbladet 14.2 Executive Management A/S from October 2005 (dissolved through a merger in July 2007), Avedøre Avistryk from November 2005 (dis- Table 6 below sets forth the name, year of birth and posi- solved through a merger in May 2006), Ejendomsselska- tion of LifeCycle Pharma’s executive management team bet Kr. Bernikowsgade 6 A/S from April to November 2005 (“Executive Management”). The business address for the (dissolved through a merger in April 2006), Ejendomssel- current members of the Executive Management is LifeCy- skabet Pilestræde 34 A/S from April to November 2005 cle Pharma A/S, Kogle Allé 4, DK-2970 Hørsholm, Den- (dissolved through a merger in April 2006), Ejendomssel- mark. skabet Kanalholmen A/S from April 2005 to April 2008, Metropol Online A/S (Chairman) from December 2006 The Company believes that both members of the Execu- (dissolved through a merger in July 2007), A/S Sjællandske tive Management possesses the professional experience Avistryk from November 2005 to September 2007, Ber- required to serve as member of the Executive Manage- lingske af 2007 A/S from December 2006 to September ment. 2007, Berlingske Avistryk A/S from November 2005 to September 2007, Trykkompagniet A/S from September Dr. William J. Polvino and Peter G. Nielsen are registered 2005 to October 2007, Berlingske IT A/S from May 2005 as the Company’s Chief Executive Offi cer and Chief Devel- (dissolved through a merger in May 2006), Berlingske opment Offi cer, respectively, with the Danish Commerce Bladsalg og Service A/S from March 2005 (dissolved and Companies Agency and are referred to jointly in this through a merger in July 2007), Berlingske Gratismedier Offering Circular as the Company’s “Executive Manage- A/S from April 2005 (dissolved through a merger in July ment”. 2007), Scanpix Danmark A/S from June 2005 (dissolved

Table 6. Executive Management

Name Year of Birth Position

Dr. William J. Polvino 1960 President and Chief Executive Ofﬁ cer Peter G. Nielsen 1954 Executive Vice President of Pharmaceutical Development and CMC

92 WILLIAM J. POLVINO – PRESIDENT AND entities, and throughout his career he has brought several CHIEF EXECUTIVE OFFICER. projects through the pipeline to late stage development and to regulatory approval. Peter G. Nielsen is a biochem- Dr. William J. Polvino has served as Chief Executive Offi cer ist by training from the University of Copenhagen. Other since December 2009 when he was promoted from his than the positions referred to above, Mr. Nielsen has not position as Chief Operating Offi cer, a position he had held held any managerial positions within the past fi ve years. since he joined the Company in September 2009. Dr. Polvino brings extensive experience in the senior management of pharmaceutical companies, together with solid 14.3 Senior Management experience in clinical as well as product development. Prior to joining LifeCycle Pharma, Dr. Polvino was CEO and Table 7 below sets forth the name, year of birth and posi- a Director at Helsinn Therapeutics US, Inc (a private com- tion of select members of the senior management team pany). In his capacity as the President, CEO, and Director (each a “Senior Manager” and collectively “Senior Man- of Sapphire Therapeutics, he successfully sold the com- agement”) whom is believed to be relevant in establishing pany to Helsinn Therapeutics U.S. in January 2009. Dr. the appropriate expertise and experience for the manage- Polvino began his career as an MD from UMDNJ-Robert ment of the business of the Company. The business Wood Johnson Medical School, USA. He joined the life sci- address for the Senior Managers is LifeCycle Pharma, Inc., ence industry in 1991, upon following training in Internal 499 Thornall Street, 13th Floor, Edison, NJ 08818, New Medicine at Massachusetts General Hospital and his fel- Jersey, U.S. except for Johnny Stilou whose business lowship in Clinical Pharmacology at the National Institute address is LifeCycle Pharma A/S, Kogle Allé 4, DK-2970 of Health, USA. Dr. Polvino had various positions of Hørsholm, Denmark. increasing responsibility within clinical research, drug development and executive functions at Merck, Wyeth and The Company believes that all members of the Senior Theravance prior to joining Sapphire Therapeutics in 2002. Management possesses the professional experience Other than the positions referred to above, Mr. Polvino required for their position as a manager in the Company. has not held any managerial positions within the past fi ve years. TIMOTHY C. MELKUS - SENIOR VICE PRESIDENT, DEVELOPMENT OPERATIONS PETER G. NIELSEN – EXECUTIVE VICE PRESIDENT OF PHARMACEUTICAL DEVELOPMENT AND CMC. Timothy C. Melkus has served as Senior Vice President, Development Operations since February 2010. He is Peter G. Nielsen has been responsible for the CMC area, employed by LifeCycle Pharma, Inc. He is responsible for including drug delivery research, pharmaceutical develop- Clinical Operations, Clinical Supply, Regulatory Affairs and ment and manufacturing activities since early 2007. Previ- Quality Assurance. Prior to joining the Company Mr. ously he was Corporate Vice President at Novo Nordisk Melkus was employed by IDM Pharma from 2007 to 2009 A/S, latest being responsible for formulation development where he held the position of Senior Vice President, Busi- and clinical supplies. Earlier in his career at Novo Nordisk ness Development and Operations for IDM Pharma where A/S he was Vice President responsible for other CMC he led small molecule and cell therapy Manufacturing, Development activities, including analytical and drug sub- Quality Operations, Process Development, Business stance development within both biotechnology products Development and Intellectual Property. He was a key and NCEs. He has a very strong background and experi- member of the executive turnaround team that achieved ence within research and development of new medical EU approval for IDM Pharma’s lead oncology compound

Table 7. Senior Management

Name Year of Birth Position

Timothy C. Melkus 1959 Senior Vice President, Development Operations Edward E. Koval 1962 Senior Vice President, Business Development and Strategic Corporate Development Dr. John Weinberg 1967 Senior Vice President, Commercial Development and Strategic Planning Johnny Stilou 1967 Chief Financial Ofﬁ cer

93 and subsequently sold the company to Takeda Pharma- berg is responsible for managing all commercial activities ceuticals. Mr. Melkus began his career with Searle Phar- supporting the portfolio of compounds in development. maceuticals in 1984 where he held a number of increas- Additionally, Dr. Weinberg directs Corporate Strategy and ingly responsible positions in a variety of functions. After Pipeline Target Identifi cation. Prior to joining the Company leaving Searle in 1998, Mr. Melkus formed a boutique Dr. Weinberg was Business Franchise Head at Novartis healthcare consulting practice, focusing on strategic and Pharmaceuticals Corporation, in the Transplant and Infec- tactical planning, business development, manufacturing tious Disease business. In this capacity he successfully strategy, trade relations and channel management. Clients managed and grew the U.S. Transplant business. Earlier in included MedPointe, Merisant, NeoPharm, Pharmacia, his career, Dr. Weinberg served as Oncology Business Unit Serono and U.S. Pharmacopeia. Mr. Melkus was employed Head at Enzon Pharmaceuticals from 2003 to 2005. From by NeoPharm Inc., as Vice President, Business Develop- 1996 to 2003, Dr. Weinberg held various positions of ment from 2006 to 2007 where he started as a consul- increasing responsibility within the Global Marketing func- tant and subsequently accepted employment. Mr. Melkus tion at Wyeth, successfully managing brands across multi- earned his Master of Business Administration degree from ple therapeutic areas, including oncology, hematology, Northwestern University’s J.L. Kellogg Graduate School of transplantation and auto-immune diseases. Dr. Weinberg Management and also earned his Bachelor of Science received his MD degree from the University of the Witwa- degree from Northwestern University. Other than the tersrand School of Medicine, Johannesburg, South Africa, positions referred to above, Mr. Melkus has not held any and his MBA degree from INSEAD in Fontainebleau, managerial positions within the past fi ve years. France. Other than the positions referred to above, Mr. Weinberg has not held any managerial positions within EDWARD E. KOVAL - SENIOR VICE PRESIDENT, the past fi ve years. BUSINESS DEVELOPMENT AND STRATEGIC CORPORATE DEVELOPMENT JOHNNY STILOU - CHIEF FINANCIAL OFFICER

Edward E. Koval has served as Senior Vice President, Busi- Johnny Stilou joined the Company in April 2008 and was ness Development and Strategic Corporate Development promoted to his current position as Chief Financial Offi cer since July 2010. He is employed by LifeCycle Pharma, Inc. in July 2010. Mr. Stilou is responsible for the activities Mr. Koval leads the partnering activities and serves a key within Finance, IT, Legal Affairs and Investor Relations. role in strategic corporate business transactions including Prior to joining the Company, Mr. Stilou held a number of the fundraising initiatives. Mr. Koval has extensive industry CFO positions with technology and medicare companies experience identifying, negotiating, executing and manag- Sigma Designs 2004-2006) and Netkoncept (2007). Mr. ing strategic alliances spanning the full range of transac- Stilou began his career with KPMG in Denmark in 1986. tions from licence agreements and collaborations to joint From 1995 he held various senior fi nance positions within ventures and M&A (both from the buy and sell sides). Mr. the GN Great Nordic group until 2003. Mr. Stilou holds a Koval began his career as an engineer with General Elec- Master of Science in Economics and Business Administra- tric before transitioning into pharmaceutical fi nance, tion from the Copenhagen Business School. Mr. Stilou is strategy, business/corporate development and liaison not registered as a manager with the Danish Commerce management functions. He held positions of increasing and Companies Agency. Other than the positions referred responsibility at Merck, Chiron, Variagenics and most to above, Mr. Stilou has not held any managerial positions recently as Vice President, Business Development and Alli- within the past fi ve years. ance Management at Novartis’ cardiovascular, metabolic, neuroscience and vaccine business units. In addition, on 14.4 Statement on past records of the Board of numerous occasions, Mr. Koval has provided consulting Directors, the Executive Management and the services to various start-up biotechs seeking fi nancing, Senior Management business development and corporate development advice. Mr. Koval received his Bachelor’s degree from New York Other than as stated immediately below, during the past University, his Master’s degree in Engineering from Rens- fi ve years, none of the members of the Board of Direc- selaer Polytechnic Institute, and his MBA degree from the tors, the Executive Management or the Senior Manage- Sloan School of Management at the Massachusetts Insti- ment has been (i) convicted of fraudulent offences or (ii) tute of Technology. Other than the positions referred to served as offi cer in any company that has entered into above, Mr. Koval has not held any managerial positions bankruptcy, receivership or liquidation or (iii) subject to within the past fi ve years. any offi cial public incriminations and/or sanctions by statutory or regulatory authorities (including designated pro- DR. JOHN WEINBERG - SENIOR VICE PRESIDENT, fessional bodies) or (iv) disqualifi ed by a court from acting COMMERCIAL DEVELOPMENT AND STRATEGIC PLANNING as a member of the administrative, management or supervisory bodies of an issuer or from acting in the man- Dr. John Weinberg has served as Senior Vice President, agement or conduct of the affairs of any issuer. Commercial Development and Strategic Planning since July 2010. He is employed by LifeCycle Pharma, Inc. Mr. Wein-

94 Board member Thomas Dyrberg has until June 2010 dent and Chief Financial Offi cer at H. Lundbeck A/S, which served as board member of Hemofocus ApS which is is controlled by LFI a/s which is one of the Major Share- under solvent liquidation. holders in the Company. The Company also has contractual relations with H. Lundbeck A/S, see Part I, Section 19 14.5 Statement of kinship and statement of “Related Party Transactions” and Part I, Section 22 “Mate- confl ict of interest rial Agreements”. Board member Mette Kirstine Agger is Executive Director and Head of LFI Life Science Invest- The Company is not aware of any family ties among the ments at LFI a/s, one of the Major Shareholders in the members of the Board of Directors, the Executive Man- Company. Board member Thomas Dyrberg is Partner at agement or the Senior Management. The Company is not Novo Ventures, Novo A/S which is one of the Major aware of any agreements or understanding among Major Shareholders in the Company. Board member Jean Dele- Shareholders, customers, suppliers or others with respect age is a founder and managing director of Alta Partners to election of members of the Board of Directors or which is one of the Major Shareholders in the Company. appointment of the Executive Management or the Senior The Company has entered into a consulting agreement Management. with member of the Board of Directors, Mr. Gérard Soula. Further, Chairman of the Board of Directors, Paul Edick Other than as set forth immediately below, no actual or receives a monthly special assignment fee. For more potential confl ict of interest exists between any duties of information on these arrangements, see Part I, Section 19 the members of the Board of Directors, the Executive “Related Party Transactions”. Management or the Senior Management towards the Company and these persons’ private interests and/or See Part III, Section 7 “Selling security holders and lock-up duties to other persons. agreements” for a description of lock-up agreements concluded between on the one hand the Company’s Board of Board member Kurt Anker Nielsen is a board member of Directors, the Executive Management and on the other Novo Nordisk Foundation which is the parent company of hand the Joint Global Coordinators in connection with the Novo A/S, one of the Major Shareholders in the Company. Offering. Board member Anders Götzsche is Executive Vice Presi-

95 15. Remuneration and beneﬁ ts

15.1 Remuneration of the members of the Executive Management and Senior Management will total Board of Directors DKK 9.0 million.

During 2009, the members of the Board of Directors The remuneration referred to above covers payments from received an aggregate cash remuneration of DKK 0.7 mil- LifeCycle Pharma A/S as well as LifeCycle Pharma, Inc. lion. During 2009, the Company recognised share-based remuneration totalling DKK 0.8 million for warrants issued The Company has not granted any loans, issued any guar- to members of the Board of Directors. antees or made any other commitments to or on behalf of any member of the Executive Management or the The Company has not granted any loans, issued any guar- Senior Management. antees or made any other commitments in respect of the Board of Directors or any member thereof. Other than Other than described in Part I, Section 16.3 “Information consulting agreements with certain members of the Com- regarding contract terms for the Executive Management pany’s Board of Directors, see Part I, Section 19 “Related and the Senior Management”, no unusual or extraordinary Party Transactions”, no exceptional agreements, including agreements, including agreements regarding extra bonus agreements regarding extra bonus schemes, have been schemes, have been concluded between the Company concluded between the Company and any member of the and the members of the Executive Management or the Board of Directors, and no member of the Board of Direc- Senior Management. The members of the Executive Man- tors is entitled to any compensation upon termination of agement and the Senior Management are not entitled to his or her term. any extraordinary benefi ts upon termination of employment. There are no amounts set aside or accrued by the Com- pany to provide pension, retirement or similar benefi ts for There are no amounts set aside or accrued by the Com- members of the Board of Directors and the Company has pany to provide pension, retirement or similar benefi ts for no current obligations to do so. employees, including members of the Executive Manage- ment or the Senior Management and the Company has no unmet obligations to do so. 15.2 Remuneration of the Executive Management and the Senior Management 15.3 Shares and warrants held by the Board of The aggregate cash remuneration to the current members Directors, the Executive Management and the of Executive Management for 2009 totalled DKK 3.0 mil- Senior Management lion including DKK 0.9 million in bonus payments. During 2009, the Company recognised share-based remuneration See Part I, Section 17.2 “Shareholdings and Warrants for totalling DKK 1.1 million for warrants issued to the cur- Members of the Board of Directors, the Executive Man- rent members of Executive Management. Of the Executive agement and the Senior Management” for information Management, William J. Polvino was employed from regarding holdings of shares and warrants for the individ- December 2009, and Peter G. Nielsen was employed for ual members of the Board of Directors, the Executive the whole of 2009. Management and the Senior Management.

The aggregate cash remuneration to the current members of the Senior Management totalled DKK 1.6 million for 2009, including DKK 0.2 million in bonus payments. Dur- ing 2009, the Company recognised share-based remuneration totalling DKK 0.3 million for warrants issued to the current members of the Senior Management. Of the Senior Management, only Johnny Stilou was employed for the whole of 2009. Timothy C. Melkus joined the Com- pany in February 2010 and Dr. John Weinberg and Edward E. Koval joined the Company in July 2010. The total cash remuneration and recognised share-based remuneration for the Company’s executive managers and senior managers in 2009 totalled DKK 4.6 million and DKK 1.4 million, respectively. For 2010, the aggregate remuneration excluding warrants and cash bonuses for the Company’s

96 16. Practices of the Board of Directors, the Executive Management and the Senior Management

16.1 Practices of the Board of Directors following termination of his employment with the Com- pany. The non-competition undertaking does not apply if The Board of Directors is entrusted with the ultimate William J. Polvino is dismissed without reasonable cause, responsibility for the Company and the supervision of the or if he terminates his position on account of the Compa- Executive Management. Board duties include establishing ny’s breach of the employment relationship. The Company policies for strategy, accounting, organisation and fi nance, may terminate the employment relationship without and the appointment of executive offi cers. The Articles of notice, but under certain circumstances, Mr. Polvino is Association stipulate that the Board of Directors is elected entitled to receive payment corresponding to six months’ by the Company’s shareholders at the annual general base salary following termination of his employment. Wil- meeting and members are elected for one-year terms. liam J. Polvino is eligible to receive an annual incentive Members may stand for re-election for successive terms. bonus in the form of both cash payment and warrants The Board of Directors shall consist of not less than three when achieving certain targets. For information on the and no more than nine members elected by the Compa- Company’s guidelines for incentive pay to the Executive ny’s shareholders at the general meeting. The Board of Management see Part I, Section 16.7, “Guidelines for Directors has established a compensation committee and incentive remuneration” below. The employment agree- an audit committee. ment for William J. Polvino does not have a fi xed term of expiry. The bonus period – during which the targets shall The Board of Directors convenes regularly and conducts be reached – runs from 1 September 2009 and until 31 its business according to its rules of procedure. Regular December 2013. board meetings include an in-depth report from Executive Management to the Board of Directors regarding the PETER G. NIELSEN – EXECUTIVE VICE PRESIDENT OF Company’s operations status and progress. The seniority, PHARMACEUTICAL DEVELOPMENT AND CMC. the date of expiration of the current term of offi ce and the positions for the members of the Board of Directors The Company has entered into an employment agreement is set out in Table 5 above. with Peter G. Nielsen to serve as Executive Vice President of Pharmaceutical Development and CMC. Mr. Nielsen may terminate his employment on two months’ notice and is 16.2 Practices of the Executive Management subject to a non-competition undertaking for a period of and the Senior Management 12 months following termination of his employment with the Company. The non-competition undertaking does not Executive Management together with the Senior Manage- apply if Mr. Nielsen is dismissed without having been ment is responsible for the day-to-day management of given reasonable grounds for termination, or if he termi- the Company’s business and shall in that capacity follow nates his position on account of the Company’s breach of the directions and guidelines provided by the Board of the employment relationship. The Company may termi- Directors. The day-to-day business does not include nate the employment relationship giving twelve months’ transactions which are unusual or of great signifi cance in notice. If a majority of the Shares of the Company (corre- consideration of the position of the Company. sponding to more than 50% of the votes) is transferred to a new owner, and Mr. Nielsen’s employment is terminated by the Company within a 12-month period after the date 16.3 Information regarding contract terms for of the transfer, Mr. Nielsen will be entitled to severance the Executive Management and the Senior pay corresponding to six months’ base salary following Management termination of his employment. Peter G. Nielsen is not otherwise entitled to any severance pay. Mr. Nielsen is eli- Executive Management gible to receive an incentive bonus in the form of cash payment or warrants when achieving certain targets dur- DR. WILLIAM J. POLVINO – PRESIDENT AND CHIEF ing a three year period. For information on the Company’s EXECUTIVE OFFICER. guidelines for incentive pay to the Executive Management see Part I, Section 16.7, “Guidelines for incentive remu- The Company has employed William J. Polvino as the Com- neration” below. The employment agreement for Mr. pany’s President and Chief Executive Offi cer. William J. Nielsen does not have a fi xed term. Polvino may terminate his employment without any notice to the Company and is subject to a non-competition and non-solicitation undertaking for a period of 12 months

97 Senior Management 16.4 Committees

The Company or its subsidiary, Lifecycle Pharma, Inc., has AUDIT COMMITTEE entered into employment agreements with each member of the Senior Management. Johnny Stilou may terminate The Audit Committee has been appointed by the Board of his employment with three months’ notice and he may be Directors and is expected to meet at least four times a dismissed with 12 months’ notice. Johnny Stilou is enti- year. The charter of the Audit Committee provides that tled to receive a severance payment corresponding to six the role of the Audit Committee is to assist the Board of months’ base pay following termination of his employ- Directors with respect to the Board of Directors’ responsi- ment, if his employment terminates within 12 months bilities to review the adequacy and consistency in the after a change of control of the Company occurs (transfer Company’s fi nancial reporting process, ensure that the of more than 50% of the Company’s shares/votes). Company’s internal controls and risk management sys- Johnny Stilou is not otherwise entitled to any severance tems are effective and satisfactory, have regular contact pay. with the Company’s external auditors and control the work, including recommendation and independence of the All other members of the Senior Management may termi- Company’s external auditors. The Audit Committee consists nate their employment, and may be terminated, without of Kurt Anker Nielsen (chair) and Anders Götzsche. notice. These three members of the Senior Management are, however, under certain circumstances entitled to COMPENSATION COMMITTEE receive severance payment corresponding to their base salaries for a period of six months (John Weinberg and The Compensation Committee is appointed by the Board Timothy C. Melkus) to twelve months (Edward E. Koval), of Directors and is expected to meet at least twice a year. respectively, following termination of their employment. The charter for the Compensation Committee provides that the role of the Compensation Committee is to assist With the exception of Johnny Stilou, the Senior Managers the Board of Directors with respect to the Board of Direc- are all subject to non-competition and non-solicitation tors’ responsibilities relating to compensation of the undertakings for a period of one year following termina- management and to oversee and advise the Board of tion of employment. Directors on the adoption of policies that govern the Company’s compensation programmes, including warrant All members of the Senior Management are, in addition and benefi t plans. It makes recommendations to the to their base salaries, eligible to receive annual cash Board of Directors regarding specifi c remuneration pack- bonus payments depending on the fulfi lment of certain ages for each of the members of management, including targets. Members of the Senior Management also partici- pension rights and any compensation payments. The pate in the Company’s warrant programme, see Part I, Compensation Committee consists of Paul Edick (Chair), Section 17.2 “Shareholdings and Warrants for Members of Thomas Dyrberg, Jean Deleage and Mette Kirstine Agger. the Board of Directors, the Executive Management and the Senior Management”. 16.5 Description of Management Reporting Inventions made by the members of the Executive Man- Systems and Internal Control Systems agement or the Senior Management during their employment are owned by the Company. The Company may, in THE FINANCIAL REPORTING PROCESS accordance with mandatory Danish legislation, be obligated to pay a reasonable compensation for any invention The Company’s internal controls and risk management are unless the value of the invention does not exceed what planned with a view to presenting an annual report in the person in question could reasonably be expected to accordance with IFRS as approved by the EU and other achieve considering the terms of employment. disclosure requirements to annual reports of listed companies providing a true and fair view without material Apart from the above, none of the members of the Exec- misstatement; selecting and applying appropriate utive Management or the Senior Management will receive accounting policies and exercise of accounting estimates remuneration upon termination of his employment, with which are reasonable in the circumstances. the exception of payments made pursuant to mandatory legislation. The Executive Management and Board of Directors determine and approve the overall policies, procedures and controls in material areas relating to the fi nancial reporting process.

The Board of Directors has set up an audit committee mainly to assist the Executive Management in monitoring the ﬁ nancial reporting and the efﬁ ciency of the Compa- ny’s internal control and risk management systems.

98 The maintenance of an effi cient control environment and 16.6 Corporate governance internal control and risk management systems is the responsibility of the Executive Management. As a tool to The Company recognises the value of an active and posi- identify and manage the critical risks, the Company has tive approach to the issue of corporate governance, implemented a control environment with internal systems including those aspects of corporate governance that are designed to reduce identifi ed risks to an acceptable level. embodied in the corporate governance recommendations published by the Committee on Corporate Governance in RISK ASSESSMENT its proposal for “Revised Corporate Governance Recom- mendations 2005”, as amended on 10 December 2008 At least once a year, the Executive Management assesses (the “Recommendations”). It is important to the Board of any identifi ed risks and reports to the Board of Directors. Directors to exercise good corporate governance and See “Risk factors” for a description of the risk manage- comply with the Recommendations and accordingly the ment process and critical risks identifi ed. Company has adopted the “Comply or Explain” principle. However, the Company does not comply with all of the The most material risk in relation to the fi nancial reporting Recommendations. Such non-compliance is set out below: process relates to ensuring suffi cient liquidity to be able to meet the Group’s liabilities as they fall due. Other risks • The Board of Directors has not established a pro- relate to estimates made in connection with the fi nancial gramme to evaluate on an annual basis the skills and reporting. These estimates are further described in Part I, professional qualifi cations of each Board member. Like- Section 10 “Review of operations and fi nancial state- wise, no formal self-appraisal programme of the Board ments – Critical accounting estimates and judgements”. of Directors and its work has been established. Further, the Board of Directors has not yet established a formal CAPITAL MANAGEMENT process for assessing and selecting candidates. The Company believes that there is currently no need to Rolling budgets are prepared on a short-term and a long- formalise these matters. term basis to ensure that the Group always has suffi cient funds to pay its liabilities as they fall due and that the • Certain members of the Board of Directors hold direc- Company can in the long term fi nance the Group’s torships in excess of the number of directorships pre- research and development projects. scribed in the Recommendations. The Company regards the Recommendations’ limit for the number of direc- CONTROL ACTIVITIES torships as guidance only and wishes to leave the matter to the professional judgment of each Board member. The objective of control activities is to prevent, detect and adjust any errors or irregularities. • A majority of the members of the Board of Directors are employed by or otherwise have interests in certain The activities are integrated into the Company’s account- of the Company’s Major Shareholders. The affi liations ing and reporting procedures and comprise among other are to an extent, a result of the Company’s origins as a things procedures for certifi cation, authorisation, spin-out company as well as the fact that the Compa- approval, reconciliation, analyses of results, segregation ny’s operations were fi nanced primarily through ven- of incompatible functions, controls relating to IT applica- ture funding until the Company’s initial public offering tions and IT general controls. in 2006.

POLICIES AND PROCEDURES • Four members of the Board of Directors have been granted warrants conferring a right to subscribe for Policies and procedures are updated when necessary and Shares in the Company. The Company believes that the are reviewed at least once a year. Relevant policies are ability to offer warrants as well as other forms of share reviewed by the audit committee and, if necessary, in incentive compensation is necessary to attract key special areas approved by the Board of Directors. people from within the industry (whether as Board members, managers or employees). MONITORING • The Company reports remuneration for the Board of The Company uses a ﬁ nance system for monitoring the Directors and the Executive Management on a group Group’s results. Monthly reviews are carried out of interim basis rather than on an individual basis. The Company consolidated ﬁ nancial statements. In connection with the does not believe that individual reporting is relevant preparation of the annual report additional analysis and for the appraisal of the Company and its performance. control activities are performed to ensure that the preparation of the annual report is in accordance with the IFRS • The Company’s Audit Committee has two members. provisions described under Accounting Policies in the The Company’s committees are not authorised to make annual report. independent decisions.

99 In April 2010, the Danish Committee on Corporate Gover- The aggregated annual fees, the supplemental and addi- nance published its revised Recommendations on Corpo- tional annual fees, and warrants granted are disclosed in rate Governance. With effect as of 1 July 2010, NASDAQ the annual report and subsequently approved at the OMX has implemented these revised Recommendations annual general meeting. into its disclosure requirements for listed companies with effect for annual reports for fi nancial years beginning on EXECUTIVE MANAGEMENT or after 1 January 2010. The Company has initiated a process towards implementing the revised (2010) Recom- The Compensation Committee performs an annual review mendations on Corporate Governance, and the Company of the remuneration package paid to members of the intends to address the revised (2010) Recommendations Executive Management. on Corporate Governance in its annual report for 2010 in accordance with the “comply-or-explain” principle, which The remuneration paid to members of the Executive Man- requires companies to either comply with the Recommen- agement consists of a fi xed and a variable part. The fi xed dations or state their reason for not doing so. pay consists of cash salary, pension contribution and other benefi ts.

16.7 Guidelines for incentive remuneration As an element of the variable pay, members of the Execu- tive Management may receive an annual bonus, subject to In accordance with Section 139 of the Danish Companies achievement of certain benchmarks. The bonus propor- Act, the Board of Directors has laid down general guide- tion varies among the members of the Executive Manage- lines for incentive remuneration to members of the Board ment, but is subject to a target of 45% of the fi xed of Directors and the Executive Management. These guide- annual cash salary. The actual bonus paid to the members lines have been approved by the shareholders at the of the Executive Management is disclosed in the annual extraordinary general meeting held on 14 March 2008. report at an aggregated level. At the date of adoption of The guidelines for incentive remuneration are set forth these guidelines, the bonus benchmarks comprise primar- below and are also available at the Company’s website, ily the progress in the Company’s development of its www.lcpharma.com. product candidates, but they may be changed by the Board of Directors. General guidelines for the Company’s incentive remuneration to members of the Board of Another element of the variable pay is made up of new Directors and the Executive Management warrants and is intended to ensure that the Executive Management’s incentive correlates with creation of share- BOARD OF DIRECTORS holder value. The estimated aggregated present value of new warrants granted in a given fi nancial year to the Members of the Board of Directors receive a fi xed annual members of the Executive Management may be up to fee. The Chairman of the Board of Directors and the 100% of the aggregated fi xed annual cash salary to the Chairman of the Audit Committee receive a supplement to member of the Executive Management. The estimated the fi xed annual fee. present value is calculated in accordance with IFRS. The grant of new warrants may or may not be subject to In addition to the fi xed annual fee, the members of the achievement of defi ned benchmarks. The exercise price of Board of Directors are annually granted a fi xed number of the new warrants cannot be less than the market price of warrants. The estimated present value of warrants the Company’s stock at the date of grant. The new war- granted in a given fi nancial year may be up to 100% of rants may have a maximum term of up to 7 years and the the fi xed annual fee to the individual member of the exercise of the new warrants may be subject to a vesting Board of Directors. The estimated present value is calcu- period of up to 4 years. New warrants may be granted on lated in accordance with IFRS. The general terms and con- such terms that the gain is taxed as share income while ditions applying to the grant, vesting, exercise, etc. of the the costs of the grant are not tax deductible for the Com- warrants must be within the general terms and conditions pany. The number of new warrants granted to each mem- applying if warrants are to be granted to members of the ber of the Executive Management and their estimated Executive Management, cf. below, and which also apply to present value is disclosed in the annual report. other employees in the Company which have been granted warrants.

Upon election, each member of the Board of Directors may decide to exchange the annual fee for an additional number of warrants. Likewise, the ﬁ xed number of warrants may be exchanged for an additional annual fee.

100 17. Staff

17.1 Overview of employees Other than as set forth above, no members of the Board of Directors and no members of the Executive Manage- As of the Offering Circular Date, the Company and its ment or the Senior Management hold Shares in the Com- wholly-owned subsidiary LifeCycle Pharma, Inc. had 50 pany. full time employees, of which 41 were employed in Hør- sholm, Denmark and 9 were employed in Edison, New Jer- The Board of Directors (with the exception of Kurt Anker sey, U.S. In total, 36 employees worked within research, Nielsen, Anders Götzsche and Mette Kirstine Agger), the preclinical, clinical and commercial development, and 14 Executive Management, the Senior Management and were general and administrative staff. The number of other employees, advisors and consultants participate in employees has developed from 84 as of 31 December the Company’s warrant programmes. Warrants issued to 2007, to 106 as of 31 December 2008, and to 65 as of the respective persons as well as applicable exercise 31 December 2009. prices are set out in Table 9. For further speciﬁ c information in respect of outstanding warrants, please see Exhib- Neither the Company nor LifeCycle Pharma, Inc. has been its 1 and 2 to the Articles of Association. Following com- subjected to any strike or other industrial action by the pletion of the Offering, a recalculation of the number of employees and considers its relationship with the employ- warrants and the applicable exercise price will be carried ees to be good. out in order to reﬂ ect the dilution as a result of the Offer- ing being conducted below the market price, see Part I, Section 21.2 “Warrant programmes”. 17.2 Shareholdings and Warrants for Members of the Board of Directors, the Executive Management and the Senior Management

The shareholdings of the members of the Board of Direc- tors, the Executive Management and the Senior Manage- ment are listed in Table 8 below.

Table 8. Shareholdings of the Board of Directors, the Executive Management and the Senior Management

Number of Nominal Name Shares value (DKK)

Board of Directors Paul Edick - - Dr. Thomas Dyrberg 15,400 15,400 Dr. Jean Deleage - - Kurt Anker Nielsen 23,000 23,000 Dr. Gérard Soula - - Anders Götzsche - - Mette Kirstine Agger 161 161

Executive Management Dr. William J. Polvino 20,000 20,000 Peter G. Nielsen 1,000 1,000

Senior Management Timothy C. Melkus 100,000 100,000 Edward E. Koval - - Dr. John Weinberg - - Johnny Stilou - -

101 Table 9. Warrants currently outstanding Number of Exercise price Number of warrants Exercise price (DKK per share) Name warrants (1) (adjusted) (2) (DKK per share) (1) (adjusted) (2) Date of grant

Board of Directors Paul Edick 15,000 32,576 27.00 12.43 14 May 2008 36,500 79,268 9.55 4.40 20 August 2009 100,000 217,173 4.05 1.86 18 August 2010 Paul Edick in total 151,500 329,016 - - - Dr. Thomas Dyrberg 12,175 26,442 46.40 21.37 9 May 2007 10,000 21,717 27.00 12.43 14 May 2008 10,000 21,717 9.55 4.40 20 August 2009 10,000 21,717 4.05 1.86 18 August 2010 Dr. Thomas Dyrberg in total 42,175 91,593 - - - Dr. Jean Deleage 21,307 46,273 46.40 21.37 9 May 2007 15,000 32,576 27.00 12.43 14 May 2008 15,000 32,576 9.55 4.40 20 August 2009 10,000 21,717 4.05 1.86 18 August 2010 Dr. Jean Deleage in total 61,307 133,142 - - - Kurt Anker Nielsen - - - - - Dr. Gérard Soula 60,877 132,208 18.32 8.43 7 November 2005 21,307 46,273 46.40 21.37 9 May 2007 68,300 18,025 27.00 12.43 14 May 2008 Dr. Gérard Soula in total 90,484 196,507 - - - Anders Götzsche - - - - - Mette Kirstine Agger - - - - - Board of Directors in total 345,466 750,258 - - -

Executive Management Dr. William J. Polvino 150,000 325,759 7.00 3.22 11 November 2009 350,000 760,104 5.85 2.69 2 December 2009 187,354 406,882 3.13 1.44 28 October 2010 Dr. William J Polvino in total 687,354 1,492,745 - - - Peter G. Nielsen 91,316 198,313 45.17 20.80 5 March 2007 66,256 143,890 26.40 12.16 24 April 2008 100,000 217,173 10.50 4.83 3 March 2009 50,000 108,586 6.05 2.79 24 February 2010 140,509 305,147 3.13 1.44 28 October 2010 Peter G. Nielsen in total 448,081 973,108 - - - Executive Management in total 1,135,435 2,465,853 - - -

Senior Management Timothy C. Melkus 100,000 217,173 4.87 2.24 12 May 2010 116,821 253,703 3.13 1.44 28 October 2010 Timothy C. Melkus in total 216,821 470,876 - - - Edward E. Koval 100,000 217,173 4.05 1.86 18 August 2010 Dr. John Weinberg 100,000 217,173 4.05 1.86 18 August 2010 Johnny Stilou 30,000 65,152 25.50 11.74 21 August 2008 51,250 111,301 10.50 4.83 3 March 2009 50,000 108,586 6.05 2.79 24 February 2010 25,000 54,293 4.05 1.86 18 August 2010 83,333 180,976 3.13 1.44 28 October 2010 Johnny Stilou in total 239,583 520,309 - - - Senior Management in total 656,404 1,425,531 - - - Current and former employees, consultants and advisors 3,515,703 7,635,141 3.13 – 46.40 1.44 – 21.37 -

Total 5,653,008 12,276,783 3.13 – 46.40 1.44 – 21.37 -

Notes: (1) Before the Offering and without giving effect to the anti-dilution adjustment provisions of the warrant programmes. See Part I, Section 21.2 “Warrant programmes” for further information. (2) The adjustment has been calculated on the basis of the closing price at 28 October 2010 of DKK 3.13.

102 18. Major shareholders

Immediately prior to the Offering Circular Date, the Com- It is the duty of shareholders to give notice to the Com- pany had approximately 4,000 registered shareholders, pany of any changes in their shareholding or voting rights who held a total of approximately 50.5 million Existing leading them to cross certain thresholds. See Part III, Sec- Shares, equivalent to 91% of the Company’s share capital. tion 4.9 “Danish regulations governing mandatory take- Since the Shares are bearer shares, the Company does over bids, redemption of shares and disclosure require- not have a complete record of all of the holders. ments”. The Company will issue a company announcement in the event it receives such notice from a shareholder. The following shareholders have as of the Offering Circu- lar Date notiﬁ ed the Company that they hold at least 5% It is outside the authority of the Company to make any of the Company’s Shares or voting rights also detailing company announcement of major shareholdings unless their actual shareholding/holding of votes as set out in prior notice from a shareholder has been received. Thus, Table 10 below. changes may have occurred in the stated share capital or voting rights of Major Shareholders which are not The Company is not aware of being controlled, directly or reﬂ ected above in the event that a shareholder has failed indirectly, by other parties, and the Company is not aware to provide notice of its shareholding or voting right of any agreements that could later result in other parties (including as a result of increases in the Company’s share taking over the control of the Company. capital).

For shareholdings of the Board of Directors, the Executive Table 10. Major Shareholders in the Company as Management and the Senior Management as of the of the Offering Circular Date Offering Circular Date, see Part I, Section 17.2 “Share- holdings and warrants for members of the Board of Direc- Shareholdings Voting rights tors, the Executive Management and the Senior Manage- Shareholder (%) (%)(1) ment”.

LFI a/s While the Company is authorised by the general meeting Vestagervej 17 to buy treasury shares, it does not hold any Shares in DK-2900 Hellerup treasury as of the Offering Circular Date. Denmark 28.1 28.1

Novo A/S Novo Ventures Tuborg Havnevej 19 DK-2900 Hellerup Denmark 23.7 23.7

Alta Partners(2) One Embarcadero Center 37th Floor San Francisco, CA 94111 USA 6.3 6.3

Notes: (1) Shareholders are entitled to one vote per Share. (2) Alta Partners includes Alta BioPharma Partners III L.P., Alta BioPharma III, GmbH & Co., Beteiligungs KG and Alta Embarcadero BioPharma III, LLC.

103 19. Related party transactions

The members of the Board of Directors and the Executive the Executive Management and the Senior Management, Management are considered related parties following their see Part I, Section 21.2 “Warrant programmes”. positions in the Company. Related parties also comprise the Company’s wholly-owned subsidiary LifeCycle Pharma, LIFECYCLE PHARMA, INC. Inc. H. Lundbeck A/S was a major shareholder in the Company until 27 January 2009 and until such time was During 2009, the subsidiary performed clinical and mana- regarded as a related party. Finally, the Company considers gerial activities on behalf of the Company, which were the Major Shareholders to be related parties due to their remunerated in accordance with service agreements ownership in the Company. between the companies. Total services amounted to DKK 24.2 million for the year 2009 and DKK 36.0 million for MEMBERS OF THE BOARD OF DIRECTORS AND THE the year 2008. Further, during 2007, the subsidiary per- EXECUTIVE MANAGEMENT formed clinical activities which were remunerated in accordance with a service agreement between the com- In 2007, the Company entered into a consulting agree- panies. Total payments for services in 2007 amounted to ment with member of the Board of Directors Gérard Soula DKK 21.5 million. Further, the Company funded the activi- pursuant to which Gérard Soula provides consulting ser- ties of LifeCycle Pharma, Inc. thereby generating interest vices and advice within the product formulation area and income of DKK 0.04 million for the period 1 January to 31 technical assessment. During 2007, Gérard Soula received December 2009 (2008: DKK 0.4 million, 2007: DKK 0.6 DKK 0.2 million for such services, plus reimbursement of million). At 31 December 2009, the Company had a net his travel expenses. During 2008 Gérard Soulá received a payable to LifeCycle Pharma, Inc. totalling DKK 2.9 million total of 45,000 warrants as remuneration for the consul- (2008: DKK 2.2 million). At 31 December 2007, the Com- tancy agreement. These warrants were subsequently can- pany had a net receivable from LifeCycle Pharma, Inc. celled. During 2008, the Company paid consultancy fees totalling DKK 3.7 million. totalling DKK 0.2 million to Gérard Soula and reimbursed travel expenses. During 2009 the Company paid consul- H. LUNDBECK A/S tancy fees totalling DKK 0.3 million to Gérard Soulá and reimbursed travel expenses. During 2010 until the date of The Company received maintenance and services related the Offering Circular the Company has paid consultancy to an agreement with H. Lundbeck A/S concerning main- fees totalling DKK 0.3 million to Gérard Soulá and reim- tenance and service of the Company’s facilities from H. bursed travel expenses. Lundbeck A/S for an amount of DKK 0.8 million in 2007, DKK 0.6 million in 2008 and DKK 0.4 million in 2009. The In 2008, the Company entered into a consulting agree- agreement was terminated in 2009. ment with the Chairman of the Board of Directors Paul Edick pursuant to which Paul Edick provides consulting In 2007, the Company performed research and develop- services and advice to the Company. During 2008, the ment work for H. Lundbeck A/S for which the Company Company paid a consultancy fee of DKK 0.3 million to was reimbursed under a research and development agree- Paul Edick and reimbursed travel expenses. The consul- ment with H. Lundbeck A/S totalling DKK 1.5 million. tancy agreement ended at the end of April 2009. Since May 2009, Paul Edick receives a monthly special assign- MAJOR SHAREHOLDERS ment fee equal to USD 12,500 (DKK 68,251). During 2009, the Company paid a special assignment fee total- The Company’s Major Shareholders (LFI a/s, Novo A/S and ling DKK 0.7 million. During 2010, until the date of the Alta Partners) have each made an advance undertaking to Offering Circular the Company has paid to Paul Edick a exercise the Preemptive Rights allocated to them in the special assignment fee totalling DKK 0.7 million. Offering to subscribe for, in aggregate, 229,806,983 Offer Shares. Four members of the Board of Directors Paul Edick, Thomas Dyrberg, Gérard Soula and Jean Deleage have In addition, LFI a/s and Novo A/S have made advance been granted warrants to subscribe for Shares in the undertakings to subscribe for those Offer Shares that are Company. See Part I, Section 17.2 “Shareholdings and not (i) subscribed for through the exercise of Preemptive warrants for members of the Board of Directors, the Exec- Rights or (ii) otherwise by shareholders and investors utive Management and the Senior Management”. who, prior to the expiry of the Subscription Period, have submitted binding advance undertakings to the Joint For a description of the remuneration received by the Global Coordinators to subscribe for Offer Shares at the Board of Directors and the Executive Management, see Offer Price. LFI a/s and Novo A/S are entitled to a com- Part I, Section 15 “Remuneration and beneﬁ ts”. For a mission for their undertakings to subscribe for additional description of warrants issued to the Board of Directors, shares. See Part III, Section 5.20 “Price disparity”.

104 20. Financial information concerning the Company’s assets and liabilities, ﬁ nancial position and proﬁ ts and losses

20.1 Financial information tion. However, the Company has recently received notice from Shionogi of its election to terminate such agreement. For fi nancial information concerning the Company refer- Under the Company’s agreement with Cowen, the Com- ence is made to Part II. pany must bear the cost of this litigation. As a result, the Company may incur substantial expenses, including legal fees. In addition, there can be no assurance that an injunc- 20.2 Dividends tion will be granted and/or that the Company’s patent will prevail. Furthermore, Impax may be found not to infringe The Company has to date not declared or paid any divi- the ‘944 patent or the ‘944 patent may be found invalid. If dends and the Company currently intends to retain all either outcome were to occur, Impax may be permitted to available fi nancial resources and any earnings generated begin selling generic Fenoglide tablets immediately follow- by the operations for use in the business and the Com- ing such decision, which may erode Fenoglide sales. More- pany does not anticipate paying any dividends in the over, in the event that Impax’s ANDA is deemed complete foreseeable future. The payment of any dividends in the by the FDA prior to the date on which the ‘944 patent was future will depend on a number of factors, including listed in the Orange Book, there would be no 30-month future earnings, capital requirements, fi nancial condition stay of approval of the ANDA under the Hatch-Waxman and future prospects, applicable restrictions on the pay- Act; in such instance, upon receiving regulatory approval, ment of dividends under Danish law and other factors and if Impax is found not to infringe the ‘944 patent, or that the Board of Directors may consider relevant. the ‘944 patent is found invalid, Impax would be permitted to begin selling generic Fenoglide tablets, which may erode The Company’s dividends, if declared, are paid in DKK to Fenoglide sales. the shareholder’s account set up through VP Securities. There are no dividend restrictions or special procedures FOURNIER for non-resident holders of the Company’s Shares. Divi- dends which have not been claimed within three years With respect to LCP-Feno in Europe, the Company fi led an from the time they are payable are forfeited and all such opposition in July 2006 against European patent EP-B- dividends will accrue to the Company. 1273294 belonging to Fournier and claiming an immediate release of the fenofi brate formulation. In October 2008, the Opposition Division revoked the patent in its 20.3 Litigation entirety. Fournier appealed this decision in 2009 although the appeal proceedings have not yet been scheduled. If IMPAX the Board of Appeal of the European Patent Offi ce reverses the decision by the fi rst instance and upholds On 28 April 2010, Shionogi (formerly Sciele) and the Com- the patent as granted, the Company may be prevented pany jointly fi led in the U.S. District Court for the district of from commercialising LCP-Feno in certain European coun- Delaware, a patent infringement lawsuit against Impax in tries for the lifetime of the patent, i.e. until January 2018. response to their ANDA for a proposed generic Fenoglide (fenofi brate) 40 and 120 milligram tablets. Impax has Apart from the above, the Company has for the past 12 generic versions approved in the United States of higher months, neither been a party to any governmental, legal or doses of fenofi brate products (200 mg capsules and 160 arbitration proceedings that have had a signifi cant effect mg tablets). In their ANDA, Impax requests approval to sell on the fi nancial position or results of operations of the generic Fenoglide tablets following the approval by the Company or its subsidiary, nor is the Company aware of FDA. Shionogi and LifeCycle Pharma’s lawsuit asserts that any such threatened proceedings that might have such an Impax, if permitted to market generic Fenoglide tablets fol- effect. lowing a potential approval of the ANDA, will infringe Life- Cycle Pharma’s patent covering Fenoglide (patent number U.S. 7,658,944 which expires in 2024) and requests that 20.4 Financial position the Court enter an injunction barring the sale of the Impax ANDA product until the expiration of the LifeCycle Pharma No material changes have occurred to the Company’s patent. The trial in the U.S. District Court has not yet been fi nancial position since the release of the Company’s scheduled. interim report for the nine months ended 30 September 2010 on 28 October 2010. Under the terms of the Company’s licence agreement with Shionogi, Shionogi currently bears the cost of this litiga-

105 21. Additional information

21.1 Share capital before and after the Offering rants will thus be adjusted following the completion of the Offering. The recalculation of the exercise price and Immediately prior to the Offering, the Company’s regis- the number of warrants will be based on a comparison tered share capital is DKK 56,567,810, comprising between the Offer Price and the closing price listed on 56,567,810 Shares. Immediately after the Offering, the NASDAQ OMX at 28 October 2010 of DKK 3.13. The recal- Company’s registered share capital will be DKK culation will ensure that the value of the outstanding 452,542,480, comprising 452,542,480 Shares. As of the warrants is not diluted as a result of the Offering being Offering Circular Date, the Company does not hold any carried out below market value. Table 11 below, as well shares in treasury. as the section headed “General Terms for the Company’s Warrant Programmes” further below, shows the number 21.2 Warrant programmes of outstanding warrants and the exercise price of the Company’s warrant programmes before and following The Company has established warrant programmes for adjustment as a result of the Offering. members of the Board of Directors, the Executive Man- agement, the Senior Management and other employees, consultants and advisers.

According to the terms and conditions of the Company’s warrant programmes, certain customary adjustment clauses apply in the event of changes to the Company’s share capital at a price which does not correspond to market price. In the Offering, the price per Offer Share will be below market price of the Shares prior to the announcement of the Offering. The number of outstanding warrants as well as the exercise price of these war-

106 Table 11. Issued and outstanding warrants

Exercise Price in Percentage of Number of Number of DKK per Share Exercise Price outstanding warrants warrants of nominal per Share of Percentage of Shares on a fully outstanding outstanding DKK 1 nominal DKK 1 total number diluted basis (unadjusted for (adjusted for (unadjusted for (adjusted for of warrants following the Issue date the Offering)(1) the Offering)(2) the Offering)(1) the Offering)(2) outstanding Offering(2)

29 August 2003 – 19 December 2003 29,900 64,934 6.06 2.88 0.53% 0.01% 22 March 2004 – 20 June 2005 158,764 344,792 6.48 3.08 2.81% 0.08% 20 June 2005 – 18 November 2005 133,871 290,732 18.32 8.70 2.37% 0.06% 12 December 2005 and 10 June 2006 424,617 922,152 29.87 14.19 7.51% 0.20% 1 December 2006 79,140 171,870 36.63 17.40 1.40% 0.04% 5 March 2007 91,316 198,313 45.17 21.46 1.62% 0.04% 9 May 2007 116,884 253,841 46.40 22.04 2.07% 0.06% 21 August 2007 65,748 142,787 42.71 20.29 1.16% 0.03% 27 November 2007 17,046 37,020 34.09 16.19 0.30% 0.01% 28 February 2008 103,491 224,755 27.10 12.87 1.83% 0.05% 24 April 2008 348,789 757,474 26.40 12.54 6.17% 0.17% 14 May 2008 93,800 203,708 27.00 12.83 1.66% 0.05% 21 August 2008 111,000 241,062 25.50 12.11 1.96% 0.05% 16 October 2008 305,556 663,584 14.50 6.89 5.41% 0.15% 26 November 2008 132,500 287,754 12.50 5.94 2.34% 0.06% 3 March 2009 596,361 1,295,133 10.50 4.99 10.55% 0.29% 14 May 2009 78,000 169,395 13.30 6.32 1.38% 0.04% 20 August 2009 61,500 133,561 9.55 4.54 1.09% 0.03% 11 November 2009 199,250 432,716 7.00 3.33 3.52% 0.10% 2 December 2009 350,000 760,104 5.85 2.78 6.19% 0.17% 24 February 2010 482,277 1,047,373 6.05 2.87 8.53% 0.23% 12 May 2010 150,000 325,759 4.87 2.31 2.65% 0.07% 18 August 2010 372,000 807,882 4.05 1.92 6.58% 0.18% 28 October 2010 1,151,197 2,500,084 3.13 1.44 20.36% 0.55% Total 5,653,008 12,276,783 - - 100% 2.71%

Notes: (1) Number of warrants and exercise prices shown is adjusted for the rights issue in April 2008. (2) The adjustment has been calculated on the basis of the closing price at 28 October 2010 of DKK 3.13.

107 The weighted average subscription price per Share per tion, the employee may only exercise warrants issued in outstanding warrant is approximately DKK 13 (adjusted: respect of which the exercise date has commenced before DKK 6). The outstanding number of warrants represents termination. Certain warrants were either vested in full 10% of the Company’s registered share capital (calculated upon grant or are subject to specifi c provisions on accel- immediately prior to the Offering) and 2.7% of the Com- erated vesting in the event of mergers, change of control pany’s registered share capital on a fully diluted basis fol- and similar. lowing the Offering. EXERCISE PRINCIPLES FOR BOARD MEMBERS, General terms for the Company’s warrant pro- CONSULTANTS AND ADVISERS grammes Exercise of warrants issued to Board members, consul- VESTING PRINCIPLES GENERALLY tants and advisers is conditional upon the warrant holder being connected with the Company as a Board member, All warrants have been issued by the general meeting or consultant or adviser, respectively, on the date of exer- by the Board of Directors pursuant to valid authorisations cise. However, if the warrant holder’s position has been in the Articles of Association and the terms and condi- terminated without this being attributable to the warrant tions have in accordance with applicable legislation been holder’s actions or omissions, the warrant holder shall be incorporated in the Articles of Association. The descrip- entitled to exercise vested warrants in the predetermined tion below merely contains a summary of the terms and exercise periods. conditions applicable and does not purport to be complete. Warrants issued vest in general at a rate of 1/36th EXERCISE PERIODS or 1/48th per month from the date of grant. Some warrants have, however, been deemed vested in full upon Vested warrants may be exercised in four annual exercise grant. The warrants issued are subject to certain restric- periods that run for 21 days from and including respec- tions on exercise as more fully described below. tively the day after the Company’s publication of (i) the annual report notifi cation – or if such notifi cation is not VESTING AND EXERCISE PRINCIPLES FOR THE EXECUTIVE published – the annual report, (ii) the interim report (six- MANAGEMENT AND EMPLOYEES month report), (iii) the interim fi nancial report for the fi rst three months of the year, and (iv) the interim fi nancial Warrants granted prior to 1 July 2004 cease to vest upon report for the fi rst nine months of the year. With respect termination of the employment relationship regardless of to warrants granted prior to 14 May 2008 the exercise the reason for such termination. Warrants granted after 1 periods are two annual exercise periods that run for 21 July 2004 cease to vest upon termination of the employ- days from and including respectively the day after the ment relationship in the event that (i) a warrant holder Company’s publication of (i) the annual report notifi cation resigns without this being due to the Company’s breach – or if such notifi cation is not published – the annual of contract or (ii) if the Company terminates the employ- report, and (ii) the interim report (six-month report). In ment relationship where the employee has given the the event of liquidation, a merger, a demerger or a sale or Company good reason to do so. For warrants granted on share exchange of more than 50% of the share capital of 14 May 2008 and later to employees who are not com- the Company, the warrant holders may be granted an prised by the Danish Stock Option Act warrants cease to extraordinary exercise period immediately prior to the vest upon termination of the employment relationship transaction in which warrants may be exercised. regardless of the reason for such termination unless specifi cally agreed otherwise in connection with the employ- ADJUSTMENTS ment. The warrant holder will be entitled to exercise vested warrants in the fi rst coming exercise period after Warrant holders are entitled to an adjustment of the termination. If the fi rst exercise period after termination number of warrants issued and/or the exercise price falls within three months of the termination date, the applicable in the event of certain changes to the Compa- warrant holder shall, additionally, be entitled to exercise ny’s share capital at a price other than the market price in the following exercise period. In all other instances and in the event of payments of dividends in a given year than (i) and (ii) above warrants granted after 1 July 2004 in excess of 10% of the Company’s equity capital. Events continue to vest as they would normally have vested had giving rise to an adjustment include, inter alia, increases the employee remained employed by the Company. For or decreases to the share capital at a price below or warrants issued on 10 June 2006 to employees comprised above market value, respectively, and issuance of bonus by the Danish Stock Option Act, such employee will be Shares. entitled to keep all warrants issued to him/her in the event of the Company’s termination of the employment For the purpose of implementing the capital increases relationship unless the termination is caused by breach necessary in connection with the exercise of warrants, on the part of the employee. In case such employee the Board of Directors has been authorised to increase resigns from his/her position due to his/her own termina- the Company’s share capital by one or more issues of

108 Shares with a total nominal value corresponding to the The Board of Directors has been authorised to issue addi- number of warrants issued upon cash payment of the tional warrants and to determine the terms and condi- exercise price without any preemptive subscription rights tions thereof. Please refer to Part I, Section 21.4 to existing shareholders. “Description of the Company’s Articles of Association”.

VALUE AND DILUTIVE EFFECT OF WARRANTS 21.3 Historical development of the Company’s share capital The aggregate value of all warrants outstanding as of 28 October 2010 has been calculated as DKK 3 million using As of the Offering Circular Date, the Company’s share the Black-Scholes option pricing model on the assumption capital amounts to DKK 56,567,810 nominal value divided of (i) a share price corresponding to the closing price at into 56,567,810 Shares of DKK 1 nominal value. The 28 October, (ii) a volatility at 48%, (iii) no payment of div- Company has no share classes, and all shares are issued idends, and (iv) a risk-free interest rate at 1.95% annu- and fully paid up. ally. Table 12 below sets forth the changes in the Company’s To the extent that the existing warrants are exercised or share capital since 2007, but before the Offering: any further warrants are issued and exercised, it will result in dilution to the shareholders.

Table 12. Changes in share capital

Share capital before Share capital after Share price Date Transaction capital increase capital increase in DKK 12 March 2007 Cash contribution(1) 30,369,816 30,514,048 3.79(8) 10 September 2007 Cash contribution(2) 30,514,048 31,770,705 6.78(8) 14 March 2008 Cash contribution(3) 31,770,705 32,105,174 6.76(8) 17 April 2008 Cash contribution(4) 32,105,174 56,092,945 17.00 11 September 2008 Cash contribution(5) 56,092,945 56,287,507 9.40(8) 25 March 2009 Cash contribution(6) 56,287,507 56,438,320 6.46(8) 10 September 2009 Cash contribution(7) 56,438,320 56,567,810 6.48(8)

Notes: (1) Issuance of 144,232 Shares in connection with the subscription through the exercise of employee warrants. (2) Issuance of 1,256,657 Shares in connection with the subscription through the exercise of employee warrants. (3) Issuance of 334,469 Shares in connection with the subscription through the exercise of employee warrants. (4) Issuance of 23,987,771 Shares in connection with the Company’s rights issue in April 2008. (5) Issuance of 194,562 Shares in connection with the subscription through the exercise of employee warrants. (6) Issuance of 150,813 Shares in connection with the subscription through the exercise of employee warrants. (7) Issuance of 129,490 Shares in connection with the subscription through the exercise of employee warrants. (8) The share price indicated reﬂ ects the average subscription price per Share.

109 21.4 Description of the Company’s Articles of (including for example take-over of existing businesses) Association or the conversion of debt. The capital increase may be carried out with or without preemptive rights for existing Set forth below is a brief description of the Company and shareholders at the discretion of the Board of Directors. certain provisions contained in the Articles of Association The Board of Directors may also use the authorisation on of the Company as of the Offering Circular Date, as well one or more occasions and without preemption rights for as a brief description of certain provisions of the Danish the existing shareholders of the Company to issue shares Companies Act. Such summary does not purport to be to employees of the Company and its subsidiaries by cash complete and is qualiﬁ ed in its entirety by reference to payment at market price or at a discount price as well as the Company’s Articles of Association and Danish laws. by the issue of bonus shares.

OBJECT CLAUSE The Board of Directors is authorised to issue 42,848,803 warrants to the Board members, the Executive Manage- The Company’s object, as set out in Article 3 of the Arti- ment, the Senior Management, employees and consul- cles of Association, is to engage in medical research, pro- tants and advisers of the Company and the Company’s duction and the sale of medical products and related subsidiaries. The authorisation is limited to the extent business. that the number of Shares that may be subscribed through the exercise of warrants issued and outstanding SUMMARY OF PROVISIONS REGARDING THE BOARD OF in the Company may not exceed 10% of the Company’s DIRECTORS AND THE EXECUTIVE MANAGEMENT share capital as calculated at the time of grant of the warrants in question. Each warrant will confer the right to Pursuant to the Articles of Association, the part of the subscribe for one Share at a price corresponding at least Board of Directors elected by the shareholders at the to the share price at the date of issuance of the relevant general meeting shall be composed of not less than three warrants. The authorisation to issue warrants is valid until and no more than nine members. Board members are 20 April 2015. The Board of Directors has also been elected by the shareholders at the annual general meet- authorised to increase the share capital to the extent that ing for a term of one year. Members of the Board of warrants are exercised. Directors may stand for re-election. Currently, the Board of Directors consists of seven members who are elected At the Company’s annual general meeting held on 21 April by the shareholders. Board Members must retire from the 2010, the Board of Directors was authorised to allow the Board of Directors at the annual general meeting follow- Company to acquire up to 10% of the Company’s share ing their 70th birthday. capital as treasury shares. The authorisation is valid until the next annual general meeting. As of the Offering Circu- The Board of Directors shall employ an Executive Manage- lar Date, the Company has not used this authorisation. ment consisting of one to ﬁ ve members to attend to the day-to-day management of the Company, and the Board of Directors shall determine the terms and conditions of 21.5 Description of the Company’s Shares the employment. VOTING RIGHTS At the Company’s extraordinary general meeting held on 25 October 2010, the Board of Directors was authorised Each shareholder is entitled to one vote for each Share to increase the Company’s share capital by up to owned at the time of any general meeting. Compared 475,000,000 Shares. The authorisation is valid until 24 with Danish citizens, there are no limitations under the October 2015. Capital increases pursuant to this authori- Articles of Association or under Danish law on the rights sation may be carried out through cash contributions, of foreigners or non-Danish citizens to hold or vote the contributions in kind (including for example take-over of Company’s Shares. existing businesses) or the conversion of debt. The capital increase may be carried out with or without preemp- DIVIDEND RIGHTS tive rights for existing shareholders at the discretion of the Board of Directors. This authorisation will be exercised Pursuant to the Danish Companies Act, the shareholders in connection with the Offering. Accordingly, after com- may at general meetings authorise the distribution of pletion of the Offering, the remaining portion of the ordinary and extraordinary dividends. authorisation will entitle the Board of Directors to issue up to 79,025,330 Shares. Shareholders, including subscribers of Offer Shares, are eligible to receive any dividends for the year ending 31 In addition, the Board of Directors is authorised to December 2010 and any other dividends payable thereaf- increase the Company’s share capital by up to 5,500,000 ter. However, the Company has not to date declared or Shares. The authorisation is valid until 23 April 2013. Cap- paid any dividends and the Company currently intends to ital increases pursuant to this authorisation may be car- retain all available ﬁ nancial resources and any earnings ried out through cash contributions, contributions in kind generated by the operations for use in the business and

110 the Company does not anticipate paying any dividends in RIGHTS ATTACHING TO THE SHARES the foreseeable future. The payment of any dividends in the future will depend on a number of factors, including All Shares have equal rights and the Articles of Associa- future earnings, capital requirements, ﬁ nancial condition tion do not include provisions allowing for a conversion of and future prospects, applicable restrictions on the pay- the Shares. ment of dividends under Danish law and other factors that the Board of Directors may consider relevant. REGISTRATION OF SHARES

The Company’s dividends, if declared, are paid in DKK to All Shares are held in book-entry form and must be held the shareholders’ account set up through VP Securities. through a Danish bank or other institution authorised to There are no dividend restrictions or special procedures be registered as the custodian of such Shares (a “custo- for non-resident holders of the Company’s Shares. Divi- dian institution”) on accounts maintained in the computer dends which have not been claimed within three years system of VP Securities. The Shares are issued as non- from the time they are payable are forfeited and all such certiﬁ cated bearer shares but the name of the holder may dividends will accrue to the Company. be registered in the Company’s register of owners through the holder’s custodian institution. See Part III, Section 4.11 “Taxation” for a summary of certain tax consequences in respect of dividends or distribu- LIMITATIONS ON HOLDING OF SHARES tions to holders of Offer Shares. There are no limitations on the right to hold Shares under PREEMPTIVE SUBSCRIPTION RIGHTS the Articles of Association or Danish law.

Under Danish law, all shareholders have preemptive subscription rights in connection with capital increases 21.6 Provisions in the Articles of Association or effected as cash contributions. An increase in share capi- other rules, which may lead to a delay of a tal can be resolved by the shareholders at a general change of control of the Company meeting or by the Board of Directors pursuant to an authorisation given by the shareholders. In connection The Articles of Association authorise the Board of Direc- with an increase of the Company’s share capital, the tors to increase the share capital of the Company without shareholders may, by resolution at a general meeting, preemptive subscription rights for the existing sharehold- approve deviations from the general Danish preemptive ers, see Part I, Section 21.4 “Description of the Compa- rights of the shareholders. Under the Danish Companies ny’s Articles of Association”. One member of the Compa- Act, such resolution must be adopted by the afﬁ rmative ny’s Executive Management and one member of the vote of shareholders holding at least a two-thirds major- Company’s Senior Management have change of control ity of the votes cast and the share capital represented at provisions in their employment contracts which protect a general meeting. against subsequent changes to their employment, see Part I, Section 16.3 “Information regarding contract terms The Board of Directors may resolve to increase the Com- for the Executive Management and the Senior Manage- pany’s share capital without preemptive subscription ment”. Depending on the speciﬁ c circumstances, the rights for existing shareholders pursuant to the authorisa- Board of Directors’ decision to issue Shares without pre- tions set out in Part I, Section 21.4 “Description of the emptive subscription rights and/or the applicable change Company’s Articles of Association”. of control provisions may delay, defer or prevent a change of control of the Company. Shareholders will need to reg- Considering that neither the Offering nor any future issu- ister their shareholding no later than one week before a ance of new Shares can be expected to be registered general meeting in order to exercise their voting rights, under the Securities Act or with any authority outside see Part I, Section 21.8 “General meetings “. Denmark, U.S. shareholders and shareholders in jurisdictions outside Denmark may be unable to exercise their preemptive subscription rights. 21.7 Disclosure requirements

RIGHTS ON LIQUIDATION Pursuant to Section 29 of the Danish Securities Trading Act, a shareholder in a listed company is required to notify On liquidation or winding-up, shareholders will be entitled the listed company and the Danish FSA as soon as possi- to participate, in proportion to their respective sharehold- ble when the shareholder’s stake represents 5% or more ings, in any surplus assets remaining after payment of the of the voting rights in the company or the nominal value Company’s creditors. accounts for 5% or more of the share capital, and when a change of a holding already notiﬁ ed entails that the limits of 5, 10, 15, 20, 25, 50 or 90% and the limits of one- third and two-thirds of the share capital’s voting rights or nominal value are reached or are no longer reached.

111 The notifi cation shall provide information about the full Shareholders are entitled to attend general meetings, name, address or, in the case of undertakings, registered either in person or by proxy. A shareholder’s right to offi ce, the number of shares and their nominal value and attend general meetings and to vote at general meetings share classes as well as information about the basis on is determined on the basis of the shares that the share- which the calculation of the holdings has been made. holder owns on the registration date. The registration Failure to comply with the notifi cation requirements is date is one week before the general meeting is held. The punishable by a fi ne. shares which the individual shareholder owns are calculated on the registration date on the basis of the registra- When the company has received a notifi cation, it must pub- tion of ownership in the Company’s register of owners, as lish the content of such notifi cation as soon as possible. well as notifi cations concerning ownership which the Company has received with a view to update the ownership in the register of owners. In addition, any share- 21.8 General meetings holder who is entitled to attend a general meeting and who wishes to attend must have requested an admission The general meeting is the supreme authority in all mat- card from the Company no later than three days in ters, subject to the limitations provided by Danish law and advance of the general meeting. Shareholders who are the Articles of Association. The annual general meeting entitled to vote may vote by letter. Votes made by letter shall be held in the Greater Copenhagen area not later must be received by the Company no later than 12.00 than the end of April in each year. noon on the business day before the general meeting.

At the annual general meeting, the audited annual report Any shareholder is entitled to submit proposals to be dis- is submitted for approval, together with the proposed cussed at the general meetings. However, proposals by appropriations of profi t/treatment of loss and the election the shareholders to be considered at the annual general of the Board of Directors and auditors. In addition, the meeting must be submitted in writing to the Board of Board of Directors submits a report on the Company’s Directors not later than six weeks before the annual gen- activities during the past year, and the annual fee to the eral meeting. Board of Directors is submitted for approval. Extraordinary general meetings must be held at the General meetings are convened by the Board of Directors request of a general meeting, the Board of Directors, the with a minimum of three weeks’ notice and a maximum Company’s auditors or shareholders representing at least of fi ve weeks’ notice by publication in a national Danish 1/20 of the registered share capital. newspaper, by announcement on the Danish Commerce and Companies Agency’s IT Information System as well as All resolutions made by the general meeting may be on the Company’s webpage. A convening notice will also adopted by a simple majority of the votes, subject only to be forwarded to shareholders recorded in the Company’s the mandatory provisions of the Danish Companies Act register of owners, who have requested such notifi cation. and the Articles of Association. Resolutions concerning all amendments to the Articles of Association must be At the latest three weeks before a general meeting (inclu- passed by two-thirds of the votes cast as well as two- sive of the day of the general meeting), the Company thirds of the share capital represented at the general shall make the following information and documents meeting. Certain resolutions which limit a shareholder’s available on the Company’s webpage: the convening ownership or voting rights are subject to approval by a notice, the total number of shares and voting rights on nine-tenth majority of the votes cast and the share capi- the date of the convening notice, the documents that tal represented at the general meeting. Decisions to shall be presented at the general meeting, the agenda increase the obligations of the shareholders towards the and the complete proposals, as well as the forms to be Company require unanimity. used for proxy voting or voting by letter unless these are sent directly to the shareholders.

112 22. Material agreements

As part of the Company’s business, the Company has Under the terms of the purchase agreement, the Com- entered into a number of agreements with third parties pany remains responsible for fulfi lling all obligations under concerning research and development activities relating to the Shionogi licence agreement. In addition, the Company the Company’s product candidates. The Company has also remains obligated to prosecute, defend and assert certain previously entered into a number of strategic collabora- patent rights related to LCP-FenoChol. Furthermore, the tions concerning the use of the Company’s MeltDose Company is obligated to inform Cowen of any action, technology for certain product candidates within the car- claim, investigation, proceeding etc. relating to the Shion- diovascular business, including with Sandoz and Mylan. ogi licence agreement, the royalty stream or the intellec- These collaborations are no longer regarded as material to tual property rights, and the Company is obligated to the Company’s business following the Company’s decision cooperate and provide reasonable assistance to Cowen to focus its resources and efforts on the development of with any litigation, arbitration or other proceedings relat- LCP-Tacro. The following agreements represent all of the ing to the purchase agreement, the royalty stream or the agreements to which the Company is a party which are intellectual property rights. Except for certain exceptions, considered to be material to the Company’s business as the Company has agreed not to directly or indirectly of the Offering Circular Date: license or commercialise rights to a competing fenofi brate monotherapy product in North America. In connection COWEN HEALTHCARE ROYALTY PARTNERS L.P. – PURCHASE with the agreement the Company has signed a United AND LICENSE AGREEMENTS. States law security agreement and Danish law mortgage deed whereby the Company provides Cowen with a fi rst In April 2007, the Company entered into a licence agree- priority pledge of the patent applications, patents, know- ment with Shionogi (formerly Sciele) to develop and com- how and commercial use relating to LCP-FenoChol. mercialise LCP-FenoChol in the U.S., Canada, and Mexico. Under this licence agreement, Shionogi began marketing Cowen can also terminate the purchase agreement in the LCP-FenoChol in the U.S. in February 2008 under the event that the licence agreement regarding the produc- brand name Fenoglide. Under the terms of the licence tion and sale of LCP-FenoChol is terminated without the agreement Shionogi agreed to use commercially reason- written consent of Cowen. The purchase agreement with able efforts to commercialise LCP-FenoChol in the U.S., Cowen can be terminated by the Company in the event Canada, and Mexico. Shionogi recently gave notice to the that any payment due to the Company under the pur- Company of termination of the licence agreement with chase agreement is not made in full on the agreed pay- the Company, effective no later than February 2011. ment date and Cowen fails to correct this within a certain timeframe. In August 2008 the Company entered into a purchase agreement with Cowen. According to the terms of the At present Cowen has not exercised its right to terminate purchase agreement, all future royalty and potential mile- the purchase agreement as a result of Shionogi’s notice stone payments on or after 1 July 2008 related to Feno- to terminate the licence agreement regarding LCP-Feno- glide in North America due to the Company from Shionogi Chol, and the parties have initiated a process with a view (or any other licensee of LCP-FenoChol) shall be made to to transfer the NDA for LCP-FenoChol to Shore Pharma- Cowen. As part of its agreement with Cowen, the Com- ceuticals, Inc. Under the purchase agreement, the Com- pany also granted to Cowen an exclusive, royalty-free pany and Cowen have agreed that, in the event any license, with right to sub-license, to develop, manufacture licence agreement regarding LCP-FenoChol is terminated, and sell LCP-FenoChol in the U.S., Canada, and Mexico, they shall each use commercially reasonable efforts, at which licence is subject to the prior rights granted by the each party’s own cost and expense, to locate and secure Company to Shionogi. a replacement licensee to develop, make, use and sell LCP-FenoChol. Under the purchase agreement, at the rea- In consideration for the sale and assignment of the future sonable direction of Cowen, the Company also has the royalty stream from the future sales of LCP-FenoChol, and obligation to take all actions necessary to enforce its for the intellectual property rights, Cowen made an rights and the rights of Cowen under the licence agree- upfront, irrevocable, non-refundable and non-deductible ment with Shionogi, including Shionogi’s obligation to use payment to the Company of USD 29 million (DKK 152 mil- commercially reasonable efforts to manufacture, market, lion). In addition to the upfront payment, under the terms sell and commercialize Fenoglide in the U.S., Canada, and of the purchase agreement with Cowen the Company may Mexico. be entitled to additional payments totalling USD 76 million (DKK 397 million) upon the realisation of certain sales milestones, but subject to certain conditions. See “Risk factors – Risks related to fi nancial results”.

113 The Company will be obligated to undertake obligations and PPD DEVELOPMENT, LP AND PPD GLOBAL LIMITED – liabilities towards any new licensee similar to those of the MASTER SERVICES AGREEMENT FOR CLINICAL STUDIES. Company set forth in the licence agreement with Shionogi that is being terminated. These obligations include: In September 2008, the Company entered into a Master Service Agreement with PPD regarding the performance • The granting of an exclusive royalty bearing licence to by PPD of clinical development services for the Company. certain intellectual property rights of the Company to The Company’s Phase III study of LCP-Tacro in stable kid- develop and commercialise LCP-FenoChol in the U.S., ney transplant patients, which was initiated in the second Canada, and Mexico, for use in the prevention, pallia- half of 2008. The Company expects that the Company’s tion or treatment of any condition, indication or dis- Phase III clinical study of LCP-Tacro in de novo kidney ease in humans. transplant patients will also be covered by this Master Service Agreement. • The indemnifi cation for the losses arising out of third party claims resulting from the Company’s negligent or Under the terms of the agreement and the accompanying wilful misconduct in the performance of the Company’s project addenda, PPD has undertaken to provide certain obligations under the terms of the licence agreement fee-based services relating to the above mentioned stud- as well as from breach of the representations, warran- ies. In addition, the Company has undertaken to reim- ties, covenants or obligations pursuant to the licence burse PPD for any outlays and other expenses. The stud- agreement. ies are being conducted at a number of clinics including in the EU and North America, and PPD’s services include • The Company shall also indemnify the licensee for consulting assistance for the administration and co-ordi- losses arising out of third party claims resulting from nation of the study activities at the clinics. Further, PPD the development or commercialisation, including the will provide a number of services in connection with the manufacture, sale and use, of LCP-FenoChol in or out- clinical studies, including preparation of protocols, regula- side the U.S., Canada and Mexico by the Company or tory fi lings, recruitment of clinical investigators, monitor- the Company’s affi liates, sublicensees or customers ing, data processing, reporting and quality assurance. PPD (excluding the licensee) including product liability claims. has undertaken to exercise all commercially reasonable efforts to meet site enrolment as set forth in the applica- The purchase agreement is governed by the laws of the ble study plan. State of New York, U.S. The Company is entitled to all inventions, technology, H. LUNDBECK A/S - MELTDOSE TRANSFER AND LICENCE know-how or other intellectual property rights related to AGREEMENT. the study or LCP-Tacro or the applicable protocol.

In June 2002, the Company entered into a transfer and The Company has undertaken broad indemnifi cation obli- licence agreement with H. Lundbeck A/S, pursuant to gations to indemnify PPD for losses, liabilities, etc. relat- which H. Lundbeck A/S irrevocably transferred the full title ing to claims relating to the agreement or the studies, to all of its patent and know-how rights to the MeltDose except for claims arising from the negligence or inten- technology to the Company in consideration for Shares tional misconduct of PPD. PPD has undertaken to indem- and a non-exclusive, perpetual, worldwide, royalty-free nify the Company for losses, liabilities, etc. arising from licence from the Company back to H. Lundbeck A/S of the negligence or intentional misconduct of PPD. With the rights to develop and commercialise therapeutic or pro- exception of each party’s indemnifi cation obligations, phylactic MeltDose treatments of central or peripheral each party’s liability excludes indirect, special, incidental nervous system diseases. H. Lundbeck A/S agreed to or consequential damage or loss. make certain milestone payments to the Company if certain regulatory milestones are achieved with respect to H. The agreement expires three years after the date of the Lundbeck A/S products utilizing the MeltDose technology. agreement or until completion of already agreed services Subject to applicable Danish mandatory bankruptcy provi- (whichever is longer). The Company may terminate the sions, H. Lundbeck A/S is entitled to purchase the trans- agreement without cause at any time subject to 30 days’ ferred patents and know-how rights in the event that the notice. Either party may further terminate the agreement Company enters into any kind of liquidation, fi les for in the event of material breach by the other party or the bankruptcy or any kind of protection under applicable other party’s insolvency. bankruptcy laws, if the Company is declared bankrupt or insolvent or undergoes comparable procedures. H. Lund- The agreement is governed by the laws of the State of beck A/S’ purchase price is agreed at DKK 2.5 million, New York, U.S. Any dispute shall be submitted to binding with an added annual interest of 15% from the date of arbitration pursuant to the Commercial Arbitration Rules the agreement and until exercise of the purchase option. of the American Arbitration Association. The transfer and licence agreement is governed by Danish law.

114 23. Third-party information and statements by experts and declarations of any interest

There are no expert statements or declarations included in this Offering Circular.

For further information on market and industry information, see “General Information – Market and industry information”.

115 24. Documentation material

The following documents (which include those documents referred to in Section 156(2) of the Danish Companies Act) are available for inspection during usual business hours on any day (Saturdays, Sundays and public holidays excepted) at the Company’s registered ofﬁ ce, Kogle Allé 4, DK-2970 Hørsholm, Denmark:

• articles of Association and Memorandum of Associa- tion;

• annual reports for 2007, 2008 and 2009 of LifeCycle Pharma A/S and LifeCycle Pharma, Inc.;

• interim reports for the nine months ended 30 Septem- ber 2009 and 2010;

• report by the Board of Directors pursuant to section 156(2) of the Danish Companies Act;

• statement from PricewaterhouseCoopers regarding the Board of Directors’ statement; and

• Danish Offering Circular.

In addition, copies of the Danish Offering Circular and the International Offering Circular, with certain exceptions, including prohibition on access by persons located in the United States, can be downloaded from the Company’s website, www.lcpharma.com.

The documents referred to in Section 156(2) of the Dan- ish Companies Act include (i) a copy of the latest annual report, (ii) a statement from the Board of Directors dis- closing, to the extent that this would not be detrimental to the Company due to special circumstances, events of material importance which have occurred after the annual report was approved and which affect the Company and (iii) a statement by the auditor on the report of the Board of Directors.

116 25. Information on capital holdings

For information on material investments held by LifeCycle Pharma in other companies, see Part I, Section 7 “Organi- sational structure”.

117 26. Deﬁ nitions

Allocation Time 4 November 2010 at 12:30 p.m. CET, the time when anyone who is registered with VP Securities as a shareholder of the Company will be entitled to and allocated seven (7) Preemptive Rights for each Existing Share. Alta Partners Alta Partners includes Alta BioPharma Partners III, L.P., Alta BioPharma Partners III, GmbH & Co. Beteiligungs KG, and Alta Embarcadero BioPharma Partners III, LLC. Banking Day A day on which banks in Denmark are open for business. Board of Directors The Board of Directors of LifeCycle Pharma A/S, whose members currently consist of Paul Edick, Dr. Thomas Dyrberg, Dr. Jean Deleage, Kurt Anker Nielsen, Dr. Gérard Soula, Anders Götzsche and Mette Kirstine Agger. Clearstream Clearstream Banking S.A., 42 Avenue JF Kennedy, L-1855 Luxembourg. Closing Date 25 November 2010, the date on which delivery of the Offer Shares is expected to take place. Company LifeCycle Pharma A/S, company reg. (CVR) no. 26527767, Kogle Allé 4, DK-2970 Hørsholm, Denmark. Danske Markets Danske Markets, (division of Danske Bank), company reg. (CVR) no. 61126228. Euroclear Euroclear Bank S.A./N.V., 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium. Exchange Act The U.S. Securities Exchange Act of 1934, as amended. Executive Management Dr. William J. Polvino (President, Chief Executive Offi cer) and Peter G. Nielsen (Executive Vice President, Pharmaceutical Development and CMC). Existing Shareholders Shareholders registered with VP Securities as shareholders of the Company as at 4 November 2010 at 12:30 p.m. CET. Existing Shares 56,567,810 existing shares of nominal value DKK 1 per share in LifeCycle Pharma A/S immediately prior to the Offering. Handelsbanken Capital Markets Handelsbanken Capital Markets, (business unit of Svenska Handelsbanken AB (publ), organisation no. 502007-7862. IFRS International Financial Reporting Standards. Joint Global Coordinators Danske Markets and Handelsbanken Capital Markets. Group LifeCycle Pharma A/S and LifeCycle Pharma, Inc. together make up the LifeCycle Pharma Group. LifeCycle Pharma LifeCycle Pharma A/S, company reg. (CVR) no. 26527767, Kogle Allé 4, DK-2970 Hørsholm, Denmark. Major Shareholders LFI a/s, Novo A/S, and Alta Partners, which includes Alta BioPharma Partners III, L.P., Alta BioPharma Partners III, GmbH & Co. Beteiligungs KG, and Alta Embarcadero BioPharma Partners III, LLC. Offering Offering of up to 395,974,670 new Shares of DKK nominal value 1 each at a price of DKK 1.20 per Share with Preemptive Rights to Existing Shareholders at the ratio of 7:1. Offer Period The Offer Period is equivalent to the Subscription Period. Offer Price DKK 1,20 per Share. Offer Shares The 395,974,670 new Shares being offered. NASDAQ OMX NASDAQ OMX Copenhagen A/S. Preemptive Rights Preemptive rights allocated to Existing Shareholders to subscribe for Offer Shares. Prospectus Order Executive Order No. 223 of 10 March 2010 issued by the Danish Financial Supervisory Authority on the requirements for prospectuses. Remaining Shares Offer Shares that have not been subscribed for by the Company’s shareholders through exercise of their allocated Preemptive Rights or by other investors through the exercise of their Preemptive Rights acquired. Securities Act The U.S. Securities Act of 1933, as amended. Senior Management Timothy C. Melkus, Senior Vice President, Development Operations, Edward E. Koval, Senior Vice President, Business Development and Strategic Corporate Development, Dr. John Weinberg, Senior Vice President, Commercial Development and Strategic Planning and Johnny Stilou, Chief Financial Offi cer. Shares The Company’s ordinary shares of nominal value DKK 1 per share. Subscription Period 5 November to 18 November 2010. U.S. Holder A benefi cial owner of Shares that is for U.S. federal income tax purposes (i) a citizen or resident of the U.S., (ii) a corporation, or other entity treated as a corporation, created or organised under the laws of the U.S. or any State thereof, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source, or (iv) a trust if (1) a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. VP Securities VP Securities A/S.

118 27. Acronyms and glossary

27.1 Acronyms

BPAR Biopsy-Proven Acute rejection of a graft in a transplant patient, e.g. a kidney transplant, conﬁ rmed by Acute Rejection biopsy. cGMP Current Good Manufacturing That part of the pharmaceutical quality assurance which ensures that products are Practice consistently produced and controlled in conformity with current good manufacturing practices and quality standards appropriate for their intended use and as required by the product speciﬁ cation. CMO Contract Manufacturing A company that offers manufacturing services, with volume capabilities ranging from Organisation small amounts for preclinical research and development to larger volumes necessary for clinical studies purposes and commercialisation. CNI Calcineurin Inhibitor A class of drugs targeting calcineurin, which is a protein phosphatase activating the T cells of the immune system. Examples of CNIs are cyclosporine, tacrolimus and pimecrolimus. CRO Clinical Research Organisation An independent organization that has been delegated some or all of a sponsor’s responsibility for the initiation and oversight of a clinical investigation.

EMA European Medicines Agency A decentralised body of the European Union responsible for the scientifi c evaluation of applications for European marketing authorisation for medicinal products. FDA Food and Drug Administration The U.S. federal agency responsible for enforcing the Food and Drug laws enacted by U.S. Congress regarding the research, manufacture, and safety of food, biologics, devices, drugs and cosmetics. FDCA Federal Food, Drug and U.S. federal legislation on food, cosmetics and drug safety. Cosmetic Act GCP Good Clinical Practices Describes the practices, responsibilities and actions that must be followed in any clinical study to ensure the safety of study participants and the quality of the data. HDL High Density Lipoprotein A lipoprotein that contains relatively small amounts of cholesterol and triglycerides. Also sometimes referred to as the “good” cholesterol. LDL Low Density Lipoprotein A lipoprotein that contains relatively high amounts of cholesterol. Also sometimes referred to as the “bad” cholesterol. MAA Marketing Authorisation A complete dossier of information including chemical, pharmaceutical, biological, and Application clinical data which is sent to a regulatory authority to support a request for marketing authorisation in the European Union. NCE New Chemical Entity A novel medicinal product where the active ingredient is a chemical substance that has not previously been approved by the FDA. NDA New Drug Application Document submitted to the FDA as a request for approval to market the drug. It is submitted after the sponsor has signifi cant proof of the safety and effi cacy of the drug; mandatory under the Federal Food, Drug and Cosmetic Act. SPA Special Protocol Assessment A sponsor of a clinical study may submit a request to the FDA of special protocol assessment of a protocol, e.g. for a clinical study that will form the primary basis of an effi cacy claim in an NDA. The sponsor and FDA may reach agreement to the effect, e.g., that the FDA will not later alter its perspective on the issues of the agreed design, execution, or analyses proposed in the protocol(s) unless public health concerns unrecognised at the time of protocol assessment under this process are evident. TRx Total Prescriptions Total prescriptions per week that each physician writes

119 27.2 Glossary

30-month stay The automatic prohibition of FDA action on an ANDA or a 505(b)(2) NDA with a Paragraph IV certifi cation if the holder of the patent or the holder of the NDA fi les a patent infringement lawsuit against the applicant within 45 days after being notifi ed of the certifi cations. AB-rated Drug products that are AB-rated are considered by the FDA to be therapeutically equivalent, and health care providers may confi dently substitute the generic product for the reference-listed drug, relying on the fact that their safety and effectiveness should be the same. Bioavailability The speed at which a drug substance is absorbed in the bloodstream and the fraction of dose that reaches the blood circulation. Often expressed as the relative bioavailability as the area under the plasma concentration curve relative to a reference formulation, e.g. oral formulation vs. a formulation administered intravenously directly in the bloodstream (absolute bioavailability). Bioequivalent A drug is bioequivalent to another drug if the effi cacy and side effects of the two drugs are more or less identical, and it is absorbed in the body in the same manner and to the same degree as the drug to which it is compared. de novo patients Patients who for the fi rst time receive a therapy, e.g. de novo kidney transplant patients are patients who very recently received a kidney transplant. Food Effect Intake of food has an effect on the body’s absorption of drugs and therefore interacts with the bioavailability. Hatch-Waxman Act Legislation that allows manufacturers of generic drugs to fi le abbreviated applications for approval by the FDA. Also known as the Drug Price Competition and Patent Term Restoration Act of 1984. Immunosuppression Suppression of the immune response as by drugs or radiation, in order to prevent the rejection of transplants or to control autoimmune diseases. Late stage Describes a stage of clinical development of Phase II or later. Narrow therapeutic index Narrow therapeutic index describes cases in which there is a small difference between an efficacious dose and a toxic dose. Orange Book Orange Book is the common name of the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations”, which lists, among other things, patents protecting the active ingredient, formulation and method of use of a drug product, as well as the therapeutic equivalence ratings for reference-listed drugs and their generic copies. Paragraph IV certifi cation Paragraph IV certifi cation is a declaration that a patent listed in the Orange Book is invalid and/or will not be infringed by the generic drug in an ANDA or in the branded drug in a 505(b)(2) NDA. Pharmacokinetic Science that studies the actions of the body on the drug, including parameters such as absorption, distribution, metabolism, and elimination of drugs (ADME). Phase I study Clinical study involving the initial introduction of a compound into healthy human subjects prior to introduction into patients who have the disease the investigational drug is being studied to treat. Phase I/II study Initial clinical study involving the use of patients rather than healthy human subjects. Phase II study Clinical study typically involving a small sample of the intended patient population to assess the effi cacy of the compound for a specifi c indication, to determine dose tolerance and the optimal dose range as well as to gather additional information relating to safety and potential adverse effects. Phase III study Extensive clinical studies in a large number of patients. The drug is tested against placebos and existing treatments, if available. The studies are often double-blinded and require detailed statistical evaluations.

120 [Intentionally left blank]

121 II. Financial information Pursuant to paragraph 20.1 of Annex I of Commission The following cross reference table refers to information Regulation (EC) no. 809/2004 of 29 April 2004 imple- in the annual reports for the fi nancial years ended 31 menting Directive 2003/71/EC of the European Parliament December 2007, 2008 and 2009 and to the Company’s and of the Council as regards information contained in interim announcements for the six months ended 30 June prospectuses as well as the format, incorporation by ref- 2009 and 2010 and for the nine months ended 30 Sep- erence and publication of such prospectuses and dissemi- tember 2009 and 2010, as published via NASDAQ OMX nation of advertisements (the Prospectus Regulation), and available at the Company’s website: www.lcpharma. audited fi nancial information for the past three fi nancial com. Reference is made to all pages of the annual and years must be included in the Offering Circular. In accor- interim reports, as the pages set out in the cross refer- dance with article 28 of the Prospectus Regulation and ence table do not limit the historical information con- section 18(2) of the Prospectus Order, the following tained in the annual and interim reports. information will be incorporated in the Offering Circular by reference to the Company’s website: www.lcpharma.com.

Table 13. Cross reference table

Reference Reference Reference Reference Reference Reference Reference to LifeCycle to LifeCycle to LifeCycle to LifeCycle to LifeCycle to LifeCycle to LifeCycle Pharma’s Pharma’s Pharma’s Pharma’s Pharma’s Pharma’s Pharma’s Interim Interim Interim Interim Annual Annual Annual Report H1 Report H1 Report Q3 Report Q3 Report 2009 Report 2008 Report 2007 2010 2009 2010 2009 Page Page Page Page Page Page Page

Management review 3-18 3-36 3-32 1-8 1-10 1-9 1-8 Highlights and outlook 4 5 4-5 1-2 1 1-2 1-2 Financial Highlights/key fi gures 13 26-27 18-19 3 and 9-10 5 and 11-12 3 and 10-11 3 and 9-10 Organisation 14 n/a 23 n/a1) n/a1) n/a1) n/a1) Corporate Governance 15-16 30-35 27-29 n/a1) n/a1) n/a1) n/a1) Corporate social responsibility 16 n/a n/a n/a1) n/a1) n/a1) n/a1) Risk Management 16 28-29 25-26 n/a1) n/a1) n/a1) n/a1) Shareholder information 17 32-33 28 n/a1) n/a1) n/a1) n/a1) Executive Management’s and Board of Directors statement 18 36 32 8 10 8 8 Independent auditor’s report – audit opinion 19 37 33 n/a1) n/a1) 9 n/a1) Income Statement (for 2009, referred to as ”Statement of Comprehensive Income”) 21 39 37 11 13 12 11 Balance sheet 22-23 40-41 38-39 12-13 14-15 13-14 12-13 Cash fl ow statements 24 42 40 14 16 15 14 Statement of changes in equity 25 43-44 41-42 15 17 16 15 Notes 26-42 45-62 43-66 n/a1) n/a1) n/a1) n/a1) Summary of signifi cant accounting policies 26-31 45-50 43-49 5 7 5 5 Staff 32-33 51-52 51-52 n/a1) n/a1) n/a1) n/a1) Changes in share capital 36-37 55-56 58-59 n/a1) n/a1) n/a1) n/a1) Warrants 38-40 58-60 60-62 n/a1) n/a1) n/a1) n/a1)

Note 1) Not included in the interim reports of LifeCycle Pharma

123 Consolidated ﬁ nancial statements for 2007, 2008 and 2009

BOARD OF DIRECTORS’ AND EXECUTIVE MANAGEMENT’S STATEMENT

The Board of Directors and the Executive Management have considered and adopted the consolidated ﬁ nancial statements of LifeCycle Pharma A/S for the ﬁ nancial years 2007, 2008 and 2009 on 28 February 2008, 3 March 2009 and 24 February 2010, respectively.

The consolidated ﬁ nancial statements for 2007, 2008 and 2009 are incorporated by reference in Part II.

The consolidated ﬁ nancial statements for 2007, 2008 and 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for the annual reports of listed companies.

We consider the applied accounting policies to be appropriate and, in our opinion, the consolidated fi nancial statements present fairly, in all material aspects, the assets and liabilities, fi nancial position, results of the operation and cash fl ow of LifeCycle Pharma for the fi nancial years 2007, 2008 and 2009.

Hørsholm, 29 October 2010

LifeCycle Pharma A/S

Board of directors

______Paul Edick Thomas Dyrberg Jean Deleage (Chairman) (Deputy Chairman)

______Kurt Anker Nielsen Dr. Gérard Soula Anders Götzsche

______Mette Kirstine Agger

Executive Management

______William J. Polvino Peter G. Nielsen President and Chief Executive Ofﬁ cer. Executive Vice President, Pharmaceutical Development and CMC.

124 Interim consolidated ﬁ nancial statements for the nine months ended 30 September 2009 and 2010

BOARD OF DIRECTORS’ AND EXECUTIVE MANAGEMENT’S STATEMENT

The Board of Directors and the Executive Management have considered and adopted the interim consolidated ﬁ nancial statements for the nine months ended 30 September 2009 and 2010 for LifeCycle Pharma A/S on 11 November 2009 and 28 October 2010, respectively.

The interim consolidated ﬁ nancial statements for nine months ended 30 September 2009 and 2010 are incorporated by reference in Part II.

The interim consolidated ﬁ nancial statements are prepared in accordance with International Financial Reporting Stan- dards (IFRS) as adopted by the EU, IAS 34 and additional Danish disclosure requirements for listed companies.

We consider the applied accounting policies to be appropriate and, in our opinion, the interim consolidated fi nancial statements give a true and fair view of the assets and liabilities, fi nancial position, results of the operation and cash fl ows of LifeCycle Pharma for the nine months ended 30 September 2009 and 2010.

Hørsholm, 29 October 2010

LifeCycle Pharma A/S

Board of directors

______Paul Edick Thomas Dyrberg Jean Deleage (Chairman) (Deputy Chairman)

______Kurt Anker Nielsen Dr. Gérard Soula Anders Götzsche

______Mette Kirstine Agger

Executive Management

______William J. Polvino Peter G. Nielsen President and Chief Executive Ofﬁ cer. Executive Vice President, Pharmaceutical Development and CMC.

125 Independent auditor’s report on the consolidated ﬁ nancial statements for 2007, 2008 and 2009

TO THE READERS OF THIS OFFERING CIRCULAR:

We have audited the consolidated fi nancial statements for the fi nancial years 2007, 2008 and 2009 of LifeCycle Pharma A/S prepared and published by the board of directors and the executive management, which have all been provided with an Auditor’s Report without any qualifi cation or emphasis of matter. The consolidated fi nancial statements for 2007, 2008 and 2009 were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for listed companies.

The consolidated ﬁ nancial statements for 2007, 2008 and 2009 are included by reference in Part II.

Our audits for the ﬁ nancial years 2007, 2008 and 2009 were completed at 28 February 2008, 3 March 2009 and 24 February 2010, respectively.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the preparation and fair presentation of the consolidated ﬁ nancial statements for 2007, 2008 and 2009 in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for listed companies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated ﬁ nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the consolidated ﬁ nancial statements for 2007, 2008 and 2009 based on our audit. We conducted our audit in accordance with International and Danish Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated ﬁ nancial statements for 2007, 2008 and 2009 are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated fi nancial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated fi nancial statements.

We believe that the audit evidence we have obtained is sufﬁ cient and appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualiﬁ cation.

OPINION

In our opinion, the consolidated fi nancial statements give a true and fair view of the fi nancial position at 31 December 2007, 31 December 2008 and 31 December 2009 of the Group and of the results of the Group’s operations and cash fl ows for the fi nancial years 2007, 2008 and 2009 in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for listed companies.

Copenhagen, 29 October 2010

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab

______Torben Jensen State Authorised Public Accountant

126 Independent auditor’s review report on the interim consolidated ﬁ nancial statements for the nine months ended 30 September 2009 and 30 September 2010

TO THE READERS OF THIS OFFERING CIRCULAR:

We have reviewed the interim consolidated fi nancial statements for the periods 1 January – 30 September 2009 and 1 January – 30 September 2010 of LifeCycle Pharma A/S prepared and published by the Board of Directors and the Execu- tive Management, which have all been provided with an Auditor’s Report without any qualifi cation or emphasis of matter. The interim consolidated fi nancial statements for the periods 1 January – 30 September 2009 and 1 January – 30 September 2010 are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, IAS 34 and additional Danish disclosure requirements applying to interim reports of listed companies.

The interim consolidated ﬁ nancial statements for the periods 1 January – 30 September 2009 and 1 January – 30 Sep- tember 2010 are included by reference in Part II.

Our review for the periods 1 January – 30 September 2009 and 1 January – 30 September 2010 was completed at 28 October 2010.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

Management is responsible for the preparation of the interim consolidated ﬁ nancial statements for the periods 1 Janu- ary – 30 September 2009 and 1 January – 30 September 2010 and the true and fair view of the interim consolidated ﬁ nancial statements in accordance with IFRS as adopted by the EU, IAS 34 and additional Danish disclosure requirements for listed companies.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on the interim consolidated ﬁ nancial statements for the periods 1 January – 30 September 2009 and 1 January – 30 September 2010 based on our review.

We conducted our review in accordance with International and Danish Auditing Standards. A review of the consolidated fi nancial statements comprises inquiries mainly to the employees responsible for fi nances and presentation of fi nancial statements and performance of analytical and other review procedures. The scope of a review is signifi cantly less than that of an audit performed in accordance with Danish auditing standards and therefore provides less assurance that we become aware of all material matters which could be disclosed by an audit. We have performed no audit. Consequently, we express no audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the interim consolidated fi nancial statements do not give a true and fair view of the Group’s fi nancial position at 30 September 2009 and 30 September 2010 and of the Group’s results of operations and cash fl ows for the periods 1 January – 30 September 2009 and 1 January – 30 September 2010 in accordance with IFRS as approved by the EU, IAS 34 and additional Danish disclosure requirements for listed companies.

Copenhagen, 29 October 2010

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab

______Torben Jensen State Authorised Public Accountant

127 III. The Offering 1. Responsibility statements

For an overview of persons responsible reference is made to Part I, Section 1 “Persons responsible”.

129 2. Risk factors related to the Offering

For a description of risk factors in connection with the Offering reference is made to “Risk factors”.

130 3. Key information

3.1 Working capital 3.2 Capitalisation and debt

If the Offering is not completed or no other measures are The following table sets out the capitalisation as at 30 taken, the Company’s capital resources will not be suffi - September 2010. The information has been derived from cient to fi nance the Company’s operations for the next 12 the reviewed interim consolidated fi nancial statements for months as from the Offering Circular Date. the nine months ended 30 September 2010 incorporated by reference in Part II. Historically, the Company has been fi nanced by capital injections from the wCompany’s shareholders. The Com- As at 30 September 2010 pany believes that the capital resources prior to the (DKK millions) Offering will be suffi cient to fund the Company’s operations until the end of the fi rst quarter of 2011. Cash and cash equivalents 134.0 Finance lease obligations, The Company believes that the capital resources, includ- current portion(1) 5.7 ing the proceeds from the Offering, corresponding to Finance lease obligations, total net proceeds of approximately DKK 442 million, long-term portion(1) 10.0 together with the existing cash balances, will be suffi cient Equity to fund the Company’s operations until the fi rst quarter of Share capital 56.6 2013. Share premium 1,079.6 Retained earnings/losses (1,026.5) Developments in the Company’s working capital are gen- Exchange adjustment reserve 2.3 erally affected by a number of factors, including the clini- Total equity, net 111.9 cal and regulatory progress in the Company’s clinical pro- Total capitalisation(2) (3) 127.6 grammes, the obligations to existing and new collaboration partners, the ability to establish commercial Notes: (1) Financial lease obligations primarily relate to leasehold improvements and relations and licence agreements, the investments in non- laboratory equipment. Financial lease obligations, current portion consists of current assets, market developments, milestone payments lease payments payable within a period of 12 months as from 30 September and any future acquisitions that the Company may under- 2010. Financial lease obligations, long-term portion consists of lease payments payable after 30 September 2011. take. Hence, the Company may need additional funds and (2) There has been no material change in the Company’s capitalisation since 30 the Company may seek to obtain additional funding by September 2010. way of equity or debt fi nancing, collaborative agreements (3) Excludes cash and cash equivalents. with commercial partners or from other sources. The Company has no secured and no guaranteed debt.

3.3 Interest of natural and legal persons involved in the Offering

As set forth in Part I, Section 14.1 “Board of Directors of the Company”, some of the members of the Board of Directors have direct interests in/are employed by some of the Company’s Major Shareholders. As set forth in Part I, Section 17.2 “Shareholdings and Warrants for Members of the Board of Directors, the Executive Management and the Senior Management”, some of the members of the Board of Directors own shares and warrants to subscribe for Shares in the Company. The Company is not aware of any interests or potential conﬂ icts of interest in relation to the Offering that are material to the Company, other than the above.

131 3.4 Reasons for the Offering and use of The Company expects to receive net proceeds from the proceeds Offering of approximately DKK 442 million.

The reasons for the Offering are to provide additional The Company intends to use the largest part of the net funding for future clinical development of the Company’s proceeds from the Offering and existing cash balances product portfolio, for research and development activities mainly to further the development of LCP-Tacro in stable and for general corporate purposes. kidney transplant patients and de novo kidney transplant patients towards an NDA/MAA submission with the FDA LFI a/s, Novo A/S and Alta Partners have each made an and EMA, respectively, expected in the fi rst quarter of advance undertaking to exercise the Preemptive Rights 2013. allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Offer Shares. In addition, the net proceeds from the Offering will be used for development of new drugs along with general In addition, LFI a/s and Novo A/S have made advance corporate purposes, including administration, as well as to undertakings to subscribe for those Offer Shares that are obtain and maintain patents and submit registration not (i) subscribed for through the exercise of Preemptive applications with the FDA and other regulatory authori- Rights or (ii) otherwise subscribed for by shareholders ties. and investors who, prior to the expiry of the Subscription Period, have submitted binding undertakings to the Joint The amount as well as the timing of the actual expendi- Global Coordinators to subscribe for Offer Shares at the tures cannot be predicted with certainty, and the specifi c Offer Price. The advance undertakings made by LFI a/s use of the net proceeds of the Offering will depend upon and Novo A/S to subscribe for Remaining Shares have for numerous factors. Pending utilisation of such net pro- effect that they will be subordinate to the other under- ceeds, the Company intends to invest such funds in cash takings. deposits, short-term, interest-bearing securities and other similar low-risk investments in and outside Den- As a result of the binding advance undertakings described mark. above, the Company will, subject to the fulfi lment of the condition attached to the advance undertakings and the completion of the Offering, receive total gross proceeds of DKK 475 million, equivalent to 100% of the Offering.

132 4. Information concerning the securities to be offered

4.1 Type of securities, Allocation Time and ISIN 4.2 Applicable law and jurisdiction codes This Offering Circular has been prepared in compliance PREEMPTIVE RIGHTS with Danish legislation and regulations, including the Danish Securities Trading Act and the Danish Prospectus The allotment free of charge of the Preemptive Rights will Order. The Offering Circular is subject to Danish law. Any be made to the Existing Shareholders who are registered dispute which may arise as a result of the Offering shall as shareholders with VP Securities on 4 November 2010 be brought before the Danish courts of law. at 12:30 p.m. CET. Shares traded after 1 November 2010 will be traded ex Preemptive Rights, provided that Shares 4.3 Registration are traded with three-day settlement. All Preemptive Rights and Offer Shares will be delivered in The Preemptive Rights will have the ISIN code book entry form through allocation to accounts with VP DK0060255016. Securities through a Danish bank or other institution authorised as the custodian of such shares. VP Securities The Preemptive Rights have been approved for trading is located at Weidekampsgade 14, P.O. Box 4040, and offi cial listing on NASDAQ OMX and the Preemptive DK-2300 Copenhagen S, Denmark. The Preemptive Rights Rights can be traded on NASDAQ OMX during the period and the Offer Shares are issued in non-certifi cated bearer from 2 November 2010 at 9:00 a.m. CET to 15 November form. The Offer Shares will be issued to the bearer but 2010 at 5:00 p.m. CET. may be registered in the name of the holder in the Com- pany’s register of owners through the holder’s custodian The Subscription Period for the Offer Shares commences bank. on 5 November 2010 at 9:00 a.m. CET and closes on 18 November 2010 at 5:00 p.m. CET. 4.4 Currency The Offering is being made at the ratio of 7:1 which means that each Existing Shareholder will be allocated The Offering will be carried out and trading of the Pre- seven (7) Preemptive Rights per Existing Share and that emptive Rights and the Offer Shares will be effected in one (1) Preemptive Right will be required to subscribe for DKK. one (1) Offer Share at the Offer Price. The Offer Shares are denominated in DKK. OFFER SHARES EXCHANGE CONTROL REGULATION IN DENMARK The Offer Shares issued by the Company upon registration of the capital increase with the Danish Commerce and There are no governmental laws, decrees, or regulations Companies Agency shall be of the same class as the in Denmark that restrict the export or import of capital Existing Shares and will not be admitted to trading and (except for certain investments in areas in accordance offi cial listing on NASDAQ OMX until such registration has with applicable resolutions adopted by the United Nations taken place. Accordingly, shareholders and investors and the European Union), including, but not limited to, should note that the Offer Shares will not be admitted to foreign exchange controls, or that affect the remittance of trading and offi cial listing on NASDAQ OMX under a tem- dividends, interest or other payments to non-resident porary ISIN code. The Offer Shares will be listed on NAS- holders of the Offer Shares. As a measure to prevent DAQ OMX directly under the ISIN code for the Existing money laundering and fi nancing of terrorism, persons Shares (DK0060048148) following registration of the travelling in and out of Denmark carrying amounts of capital increase with the Danish Commerce and Compa- money (including, but not limited to, cash and travellers nies Agency, which is expected to take place on 25 checks) worth the equivalent of EUR 15,000 or more must November 2010. declare such amounts with the Danish Customs Authority when travelling in or out of Denmark.

133 4.5 Rights attached to the Preemptive Rights 4.6 Resolutions, authorisations and approvals to and the Offer Shares proceed with the Offering

PREEMPTIVE RIGHTS BOARD MEETING APPROVING THE CAPITAL INCREASE

One (1) Preemptive Right confers the right to subscribe The Offer Shares will be issued pursuant to Article 9 of for one (1) Offer Share of nominal DKK 1 each at the the Articles of Association which authorises the Board of Offer Price. The Preemptive Rights may be traded on NAS- Directors to issue up to 475,000,000 Shares of DKK 1 DAQ OMX during the period from 2 November 2010 at each. 9:00 a.m. CET to 15 November 2010 at 5:00 p.m. CET and exercised in the period from 5 November 2010 at 9:00 Pursuant to this authorisation, the Board of Directors a.m. CET to 18 November 2010 at 5:00 p.m. CET (the lat- passed a resolution on 29 October 2010 to increase the ter period is the Subscription Period). Company’s share capital. The minimum capital increase is nominal value DKK 1 and the maximum capital increase is The Preemptive Rights may be exercised only by using a nominal value DKK 395,974,670 (395,974,670 Offer number of Preemptive Rights that allow subscription for a Shares of DKK 1 each). whole number of Offer Shares. If a holder of Preemptive Rights does not have a sufﬁ cient number of Preemptive Rights to subscribe for a whole number of Offer Shares, 4.7 Allocation date for Preemptive Rights and such holder wishing to subscribe for Offer Shares must issue date of Offer Shares acquire in the market, during the trading period for Pre- emptive Rights, the number of Preemptive Rights neces- DATE SET FOR ALLOCATION OF PREEMPTIVE RIGHTS sary to subscribe for a whole number of Offer Shares or may choose to sell the Preemptive Rights during the same On 4 November 2010 at 12:30 p.m. CET, any person who period. Preemptive Rights that are not exercised by the is registered with VP Securities as a shareholder of the end of the Subscription Period will lapse with no value, Company will be allocated Preemptive Rights. Shares and a holder of Preemptive Rights at such time will not be traded after 1 November 2010 will be traded ex Preemp- entitled to compensation. The Subscription Period will end tive Rights provided that Shares are traded with custom- on 18 November 2010 at 5:00 p.m. CET. ary three-day value.

If the Offering is not completed, the exercise of Preemp- DATE SET FOR ISSUE OF OFFER SHARES tive Rights that has already taken place will automatically be cancelled, the subscription price for Offer Shares will Subscription for the Offer Shares may be made from 5 be refunded (less any brokerage fees), all Preemptive November 2010 at 9:00 a.m. CET to 18 November 2010 Rights will be null and void, and no Offer Shares will be at 5:00 p.m. CET. Accordingly, during this period the Offer issued. However, trades of Preemptive Rights executed Shares will be allocated through VP Securities by exercise during the trading period for Preemptive Rights will not be of Preemptive Rights. The Offer Shares are expected to be affected. As a result, investors who acquired Preemptive issued by the Company and the capital increase to be Rights will incur a loss corresponding to the purchase registered with the Danish Commerce and Companies price of the Preemptive Rights and any brokerage fees. Agency on 25 November 2010. The Offering may be with- Any withdrawal will be notiﬁ ed immediately to NASDAQ drawn and cancelled until the capital increase relating to OMX and announced as soon as possible in the same the Offer Shares has been registered with the Danish Danish daily newspapers in which the Offering was Commerce and Companies Agency. See Part III, Section announced. 5.6 “Withdrawal of the Offering”. Admission to trading and ofﬁ cial listing of the Offer Shares are expected to OFFER SHARES take place on 29 November 2010.

The Offer Shares will, when fully paid up and after registration of the capital increase with the Danish Commerce 4.8 Negotiability and transferability of Shares and Companies Agency, have the same rights as the Exist- and the Offer Shares ing Shares. See Part I, Section 21.5 “Description of the Company’s Shares”. NEGOTIABILITY AND TRANSFERABILITY

The Existing Shares are and the Offer Shares will be negotiable under Danish law and freely transferable.

134 4.9 Danish regulations governing mandatory SQUEEZE OUT takeover bids, redemption of shares and disclosure requirements According to Section 70 of the Danish Companies Act, shares in a company may be redeemed in full or in part by MANDATORY BIDS a shareholder holding more than nine-tenths of the shares and the corresponding voting rights in the com- Section 31 of the Danish Securities Trading Act includes pany. Furthermore, according to Section 73 of the Danish rules concerning public offers for the acquisition of shares Companies Act, a minority shareholder may require the in companies admitted to trading on a regulated market majority shareholder holding more than nine-tenths of (including NASDAQ OMX) or an alternative market. the shares and the corresponding voting rights to redeem the minority shareholder’s shares. If a shareholding is transferred, directly or indirectly, in a company with one or several share classes admitted to MAJOR SHAREHOLDINGS trading on a regulated market or an alternative market place, the acquirer shall enable all shareholders of the Pursuant to Section 29 of the Danish Securities Trading company to dispose of their shares on identical terms, if Act, a shareholder in a listed company is required to notify such transfer involves the acquirer obtaining a controlling the listed company and the Danish FSA as soon as possi- infl uence. ble when the shareholder’s stake represents 5% or more of the voting rights in the company or the nominal value An acquirer has a controlling infl uence when he directly or accounts for 5% or more of the share capital, and when a indirectly holds more than half of the voting rights in a change of a holding already notifi ed entails that the limits company, unless it is possible in special cases to clearly of 5, 10, 15, 20, 25, 50 or 90% and the limits of one- demonstrate that such holding does not constitute a con- third and two-thirds of the share capital’s voting rights or trolling interest. nominal value are reached or are no longer reached.

An acquirer who does not hold more than half of the vot- The notifi cation shall provide information about the full ing rights in a company, nevertheless has a controlling name, address or, in the case of undertakings, registered infl uence when he: offi ce, the number of shares and their nominal value and share classes as well as information about the basis on • has the right to appoint or dismiss a majority of the which the calculation of the holdings has been made. members of the supervisory board or equivalent man- Failure to comply with the notifi cation requirements is aging body and this body has a controlling infl uence in punishable by a fi ne. the company; When the company has received a notifi cation, it must • has the right to control the fi nancial and operational publish the content of such notifi cation as soon as possi- affairs of the company according to the articles of ble. association or an agreement;

• has the right to control the majority of voting rights in 4.10 Public takeover bids by third parties for the the company in accordance with any agreement with Company’s Shares during the previous or current other shareholders; or ﬁ nancial year

• holds more than one-third of the voting rights in the No take-over bids by third parties for the Company’s company and the actual majority of the votes on the Shares have been presented during the previous or cur- general meeting or any other managing body and rent fi nancial year. thereby possesses actual controlling infl uence over the company. 4.11 Taxation Warrants, call options and other potential voting rights, which may currently be exercised or converted must be The following is a summary of certain Danish income tax taken into account in the assessment of whether an and U.S. federal income tax considerations relating to an acquirer has a controlling infl uence. Exemptions from the investment in the Preemptive Rights and the Offer Shares. mandatory bid requirement may be granted under certain The summary is for general information only and does not circumstances by the Danish FSA. purport to constitute tax or legal advice. It is specifi cally

135 noted that the summary does not address all possible tax 90/435/EEC. Special rules also apply with respect to tax consequences relating to an investment in the Preemptive exempt dividend payments when the receiving company is Rights and the Offer Shares. The summary is based solely jointly taxed with the dividend-paying company or meets upon the tax laws of Denmark and the U.S. in effect on the conditions of section 31A of the Danish Corporate the Offering Circular Date. Both the Danish and U.S. tax Income Tax Act for being jointly taxed with the dividend- laws may be subject to change, possibly with retroactive paying company. effect. Shareholders who are not subject to full taxation in Den- The summary does not cover investors, to whom special mark tax rules apply, including professional investors, and therefore, for example, may not be relevant to certain Under Danish law, dividends paid in respect of shares are institutional investors, insurance companies, banks, stock generally subject to Danish withholding tax at the rate of brokers and investors liable for tax on return on pension 28% (27% from 1 January 2012). investments. There are specifi c rules that apply with regard to tax Investors in the Preemptive Rights and the Offer Shares exempt dividend payments to companies holding at least are advised to consult their tax advisers regarding the 10% of the shares in the Danish company paying the divi- applicable tax consequences of acquiring, holding, exer- dends if the taxation of dividends is waived or reduced cising and disposing of the Preemptive Rights and the pursuant to Directive 90/435/EEC or a double taxation Offer Shares based on their particular circumstances. treaty and if the receiving company and the dividend-pay- Investors who may be affected by the tax laws of other ing company are jointly taxed or meet the conditions for jurisdictions should consult their tax advisers with respect international joint taxation. In such situations, there is to the tax consequences applicable to their particular cir- normally no Danish withholding tax. cumstances. Non-resident shareholders (both individuals and compa- Danish taxation nies) holding less than 10% of the share capital which are tax resident in a jurisdiction which has a double taxation DIVIDENDS treaty or a tax information exchange agreement with Denmark may be eligible for a refund of a part of the Shareholders who are subject to full taxation in Denmark withholding tax. If the shareholder is a tax resident outside of the European Union but within a jurisdiction that Dividends received by individuals, who are subject to full has entered into a treaty on the exchange of tax informa- taxation in Denmark, are taxed as share income. For the tion, it is an additional requirement for eligibility for the income year 2010, share income is taxed at the rate of refund that the shareholder in aggregate with group 28% (27% from 1 January 2012) for share income up to related shareholders hold less than 10% of the share cap- DKK 48,300 (for married couples DKK 96,600), at the ital of the company. Eligible shareholders who comply rate of 42% for share income exceeding DKK 48,300 (for with certain certifi cation procedures may thus claim a par- married couples DKK 96,600). The relevant thresholds tial refund of the withholding tax from the Danish tax apply for the income years 2010-2013 and are subject to authorities, which will reduce the effective withholding annual adjustment from 2014. They include all share tax rate prevailing to the relevant double taxation treaty income derived by the individual or married couple rate (normally 15%). The claim for refund must be certi- respectively. fi ed by the shareholder’s local tax authorities on special forms prepared by the Danish tax authorities. The certi- Dividends paid to individuals, who are subject to full taxa- fi ed form must then be submitted to the Danish tax tion in Denmark, are generally subject to a withholding authorities. tax of 28% (27% from 1 January 2012). Accordingly, provided that the amount of dividends received together Denmark has concluded double taxation treaties with with other share income does not exceed DKK 48,300 approximately 80 countries, including the U.S., Switzer- (for married couples DKK 96,600 in total), individuals are land, Norway, Japan, Australia and all members of the not subject to any further taxation beyond the withhold- European Union (excluding France and Spain). Under the ing tax. current income tax convention between Denmark and the U.S. (the “Treaty”), dividends are subject to Danish with- Companies which hold less than 10% of the share capital holding tax at a maximum rate of 15%. This rate may be in a company that declares dividends are in 2010 liable to reduced to 5% if the dividends are paid to a company pay tax on the dividends received at a fl at rate of 25%. holding more than 10% of the share capital in the com- There are specifi c rules that apply with regard to tax pany paying the dividends. In both cases, the benefi cial exempt dividend payments to companies holding at least owners must be U.S. Holders eligible for Treaty benefi ts in 10% of the share capital in the dividend-paying company compliance with the procedures for claiming benefi ts as and Danish taxation is waived pursuant to Directive briefl y described above.

136 A separate regime for the reduction of withholding tax to principle. Consequently, a gain or a loss is calculated as the applicable tax treaty rate is available to residents of the difference between the value of the shares at the certain jurisdictions, such as the U.S. In order to qualify beginning and the end of the income year, beginning with for this regime, an eligible holder of shares must deposit the difference between the acquisition sum of the shares his shares with a Danish bank, and the shareholding must and the value of the shares at the end of the same be registered and administered through VP Securities. In income year. Upon realisation of the shares, i.e. redemp- addition, such shareholders must provide documentation tion or disposal, the taxable income of that income year from the relevant foreign tax authority as to the share- equals the difference between the value of the shares at holder’s tax residence and eligibility under the relevant the beginning of the income year and the value of the treaty. A special form prepared by the Danish Tax Authori- shares at realisation. If the shares have been acquired ties must be used. The shareholder can agree with the and realised in the same income year, the taxable income relevant custodian bank that the bank procures the rele- equals the difference between the acquisition sum and vant form. the price at realisation.

Distribution of additional shares in connection with an Capital gains and losses realised by companies from the increase of the share capital made as part of a pro rata sale of shares are tax exempt, if the company holds at distribution to all shareholders of a company (bonus least 10% of the share capital or if the company is or can shares as well as the allocation of preemptive rights) will be jointly taxed with the company pursuant to section 31 generally not be subject to Danish tax. or 31A of the Danish Corporate Income Tax Act. Losses are not deductible and cannot be offset against other tax- DISPOSAL OF SHARES able gains.

Shareholders who are subject to full taxation in Denmark Distributions in connection with a reduction of share capital will be taxed as dividends. It is possible to apply for an Individuals are taxed on share income from the sale of exemption from the Danish tax authorities allowing such shares at the rate of 28% (27% from 1 January 2012) for dividends to be taxed as capital gains on shares. the ﬁ rst DKK 48,300 in 2010 (for married couples DKK 96,600) and at the rate of 42% for income exceeding Preemptive Rights allocated to companies will be deemed DKK 48,300 (for married couples DKK 96,600 in total). to have been acquired at DKK 0. Upon the sale of allo- The relevant thresholds apply for the income years 2010- cated preemptive rights, a company’s gain or loss is taxed 2013 and are subject to annual adjustment from 2014. at the rate of 25% if the company holds less than 10% of Losses for individuals will be offset against share income the share capital. from listed shares for the year. Any residual loss will be offset against the share income from listed shares of a Any gains or losses arising on the sale of listed shares to cohabiting spouse. Any losses not utilised will be carried the issuing company will generally be taxed pursuant to forward for set-off against share income from listed the above rules on taxation of capital gains. shares for future years. Shareholders who are not subject to full taxation in Den- Offset of losses on listed shares is subject to the Danish mark tax authorities having received relevant information on the shareholder’s holding, which is usually done automat- A non-resident of Denmark will generally not be subject ically if the shareholder’s stockbroker is Danish. to Danish tax on the allocation of preemptive rights or on the sale or other disposition of preemptive rights or In the event that shares have been acquired by individuals shares unless the preemptive rights or shares can be allo- at different dates and at different prices, the purchase cated to a permanent establishment in Denmark in accor- price will, for the purposes of calculating the capital gain dance with the principles in the OECD Model Tax Conven- in the event of a partial sale, be determined as the aver- tion on Income and on Capital. age purchase price. Distributions in connection with a reduction of share capi- For individuals, if a Preemptive Right is sold, a gain or loss tal will be taxed as dividends and not as capital gains. It is taxable as share income. The preemptive right will be is possible to apply for an exemption from the Danish tax considered to have been acquired for DKK 0, and thus the authorities allowing such dividends to be taxed as capital entire gain or loss will be taxed as share income. gains. The distribution would, however be considered to be a capital gain if the shareholder is a company that ful- Capital gains or losses realised by companies on the sale ﬁ ls the requirements for receiving tax exempt dividends as of shares are taxable if the company holds less than 10% described above. of the share capital. Furthermore, companies holding less than 10% of the share capital are subject to tax on gains and losses on the shares based on the mark-to-market

137 TRANSFER TAXES/STAMP DUTIES cussion. In addition, the application and interpretation of certain aspects of the passive foreign investment com- Transfer of shares is not subject to any Danish share pany rules, referred to below, require the issuance of reg- transfer tax or Danish stamp duty. ulations which in many instances have not been promulgated and which may have retroactive effect. There can be U.S. Taxation no assurance that any of these regulations will be enacted or promulgated, and if so, the form they will take Internal Revenue Service Circular 230 Notice or the effect that they may have on this discussion. This To ensure compliance with Internal Revenue Service discussion is not binding on the U.S. Internal Revenue Circular 230, prospective investors are hereby noti- Service (“IRS”) or the courts. No ruling has been or will be fi ed that: (a) any discussion of United States federal sought from the IRS with respect to the positions and tax issues contained or referred to in this Offering issues discussed herein, and there can be no assurance Circular is not intended or written to be used, and that the IRS or a court will not take a different position cannot be used, by prospective investors for the pur- concerning the U.S. federal income tax consequences of pose of avoiding penalties that may be imposed on an investment in the Shares or that any such position them under the Internal Revenue Code; (b) such dis- would not be sustained. cussion is written in connection with the promotion or marketing of the transaction or matters addressed You are a “U.S. Holder” if you are a benefi cial owner of herein; and (c) prospective investors should seek Shares and you are: advice based on their particular circumstances from an independent tax adviser. • an individual citizen or resident of the United States for U.S. federal income tax purposes; The following is a summary of certain material U.S. federal income tax consequences of the acquisition, ownership • a U.S. domestic corporation, or other entity treated as and disposition of Preemptive Rights or Shares by a a domestic corporation for U.S. federal income tax pur- U.S. Holder. This summary deals only with persons that poses; are U.S. Holders and that will hold the Shares as capital assets (generally, for investment). The discussion does • an estate whose income is subject to U.S. federal not cover all aspects of U.S. federal income taxation that income tax regardless of its source; or may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, • a trust if (1) a U.S. court can exercise primary supervi- ownership or disposition of Preemptive Rights or Shares sion over the trust’s administration and one or more by particular investors, and does not address state, local, U.S. persons are authorized to control all substantial foreign or other tax laws. In particular, this summary does decisions of the trust or (2) has a valid election in not address the tax considerations applicable to investors effect under applicable U.S. Treasury regulations to be that own (directly or indirectly) 5% or more of the Com- treated as a U.S. person. pany’s voting shares, nor does this summary discuss all of the tax considerations that may be relevant to certain In addition, this discussion is limited to U.S. Holders who types of investors subject to special treatment under the are not resident in Denmark for purposes of the Treaty. U.S. federal income tax laws, such as certain fi nancial institutions, insurance companies, partnerships or other If a partnership (including for this purpose any entity entities classifi ed as partnerships for U.S. federal income treated as a partnership for U.S. federal income tax pur- tax purposes, investors liable for the alternative minimum poses) is a benefi cial owner of the Shares, the U.S. tax tax, individual retirement accounts and other tax-deferred treatment of a partner in the partnership generally will accounts, tax-exempt organisations, dealers in securities depend on the status of the partner and the activities of or currencies, investors that will hold the Shares as part the partnership. A holder of the Shares that is a partner- of straddles, hedging transactions or conversion transac- ship and partners in such a partnership should consult tions for U.S. federal income tax purposes or investors their own tax advisors concerning the U.S. federal income whose functional currency is not the U.S. dollar. tax consequences of purchasing, owning and disposing of Shares. This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed A “non-U.S. Holder” is a benefi cial owner of Shares that U.S. Treasury Department income tax regulations issued is not a U.S. Holder for U.S. federal income tax purposes. under the Code, legislative history, and judicial and administrative interpretations thereof, as well as on the THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSE- income tax treaty between the U.S. and Denmark (the QUENCES SET OUT BELOW IS FOR GENERAL INFORMATION “Treaty”), all as of the date hereof. All of the foregoing ONLY. ALL PROSPECTIVE PURCHASERS SHOULD CONSULT are subject to change at any time, and any change could THEIR OWN TAX ADVISERS AS TO THE PARTICULAR TAX be retroactive and could affect the accuracy of this dis- CONSEQUENCES TO THEM OF OWNING THE SECURITIES,

138 INCLUDING THEIR ELIGIBILITY FOR THE BENEFITS OF THE DIVIDENDS TREATY, THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND POSSIBLE CHANGES General IN TAX LAW. Subject to the PFIC rules discussed below, distributions paid by the Company out of current or accumulated earn- PREEMPTIVE RIGHTS ings and profi ts (as determined for U.S. federal income tax purposes), before reduction for any Danish withhold- The allocation of the Preemptive Rights to U.S. Holders ing tax paid by the Company with respect thereto, gener- will be treated for U.S. federal income tax purposes as a ally will be taxable to a U.S. Holder as foreign source divi- distribution of a stock right with respect to the Shares dend income, and will not be eligible for the dividends held by each shareholder. The receipt of the Preemptive received deduction allowed to corporations. Distributions Rights will not be included in the gross income of a U.S. in excess of current and accumulated earnings and profi ts Holder. Under proposed Treasury Regulations, the distri- will be treated as a return of capital to the extent of the bution will not be treated as a distribution under the PFIC U.S. Holder’s basis in the Offer Shares and thereafter as rules discussed below. capital gain. However, the Company does not expect to determine earnings and profi ts in accordance with U.S. If the fair market value of the Preemptive Rights at the federal income tax principles. Therefore, U.S. Holders time of the distribution equals 15% or more of the fair should expect that a distribution with respect to the Com- market value of the Shares at such time, the U.S. Holder pany’s Shares will be reported as a dividend. will be required to allocate the adjusted basis of the Shares immediately before the distribution of the Preemp- For taxable years beginning before 1 January 2011, cer- tive Rights between the Shares and the Preemptive Rights tain dividends paid by a foreign corporation are taxable to in proportion to their relative fair market values immedi- non-corporate U.S. Holders at the rate normally applicable ately after the distribution. If the fair market value of the to long-term capital gains, provided the foreign corpora- Preemptive Rights at the time of the distribution is less tion qualifi es for the benefi ts of a comprehensive income than 15% of the fair market value of the Shares at such tax treaty with the U.S. which meets certain require- time, the U.S. Holder will have a basis of zero in the Pre- ments, such as the Treaty, and the non-corporate U.S. emptive Rights received unless the U.S. Holder makes an Holders satisfy certain holding period requirements. The election to allocate the adjusted basis of the Shares Company believes that it qualifi es for the benefi ts of the between the Shares and the Preemptive Rights as Treaty. Non-corporate U.S. Holders should consult their described above. Such election must be made by the U.S. tax advisers to determine whether they are eligible to be Holder on the tax return for the year in which the distri- taxed at this favourable rate. A qualifi ed foreign corpora- bution occurs and must satisfy the requirements of the tion does not include any foreign corporation which is a Treasury Regulations. PFIC in the taxable year the dividend is paid or in the preceding taxable year. The holding period of the Preemptive Rights will include the period for which the U.S. Holder has held the Shares Foreign currency dividends with respect to which the Preemptive Rights are distrib- Dividends paid in Danish Kroner will be included in income uted. The holding period of a purchaser of the Preemptive in a U.S. dollar amount calculated by reference to the Rights will commence on the date of purchase. If a U.S. exchange rate in effect on the day the U.S. Holder Holder of Preemptive Rights exercises the right to pur- receives the dividends, regardless of whether the U.S. chase Offer Shares, the holding period of the Offer Holder converts the Danish Kroner into U.S. dollars. If div- Shares will commence on the date of the exercise and will idends received in Danish Kroner are converted into U.S. not include any period for which the holder of the Pre- dollars on the day they are received, the U.S. Holder gen- emptive Rights held the Shares with respect to which the erally will not be required to recognise foreign currency Preemptive Rights were distributed or the period for gain or loss in respect of the dividend income. A U.S. which the holder held the Preemptive Rights. Holder may have foreign currency gain or loss if it does not convert the amount of such dividend into U.S. dollars The exercise of Preemptive Rights to purchase Offer on the date of its receipt. Shares will not cause a U.S. Holder to recognise income. The U.S. Holder’s basis in the Offer Shares purchased by Effect of Danish withholding taxes exercise of the Preemptive Rights will equal the sum of As discussed in “Danish Taxation - Dividends - Sharehold- the basis, if any, in the Preemptive Rights exercised to ers who are not subject to full taxation in Denmark”, purchase the Offer Shares and the amount paid for the under current law, payments of dividends to foreign Offer Shares. investors are subject to a 28% Danish withholding tax. The rate of withholding tax applicable to U.S. Holders that A sale of the Preemptive Rights generally will be taxed in are eligible for benefi ts under the Treaty is reduced to a the same manner as described for a sale of Offer Shares maximum of 15%. For U.S. federal income tax purposes, under “Sale or other disposition” below. U.S. Holders will be treated as having received the

139 amount of Danish taxes withheld by the Company, and as MEDICARE TAX then having paid over the withheld taxes to the Danish taxing authorities. As a result of this rule, the amount of For taxable years beginning after 31 December 2012, a dividend income included in gross income for U.S. federal United States person that is an individual or estate, or a income tax purposes by a U.S. Holder with respect to a trust that does not fall into a special class of trusts that is payment of dividends will be greater than the amount of exempt from such tax, is subject to a 3.8% tax on the cash actually received (or receivable) by the U.S. Holder lesser of (1) the United States person’s “net investment from the Company with respect to the payment. income” for the relevant taxable year and (2) the excess of the United States person’s modifi ed adjusted gross Subject to certain limitations, a U.S. Holder will generally income for the taxable year over a certain threshold be entitled to a credit against its U.S. federal income tax (which in the case of individuals will be between liability, or a deduction in computing its U.S. federal tax- $125,000 and $250,000, depending on the individual’s able income, for Danish income taxes withheld by the circumstances). A holder’s net investment income will Company. U.S. Holders that are eligible for benefi ts under generally include its gross dividend income and its net the Treaty will not be entitled to a foreign tax credit for gains from the disposition of Shares, unless such divi- the amount of any Danish taxes withheld in excess of the dends or net gains are derived in the ordinary course of 15% maximum rate, with respect to which the holder can the conduct of a trade or business (other than a trade or obtain a refund from the Danish taxing authorities. The business that consists of certain passive or trading activi- limitation on foreign taxes eligible for credit is calculated ties). If you are a United States person that is an individ- separately with respect to specifi c classes of income. The ual, estate or trust, you are urged to consult your tax rules governing foreign tax credits are complex and, advisors regarding the applicability of the Medicare tax to therefore, you should consult your own tax advisers your income and gains in respect of your investment in regarding the availability of foreign tax credits in your par- the Shares. ticular circumstances. Instead of claiming a credit, you may, at your election, deduct such otherwise creditable PASSIVE FOREIGN INVESTMENT COMPANY Danish taxes in computing your taxable income, subject CONSIDERATIONS to generally applicable limitations under U.S. law. The Company expects that it will be a PFIC for U.S. federal U.S. Holders that are accrual basis taxpayers must convert income tax purposes for the 2010 taxable year and possi- Danish taxes into U.S. dollars at a rate equal to the aver- bly for future years. A foreign corporation will be a PFIC in age exchange rate for the taxable year in which the taxes any taxable year in which, after taking into account the accrue. All U.S. Holders must convert taxable dividend nature of the income and assets of the corporation and income into U.S. dollars at the spot rate on the date certain subsidiaries pursuant to the applicable “look- received. This exchange difference may reduce the U.S. through rules”, either (i) 75% or more of its gross income dollar value of the credits for Danish taxes relative to the is “passive income”, such as dividends, interest, rents and U.S. Holder’s federal income tax liability attributable to a royalties (the “income test”), or (ii) 50% or more of the dividend. average quarterly value of its assets is attributable to assets that produce passive income (“passive assets”) or Prospective purchasers should consult their tax advisers are held for the production of passive income (the “asset concerning the foreign tax credit implications of the pay- test”). ment of Danish taxes. Whether the Company meets the income test for the cur- SALE OR OTHER DISPOSITION rent taxable year or any future year will depend on a number of factors, including the Company’s ability to earn Subject to the PFIC rules discussed below, upon a sale or milestone payments, licence fees, royalties and other other disposition of Offer Shares, a U.S. Holder generally income from the Company’s operations and the timing will recognise capital gain or loss for U.S. federal income and amounts of the Company’s investments in assets that tax purposes equal to the difference, if any, between the are not passive assets. The Company expects that its amount realised on the sale or other disposition and the book assets will consist largely of cash and cash equiva- U.S. Holder’s adjusted tax basis in the Shares, each deter- lents (which are passive assets) for the current tax year mined in U.S. dollars. This capital gain or loss will be long- and the foreseeable future. Consequently, whether the term capital gain or loss if the U.S. Holder’s holding Company meets the asset test will depend largely on the period in the Shares exceeds one year. For a non-corpo- value of its goodwill, which is considered part of the rate U.S. Holder, the maximum long-term capital gains operating assets that are not held for the production of rate is 15% prior to 1 January 2011. Any gain or loss gen- passive income. The value of the Company’s goodwill may erally will be U.S. source. be determined based upon the price at which the Compa-

140 ny’s Shares will trade on NASDAQ OMX. Due to the possi- the exchange is located; (ii) the foreign exchange has bility of substantial fl uctuations in the price of the Com- trading volume, listing, fi nancial disclosure, and other pany’s Shares, the Company cannot provide any requirements designed to prevent fraudulent and manipu- assurance whether the Company will meet the asset test lative acts and practices, remove impediments to, and in any given year. Accordingly, the Company cannot offer perfect the mechanism of, a free and open market, and any assurance that the Company will or will not be a PFIC to protect investors; (iii) the laws of the country in which for any taxable year, including 2010, even if the Company the exchange is located and the rules of the exchange meets the income test with respect to any such year. ensure that these requirements are actually enforced; and (iv) the rules of the exchange effectively promote the If the Company is a PFIC in any year during which a U.S. active trading of listed stocks. The U.S. Internal Revenue Holder owns Shares, and the U.S. Holder has not made a Service (“IRS”) has not identifi ed specifi c foreign mark to market or qualifi ed electing fund election (each exchanges that meet these criteria. The Company believes as described below), the U.S. Holder generally will be that NASDAQ OMX, on which the Company’s Shares are subject to special rules (regardless of whether the Com- traded, satisfi es these four requirements. For these pur- pany continues to be a PFIC) with respect to (i) any poses, the Shares generally will be considered regularly “excess distribution” (generally, any distributions received traded during any calendar year during which they are by the U.S. Holder on the Shares in a taxable year that traded, other than in de minimis quantities, on at least are greater than 125% of the average annual distributions 15 days during each calendar quarter (or on at least 1/6 received by the U.S. Holder in the three preceding taxable of the days remaining in the quarter in which an initial years or, if shorter, the U.S. Holder’s holding period for public offering occurs). Any trades that have as their prin- the Shares) and (ii) any gain realised on the sale or other cipal purpose meeting this requirement will be disre- disposition of Shares. Under these rules (a) the excess garded. distribution or gain will be allocated rateably over the U.S. Holder’s holding period, (b) the amount allocated to the A U.S. Holder that makes a mark to market election must current taxable year and any taxable year prior to the fi rst include as ordinary income for each year an amount equal taxable year in which the Company is a PFIC will be taxed to the excess, if any, of the fair market value of the as ordinary income, and (c) the amount allocated to each Shares at the close of the taxable year over the U.S. taxable year other than the current taxable year will be Holder’s adjusted basis in the Shares. An electing holder subject to tax at the highest rate of tax in effect for the may also claim an ordinary loss deduction for the excess, applicable class of taxpayer for that year and an interest if any, of the U.S. Holder’s adjusted basis in the Shares charge will be applied. If the Company ceases to be a over the fair market value of the Shares at the close of PFIC, a U.S. Holder may make an election (a “deemed sale the taxable year, but this deduction is allowable only to election”) to be treated for U.S. federal income tax pur- the extent of any net mark to market gains for prior poses as having sold its Shares on the last day of the last years. The U.S. Holder’s basis in the Shares will be taxable year during which the Company was a PFIC. A U.S. adjusted each year to refl ect any such income or loss Holder that makes a deemed sale election will cease to be amounts. Gains from an actual sale or other disposition treated as owning stock in a PFIC. However, gain recogn- of the Shares will be treated as ordinary income, and any ised by a U.S. Holder as a result of making the deemed losses incurred on a sale or other disposition of the sale election will be taxed as ordinary income and will be Shares will be treated as an ordinary loss to the extent of subject to the interest charge rules described above. any net mark to market gains for prior years. Once made, the election cannot be revoked without the consent of If the Company is a PFIC, a U.S. Holder generally will be the IRS unless the Shares cease to be marketable. If the subject to similar rules with respect to distributions to the Company is a PFIC for any year in which the U.S. Holder Company by, and dispositions by the Company of the owns the Shares but before a mark to market election is shares of, any direct or indirect subsidiaries the Company made, the interest charge rules described above will apply may have in the future that are also PFICs (“Lower-tier to any mark to market gain recognised in the year the PFICs”). election is made.

U.S. Holders can avoid the treatment described above by Alternatively, a timely election to treat the Company as a making a mark to market election with respect to the qualiﬁ ed electing fund (a “QEF Election”) under the Inter- Shares (but not with respect to the stock of any lower- nal Revenue Code could be made to avoid the foregoing tier PFIC), provided that the Shares are “marketable”. rules with respect to excess distributions and disposi- Shares will be marketable if they are regularly traded on tions. The Company will comply with all reporting require- certain U.S. stock exchanges, or on a foreign stock ments necessary for you to make a QEF Election and will, exchange if (i) the foreign exchange is regulated or super- as promptly as practicable following the end of any tax- vised by a governmental authority of the country in which able year in which the Company determines that it is a

141 PFIC, provide to registered holders of Shares with U.S. If the Company is a PFIC with respect to any taxable year, addresses, and to other shareholders upon request, infor- each U.S. Holder must fi le IRS Form 8621, reporting distri- mation necessary for such an election. If a U.S. Holder butions received and gains realised with respect to each makes a QEF Election, a U.S. Holder would be currently PFIC in which it holds a direct or indirect interest. Prospec- taxable on its pro rata share of the Company’s ordinary tive purchasers should consult their tax advisers regarding earnings and net capital gain (at ordinary income and the Company’s status as a PFIC and the potential applica- capital gains rates, respectively) for each taxable year of tion of the PFIC regime. the Company for which the Company is classifi ed as a PFIC, regardless of whether dividend distributions were BACKUP WITHHOLDING AND INFORMATION REPORTING received. For the purposes of determining gain or loss on the disposition (including redemption or retirement) of Payments of dividends and other proceeds with respect Shares, a U.S. Holder’s initial tax basis in the Shares will to Shares in the U.S. by a U.S. paying agent or other U.S. be increased by the amount so included in gross income intermediary will be reported to the IRS and to the U.S. with respect to the Shares and decreased by the amount Holder as may be required under applicable regulations. of any non-taxable distributions on the Shares. In general, Backup withholding may apply to these payments if the a U.S. Holder making a timely QEF Election will recognise, U.S. Holder fails to provide an accurate taxpayer identifi - on the sale or disposition (including redemption and cation number or certifi cation of foreign or other exempt retirement) of Shares, capital gain or loss equal to the status or fails to report all interest and dividends required difference, if any, between the amount realised upon to be shown on its U.S. federal income tax returns. Cer- such sale or disposition and that U.S. Holder’s adjusted tain U.S Holders (including, among others, corporations) tax basis in those Shares. Such gain will be long-term if are not subject to backup withholding. U.S. Holders the U.S. Holder held the Shares for more than one year should consult their tax advisers as to their qualifi cation on the date of disposition. for exemption from backup withholding and the procedure for obtaining an exemption. Each U.S. Holder who desires to make a QEF Election must individually make the QEF Election. The QEF Election is A non-U.S. Holder generally may eliminate the require- effective for the U.S. Holder’s taxable year for which it is ment for information reporting and backup withholding by made and all subsequent taxable years and may not be providing certifi cation of its foreign status to the payor, revoked without the consent of the IRS. In general, a U.S. under penalties of perjury, on IRS Form W-8BEN. You Holder must make a QEF Election on or before the due should consult your own tax advisor as to the qualifi ca- date for fi ling its income tax return for the fi rst year to tions for exemption from backup withholding and the pro- which the QEF Election will apply. cedures for obtaining the exemption.

Based on the nature of the Company’s expected income, INFORMATION WITH RESPECT TO FOREIGN FINANCIAL the expected composition of the Company’s assets and ASSETS the business prospects, the Company does not expect to have signifi cant ordinary earnings or net capital gain in Under recently enacted legislation, individuals that own any taxable year in which the Company may be classifi ed “specifi ed foreign fi nancial assets” with an aggregate as a PFIC. Accurate predictions of the nature of the Com- value in excess of $50,000 in taxable years beginning pany’s income and the composition of assets, however, after 18 March 2010 will generally be required to fi le an are particularly diffi cult in view of the volatile nature of information report with respect to such assets with their the earnings patterns in technological industries such as tax returns. “Specifi ed foreign fi nancial assets” include emerging pharmaceutical and biotechnology industries any fi nancial accounts maintained by foreign fi nancial and available interest rates. Accordingly, there can be no institutions, as well as any of the following, but only if assurance that the Company’s expectations described they are not held in accounts maintained by fi nancial above will be fulfi lled. Investors should consult their own institutions: (i) stocks and securities issued by non-U.S. tax advisers concerning the applicability of the PFIC rules persons, (ii) fi nancial instruments and contracts held for and the merits of making a QEF Election if the Company is investment that have non-U.S. issuers or counterparties a PFIC for any taxable year. and (iii) interests in foreign entities. U.S. Holders that are individuals are urged to consult their tax advisors regarding the application of this legislation to their ownership of Shares.

142 Non-U.S. Holders If you are a non-U.S. Holder, you will not be subject to U.S. federal income tax on gain recognized on the sale, exchange or other disposition of your Shares unless:

• the gain is “effectively connected” with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment (or in the case of an individual, a ﬁ xed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis; or

• you are an individual, you are present in the United States for 183 or more days in the taxable year of such sale, exchange or other disposition and certain other conditions are met.

In the ﬁ rst case, the non-U.S. Holder will be taxed in the same manner as a U.S. Holder. In the second case, the non-U.S. Holder will be subject to U.S. federal income tax at a rate of 30% on the amount by which such the non- U.S. Holder’s U.S.-source capital gains exceed such non- U.S.-source capital losses.

If you are a corporate non-U.S. Holder, “effectively connected” gains that you recognize may also, under certain circumstances, be subject to an additional “branch proﬁ ts tax” at a 30% rate or at a lower rate if you are eligible for the beneﬁ ts of an income tax treaty that provides for a lower rate.

143 5. Terms and conditions of the Offering

5.1 Terms of the Offering, subscription ratio and Companies Agency. The merger of the ISIN codes will take allocation of Preemptive Rights place in VP Securities and is expected to take place on 1 December 2010. On 4 November 2010 at 12:30 p.m. CET, anyone who is registered with VP Securities as a shareholder of the Upon trading and ofﬁ cial listing of the Offer Shares, the Company will be entitled to and allocated seven (7) Pre- Offer Shares will be accepted for clearance through Euro- emptive Rights for each Existing Share. clear and Clearstream.

LFI a/s, Novo A/S and Alta Partners have each made an advance undertaking to exercise the Preemptive Rights 5.2 Offering and proceeds allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Offer Shares. The Offering comprises a maximum of 395,974,670 Offer Shares with a nominal value of DKK 1 each In addition, LFI a/s and Novo A/S have made advance undertakings to subscribe for those Offer Shares that are The gross proceeds of the Offering will total DKK 475 mil- not (i) subscribed for through the exercise of Preemptive lion (estimated net proceeds of DKK 442 million). Rights or (ii) otherwise subscribed for by shareholders and investors who, prior to the expiry of the Subscription Period, have submitted binding undertakings to the Joint 5.3 Completion of the Offering Global Coordinators to subscribe for Offer Shares at the Offer Price. The advance undertakings made by LFI a/s The Offering will only be completed if and when the Offer and Novo A/S to subscribe for Remaining Shares entail Shares subscribed for are issued by the Company upon that they will be subordinate to the other undertakings. registration of the capital increase with the Danish Com- merce and Companies Agency which is expected to take As a result of the binding advance undertakings described place on 25 November 2010. above, the Company will, subject to the fulfi lment of the condition attached to the advance undertakings and the An announcement concerning the results of the Offering completion of the Offering, receive total gross proceeds is expected to be made on 23 November 2010. See Part of DKK 475 million, equivalent to 100% of the Offering. III, Section 5.11 “Publication of the results of the Offer- ing”. One (1) Preemptive Right will entitle the holder to subscribe for one (1) Offer Share. Accordingly, the holder will have the right, upon payment of the Offer Price, to sub- 5.4 Subscription Period scribe for one (1) Offer Share for every one (1) Preemp- tive Right. No fractional Offer Shares will be issued The Subscription Period for the Offer Shares commences on 5 November 2010 at 9:00 a.m. CET and closes on 18 Shares traded after 1 November 2010 will be traded ex November 2010 at 5:00 p.m. CET. Preemptive Rights provided that Shares are traded with customary three-day value. See Part III, Section 5.12 “Procedure for exercise of and dealings in Preemptive Rights and treatment of Preemp- The Preemptive Rights and the Offer Shares will be avail- tive Rights” and Section 5.13 “Procedure for subscription able for delivery by allocation to accounts through the of Offer Shares not subscribed for through exercise of book-entry facilities of VP Securities. Preemptive Rights” below for a description of the procedure of exercise and subscription. The Preemptive Rights will be admitted to trading and offi cial listing on NASDAQ OMX under the ISIN code DK0060255016.The Offer Shares will be registered under the temporary ISIN code DK0060254985. The Offer Shares will not be traded and offi cially listed on NASDAQ OMX under the temporary ISIN code. The temporary ISIN code is expected to be merged with the permanent ISIN code for the Existing Shares (DK0060048148) with VP Securities as soon as possible following the registration of the capital increase with the Danish Commerce and

144 5.5 Expected timetable of principal events

Last day of trading of Existing Shares cum Preemptive Rights: 1 November 2010 First day of trading of Existing Shares ex Preemptive Rights: 2 November 2010 Trading period for Preemptive Rights commences on NASDAQ OMX: 2 November 2010 Allocation Time: 4 November 2010 at 12:30 p.m. CET through the computer system of VP Securities Subscription Period for Offer Shares begins: 5 November 2010 (the day after the Allocation Time) Trading period for Preemptive Rights ends: 15 November 2010 at 5:00 p.m. CET Subscription Period for Offer Shares ends: 18 November 2010 at 5:00 p.m. CET Publication of the results of the Offering: Not later than three Banking Days after the end of the Subscription Period (expected to be on 23 November 2010) Completion of the Offering: The Offering will only be completed if and when the Offer Shares subscribed for are issued by the Company upon registration of the capital increase with the Danish Commerce and Companies Agency which is expected to take place on 25 November 2010 Ofﬁ cial listing of and trading in Offer Shares under 29 November 2010 (7 Banking Days after the end of the Subscription existing ISIN code expected to take place: Period)

5.6 Withdrawal of the Offering

The Offering may be withdrawn at any time prior to regis- of Preemptive Rights executed during the trading period tration of the capital increase relating to the Offer Shares for Preemptive Rights will not be affected. As a result, has taken place with the Danish Commerce and Compa- investors who acquired Preemptive Rights will incur a loss nies Agency. The Rights Issue Agreement provides that corresponding to the purchase price of the Preemptive each of the Joint Global Coordinators may require the Rights and any brokerage fees. Any withdrawal will be Company to withdraw the Offering at any time prior to notiﬁ ed immediately to NASDAQ OMX and announced as the registration of the capital increase relating to the soon as possible in the same Danish daily newspapers in Offer Shares upon notiﬁ cation of termination of the which the Offering was announced. Rights Issue Agreement. Each of the Joint Global Coordi- nators is entitled to terminate the Rights Issue Agreement 5.7 Reduction of subscription upon the occurrence of certain exceptional and/or unpredictable circumstances, such as force majeure. The Rights Not applicable. Issue Agreement also contains closing conditions which the Company believes are customary for offerings such as the Offering and the closing of the Offering is dependent 5.8 Minimum and/or maximum subscription on compliance with all of the closing conditions set forth amounts in the Rights Issue Agreement. If one or more closing conditions are not met, each of the Joint Global Coordina- The minimum number of Offer Shares that a holder of tors may, at their discretion, also terminate the Rights Preemptive Rights may subscribe for will be one (1) Offer Issue Agreement and thereby require the Company to Share, requiring the exercise of one (1) Preemptive Right withdraw the Offering. and the payment of the Offer Price. The number of Offer Shares that a holder of Preemptive Rights may subscribe If the Offering is not completed, the exercise of Preemp- for is not capped tive Rights that has already taken place will automatically be cancelled, the subscription price for Offer Shares will be refunded (less any brokerage fees), all Preemptive Rights will be null and void, and no Offer Shares will be issued, potentially causing investors who may have acquired Preemptive Rights and/or Offer Shares (in an off- market transaction) to incur a loss. In relation to the withdrawal of the Offering, see the section entitled “Risk factors – Risks related to the Offering”. However, trades

145 5.9 Revocation of subscription orders Exercise instructions, without the required supporting documentation, sent from a person located in the U.S. or Instructions to exercise Preemptive Rights are irrevocable. such other jurisdiction in which it would not be permissible to subscribe for the Offer Shares will be deemed to be invalid, and no Offer Shares will be credited to institutions 5.10 Payment with addresses inside the U.S. or such other jurisdictions in which it would not be permissible to subscribe for the Upon exercise of the Preemptive Rights, the holder must Offer Shares without the required supporting documenta- pay DKK 1.20 per Offer Share for which it subscribes tion. The Company and the Joint Global Coordinators will . reject any exercise of Preemptive Rights in the name of Payment for the Offer Shares shall be made in Danish any person who, without providing required supporting Kroner at the time of subscription, however, not later documentation such as the investor letter applicable to than 18 November 2010 at 5:00 p.m. CET, against regis- persons located in the U.S., (i) provides for acceptance or tration of the Offer Shares in the transferee’s account delivery of Offer Shares an address in the U.S. or such with VP Securities. Holders of Preemptive Rights are other jurisdiction in which it would not be permissible to required to adhere to the account agreement with their subscribe for the Offer Shares, (ii) is unable to represent Danish custodian or other ﬁ nancial intermediaries through or warrant that such person is not in the U.S. or such which they hold Shares. Financial intermediaries through other jurisdiction in which it would not be permissible to whom a holder may hold Preemptive Rights may require subscribe for the Offer Shares, (iii) is acting for persons in payment by an earlier date. the U.S. or such other jurisdiction in which it would not be permissible to subscribe for the Offer Shares other than on a discretionary basis, or (iv) appears to the 5.11 Publication of the results of the Offering Company or its agents to have executed its exercise instructions or certiﬁ cations in, or dispatched them from, The results of the Offering will be communicated in a the U.S. or such other jurisdiction in which it would not company announcement which is expected to be released be permissible to make an offer of the Offer Shares. through NASDAQ OMX not later than three Banking Days after the end of the Subscription Period (expected to be See Part III, Section 5.14 “Jurisdictions in which the Offer- on 23 November 2010 ing will be made and restrictions applicable to the Offer- ing’’.

5.12 Procedure for exercise of and dealings in Accountholders who exercise their Preemptive Rights shall Preemptive Rights and treatment of Preemptive be deemed to have represented that no Preemptive Rights Rights are being exercised by or for the account or benefi t of persons located in the U.S. (subject to certain excep- The Preemptive Rights have been approved for and will be tions with respect to QIBs in accordance with procedures admitted to trading and offi cial listing on NASDAQ OMX. established by the Company in accordance with applicable law) or such other jurisdictions in which it would not be Holders of Preemptive Rights wishing to subscribe for permissible to make an offer of the Offer Shares. Offer Shares must do so through their own custodian institution, in accordance with the rules of such institu- Any holder who exercises its Preemptive Right shall be tion. The time until which notifi cation of exercise may be deemed to have represented that it has complied with all given will depend upon the holder’s agreement with, and applicable laws. Custodian banks exercising Preemptive the rules and procedures of, the relevant custodian insti- Rights on behalf of benefi cial holders shall be deemed to tution or other fi nancial intermediary and may be earlier have represented that they have complied with the offer- than the end of the Subscription Period. Once a holder ing procedures set forth in this Offering Circular. Neither has exercised his Preemptive Rights, the exercise may not the Preemptive Rights nor the Offer Shares have been be revoked or modifi ed. registered under the Securities Act.

Upon payment of the Offer Price and exercise of Preemp- Upon expiry of the Subscription Period, the Preemptive tive Rights, the Offer Shares will be allocated through VP Rights will lapse without value and the holders will not be Securities at the close of any Banking Day. The Offer entitled to any compensation. Holders of Preemptive Shares will not be issued or admitted to trading and ofﬁ - Rights who do not wish to exercise their Preemptive cial listing on NASDAQ OMX until registration of the capi- Rights to subscribe for Offer Shares may sell their Pre- tal increase has taken place with the Danish Commerce emptive Rights during the trading period for the Preemp- and Companies Agency. The admission to trading and tive Rights, and the transferee may use the acquired Pre- ofﬁ cial listing of the Offer Shares under the existing ISIN emptive Rights to subscribe for Offer Shares. Holders code on the NASDAQ OMX is expected to take place on wishing to sell their Preemptive Rights should instruct 29 November 2010. their custodian banks accordingly.

146 The Joint Global Coordinators may, from time to time, Shares. Only shareholders and investors who acquire and exercise, acquire and sell Preemptive Rights and acquire, exercise Preemptive Rights are guaranteed allocation of sell or subscribe for Offer Shares. Offer Shares in the Company and only in the event that the Offering is completed. Accordingly, Remaining Shares will only be available for allocation if the Offer Shares 5.13 Procedure for subscription of Remaining have not been subscribed for by the Company’s share- Shares holders through the exercise of allocated Preemptive Rights or by investors through the exercise of acquired Existing Shareholders and investors in Denmark wishing to Preemptive Rights. subscribe for Remaining Shares must do so by making binding undertakings through their own account-holding institution or through the Joint Global Coordinators. Exist- 5.14 Jurisdictions in which the Offering will be ing Shareholders in Denmark and investors in Denmark made and restrictions applicable to the Offering may use the subscription form that accompanies the Dan- ish Offering Circular. Existing Shareholders outside Den- WHERE THE OFFERING WILL BE MADE mark should contact their account-holding institution. Investors outside Denmark who are not Existing Share- The Offering consists of a public offering in Denmark and holders will be invited to participate in a separate process private placements in certain other jurisdictions. by the Joint Global Coordinators with a view to making binding undertakings to subscribe for Offer Shares and RESTRICTIONS APPLICABLE TO THE OFFERING upon providing other documentation as may be required by the Joint Global Coordinators. The subscription form or General restrictions any other binding undertakings must be in the possession of Danske Bank Corporate Actions or Handelsbanken Capi- The distribution of this Offering Circular and the Offering tal Markets no later than at 5.00 p.m. CET on 18 Novem- may, in certain jurisdictions, be restricted by law, and this ber 2010. Orders are binding and cannot be altered or Offering Circular may not be used for the purpose of, or cancelled. in connection with, any offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not Offer Shares which have not been subscribed for by the authorised or to any person to whom it is unlawful to Company’s shareholders through the exercise of their make such offer or solicitation. This Offering Circular does allocated Preemptive Rights or by other investors through not constitute an offer of or an invitation to exercise or the exercise of their acquired Preemptive Rights before purchase any Preemptive Rights or subscribe for Offer the expiry of the Subscription Period (“Remaining Shares in any jurisdiction in which such offer or invitation Shares”) may be subscribed for, without compensation to would be unlawful. The Company and the Joint Global the holders of unexercised Preemptive Rights, by Existing Coordinators require persons into whose possession this Shareholders and other investors who have made binding Offering Circular comes to inform themselves of and undertakings to subscribe for Offer Shares at the Offer observe all such restrictions. Neither the Company nor the Price before the end of the Subscription Period. In the Joint Global Coordinators accept any legal responsibility event that binding undertakings made by Existing Share- for any violation by any person, whether or not a pro- holders and other investors exceed the number of spective purchaser of Preemptive Rights or Offer Shares, Remaining Shares, the Shares will be allocated on the of any such restrictions. basis of a plan of distribution to be determined by the Board of Directors upon consultation with the Joint Global This Offering Circular may not be distributed or otherwise Coordinators. Allocation will be made on the basis of made available, and the Offer Shares may not be directly undertakings received without taking into account or indirectly offered, sold or subscribed for, and the Pre- whether or not the subscribers are shareholders. The emptive Rights may not be directly or indirectly offered, advance undertakings made by LFI a/s and Novo A/S to sold, acquired or exercised in the United States, Canada, subscribe for Remaining Shares have for effect that they Australia or Japan, unless such distribution, offering, sale, will be subordinate to the other undertakings. acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction, and the Com- Two shareholders, LFI a/s and Novo A/S have made pany and the Joint Global Coordinators receive satisfactory advance undertakings to take effect if the Offering is not documentation to that effect. The Offering Circular may fully subscribed, to subscribe for, in aggregate, not be distributed or otherwise made available, the Offer 166,167,687 Offer Shares corresponding to total gross Shares may not be directly or indirectly offered, sold or proceeds of approximately DKK 199.4 million. subscribed for and the Preemptive Rights may not be directly or indirectly offered, sold, acquired or exercised in Neither the Company nor the Joint Global Coordinators any other jurisdiction, unless such distribution, offering, can guarantee that investors or shareholders who want to sale, acquisition, exercise or subscription is permitted subscribe for Offer Shares will be allocated Remaining under applicable laws of the relevant jurisdiction.

147 The Company and the Joint Global Coordinators may Restrictions on sales in the European Economic Area require receipt of satisfactory documentation to that effect. In relation to each Relevant Member State (not including Denmark), an offer to the public of any Preemptive Rights Due to such restrictions under applicable legislations and or Offer Shares may not be made in any Relevant Member regulations, the Company expects that certain investors State prior to the publication of a prospectus which has residing in the U.S., Canada, Australia, Japan and other been approved by the competent authority in such Rele- jurisdictions may not be able to receive this Offering Cir- vant Member State or, where relevant, approved in cular and may not be able to exercise their Preemptive another Relevant Member State and notiﬁ ed to the com- Rights or subscribe for the Offer Shares. petent authority in such Relevant Member State, all pursuant to the Prospectus Directive, except that with effect Restrictions on offers and sales in the U.S. from and including the date of implementation of the Prospectus Directive in such Relevant Member State, an The Preemptive Rights and the Offer Shares have not offering of Preemptive Rights and Offer Shares may be been approved by the U.S. Securities and Exchange made to the public at any time in such Relevant Member Commission, any state securities commission in the State: U.S. or any other U.S. regulatory authority, nor have any of such regulatory authorities passed upon or • to legal entities that are authorised or regulated to endorsed the merits of the Offering or the accuracy operate in the ﬁ nancial markets or, if not so authorised or adequacy of this Offering Circular. Any representa- or regulated, whose corporate purpose is solely to tion to the contrary is a criminal offence in the U.S. invest in securities;

The Preemptive Rights and the Offer Shares have not • to any legal entity fulfi lling at least two of the follow- been and will not be registered under the Securities Act, ing conditions (1) an average of at least 250 employ- or any state securities laws in the U.S. Any person in the ees during the last fi nancial year; (2) a total balance U.S. wishing to exercise Preemptive Rights or subscribe sheet of more than EUR 43 million and (3) an annual for Offer Shares must execute and deliver an investor let- net turnover of more than EUR 50 million, as shown in ter satisfactory to the Company and the Joint Global Coor- its last annual or consolidated accounts; dinators to the effect that such person is a QIB within the meaning of Rule 144A under the Securities Act and satis- • to fewer than 100 natural or legal persons (other than fi es certain other requirements, subject to certain excep- qualifi ed investors as defi ned in the Prospectus Direc- tions. tive) subject to obtaining the prior written consent of the Joint Global Coordinators, for any such offer; or Any person who wishes to exercise Preemptive Rights or subscribe for Offer Shares will be deemed to have • in any other circumstances falling within Article 3(2) of declared, warranted and agreed, by accepting delivery of the Prospectus Directive; this Offering Circular and delivery of Preemptive Rights or Offer Shares, either that he is exercising the Preemptive provided that no such offer of Offer Shares shall result in Rights and subscribing for the Offer Shares in an offshore a requirement for the publication by the Company or any transaction as defi ned by Regulation S of the Securities Joint Global Coordinator of a prospectus pursuant to Arti- Act, or that he is exercising the Preemptive Rights and cle 3 of the Prospectus Directive. subscribing for the Offer Shares in his capacity as a QIB and that he will not re-sell, pledge or otherwise transfer For the purposes of the above, the expression an “offer the Preemptive Rights or the Offer Shares except (i) in an of Preemptive Rights and Offer Shares to the public” in offshore transaction meeting the requirements of Regula- relation to Preemptive Rights and Offer Shares in any Rel- tion S of the Securities Act, (ii) pursuant to an effective evant Member State means the communication in any registration statement, or (iii) pursuant to an exemption form and by any means of suffi cient information on the from registration. terms of the Offering, the Preemptive Rights and Offer Shares so as to enable an investor to decide to exercise In addition, until the expiration of the 40-day period or acquire Preemptive Rights or subscribe for Offer beginning on the Offering Circular Date, an offer to sell or Shares, as the same may be varied in that Member State a sale of the Preemptive Rights and the Offer Shares by any measure implementing the Prospectus Directive in within the U.S. by a broker/dealer (whether or not it is that Member State. participating in the Offering) may violate the registration requirements of the Securities Act if such offer to sell or sale is made otherwise than pursuant to the foregoing.

148 Restrictions on sales in the United Kingdom In addition, LFI a/s and Novo A/S have made advance undertakings on 29 October 2010 to subscribe for those This communication is only being distributed to, and is Offer Shares that are not (i) subscribed for through the only directed at, (i) persons who are outside the United exercise of Preemptive Rights or (ii) otherwise subscribed Kingdom or (ii) investment professionals falling within for by shareholders and investors who, prior to the expiry article 19(5) of the Order or (iii) high net worth compa- of the Subscription Period, have submitted binding under- nies and other Relevant Persons. The Preemptive Rights takings to the Joint Global Coordinators to subscribe for and the Offer Shares are only available to, and any invita- Offer Shares at the Offer Price. tion, offer or agreement to subscribe for, purchase or otherwise acquire such Preemptive Rights or Offer Shares The advance undertakings have the effect that, upon will be engaged in only with, Relevant Persons. Any per- exercise of allocated Preemptive Rights, LFI a/s and Novo son who is not a Relevant Person should not act or rely A/S will each subscribe for 50% of any additional Shares on this document or any of its contents. until LFI a/s attains an ownership interest of one-third of the Company’s share capital. Subsequently, Novo A/S will Restrictions on sales in Canada, Australia and Japan only subscribe for Shares until Novo A/S attains an ownership interest of one-third of the Company’s share capital. This Offering Circular may not be distributed or otherwise Subsequently, LFI a/s and Novo A/S will each subscribe for made available, the Offer Shares may not be directly or 50% of any additional Shares. indirectly offered, sold or subscribed for, and the Preemp- tive Rights may not be directly or indirectly offered, sold, The advance undertakings as of the Offering Circular Date acquired or exercised in Canada, Australia or Japan, unless are conditioned upon no fact or circumstance occurring such distribution, offering, sale, acquisition, exercise or during the Offer Period which LFI a/s, Novo A/S or Alta subscription is permitted under applicable laws of the rel- Partners deem likely to have a material adverse effect on evant jurisdiction, and the Company and the Joint Global the Company’s business, ﬁ nancial condition or prospects Coordinators receive satisfactory documentation to that for future operations. Should any of the aforesaid occur, effect. LFI a/s, Novo A/S and/or Alta Partners may rescind their advance subscription undertakings. Due to such restrictions under applicable legislation and regulations, the Company expects that certain investors As a result of the advance undertakings described above, residing in Canada, Australia, Japan and other jurisdictions the Company will, subject to the fulﬁ lment of the condi- may not be able to receive this Offering Circular and may tion attached to the advance undertakings and the com- not be able to exercise their Preemptive Rights or sub- pletion of the Offering, receive total gross proceeds of scribe for the Offer Shares. No offering and no solicitation DKK 475 million, equivalent to 100% of the Offering. to any person is being made by the Company in any jurisdiction or under any circumstances that would be unlaw- The Company has received indications from the members ful. of the Board of Directors and the Executive Management holding shares in the Company that they will participate The Joint Global Coordinators reserve the right to require in the Offering by exercising all Preemptive Rights allo- documentation that attests to the genuineness of all cated to them. orders and the names of investors, and to provide such information to the Company. The Board of Directors, upon consultation with the Joint Global Coordinators, reserves 5.16 Plan of distribution the right not to allocate shares or to reduce any allocation of shares to certain investors under objective circum- Not applicable. stances, including an investor’s lack of ability to pay, or other similar circumstances. 5.17 Pre-Allotment information

5.15 Intentions of Major Shareholders of the There is no pre-allotment of Offer Shares. Company, the Board of Directors, the Executive Management or the Senior Management to participate in the Offering 5.18 Over allotment information

LFI a/s, Novo A/S and Alta Partners have each made an There is no over-allotment of Offer Shares. advance undertaking on 29 October 2010 to exercise the Preemptive Rights allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Offer Shares.

149 5.19 Offer Price The Company has given certain representations and war- ranties to the Joint Global Coordinators. The Company has The Offer Shares are offered at DKK 1.20 per Share with a furthermore undertaken to indemnify the Joint Global nominal value of DKK 1 each, free of brokerage fees. Coordinators for certain matters related to the Offering. The Rights Issue Agreement provides that each of the Joint Global Coordinators may require the Company to 5.20 Price disparity withdraw the Offering at any time prior to the registration of the capital increase relating to the Offer Shares upon All Existing Shareholders will be granted the right to sub- notiﬁ cation of termination of the Rights Issue Agreement. scribe for Offer Shares at the Offer Price, and conse- Each of the Joint Global Coordinators is entitled to termi- quently there is no price disparity, however, LFI a/s and nate the Rights Issue Agreement upon the occurrence of Novo A/S who prior to the publication of the Offering Cir- certain exceptional and/or unpredictable circumstances, cular have undertaken to the Company to subscribe for such as force majeure. The Rights Issue Agreement con- Offer Shares not subscribed for by exercise of Preemptive tains closing conditions which the Company believes are Rights will receive a subscription commission equal to customary for offerings such as the Offering and the clos- 2.5% of their full undertaking. ing of the Offering is dependent on compliance with all of the closing conditions set forth in the Rights Issue Agree- ment. If one or more closing conditions are not met, each 5.21 Payment intermediaries of the Joint Global Coordinators may, at their discretion, also terminate the Rights Issue Agreement and thereby Euroclear Bank S.A./N.V. require the Company to withdraw the Offering. See Part 1 Boulevard du Roi Albert II III, Section 5.6 “Withdrawal of the Offering”. B-1210 Brussels Belgium 5.23 Undertakings to subscribe Clearstream Banking S.A. 42 Avenue JF Kennedy LFI a/s, Novo A/S and Alta Partners have each made an L-1855 Luxembourg advance undertaking to exercise the Preemptive Rights Luxembourg allocated to them in the Offering to subscribe for, in aggregate, 229,806,983 Offer Shares.

5.22 Placing In addition, LFI a/s and Novo A/S have made advance undertakings to subscribe for those Offer Shares that are Danske Markets (division of Danske Bank) and Handels- not (i) subscribed for through the exercise of Preemptive banken Capital Markets (business unit of Svenska Han- Rights or (ii) otherwise subscribed for by shareholders delsbanken AB (publ) are Joint Global Coordinators. and investors who, prior to the expiry of the Subscription Period, have submitted binding undertakings to the Joint ADDRESSES OF JOINT GLOBAL COORDINATORS Global Coordinators to subscribe for Offer Shares at the Offer Price. The advance undertakings made by LFI a/s The addresses of the Joint Global Coordinators are: and Novo A/S to subscribe for Remaining Shares have for effect that they will be subordinate to the other under- • Danske Markets (division of Danske Bank) (CVR-no. takings. 61126228), Holmens Kanal 2-12, DK-1092 Copenha- gen K, Denmark; and The advance undertakings are conditioned upon no fact or circumstance occurring during the Offer Period which, • Handelsbanken Capital Markets (business unit of LFI a/s, Novo A/S or Alta Partners deem likely to have a Svenska Handelsbanken AB (publ)) (Organisation no. material adverse effect on the Company’s business, ﬁ nan- 202007-7862), Havneholmen 29, DK-1561 Copen- cial condition or prospects for future operations. Should hagen V, Denmark. any of the aforesaid occur, LFI a/s, Novo A/S and/or Alta Partners may rescind their advance subscription undertak- RIGHTS ISSUE AGREEMENT ings.

In connection with the Offering, the Company and the As a result of the binding advance undertakings described Joint Global Coordinators have entered into the Rights above, the Company will, subject to the fulﬁ lment of the Issue Agreement. condition attached to the advance undertakings and the completion of the Offering, receive total gross proceeds of DKK 475 million, equivalent to 100% of the Offering.

150 6. Admission to trading and ofﬁ cial listing

The Preemptive Rights have been approved for and will be 6.1 Market maker agreement admitted to trading and offi cial listing on NASDAQ OMX and the trading period for the Preemptive Rights will com- The Company has entered into a market maker agreement mence on 2 November 2010 at 9:00 a.m. CET and will with Danske Bank according to which Danske Bank will act close on 15 November 2010, at 5:00 p.m. CET under the as market maker for the Company’s Shares. The agree- ISIN code DK0060255016. ment implies that Danske Bank will continually quote bid and ask prices for the Company’s Shares. Upon registration of the capital increase relating to the Offer Shares with the Danish Commerce and Companies Agency which is expected to take place on 25 November 6.2 Price stabilisation and short positions 2010, the Offer Shares are to be issued and admission to trading and offi cial listing of Offer Shares under the exist- In connection with the Offering, the Joint Global Coordina- ing ISIN code. Admission to trading and offi cial listing of tors will not effect transactions which stabilise or maintain the Offer Shares under the existing ISIN code is expected the market price of the Preemptive Rights, the Offer to take place on 29 November 2010. See Part III, Section Shares and the Existing Shares at levels above those 5.1 “Terms of the Offering, subscription ratio and alloca- which might otherwise prevail in the open market. tion of Preemptive Rights”.

The Existing Shares are listed on NASDAQ OMX under the ISIN code DK0060048148.

151 7. Selling security holders and lock-up agreements

7.1 Shareholders that have indicated that they LOCK-UP AGREEMENT WITH THE BOARD OF DIRECTORS expect to sell their Shares or Preemptive Rights AND THE EXECUTIVE MANAGEMENT

The Company has not received any indications from The members of the Board of Directors and of the Execu- shareholders that they intend to sell their Shares or Pre- tive Management have each agreed for the period start- emptive Rights. ing on the date of this Offering Circular and ending 180 days counted from the completion of the Offering (expected to take place on 25 November 2010) not to 7.2 Lock-up agreements in connection with the sell, offer for sale, enter into any agreement regarding the Offering sale of, pledge or in any other way directly or indirectly transfer shares in the Company or other securities The Company, its Board of Directors and the Executive exchangeable into Shares in the Company or warrants or Management have entered into lock-up agreements with other options to acquire Shares in the Company nor to the Joint Global Coordinators. announce the intention to make any such act without the prior written consent of the Joint Global Coordinators. LOCK-UP AGREEMENTS WITH THE COMPANY Such consent is not to be unreasonably withheld or delayed by the Joint Global Coordinators. The obligation The Company has undertaken until 180 days counted shall not apply to the acquisition, subscription or disposal from the completion of the Offering (expected to take of Company Securities in relation to the exercise by such place on 25 November 2010 not to issue, sell, offer for persons of their rights in accordance with existing or sale, enter into any agreement regarding the sale of, future employee shareholdings and warrant programs and pledge or in any other way directly or indirectly transfer the obligation does not cover Preemptive Rights and Offer the Shares in the Company or other securities exchange- Shares acquired by such persons after the date of this able into Shares in the Company or warrants or other Offering Circular. options to acquire Shares in the Company (together “Company Securities”) or to announce the intention to make any such act without the prior written consent of the Joint Global Coordinators. Such consent is not to be unreasonably withheld or delayed, if the transaction is motivated by reasonable business considerations attributable to the Company. The above-mentioned obligation of the Company shall not apply to transfers or issues of Company Securities to the Company’s employees and its subsidiary’s employees, the members of the Executive Management or the Board of Directors’ members in relation to the exercise by such persons of their rights in accordance with the existing or future employee shareholding and warrant programs.

152 8. Net proceeds and aggregate costs

The gross proceeds of the Offering will total DKK 475 million (estimated net proceeds of DKK 442 million).

The estimated expenses (ﬁ xed and discretionary) payable by the Company in connection with the Offering are as stated in Table 14 below.

Table 14. Costs of the Offering

Costs (DKK) million

Fees to the Joint Global Coordinators 16.0 Subscription commission to 5.0 Investors for advance undertakings Fees to auditors and legal advisers 7.5 Other expenses 4.5

Total costs 33.0

In connection with the Offering, the Company has undertaken to pay a subscription commission of 0.25% per Offer Share to the account-holding banks. Fees and commission to the Joint Global Coordinators and subscription commission to custodian institutions are variable, and the costs therefore depend on the results of the Offering.

Investors who prior to the publication of the Offering Cir- cular have undertaken, towards the Company, to subscribe for Offer Shares not subscribed to by exercise of Preemptive Rights (LFI a/s and Novo A/S) will receive a subscription commission equal to 2.5% of their full undertaking.

153 9. Dilution

The Company’s equity value as of 30 September 2010 was DKK 111.9 million or DKK 1.98 per Share. The equity per Share is determined by dividing the equity value by the total number of our Shares. After giving effect to the issue of the maximum number of Offer Shares (395,974,670 Offer Shares) at the Offer Price of DKK 1.20 per Share, and deducting commissions and estimated expenses, the pro forma equity value as of 30 Sep- tember 2010 would have been approximately DKK 553.9 million or DKK 1.22 per Share. This represents an immediate reduction in equity value per Share of DKK 0.75, corresponding to dilution of 38% for the Company’s shareholders, and an immediate dilution in adjusted equity per Share of DKK 0.02, corresponding to an increase of 2% for subscribers of Offer Shares. The following table illustrates the per Share dilution that investors in the Offer Shares will experience:

Offer Price per Share DKK 1.20 Equity per Share at 30 September 2010 DKK 1.98 Reduction in equity value per Share DKK 0.75 attributable to new investors

Equity value per Share after the DKK 1.22 Offering(1)(2) Increase per Share to new investors DKK 0.02 Percentage increase 2 %

Notes: (1) Dilution is determined by subtracting equity value per Share after the Offering from the Offer Price per Share. (2) Further dilution will occur upon exercise of outstanding warrants. Upon completion of the Offering, the number of warrants will increase and the exercise price thereof will decrease as the Offer Price is lower than the market price of the Shares of the Company. See Part I, Section 21.2 “Warrant programmes”.

154 10. Additional information

10.1 Advisers This Offering Circular can also, with certain exceptions, including prohibition on access by persons located in the • Danish legal counsel to the Company: U.S., be downloaded from the Company’s website: www. lcpharma.com. Mazanti-Andersen, Korsø Jensen & Partnere, St. Kongensgade 69, 1264 Copenhagen K, Denmark The distribution of this Offering Circular and the offering of the Preemptive Rights and the Offer Shares is, in cer- • Independent Auditor to the Company: tain jurisdictions, restricted by law. This Offering Circular does not constitute an offer to sell or an invitation to PricewaterhouseCoopers Statsautoriseret subscribe for or purchase any of the Preemptive Rights or Revisionsaktie selskab, Strandvejen 44, the Offer Shares in any jurisdiction in which such offer or 2900, Hellerup, Copen hagen, Denmark invitation is not authorised or to any person to whom it is unlawful to make such an offer or invitation. Persons into • Joint Global Coordinators: whose possession this Offering Circular comes are required to inform themselves about and to observe any Danske Markets (division of Danske Bank), Holmens such restrictions. Kanal 2-12, 1092 Copenhagen K, Denmark;

Handelsbanken Capital Markets (business unit of Svenska Handelsbanken AB (publ)), Havneholmen 29, 1561 Copenhagen V, Denmark

• Danish legal counsel to the Joint Global Coordinators:

Kromann Reumert, Sundkrogsgade 5, 2100 Copenha- gen Ø, Denmark

• US legal counsel to the Joint Global Coordinators:

Jones Day, 2, rue Saint-Florentin, 75001 Paris, France

10.2 Availability of the Offering Circular

Requests for copies of this Offering Circular may be addressed to:

Danske Bank A/S, Corporate Actions Holmens Kanal 2-12 DK-1092 Copenhagen K Tel. 70 23 08 34 E-mail: [email protected]

Handelsbanken Capital Markets Havneholmen 29 DK-1561 Copenhagen V Tel. 33 41 86 14 E-mail: [email protected]

155 IV. Appendices

Articles of association of LifeCycle Pharma A/S (Registration no 26 52 77 67)

NAME, REGISTERED OFFICE AND OBJECTS OF THE 7.3825 (adjusted following the Rights Issue in April 2008: COMPANY: DKK 6.06) per nominal DKK 1 share and resolved simulta- Article 1 neously, at one or more times, to increase the share capi- The Company’s name is LifeCycle Pharma A/S. tal with minimum nominal DKK 1,000 and maximum nominal DKK 143,944 (adjusted following the Rights Issue in Article 2 April 2008: 175,258). The terms and conditions for the [Deleted by resolution by the annual general meeting held warrants have been adopted as Exhibit 1 to the Articles 21 April 2010] of Association and form an integral part hereof.

Article 3 On 3 October the Board of Directors issued, pursuant to The objects of the Company are to engage in medical authorisation from the general meeting, 266,408 research, production and sale of such products and (adjusted following the Rights Issue in April 2008: related business. 324,363) warrants, each conferring a right to subscribe for nominal DKK 1 share at a subscription price of DKK 7.3825 (adjusted following the Rights Issue in April 2008: THE COMPANY’S SHARE CAPITAL: 6.06) per nominal DKK 1 share and resolved simultaneously, at one or more times, to increase the share capital Article 4 with minimum nominal DKK 1,000 and maximum nominal The Company’s share capital is nominal DKK 56,567,810 DKK 266,408 (adjusted following the Rights Issue in April divided into shares of DKK 1 each and multiples hereof. 2008: 324,363). The terms and conditions for the war- The share capital has been fully paid up. rants have been adopted as Exhibit 1 to the Articles of Association and form an integral part hereof.

WARRANTS: On 19 December 2003 the Board of Directors issued, pursuant to authorisation from the general meeting, 21,000 Article 5 (adjusted following the Rights Issue in April 2008: Pursuant to authorisation from the general meeting, the 25,568) warrants, each conferring a right to subscribe for Board of Directors has issued in total 13,376,435 war- nominal DKK 1 share at a subscription price of DKK rants (numbers as adjusted following the Rights Issue in 7.3825 (adjusted following the Rights Issue in April 2008: April 2008 and after the issue of bonus shares in July, DKK 6.06) per nominal DKK 1 share and resolved simulta- 2006) to the Company’s employees, board members, neously, at one or more times, to increase the share capi- consultants and advisors, and determined the terms and tal with minimum nominal DKK 1,000 and maximum nom- conditions as follows (all numbers adjusted after the issue inal DKK 21,000 (adjusted following the Rights Issue in of bonus shares in July, 2006 and in addition where April 2008: 25,568). The terms and conditions for the stated following the Rights Issue in April 2008): warrants have been adopted as Exhibit 1 to the Articles of Association and form an integral part hereof. On 4 April 2003 the Board of Directors issued, pursuant to authorisation from the general meeting, 591,444 On 22 march 2004 the Board of Directors issued, pursu- (adjusted following the Rights Issue in April 2008: ant to authorisation from the general meeting, 259,148 720,108) warrants, each conferring a right to subscribe (adjusted following the Rights Issue in April 2008: for nominal DKK 1 share at a subscription price of DKK 315,524) warrants, each conferring a right to subscribe 2.50 (adjusted following the Rights Issue in April 2008: for nominal DKK 1 share at a subscription price of DKK 2.05) per nominal DKK 1 share and resolved simultane- 7.8850 (adjusted following the Rights Issue in April 2008: ously, at one or more times, to increase the share capital DKK 6.48) per nominal DKK 1 share and resolved simulta- with minimum nominal DKK 1,000 and maximum nominal neously, at one or more times, to increase the share capi- DKK 591,444 (adjusted following the Rights Issue in April tal with minimum nominal DKK 1,000 and maximum nom- 2008: DKK 720,108). The terms and conditions for the inal DKK 259,148 (adjusted following the Rights Issue in warrants have been adopted as Exhibit 1 to the Articles of April 2008: 315,524). The terms and conditions for the Association and form an integral part hereof. warrants have been adopted as Exhibit 1 to the Articles of Association and form an integral part hereof. On 29 August 2003 the Board of Directors issued, pursuant to authorisation from the general meeting, 143,944 On 22 March 2004 the Board of Directors issued, pursu- (adjusted following the Rights Issue in April 2008: ant to authorisation from the general meeting, 370,880 175,258) warrants, each conferring a right to subscribe (adjusted following the Rights Issue in April 2008: for nominal DKK 1 share at a subscription price of DKK 451,562) warrants, each conferring a right to subscribe

157 for nominal DKK 1 share at a subscription price of DKK share capital with minimum nominal DKK 1,000 and maxi- 7.8850 (adjusted following the Rights Issue in April 2008: mum nominal DKK 182,000 adjusted following the Rights DKK 6.48) per nominal DKK 1 share and resolved simulta- Issue in April 2008: 221,593). The terms and conditions neously, at one or more times, to increase the share capi- for the warrants have been adopted as Exhibit 1 to the tal with minimum nominal DKK 1,000 and maximum nom- Articles of Association and form an integral part hereof. inal DKK 370,880 (adjusted following the Rights Issue in April 2008: 451,562). The terms and conditions for the On 17 October 2005 the Board of Directors issued, pursu- warrants have been adopted as Exhibit 1 to the Articles ant to authorisation from the general meeting, 100,000 of Association and form an integral part hereof. (adjusted following the Rights Issue in April 2008: 121,754) warrants, each conferring a right to subscribe On 28 April 2004 the Board of Directors issued, pursuant for nominal DKK 1 share at a subscription price of DKK to authorisation from the general meeting, 273,000 22.30 (adjusted following the Rights Issue in April 2008: (adjusted following the Rights Issue in April 2008: DKK 18.32) per nominal DKK 1 share and resolved simul- 332,389) warrants, each conferring a right to subscribe taneously, at one or more times, to increase the share for nominal DKK 1 share at a subscription price of DKK capital with minimum nominal DKK 1,000 and maximum 7.8850 (adjusted following the Rights Issue in April 2008: nominal DKK 100,000 (adjusted following the Rights Issue DKK 6.48) per nominal DKK 1 share and resolved simulta- in April 2008: 121,754). The terms and conditions for the neously, at one or more times, to increase the share capi- warrants have been adopted as Exhibit 1 to the Articles tal with minimum nominal DKK 1,000 and maximum nom- of Association and form an integral part hereof. inal DKK 273,000 (adjusted following the Rights Issue in April 2008: 332,389). The terms and conditions for the On 18 November 2005 the Board of Directors issued, pur- warrants have been adopted as Exhibit 1 to the Articles suant to authorisation from the general meeting, 120,000 of Association and form an integral part hereof. (adjusted following the Rights Issue in April 2008: 146,105) warrants, each conferring a right to subscribe On 20 June 2005 the Board of Directors issued, pursuant for nominal DKK 1 share at a subscription price of DKK to authorisation from the general meeting, 30,000 22.30 (adjusted following the Rights Issue in April 2008: (adjusted following the Rights Issue in April 2008: DKK 18.32) per nominal DKK 1 share and resolved simul- 36,526) warrants, each conferring a right to subscribe for taneously, at one or more times, to increase the share nominal DKK 1 share at a subscription price of DKK 22.30 capital with minimum nominal DKK 1,000 and maximum (adjusted following the Rights Issue in April 2008: DKK nominal DKK 120,000 (adjusted following the Rights Issue 18.32) per nominal DKK 1 share and resolved simultane- in April 2008: 146,105). The terms and conditions for the ously, at one or more times, to increase the share capital warrants have been adopted as Exhibit 1 to the Articles with minimum nominal DKK 1,000 and maximum nominal of Association and form an integral part hereof. DKK 30,000 (adjusted following the Rights Issue in April 2008: 36,526). The terms and conditions for the warrants On 12 December 2005 the Board of Directors issued, pur- have been adopted as Exhibit 1 to the Articles of Associ- suant to authorisation from the general meeting, 72,000 ation and form an integral part hereof. (adjusted following the Rights Issue in April 2008: 87,663) warrants, each conferring a right to subscribe for On 20 June 2005, the Company decided, pursuant to nominal DKK 1 share at a subscription price of DKK authorisation from the general meeting, to issue 8,000 36.3725 (adjusted following the Rights Issue in April (adjusted following the Rights Issue in April 2008: 9,740) 2008: DKK 29.87) per nominal DKK 1 share and resolved warrants, each conferring a right to subscribe for nominal simultaneously, at one or more times, to increase the DKK 1 share at a subscription price of DKK 7.8850 share capital with minimum nominal DKK 1,000 and maxi- (adjusted following the Rights Issue in April 2008: DKK mum nominal DKK 72,000 (adjusted following the Rights 6.48) per nominal DKK 1 share and resolved simultane- Issue in April 2008: 87,663). The terms and conditions for ously, at one or more times, to increase the share capital the warrants have been adopted as Exhibit 1 to the Arti- with minimum nominal DKK 1,000 and maximum nominal cles of Association and form an integral part hereof. DKK 8,000 (adjusted following the Rights Issue in April 2008: 9,740). The terms and conditions for the warrants On 10 June 2006 the Board of Directors issued, pursuant have been adopted as Exhibit 1 to the Articles of Associ- to authorisation from the general meeting, 1,104,000 ation and form an integral part hereof. (adjusted following the Rights Issue in April 2008: 1,344,166) warrants, each conferring a right to subscribe On 21 September 2005 the Board of Directors issued, for nominal DKK 1 share at a subscription price of DKK pursuant to authorisation from the general meeting, 36.3725 (adjusted following the Rights Issue in April 182,000 (adjusted following the Rights Issue in April 2008: DKK 29.87) per nominal DKK 1 share and resolved 2008: 221,593) warrants, each conferring a right to sub- simultaneously, at one or more times, to increase the scribe for nominal DKK 1 share at a subscription price of share capital with minimum nominal DKK 1,000 and maxi- DKK 22.30 (adjusted following the Rights Issue in April mum nominal DKK 1,104,000 (adjusted following the 2008: DKK 18.32) per nominal DKK 1 share and resolved Rights Issue in April 2008: 1,344,166). The terms and simultaneously, at one or more times, to increase the conditions for the warrants have been adopted as Exhibit

158 2 to the Articles of Association and form an integral part from the publication of the Company’s preliminary annual hereof. fi nancial report for 2007. The last exercise period shall be 21 days after publication of the Company’s interim fi nan- On 7 September 2006 the Board of Directors issued, pur- cial report for the fi rst 6 months of 2012. suant to authorisation from the general meeting, 1,120,757 (adjusted following the Rights Issue in April On 22 December 2006 the Board of Directors resolved to 2008: 1,364,569) warrants, and resolved simultaneously, exercise the authorisation under article 8 hereof to issue at one or more times, to increase the share capital with 32,381 (adjusted following the Rights Issue in April 2008: minimum nominal DKK 1,000 and maximum nominal DKK 39,425) warrants and resolved simultaneously, at one or 1,120,757 (adjusted following the Rights Issue in April more times, to increase the share capital with minimum 2008: 1,364,569). The terms and conditions for the war- nominal DKK 1,000 and maximum nominal DKK 32,381 rants have been adopted as Exhibit 2 to the Articles of (adjusted following the Rights Issue in April 2008: Association, however with the deviation set out below 39,425). The authorisation under article 8 hereof is and form an integral part hereof: therefore reduced from a denomination of 404,000 to a denomination of 371,619 (this number shown not a) The exercise price shall correspond to the offer price adjusted by the Rights Issue completed in April 2008). (determined according to the book-building method) The terms and conditions of the issued warrants have which is used in connection with an IPO, if any, of the been adopted as Exhibit 1 to the articles of association company (as adjusted following the Rights Issue in and shall form an integral part hereof. The exercise price April 2008). has been determined to DKK 53 (adjusted following the Rights Issue in April 2008: 43.53) and 1 warrant therefore b) If an IPO is not carried out the exercise price shall be confers the right to subscribe nominal DKK 1 share determined as the subscription price used in connec- against cash contribution of DKK 53 (adjusted following tion with the next capital increase in the company. the Rights Issue in April 2008: 43.53) and the warrants are fully vested as of the time of grant. Further, the fi rst c) The warrants vest with 1/48 per month from the date exercise period shall be 21 days from the publication of of allocation. If an IPO is carried out prior to the end of the Company’s preliminary annual fi nancial report for 2006, 1/10 of the warrants originally granted shall vest 2007. The last exercise period shall be 21 days after pub- automatically at the time of the IPO and the 4 year lication of the Company’s interim fi nancial report for the vesting period for the remaining unvested warrants fi rst 6 months of 2012. shall be shortened with 4.8 months. If the price of the company’s shares on the fi rst anniversary date of the On 5 March 2007 the Board of Directors resolved to exer- company’s IPO corresponds to the offer price with cise the authorisation under article 8 hereof to issue addition of 50 % then a further 1/10 of the warrants 160,000 (adjusted following the Rights Issue in April originally granted shall vest automatically and the 4 2008: 194,807) warrants and resolved simultaneously, at year vesting period for the remaining unvested war- one or more times, to increase the share capital with rants shall be further shortened by 4.8 months on the minimum nominal DKK 1,000 and maximum nominal DKK fi rst anniversary date of the IPO. 160,000 (adjusted following the Rights Issue in April 2008: 194,807). The authorisation under article 8 hereof On 1 December 2006 the Board of Directors resolved to is therefore reduced from a denomination of 371,619 to a exercise the authorisation under article 8 hereof to issue denomination of 211,619 (this number shown not 96,000 (adjusted following the Rights Issue in April 2008: adjusted by the Rights Issue completed in April 2008). 116,884) warrants and resolved simultaneously, at one or The terms and conditions of the issued warrants have more times, to increase the share capital with minimum been adopted as Exhibit 1 to the articles of association nominal DKK 1,000 and maximum nominal DKK 96,000 and shall form an integral part hereof. The exercise price (adjusted following the Rights Issue in April 2008: has been determined to DKK 55 (adjusted following the 116,884). The authorisation under article 8 hereof is Rights Issue in April 2008: DKK 45.17) and 1 warrant therefore reduced from a denomination of 500,000 to a therefore confers the right to subscribe nominal DKK 1 denomination of 404,000 (this number shown not share against cash contribution of DKK 55 (adjusted fol- adjusted by the Rights Issue completed in April 2008). lowing the Rights Issue in April 2008: DKK 45.17) and the The terms and conditions of the issued warrants have warrants vest with 1/48 per month from 5 March 2007. been adopted as Exhibit 1 to the articles of association Further, the fi rst exercise period shall be 21 days from the and shall form an integral part hereof. The exercise price publication of the Company’s preliminary annual fi nancial has been determined to DKK 44.60 (adjusted following report for 2007. The last exercise period shall be 21 days the Rights Issue in April 2008: DKK 36.63) and 1 warrant after publication of the Company’s interim fi nancial report therefore confers the right to subscribe nominal DKK 1 for the fi rst 6 months of 2013. share against cash contribution of DKK 44.60 (adjusted following the Rights Issue in april 2008: DKK 36.63) and On 9 May 2007 the Board of Directors resolved to exer- the warrants vest with 1/48 per month from 1 December cise the authorisation under article 8 hereof to issue 2006. Further, the fi rst exercise period shall be 21 days 248,000 (adjusted following the Rights Issue in April

159 2008: 301,950) warrants and resolved simultaneously, at The terms and conditions of the issued warrants have one or more times, to increase the share capital with been adopted as Exhibit 1 to the articles of association minimum nominal DKK 1,000 and maximum nominal and shall form an integral part hereof. The exercise price DKK248,000 (adjusted following the Rights Issue in April has been determined to DKK 41.50 (adjusted following 2008: 301,959). The authorisation under article 8 hereof the Rights Issue in April 2008: 34.09) and 1 warrant is therefore reduced from a denomination of 811,619 to a therefore confers the right to subscribe nominal DKK 1 denomination of 563,619 (this number shown not share against cash contribution of DKK 41.50 (adjusted adjusted by the Rights Issue completed in April 2008). following the Rights Issue in April 2008: 34.09) and the The terms and conditions of the issued warrants have warrants vest with 1/48 per month from 27 November been adopted as Exhibit 1 to the articles of association 2007. Further, the fi rst exercise period shall be 21 days and shall form an integral part hereof. The exercise price from the publication of the Company’s preliminary annual has been determined to DKK 56.50 (adjusted following fi nancial report for 2008. The last exercise period shall be the Rights Issue in April 2008: DKK 46.40) and 1 warrant 21 days after publication of the Company’s interim report therefore confers the right to subscribe nominal DKK 1 for the fi rst 6 month of 2014. share against cash contribution of DKK 56.50 (adjusted following the Rights Issue in April 2008: DKK 46.40) and On 28 February 2008 the Board of Directors resolved to the warrants vest with 1/48 per month from 9 May 2007. exercise the authorisation under article 8 hereof to issue Further, the fi rst exercise period shall be 21 days from the 185,000 (adjusted following the Rights Issue in April publication of the Company’s preliminary annual fi nancial 2008: 225,245) warrants and resolved simultaneously, at report for 2007. The last exercise period shall be 21 days one or more times, to increase the share capital with after publication of the Company’s interim fi nancial report minimum nominal DKK 1,000 and maximum nominal DKK for the fi rst 6 months of 2013. 185,000 (adjusted following the Rights Issue in April 2008: 225,245). The authorisation under article 8 hereof On 21 August 2007 the Board of Directors resolved to is therefore reduced from a denomination of 268,119 to a exercise the authorisation under article 8 hereof to issue denomination of 83,119 (this number shown not adjusted 237,000 (adjusted following the Rights Issue in April by the Rights Issue completed in April 2008). The terms 2008: 288,557) warrants and resolved simultaneously, at and conditions of the issued warrants have been adopted one or more times, to increase the share capital with as Exhibit 1 to the articles of association and shall form minimum nominal DKK 1,000 and maximum nominal DKK an integral part hereof. The exercise price has been deter- 237,000 (adjusted following the Rights Issue in April mined to DKK 33.00 (adjusted following the Rights Issue 2008: 288,557). The authorisation under article 8 hereof in April 2008: DKK 27.10) and 1 warrant therefore confers is therefore reduced from a denomination of 563,619 to a the right to subscribe nominal DKK 1 share against cash denomination of 326,619 (this number shown not contribution of DKK 33.00 (adjusted following the Rights adjusted by the Rights Issue completed in April 2008). Issue in April 2008: DKK 27.10) and the warrants vest The terms and conditions of the issued warrants have with 1/48 per month from 28 February 2008. Further, the been adopted as Exhibit 1 to the articles of association fi rst exercise period shall be 21 days from the publication and shall form an integral part hereof. The exercise price of the Company’s preliminary annual fi nancial report for has been determined to DKK 52 (adjusted following the 2008. The last exercise period shall be 21 days after pub- Rights Issue in April 2008: 42.71) and 1 warrant therefore lication of the Company’s interim report for the fi rst 6 confers the right to subscribe nominal DKK 1 share month of 2014. against cash contribution of DKK 52 (adjusted following the Rights Isuue in April 2008: 42.71) and the warrants On 24 April 2008 the Board of Directors resolved to exer- vest with 1/48 per month from 21 August 2007. Further, cise the authorisation under article 8 hereof (as amended the fi rst exercise period shall be 21 days from the publica- on the general meeting held on 24 April 2008) to issue tion of the Company’s interim report for the fi rst 6 1,036,906 warrants and resolved simultaneously, at one months of 2008. The last exercise period shall be 21 days or more times, to increase the share capital with mini- after publication of the Company’s preliminary annual mum nominal DKK 1,000 and maximum nominal DKK fi nancial report for 2013. 1,036,906. The authorisation under article 8 hereof is therefore reduced from a denomination of 3,885,381 to a On 27 November 2007 the Board of Directors resolved to denomination of 2,848,475. The terms and conditions of exercise the authorisation under article 8 hereof to issue the issued warrants have been adopted as Exhibit 1 to 58,500 (adjusted following the Rights Issue in April 2008: the articles of association and shall form an integral part 71,226) warrants and resolved simultaneously, at one or hereof. The exercise price has been determined to DKK more times, to increase the share capital with minimum 26.40 and 1 warrant therefore confers the right to sub- nominal DKK 1,000 and maximum nominal DKK 58,500 scribe nominal DKK 1 share against cash contribution of (adjusted following the Rights Issue in April 2008: DKK 26.40. 71,226). The authorisation under article 8 hereof is therefore reduced from a denomination of 326,619 to a 550,415 of the warrants granted vest with 1/36 per denomination of 268,119 (this number shown not month of employment/affi liation from the date of grant. adjusted by the Rights Issue completed in April 2008). The fi rst exercise period shall be 21 days from the publi-

160 cation of the Company’s interim report for the fi rst 6 232,000 of the warrants granted vest with 1/36 per month of 2009. The last exercise period shall be 21 days month of employment/affi liation from the date of grant. after publication of the Company’s preliminary annual The fi rst exercise period shall be 21 days from the publi- fi nancial report for 2014. cation of the Company’s interim report for the fi rst 6 month of 2009. The last exercise period shall be 21 days 486,491 of the warrants granted are fully vested at the after publication of the Company’s preliminary annual time of grant. The fi rst exercise period shall be 21 days fi nancial report for 2014. from the publication of the Company’s interim report for the fi rst 6 months of 2008. The last exercise period shall Of the 177,000 warrants granted to consultant 27,000 be 21 days after publication of the Company’s preliminary shall vest by 3,000 warrants per month of affi liation with annual fi nancial report for 2013. the Company. The remaining 150,000 shall vest on the occurrence of certain events as determined by the board On 14 May 2008 the Board of Directors resolved to exer- of directors. The fi rst exercise period shall be 21 days cise the authorisation under article 8 hereof (as amended from the publication of the Company’s interim report for on the general meeting held on 24 April 2008) to issue the fi rst 6 months of 2009. The last exercise period shall 350,600 warrants and resolved simultaneously, at one or be 21 days after publication of the Company’s preliminary more times, to increase the share capital with minimum annual fi nancial report for 2014, provided however that nominal DKK 1,000 and maximum nominal DKK 350,600. before any warrant may be exercised it shall have vested. The authorisation under article 8 hereof is therefore reduced from a denomination of 2,848,475 to a denomi- On 16 October 2008 the Board of Directors resolved to nation of 2,497, 875. The terms and conditions of the exercise the authorisation under article 8 hereof (as issued warrants have been adopted as Exhibit 1 to the amended on the general meeting held on 24 April 2008) articles of association and shall form an integral part to issue 500,000 warrants and resolved simultaneously, hereof. The exercise price has been determined to DKK 27 at one or more times, to increase the share capital with and 1 warrant therefore confers the right to subscribe minimum nominal DKK 1,000 and maximum nominal DKK nominal DKK 1 share against cash contribution of DKK 27. 500,000. The authorisation under article 8 hereof is therefore reduced from a denomination of 2,088,875 to a 270,600 of the warrants granted vest with 1/36 per denomination of 1,588, 875. Unless other terms are stip- month of employment/affi liation from the date of grant. ulated below, the terms and conditions of the issued war- The fi rst exercise period shall be 21 days from the publi- rants have been adopted as Exhibit 1 to the articles of cation of the Company’s interim report for the fi rst 6 association and shall form an integral part hereof. The month of 2009. The last exercise period shall be 21 days exercise price has been determined to DKK 14.5 and 1 after publication of the Company’s preliminary annual warrant therefore confers the right to subscribe nominal fi nancial report for 2014. DKK 1 share against cash contribution of DKK 14.5. The warrants granted vest with 1/36 per month of employ- The 80,000 warrants granted to Michael Beckert are fully ment/affi liation from the date of grant. The fi rst exercise vested on 31 December 2008 provided he is employed period shall be 21 days from the publication of the Com- with the Company on the 31 December 2008. The fi rst pany’s interim report for the fi rst 6 month of 2009. The exercise period shall be 21 days from the publication of last exercise period shall be 21 days after publication of the Company’s interim report for the fi rst 6 months of the Company’s preliminary annual fi nancial report for 2009. The last exercise period shall be 21 days after pub- 2014. lication of the Company’s preliminary annual fi nancial report for 2014. On 26 November 2008 the Board of Directors resolved to exercise the authorisation under article 8 hereof (as On 21 August 2008 the Board of Directors resolved to amended on the general meeting held on 24 April 2008) exercise the authorisation under article 8 hereof (as to issue 196,500 warrants and resolved simultaneously, amended on the general meeting held on 24 April 2008) at one or more times, to increase the share capital with to issue 409,000 warrants and resolved simultaneously, minimum nominal DKK 1,000 and maximum nominal DKK at one or more times, to increase the share capital with 196,500. The authorisation under article 8 hereof is minimum nominal DKK 1,000 and maximum nominal DKK therefore reduced from a denomination of 1,588,875 to a 409,000. The authorisation under article 8 hereof is denomination of 1,392,375. Unless other terms are stipu- therefore reduced from a denomination of 2,497,875 to a lated below, the terms and conditions of the issued war- denomination of 2,088,875. Unless other terms are stipu- rants have been adopted as Exhibit 1 to the articles of lated below, the terms and conditions of the issued war- association and shall form an integral part hereof. The rants have been adopted as Exhibit 1 to the articles of exercise price has been determined to DKK 12.5 and 1 association and shall form an integral part hereof. The warrant therefore confers the right to subscribe nominal exercise price has been determined to DKK 25.5 and 1 DKK 1 share against cash contribution of DKK 12.5. warrant therefore confers the right to subscribe nominal DKK 1 share against cash contribution of DKK 25.5.

161 The warrants granted vest with 1/36 per month of at one or more times, to increase the share capital with employment/affi liation from the date of grant. minimum nominal DKK 1,000 and maximum nominal DKK 135,000. The authorisation under article 8 hereof is The fi rst exercise period is 21 days after publication of the therefore reduced from a denomination of 2,372,000 to a preliminary annual report for 2009 and the last exercise denomination of 2,237,000. Unless other terms are stipu- period is 21 days from publication of the interim fi nancial lated below, the terms and conditions of the issued war- report for the fi rst half of 2015. rants have been adopted as Exhibit 1 in the articles of association and shall form an integral part hereof. The On 3 March 2009 the Board of Directors resolved to exer- exercise price has been determined to DKK 9.55 and 1 cise the authorisation under article 8 hereof (as amended warrant therefore confers the right to subscribe nominal on the general meeting held on 24 April 2008) to issue DKK 1 share against cash contribution of DKK 9.55. 876,250 warrants and resolved simultaneously, at one or more times, to increase the share capital with minimum 85,000 of the warrants granted vest with 1/36 per month nominal DKK 1,000 and maximum nominal DKK 876,250. of employment/affi liation from the date of grant. 50,000 The authorisation under article 8 hereof is therefore warrants vest immediately from the date of grant. reduced from a denomination of 1,392,375 to a denomination of 516,125. Unless other terms are stipulated The exercise periods are determined as 21 days from the below, the terms and conditions of the issued warrants company’s announcements of its preliminary annual have been adopted as Exhibit 1 to the articles of associa- report and the interim fi nancial report for the each quar- tion and shall form an integral part hereof. The exercise ter of a year, respectively. The fi rst exercise period is 21 price has been determined to DKK 10.5 and 1 warrant days from publication of the interim fi nancial report for therefore confers the right to subscribe nominal DKK 1 the fi rst half of 2010 and the last exercise period is 21 share against cash contribution of DKK 10.5. days after publication of the preliminary annual report for 2015. The warrants granted vest with 1/36 per month of employment/affi liation from the date of grant. On 11 Nov 2009 the Board of Directors resolved to exercise the authorisation under article 8 hereof (as amended The fi rst exercise period is 21 days from publication of on the general meeting held on 23 April 2009) to issue the interim fi nancial report for the fi rst half of 2009 and 218,000 warrants and resolved simultaneously, at one or the last exercise period is 21 days after publication of the more times, to increase the share capital with minimum preliminary annual report for 2015. nominal DKK 1,000 and maximum nominal DKK 218,000. The authorisation under article 8 hereof is therefore On 14 May 2009 the Board of Directors resolved to exer- reduced from a denomination of 2,372,000 to a denomi- cise the authorisation under article 8 hereof (as amended nation of 2,019,000. Unless other terms are stipulated on the general meeting held on 23 April 2009) to issue below, the terms and conditions of the issued warrants 128,000 warrants and resolved simultaneously, at one or have been adopted as Exhibit 1 in the articles of associa- more times, to increase the share capital with minimum tion and shall form an integral part hereof. The exercise nominal DKK 1,000 and maximum nominal DKK 128,000. price has been determined to DKK 7.00 and 1 warrant The authorisation under article 8 hereof is therefore therefore confers the right to subscribe nominal DKK 1 reduced from a denomination of 2,500,000 to a denomi- share against cash contribution of DKK 7.00. nation of 2,372,000. Unless other terms are stipulated below, the terms and conditions of the issued warrants The warrants granted vest with 1/36 per month of have been adopted as Exhibit 1 to the articles of associa- employment/affi liation from the date of grant. tion and shall form an integral part hereof. The exercise price has been determined to DKK 13.30 and 1 warrant The exercise periods are determined as 21 days from the therefore confers the right to subscribe nominal DKK 1 company’s announcements of its preliminary annual share against cash contribution of DKK 13.30. report and the interim fi nancial report for the each quarter of a year, respectively. The fi rst exercise period is 21 The warrants granted vest with 1/36 per month of days from publication of the interim fi nancial report for employment/affi liation from the date of grant. the fi rst half of 2010 and the last exercise period is 21 days after publication of the preliminary annual report for The fi rst exercise period is 21 days from publication of the 2015. interim fi nancial report for the fi rst half of 2010 and the last exercise period is 21 days after publication of the On 2 December 2009 the Board of Directors resolved to preliminary annual report for 2015. exercise the authorisation under article 8 hereof (as amended on the general meeting held on 23 April 2009) On 20 August 2009 the Board of Directors resolved to to issue 350,000 warrants and resolved simultaneously, exercise the authorisation under article 8 hereof (as at one or more times, to increase the share capital with amended on the general meeting held on 23 April 2009) minimum nominal DKK 1,000 and maximum nominal DKK to issue 135,000 warrants and resolved simultaneously, 350,000. The authorisation under article 8 hereof is therefore reduced from a denomination of 2,019,000 to a

162 denomination of 1,669,000. Unless other terms are stipu- The exercise periods are determined as 21 days from the lated below, the terms and conditions of the issued war- company’s announcements of its preliminary annual rants have been adopted as Exhibit 1 to the articles of report and the interim fi nancial report for the each quar- association and shall form an integral part hereof. The ter of a year, respectively. The fi rst exercise period is 21 exercise price has been determined to DKK 5.85 and 1 days from publication of the preliminary annual report for warrant therefore confers the right to subscribe nominal 2010 and the last exercise period is 21 days after publica- DKK 1 share against cash contribution of DKK 5.85. tion of the interim fi nancial report for the fi rst half of 2016. The warrants granted vest with 1/36 per month of employment/affi liation from the date of grant. The fi rst On 18 August 2010 the Board of Directors resolved to exercise period shall be 21 days from the publication of exercise the authorisation under article 8 hereof (as the Company’s interim report for the fi rst 6 month of amended on the general meeting held on 21 April 2010) 2010. The last exercise period shall be 21 days after pub- to issue 372,000 warrants and resolved simultaneously, lication of the Company’s preliminary annual fi nancial at one or more times, to increase the share capital with report for 2015. minimum nominal DKK 1,000 and maximum nominal DKK 372,000. The authorisation under article 8 hereof is On 24 February 2010 the Board of Directors resolved to therefore reduced from a denomination of 2,850,000 to a exercise the authorisation under article 8 hereof (as denomination of 2,478,000. Unless other terms are stipu- amended on the general meeting held on 23 April 2009) lated below, the terms and conditions of the issued war- to issue 588,000 warrants and resolved simultaneously, rants have been adopted as Exhibit 1 in the articles of at one or more times, to increase the share capital with association and shall form an integral part hereof. The minimum nominal DKK 1,000 and maximum nominal DKK exercise price has been determined to DKK 4.05 and 1 588,000. The authorisation under article 8 hereof is warrant therefore confers the right to subscribe nominal therefore reduced from a denomination of 1,669,000 to a DKK 1 share against cash contribution of DKK 4.05. denomination of 1,081,000. Unless other terms are stipulated below, the terms and conditions of the issued war- The warrants granted vest with 1/36 per month of rants have been adopted as Exhibit 1 to the articles of employment/affi liation from the date of grant. association and shall form an integral part hereof. The exercise price has been determined to DKK 6.05 and 1 The exercise periods are determined as 21 days from the warrant therefore confers the right to subscribe nominal company’s announcements of its preliminary annual DKK 1 share against cash contribution of DKK 6.05. report and the interim fi nancial report for the each quarter of a year, respectively. The fi rst exercise period is 21 The warrants granted vest with 1/36 per month of days from publication of the preliminary annual report for employment/affi liation from the date of grant. The fi rst 2010 and the last exercise period is 21 days after publica- exercise period shall be 21 days after publication of the tion of the interim fi nancial report for the fi rst half of Company’s preliminary annual fi nancial report for 2010. 2017. The last exercise period shall be 21 days from the publication of the Company’s interim report for the fi rst 6 month On 28 October 2010 the Board of Directors resolved to of 2016. exercise the authorisation under article 8 hereof (as amended on the general meeting held on 25 October On 12 May 2010 the Board of Directors resolved to exer- 2010) to issue 1,151,197 warrants and resolved simulta- cise the authorisation under article 8 hereof (as amended neously, at one or more times, to increase the share capi- on the general meeting held on 21 April 2010) to issue tal with minimum nominal DKK 1,000 and maximum nom- 150,000 warrants and resolved simultaneously, at one or inal DKK 1,151,197. The authorisation under article 8 more times, to increase the share capital with minimum hereof is therefore reduced from a denomination of nominal DKK 1,000 and maximum nominal DKK 150,000. 44,000,000 to a denomination of 42,848,803. Unless The authorisation under article 8 hereof is therefore other terms are stipulated below, the terms and condi- reduced from a denomination of 3,000,000 to a denomi- tions of the issued warrants have been adopted as Exhibit nation of 2,850,000. Unless other terms are stipulated 1 in the articles of association and shall form an integral below, the terms and conditions of the issued warrants part hereof. The exercise price has been determined to have been adopted as Exhibit 1 in the articles of associa- DKK 3.13 and 1 warrant therefore confers the right to tion and shall form an integral part hereof. The exercise subscribe nominal DKK 1 share against cash contribution price has been determined to DKK 4.87 and 1 warrant of DKK 3.13. therefore confers the right to subscribe nominal DKK 1 share against cash contribution of DKK 4.87. The warrants granted vest with 1/36 per month of employment/affi liation from the date of grant. The warrants granted vest with 1/36 per month of employment/affi liation from the date of grant. The exercise periods are determined as 21 days from the company’s announcements of its preliminary annual report and the interim fi nancial report for the each quar-

163 ter of a year, respectively. The fi rst exercise period is 21 (adjusted following the Rights Issue in April 2008: days from publication of the preliminary annual report for 60,877) warrants, each conferring a right to subscribe for 2010 and the last exercise period is 21 days after publica- nominal DKK 1 share at a subscription price of DKK 22.30 tion of the interim fi nancial report for the fi rst half of (adjusted following the Rights Issue in April 2008: DKK 2017. 18.32) per nominal DKK 1 share and resolved simultaneously, at one or more times, to increase the share capital with minimum nominal DKK 1,000 and maximum nominal Article 6 DKK 50,000 (adjusted following the Rights Issue in April The Company has on extraordinary general meetings 2008: 60,877). The terms and conditions for the warrants issued in total 516,000 (numbers as adjusted following have been adopted as Exhibit 1 to the Articles of Associ- the Rights Issue in April 2008: 628,252) warrants (num- ation and form an integral part hereof. bers in both cases adjusted after the issue of bonus shares in July, 2006), and determined the terms and conditions as follows (all adjusted after the issue of bonus Article 7 shares in July, 2006): On 22 August 2005 the Company’s employees exercised 10,278 (50,056 after adjustment following bonus issue in On the Company’s extraordinary general meeting held on July 2006 and following the Rights Issue in April 2008) 16 June 2004, the Company decided to issue 220,000 warrants and subscribed for nominal DKK 10,278 (50,056 (adjusted following the Rights Issue in April 2008: after adjustment following bonus issue in July 2006 and 267,859) warrants, each conferring a right to subscribe following the Rights Issue in April 2008) shares in the for nominal DKK 1 share at a subscription price of DKK Company. On 23 January 2006 the Company’s employees 7.8850 (adjusted following the Rights Issue in April 2008: exercised 1,385 (6,745 after adjustment following bonus DKK 6.48) per nominal DKK 1 share and resolved simulta- issue in July 2006 and following the Rights Issue in April neously, at one or more times, to increase the share capi- 2008) warrants and subscribed for nominal DKK 1,385 tal with minimum nominal DKK 1,000 and maximum nom- (6,745 after adjustment following bonus issue in July inal DKK 220,000 (adjusted following the Rights Issue in 2006 and following the Rights Issue in April 2008) shares April 2008: 267,859). The terms and conditions for the in the Company. On 12 March 2007 the Company’s warrants have been adopted as Exhibit 1 to the Articles employees exercised 144,232 pieces (numbers as of Association and form an integral part hereof. adjusted following bonus issue in July 2006) (175,609 as adjusted following the Rights Issue in April 2008) war- On the Company’s extraordinary general meeting held on rants and subscribed for nominal DKK 144,232 (175,609 16 December 2004, the Company decided to issue as adjusted following the Rights Issue in April 2008) 32,000 (adjusted following the Rights Issue in April 2008: shares in the Company. On 10 September 2007 the Com- 38,961) warrants, each conferring a right to subscribe for pany’s employees exercised 1,256,657 pieces (numbers nominal DKK 1 share at a subscription price of DKK as adjusted following bonus issue in July 2006) 7.8850 (adjusted following the Rights Issue in April 2008: (1,530,033 as adjusted following the Rights Issue in April DKK 6.48) per nominal DKK 1 share and resolved simulta- 2008) warrants and subscribed for nominal DKK neously, at one or more times, to increase the share capi- 1,256,657 shares in the Company (1,530,033 as adjusted tal with minimum nominal DKK 1,000 and maximum nom- following the Rights Issue in April 2008). On 14 March inal DKK 32,000 (adjusted following the Rights Issue in 2008 the Company’s employees exercised 334,469 pieces April 2008: 38,961). The terms and conditions for the (numbers as adjusted following bonus issue in July 2006) warrants have been adopted as Exhibit 1 to the Articles (407,230 as adjusted following the Rights Issue in April of Association and form an integral part hereof. 2008) warrants and subscribed for nominal DKK 334,469 shares in the Company (numbers as adjusted following On the Company’s extraordinary general meeting held on bonus issue in July 2006 (407,230 as adjusted following 17 March 2005, the Company decided to issue 214,000 the Rights Issue in April 2008) warrants. On 11 Septem- (adjusted following the Rights Issue in April 2008: ber 2008 the Company’s employees exercised 194,562 260,554) warrants, each conferring a right to subscribe (numbers after adjustment following bonus issue in July for nominal DKK 1 share at a subscription price of DKK 2006 and the Rights Issue in April 2008) warrants and 7.8850 (adjusted following the Rights Issue in April 2008: subscribed for nominal DKK 194,562 shares in the Com- DKK 6.48) per nominal DKK 1 share and resolved simulta- pany. On 25 March 2009 the Company’s current and for- neously, at one or more times, to increase the share capi- mer employees exercised 150,813 (numbers after adjust- tal with minimum nominal DKK 1,000 and maximum nom- ment following bonus issue in July 2006 and the Rights inal DKK 214,000 (adjusted following the Rights Issue in Issue in April 2008) warrants and subscribed for nominal April 2008: 260,554). The terms and conditions for the DKK 150,813 shares in the Company. On 10 September warrants have been adopted as Exhibit 1 to the Articles 2009 the Company’s former employees exercised of Association and form an integral part hereof. 129,490 (numbers after adjustment following bonus issue in July 2006 and the Rights Issue in April 2008) warrants On the Company’s extraordinary general meeting held on and subscribed for nominal DKK 129,490 shares in the 7 November 2005, the Company decided to issue 50,000 Company. In total 5,707,141 warrants (numbers as

164 adjusted following bonus issue in July 2006 and following On board meeting on 30 December 2009 the Board of the Rights Issue in April 2008) have been annulled or Directors resolved to change the terms and conditions for have lapsed unexercised. employees employed in the Company for warrants issued in the years 2007 – 2009, with the effect that the vesting There are hereafter 5.653.008 outstanding warrants and exercise of warrants in the event of death shall con- (numbers as adjusted following bonus issue in July 2006 tinue as if the deceased was still employed. Rights and and following the completion of the Rights Issue in April obligations regarding warrants in the event of death shall 2008), of which be transferred to the death estate respectively the heirs. All speciﬁ c provisions in Appendix 1 and Appendix 2 to • 29,900 can be exercised at a price of DKK 6.06 per the Articles of Association regarding vesting and exercise nominal DKK 1 shares, of warrants in the event of death shall hereafter be • 158,764 can be exercised at a price of DKK 6.48 per deemed null and void in respect to warrants issued in the nominal DKK 1 shares, years 2007 – 2009. • 133,871 can be exercised at a price of DKK 18.32 per nominal DKK 1 shares, Article 8 • 424,617 can be exercised at a price of DKK 29.87 per The Board of Directors is until 20 April 2015 authorised, nominal DKK 1 shares, at one or more times, to issue up to 42,848,803 war- • 79,140 may be exercised at a price of DKK 36.63 per rants, each conferring a right to subscribe for 1 share of share of nominally DKK 1, nominal DKK 1 in the Company, and to implement the • 91,316 may be exercised at a price of DKK 45.17 per corresponding increase(s) of the share capital. share of nominally DKK 1 • 116,884 may be exercised at a price of DKK 46.40 per The number of warrants that may be issued pursuant to share of nominally DKK 1, this authorisation is limited to the extent that the number • 65,748 may be exercised at a price of DKK 42.71 per of shares that may be subscribed through the exercise of share of nominally DKK 1, warrants issued and outstanding in the Company may not • 17,046 may be exercised at a price of DKK 34.09 per exceed 10% of the Company’s registered share capital as share of nominally DKK 1, calculated at the time of issuance of the warrants in • 103,491may be exercised at a price of DKK 27.10 per question. share of nominally DKK 1 • 348,789 may be exercised at a price of DKK 26.40 per The warrants can be issued to employees, executive direc- share of nominally DKK 1, tors, board members, consultants and advisors to the • 93,800 may be exercised at a price of DKK 27 per Company and its subsidiaries without pre-emptive sub- share of nominally DKK 1, scription rights for the Company’s shareholders. • 111,00 may be exercised at a price of DKK 25.5 per share of nominally DKK 1, The exercise price for warrants, which are issued pursuant • 305,556 may be exercised at a price of DKK 14.5 per to the authorisation, shall at a minimum correspond to share of nominally DKK 1, the market price of the Company’s shares on the date of • 132,500 may be exercised at a price of DKK 12.5 per issuance of the warrants. The other terms for the war- share of nominally DKK 1 rants issued pursuant to this authorisation, including pay- • 596,361 may be exercised at a price of DKK 10.5 per ment for the warrants, duration, exercise periods, vesting share of nominally DKK 1 periods, adjustments as a result of corporate changes etc. • 78,000 may be exercised at a price of DKK 13.30 per shall be determined by the Board of Directors. The shares share of nominally DKK 1, subscribed for on the basis of the issued warrants shall • 61.500 may be exercised at a price of DKK 9.55 per be negotiable shares issued to bearer, but may be share of nominally DKK 1 recorded on name. The shares shall not have any restric- • 199,250 may be exercised at a price of DKK 7.00 per tions as to their transferability and no shareholder shall share of nominally DKK 1 be obliged to have their shares redeemed fully or partly. • 350,000 may be exercised at a price of DKK 5.85 per share of nominally DKK 1 The Board of Directors is entitled to make such amend- • 482,277 may be exercised at a price of DKK 6.05 per ments to the Articles of Association which are connected share of nominally DKK 1, with the issuance of warrants comprised by this clause or • 150,000 may be exercised a price of DKK 4.87 per the exercise thereof. share of nominally DKK 1, • 372,000 may be exercised a price of DKK 4.05 per share of nominally DKK 1 and • 1,151,197 may be exercised a price of DKK 3.13 per share of nominally DKK 1

165 AUTHORISATION TO INCREASE THE SHARE THE COMPANY’S SHARES: CAPITAL: Article 10 Article 9 The Company’s shares shall be bearer shares, but may be The Board of Directors is in the period up until 24 October recorded on name in the Company’s Register of Owners. 2015 authorized, at one or more times, to increase the The Company’s Register of Owners shall be kept and Company’s share capital with up to nominal DKK maintained by Computershare A/S, Kongevejen 418, 2840 475,000,000. Holte.

Capital increases according to this authorisation can be The Company’s shares are issued through a central securi- carried out by the Board of Directors by way of contribu- ties depository and dividends are in accordance with the tions in kind (including e.g. take over of existing busi- rules applicable from time to time for such central securi- nesses), conversion of debt and/or cash capital contribu- ties depository paid by way of transfer to accounts desig- tions and can be carried out with or without pre-emptive nated by the shareholders. subscription rights for the Company’s shareholders at the discretion of the Board of Directors. The new shares shall The Company’s shares are negotiable instruments. be negotiable shares issued to bearer, but may be recorded on name. The new shares shall not have any No shares carry special rights. restrictions as to their transferability and no shareholder shall be obliged to have the shares redeemed fully or No shareholder shall be obliged to have shares redeemed partly. The shares shall be with the same rights as the in whole or in part by the Company or others. existing share capital on the date of the capital increase. The new shares shall give rights to dividends and other rights in the Company from the time which is determined GENERAL MEETINGS: by the Board of Directors in connection with the decision to increase the share capital. Article 11 General Meetings of the Company shall be held in Greater 9A Copenhagen. The Board of Directors is in the period up until 23 April 2013 authorized, at one or more times, to increase the General Meetings shall be convened with a notice of mini- Company’s share capital with up to nominal DKK mum 3 weeks and maximum 5 weeks by publication in 5,500,000. minimum 1 national newspaper, by announcement on the Danish Commerce and Companies Agency’s IT information Capital increases according to this authorization can be system and on the Company’s webpage. A convening carried out by the Board of Directors by way of contribu- notice shall, furthermore, be forwarded in writing by ordi- tions in kind (including e.g. takeover of existing busi- nary mail to all shareholders recorded in the Register of nesses), conversion of debt and/or cash capital contribu- Owners who have requested such notifi cation. The con- tions and can be carried out with or without pre emptive vening notice shall contain the agenda for the General subscription rights for the Company’s shareholders at the Meeting. If the agenda contains proposals, the adoption discretion of the Board of Directors. The Board of Direc- of which require a qualifi ed majority, the convening notice tors also use the authorization to on one or more occa- shall contain a specifi cation of such proposals and their sions and without pre-emption rights for the existing material contents. shareholders of the Company to issue shares to employees of the Company and its subsidiaries by cash payment Article 12 at market price or at a discount price as well as by the The Annual General Meeting shall be held within 4 issue of bonus shares. months after the expiry of the fi nancial year. Motions from shareholders shall, in order to be considered at the The new shares shall be negotiable shares issued to Annual General Meeting, be fi led in writing with the Board bearer, but may be recorded on name. The new shares of Directors at the latest 6 weeks before the Annual Gen- shall not have any restrictions as to their transferability eral Meeting unless the Board of Directors resolves that and no shareholder shall be obliged to have the shares motions fi led later were fi led in such timely fashion that redeemed fully or partly. The shares shall be with the the motion can be included on the agenda. same rights as the existing share capital on the date of the capital increase. The new shares shall give rights to Extraordinary General Meetings shall be held according to dividends and other rights in the Company from the time resolutions by the General Meeting or the Board of Direc- which is determined by the Board of Directors in connec- tors or upon written request to the Board of Directors tion with the decision to increase the share capital. from one of the elected auditors and if a request is presented by shareholders representing in aggregate at least 1/20 of the share capital. A request from shareholders representing at least 1/20 of the share capital shall spec-

166 ify the motion to be considered by the General Meeting. Any shareholder is entitled to attend in person or be rep- The General Meeting shall in this case be convened within resented by proxy and both the shareholder and the 2 weeks from the date the motion has been presented to proxy holder may attend together with an advisor. A the Board of Directors. shareholder may vote by proxy. It is a condition that the representative presents a written power of attorney, Article 13 which is dated. A power of attorney cannot be given to At the latest 3 weeks before a General Meeting (inclusive the company’s board of directors or management for a of the day of the General Meeting), the Company shall period in excess of 1 year and must be given to a speciﬁ c make the following information and documents available general meeting with an agenda known in advance. on the Company’s webpage: the convening notice, the Members of the press shall have access to the General total number of shares and voting rights on the date of Meetings, provided that they can present press cards. the convening, the documents that shall be presented at the General Meeting, the agenda and the complete pro- Shareholders who are entitled to vote cf. article 14 (2) posals as well as the forms to be used for proxy voting or may vote by letter. Votes made by letter must be received voting by letter unless these are sent directly to the by the Company no later than 12.00 noon the business shareholders. If said forms cannot be made available for day before the general meeting technical reasons on the internet, the Company shall on its webpage inform how the form can be obtained in Article 15 hardcopy; in which case the Company shall send the Decisions at General Meetings shall be adopted by a sim- forms to any shareholders who requests this. ple majority of votes unless mandatory legislation or the Articles of Association provide otherwise. The agenda of the Annual General Meeting shall include: In case of equality of votes the motion shall be deemed 1. Report on the Company’s activities during the past annulled. year. A Chairman appointed by the Board of Directors shall pre- 2. Presentation of audited annual report with auditor’s side over the General Meeting. The Chairman shall settle statement for approval. all matters relating to the legality of the General Meeting, the business conducted at the meeting and the voting. 3. Resolution on application of proﬁ ts or covering of Minutes of the proceedings at the General Meeting shall losses as per the adopted annual report. be entered in a Minute Book and the minutes shall be signed by the Chairman. 4. Approval of Fee to the Board of Directors.

5. Election of board members. BOARD OF DIRECTORS:

6. Election of auditor. Article 16 The Company shall be governed by the Board of Directors, 7. Any motions from the Board of Directors and/or share- consisting of no less than 3 and no more than 9 board holders. members, elected by the General Meeting. The Board of Directors is elected for one year at a time. Article 14 At General Meetings, each share of DKK 1 shall carry one A number of alternate board members corresponding to vote. the number of board members may be elected. Alternate board members shall also be elected for one year at a A shareholder’s right to attend General Meetings and to time. vote at General Meetings is determined on the basis of the shares that the shareholder owns on the registration Any board member shall retire from the Board of Directors date. The registration date shall be 1 week before the at the Annual General Meeting following immediately after General Meeting is held. The shares which the individual his attaining the age of 70. shareholder owns are calculated on the registration date on the basis of the registration of ownership in the Regis- Article 17 ter of Owners as well as notiﬁ cations concerning owner- The Board of Directors shall elect their Chairman from ship which the Company has received with a view to their own number. update the ownership in the Register of Owners. The Board of Directors shall adopt its own Rules of Proce- In addition, any shareholder who is entitled to attend a dure and ensure that the Company conducts its activities General Meeting and who wishes to attend must have in conformity with the Articles of Association and the leg- requested an admission card from the Company no later islation in force at any time. than 3 days in advance of the General Meeting.

167 The Board forms a quorum when more than half of the ELECTRONIC COMMUNICATION board members are present. Board resolutions require simple majority. In case of parity of votes the Chairman’s Article 23 vote shall be casting. The Company may make use of electronic document exchange and electronic mail (electronic communication) The Chairman shall convene board meetings whenever he in its communications with shareholders cf. section 92 of fi nds it necessary, or when any board member or member the Danish Companies Act. The Company may at any time of management so requests. elect to communicate by ordinary mail but is not obligated to do so. Minutes of the proceedings at board meetings shall be entered into a Minute Book, which shall be signed by all All announcements and documents that pursuant to the present board members. Company’s Articles of Association, the Danish Companies Act as well as stock exchange legislation and regulations must be exchanged between the Company and the share- MANAGEMENT: holders, including, by example, notices to convene annual or extraordinary general meetings along with agendas and Article 18 full wordings of proposed resolutions, proxies, interim The Board of Directors shall employ a management con- reports, annual reports, stock exchange announcements, sisting of 1-5 members to attend to the day-to-day man- fi nancial calendar and prospectuses, as well as general agement of the Company, and the Board of Directors shall information from the Company to the shareholders may determine the terms and conditions of the employment. be sent as an attached fi le by e-mail or by including in an The management shall perform its duties in accordance e-mail exact information as to where the document may with the guidelines and directions issued by the Board of be downloaded (a link). Directors. The Company shall request its name-registered shareholders to forward an electronic address which may be used GUIDELINES FOR INCENTIVE PAY for electronic notices. It is the responsibility of the individual shareholder to ensure that the Company is Article 19 informed of the correct address. On the general meeting held on March 14, 2008, the Company adopted general guidelines for incentive pay to Information about system requirements and about the the members of the board of directors and executive procedure for electronic communications can be found on management. the Company’s webpage www.lifecyclepharma.com.

AUTHORISATION TO BIND THE COMPANY: LANGUAGE

Article 20 Article 24 The Company shall be bound by the joint signatures of a The corporate language shall be English. member of the Board of Directors and a registered manager or by the signatures of the entire Board of Directors. *****

AUDIT: As adopted latest at the board meeting held on 28 Octo- Article 21 ber 2010.

One or more state-authorised public accountants, elected by the General Meeting for one year at a time, shall audit the Company’s annual reports.

ACCOUNTING YEAR/ANNUAL REPORT:

Article 22 The Company’s accounting year shall be the calendar year.

The Company’s annual report shall present a true and fair view of the Company’s assets and liabilities, its ﬁ nancial position and results.

168 Appendix 1 to the Articles of Association of LifeCycle Pharma A/S

Pursuant to authorization granted by the shareholders of 2.3 LifeCycle Pharma A/S (hereinafter “LifeCycle Pharma”) the LifeCycle Pharma shall keep records of granted warrants Board of Directors of LifeCycle Pharma has resolved that and update the records at suitable intervals. the following terms and conditions shall apply to warrants granted to employees, consultants, advisors and board 3. Vesting members during 2003, 2004, 2005, 2006, 2007 and 2008: 3.1 The warrants shall be vested with 1/36 per month from the date of grant of the warrants. The board may have General determined a different vesting period in its decision to issue warrants. 1.1 LifeCycle Pharma A/S (hereinafter ”LifeCycle Pharma”) has 727,364 warrants, which are issued to LifeCycle Pharma’s decided to introduce an incentive scheme for LifeCycle employees, consultants, advisors and board members on Pharma ’s employees, consultants, advisors and board board meetings of respectively 4 April 2003, 3 October members (hereinafter collectively referred to as “Warrant 2003 and 19 December 2003, shall, however, be vested Holders”). The scheme is based on issuance of options, with 1/36 per month from the date of employment. also called warrants (hereinafter only referred to as “warrants”), which are not subject to payment. 554,580 warrants, which are issued to JMM Invest ApS on board meetings of respectively 4 April 2003, 29 August 1.2 2003 and 22 March 2004 shall be fully vested as from the A warrant is a right, but not an obligation, during fi xed time of the issuance. periods (exercise periods) to subscribe for new shares in LifeCycle Pharma at a price fi xed in advance (the exercise 227,636 warrants which are isued to JMM Invest ApS and price). The exercise price, which shall correspond to the 83,244 warrants which are issued to LifeCycle Pharma’s market price at the date of issuance, shall be determined Chief Financial Offi cer Michael Wolff Jensen on the board by the board of directors in connection with the grant of meeting of 22 March 2004 vest fully and may, in addition warrants. Each warrant carries the right to subscribe for to the ordinary exercise periods, (in case they have not nominal DKK 1 share in LifeCycle Pharma at the subscrip- lapsed before then) be exercised immediately before one tion price determined by the board of directors at the of the events described in clauses 5.10, 5.11 and/or 6.1 date of issuance. below.

1.3 3.2 Warrants will be offered to employees, consultants, advi- If the stipulated fraction does not amount to a whole sors and board members in LifeCycle Pharma at the dis- number of warrants, the number shall be rounded down cretion of the Board of Directors after suggestion from to the nearest whole number. the management. The number of warrants offered to each individual shall be based on an individual evaluation 3.3 of the Warrant Holder’s duties. It shall appear from the Warrants shall only be vested to the extent the Warrant individual Warrant Holder’s warrant certifi cate how many Holder is employed by LifeCycle Pharma, cf. however warrants have been granted to the Warrant Holder and clause 3.4 to 3.6 below. what the exercise price for the warrant is. 3.4 2. Granting/subscription of warrants In the event that the Warrant Holder terminates the employment contract and the termination is not a result 2.1 of breach of the employment terms by LifeCycle Pharma, Warrant Holders who wish to subscribe the offered war- and in the event that LifeCycle Pharma terminates the rants shall sign a Warrant Certifi cate with this Appendix employment contract and the Warrant Holder has given attached. LifeCycle Pharma good reason to do so, then the vesting of warrants shall cease from the time the employment is 2.2 terminated, meaning from the fi rst day when the Warrant The granting of warrants shall not be subject to payment Holder is no longer entitled to salary from LifeCycle from the Warrant Holders. Pharma, notwithstanding that the Warrant Holder has actually ceased to perform his/her duties at an earlier date. In addition hereto the Warrant Holder’s right, if any,

169 to receive warrants granted after termination of the 3.8 employment shall cease. With respect to warrants issued Warrants issued to consultants, advisors and board mem- to employees of LifeCycle Pharma on the board meetings bers only vest to the extent that the consultant, advisor of 4 April 2003, 3 October 2003, 19 December 2003, 22 or board member acts on behalf of LifeCycle Pharma as a March 2004, 28 April 2004 and on the General Meeting consultant, advisor or board member. on 16 June 2004 (previous Appendices A, B and D) excluding warrants granted to JMM Invest ApS on the 3.9 board meetings held on 4 April 2003 and 22 March 2004 If the Warrant Holder takes leave – other than maternity (previous Appendix C) the foregoing clause 3.4 applies leave – and the leave exceeds 60 days, the dates when regardless of the reason for termination of the employ- the warrants shall be vested shall be postponed by a ment contract. period corresponding to the duration of the leave.

3.5 4. Exercise In the event that the Warrant Holder terminates the employment contract and the termination is a result of 4.1 breach of the employment terms by LifeCycle Pharma, or When a warrant has been vested, it may be exercised dur- in the event that LifeCycle Pharma terminates the employing the exercise periods. The exercise periods run for 21 ment contract and the Warrant Holder having not given days from and including respectively the day after the LifeCycle Pharma good reason to due so, then warrants Company’s publication of i) the annual report notifi cation shall continue to vest as if the Warrantholder was still – or if such notifi cation is no published – the annual employed by LifeCycle Pharma. This clause 3.5 only report and ii) the interim report (6 months report). The applies to warrants issued to employees of LifeCycle last exercise period shall run for 21 days following the Pharma on the board meetings held on 20 June 2005, 21 date of the publication of the interim report for the fi rst 6 September 2005, 17 October 2005 og 12 December 2005 months of 2012. With respect to warrants granted 14 as well as the General Meetings held on 16 December May 2008 or later, the exercise periods shall (in addition 2004, 17 March 2005, as well as 7 November 2005(previ- to i) and ii) above) run for 21 days from and including ous Appendices E and F) as well as on board meetings or respectively the day after the Company’s publication of its General Meetings held after 7 November 2005 cf. how- interim fi nancial report for the fi rst 3 months and the ever clause 3.6 below. Company’s publication of its interim fi nancial report for the fi rst 9 months of the year. 3.6 Regardless of clauses 3.4 and 3.5 the following shall As concerns 2,145,820 warrants, which are issued to JMM apply to grants of warrants made on 14 May 2008 and Invest ApS and to LifeCycle Pharma’s employees, consul- later to Warrant Holders who are employees and receive tants, advisors and board members on board meetings of the warrants as part of a employment relationship but respectively 4 April 2003, 29 August 2003, 3 October who are not comprised by the (Danish) law no. 309 of 5 2003, 19 December 2003, 22 March 2004, 28 April 2004 May 2004 (the Stock Option Act): Regardless of the rea- and on the General Meeting on 16 June 2004, the last son for the termination of the employment relationship exercise period is, however, 21 days following the date of the vesting of warrants shall cease from the time the the publication of the interim report for the fi rst 6 months employment is terminated, meaning from the fi rst day of 2011. when the Warrant Holder is no longer entitled to salary from LifeCycle Pharma of its subsidiary, notwithstanding 4.2 that the Warrant Holder has actually ceased to perform If the last day of an exercise period is Saturday or Sunday, his/her duties at an earlier date. In addition hereto the the exercise period shall also include the fi rst weekday Warrant Holder’s right, if any, to receive warrants granted following the stipulated period. after termination of the employment shall cease. It is noted that employees whose employment relationship is 4.3 not governed by Danish law cannot by reference to clause When warrants have been vested, the Warrant Holder 11.1 below be able to claim any rights pursuant to provi- shall be free to choose, which exercise period to apply for sions of Danish mandatory legislation and that no such the vested warrants, cf. however, clause 4.5 below provisions are included in this warrant scheme. The afore- regarding material breach. It is, however, a condition for said cannot be used as basis for e contrario interpretation exercise that the Warrant Holder in a given exercise with respect to warrant grants made prior to 14 May period exercises warrants, which give a right to subscribe 2008. minimum nominal DKK 1,000 shares.

3.7 4.4 Should the Warrant Holder materially breach the terms of Warrants not exercised by the Warrant Holder during the the employment, the vesting of warrants shall cease from last exercise period shall become null and void without the date when the Warrant Holder is dismissed due to the further notice or compensation or payment of any kind to material breach. the Warrant Holder.

170 4.5 compensation or payment of any kind to the Warrant The Warrant Holder’s exercise of warrants is in principle Holder. conditional upon the Warrant Holder being employed in LifeCycle Pharma at the time when warrants are exer- b. In the event that the Warrant Holder terminates the cised. In case of termination of the employment the fol- employment contract and the termination is a result of lowing shall apply: breach of the employment by LifeCycle Pharma, or in the event that LifeCycle Pharma terminates the a. In the event that the Warrant Holder is terminating the employment contract and the Warrant Holder have not employment contract and the termination is not a given LifeCycle Pharma good reason to do so, the War- result of breach of the employment by LifeCycle rant Holder is entitled to exercise the warrants as if Pharma, and in the event that LifeCycle Pharma termi- the Warrant Holder were still employed with LifeCycle nates the employment contract and the Warrant Holder Pharma. Exercise shall take place in accordance with having given LifeCycle Pharma good reason to do so,, the general terms and conditions regarding exercise of the Warrant Holder is ony entitled to exercise the war- warrants stipulated in clause 4.1 – 4.5. This provision rants vested at the time of termination. Exercise shall shall apply if the employment contract is terminated take place during the fi rst coming exercise period after due to your retirement This clause 4.5(b) only applies termination of the employment, however the Warrant to warrants issued to employees of LifeCycle Pharma Holder shall always have minimum 3 months from the on the board meetings held on 20 June 2005, 21 Sep- date of termination to decide if warrants shall be exer- tember 2005, 17 October 2005 og 12 December 2005 cised. To the extent that the fi rst coming exercise as well as the General Meetings held on 16 December period commences within 3 months from the date of 2004, 17 March 2005 and 7 November 2005 (previous actual termination the Warrant Holder shall be entitled Appendices E and F) as well as on board meetings or to exercise the warrants in the exercise period follow- General Meetings held after 7 November 2005 cf. how- ing the fi rst coming exercise period. All vested warrants ever clause 4.5(c) below. not exercised by the Warrant Holder according to this clause shall become null and void without further c. Regardless of clause 4.5 (b) the following shall apply notice or compensation or payment of any kind. to grants of warrants made on 14 May 2008 and later to Warrant Holders who are employees and receive the With respect to warrants issued to employees of Life- warrants as part of a employment relationship but who Cycle Pharma on the board meetings of 4 April 2003, 3 are not comprised by the (Danish) law no. 309 of 5 October 2003, 19 December 2003, 22 March 2004, 28 May 2004 (the Stock Option Act): the Warrant Holder April 2004 and on the General Meeting on 16 June is only entitled to exercise the warrants vested at the 2004 (previous Appendices A, B and D) excluding war- time of termination. Exercise shall take place during rants granted to JMM Invest ApS on the board meetings the fi rst coming exercise period after termination of held on 4 April 2003 and 22 March 2004 (previous the employment, however the Warrant Holder shall Appendix C), clause 4.5 (a) above applies in all always have minimum 3 months from the date of ter- instance where the employment of the warrantholder mination to decide if warrants shall be exercised. To by LifeCycle Pharma ceases including also as a result of the extent that the fi rst coming exercise period com- illness, death, disability, retirement or death, cf. how- mences within 3 months from the date of actual termi- ever, clause 4.5(d) in fi ne, below. nation the Warrant Holder shall be entitled to exercise the warrants in the exercise period following the fi rst As concerns 554,580 warrants, which are issued to coming exercise period. All vested warrants not exer- JMM Invest ApS on the board meetings held on 4 April cised by the Warrant Holder according to this clause 2003, 29 August 2003 and 22 Marts 2004 (previous shall become null and void without further notice or Appendix C), clause 4.5(b) above does not apply. compensation or payment of any kind. It is noted that Rather, Clause 4.5(a) as written below applies: employees whose employment relationship is not governed by Danish law cannot by reference to clause In the event that the CEO’s employment is terminated 11.1 below be able to claim any rights pursuant to pro- by LifeCycle Pharma due to a material breach by the visions of Danish mandatory legislation and that no CEO of the employment contract or in the event that such provisions are included in this warrant scheme. the CEO should terminate the employment contract The aforesaid cannot be used as basis for e contrario without this being due to a breach of the employment interpretation with respect to warrant grants made contract by the LifeCycle Pharma, the Warrant Holder prior to 14 May 2008. shall (irrespective of clauses 4.1 – 4.3.), to the extent that it wishes to exercise warrants, exercise the war- d. If the employment is terminated as a consequence of rants in the fi rst coming exercise period after the date summary dismissal of the Warrant Holder on grounds of the CEO’s actual cessation of the employment. If of material breach, all warrants not exercised at that warrants are not exercise accordingly the warrant shall time shall become null and void without notice or com- automatically be deemed null and void without any pensation.As concerns warrants issued to employees of LifeCycle Pharma on the board meetings held on 20

171 June 2005, 21 September 2005, 17 October 2005 og 5.2 12 December 2005 as well as the Geneal Meetings Adjustments shall be made so that the potential possibil- held on 16 December 2004, 17 March 2005, and 7 ity of gain attached to a warrant in so far as possible shall November 2005 (previous appendices E and F) as well remain the same before and after the occurrence of an as on board meetings or General Meetings held after 7 incident causing the adjustment. The adjustment shall be November 2005 then if the material breach is commit- carried out with the assistance of LifeCycle Pharma’s ted prior to the dismissal the vesting and the right to external advisor. The adjustment may be effected either exercise warrants shall be deemed to have ceased at by increase or reduction of the number of shares that can the time of the material breach. The Warrant Holder be issued in accordance with a warrant and/or an increase shall in this case, after demand from LifeCycle Pharma, or reduction of the exercise price. be obligated to sell to LifeCycle Pharma shares which have been subscribed though exercise of warrants, 5.3 after the date of the material breach. The shares shall Warrants shall not be adjusted as a result of LifeCycle be sold at a price corresponding to the subscription Pharma’s issue of employee shares, share options and/or price paid by the Warrant Holder. warrants as part of employee share option schemes (including options to Directors, advisors and consultants) e. As concerns warrants issued to employeesof LifeCycle as well as future exercise of such options and/or war- Pharma on the board meetings held on 20 June 2005, rants. Warrants shall, furthermore, not be adjusted as a 21 September 2005, 17 October 2005 og 12 Decem- result of capital increases following the Warrant Holders’ ber 2005 as well as the Geneal Meetings held on 16 and others’ exercise of warrants in LifeCycle Pharma. December 2004, 17 March 2005, and 7 November 2005 (previous appendices E and F) as well as on 5.4 board meetings or General Meetings held after 7 Bonus shares November 2005 then if the employment is terminated due to the death of the Warrant Holder all warrants If it is decided to issue bonus shares in LifeCycle Pharma, not exercised by the Warrant Holder shall become null warrants shall be adjusted as follows: and void. For all warrants issued during 2003 – 2005 as well as on board meetings or General Meetings held The exercise price for each warrant not yet exercised shall after 7 November 2005, however, the LifeCycle Pharma be multiplied by the factor: Board of Directors may decide to enable the estate of the Warrant Holder to exercise the issued warrants ␣ = A whether they have been vested at the time of the (A+B) death or not on the condition that exercise be effected and the number of warrants not yet exercised shall be during the ﬁ rst exercise period commencing after the multiplied by the factor: death. 1 4.6 If the Warrant Holder is a consultant, advisor or board member the exercise of warrants is in principle condi- where: tional upon the Warrant Holder being connected to Life- Cycle Pharma in this capacity at the time when warrants A = the nominal share capital before issue of bonus are exercised. In case that the consultant’s, advisor’s or shares, and board member’s relationship with LifeCycle Pharma should cease without this being attributable to the War- B = the total nominal value of bonus shares. rant Holder’s actions or omissions the Warrant Holder shall be entitled to exercise vested warrants in the exer- If the adjusted exercise price and/or the adjusted number cise periods set forth in clause 4.1 above. of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. LifeCycle Pharma’s board of directors is in the event of a listing of the company’s shares on a stock exchange enti- 5.5 tled at its discretion to change the exercise periods in Changes of capital at a price different from the market order to coordinate these with applicable rules for insider price: trading. If it is decided to increase or reduce the share capital in 5. Adjustment of warrants LifeCycle Pharma at a price below the market price (in relation to capital decreases also above the market price), 5.1 warrants shall be adjusted as follows: Changes in LifeCycle Pharma’s capital structure causing a change of the potential possibility of gain attached to a warrant shall require an adjustment of the warrants.

172 The exercise price for each non-exercised warrant shall be E2 = E1 - U – Umax multiplied by the factor: A where: ␣ = (A_x K) + (B x T) (A+B) x K E2 = the adjusted exercise price E1 = the original exercise price and the number of non-exercised warrants shall be multi- U = dividends paid out plied by the factor: Umax = 10 per cent of the equity capital, and A = total number of shares in LifeCycle Pharma 1 ␣ If the adjusted exercise price does not amount to a whole number, it shall be rounded down to the nearest whole where: number.

A = nominal share capital before the change in capital The equity capital that shall form the basis of the adjust- B = nominal change in the share capital ment above is the equity capital stipulated in the Annual K = market price of the share prior to change in the share Report to be adopted at the General Meeting where divi- capital, and dends shall be approved before allocation hereof has T = subscription price/reduction price in relation to the been made in the Annual Report. change in the share capital 5.8 If the adjusted exercise price and/or the adjusted number Other changes in LifeCycle Pharma’s capital position: of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. In the event of other changes in LifeCycle Pharma’s capital position causing changes to the fi nancial value of war- 5.6 rants, warrants shall (save as provided above) be adjusted Changes in the nominal value of each individual share: in order to ensure that the changes do not infl uence the fi nancial value of the warrants. If it is decided to change the nominal value of the shares, warrants shall be adjusted as follows: The calculation method to be applied to the adjustment shall be decided by an external advisor appointed by the The exercise price for each non-exercised warrant shall be Board of Directors. multiplied by the factor: It is emphasized that increase or reduction of LifeCycle ␣ = A Pharma’s share capital at market price does not lead to B an adjustment of the subscription price or the number of shares to be subscribed. and the number of non-exercised warrants shall be multiplied by the factor: 5.9 Winding-up: 1 ␣ Should LifeCycle Pharma be liquidated, the vesting time for all non-exercised warrants shall be changed so that where: the Warrant Holder may exercise his/her warrants in an extraordinary exercise period immediately preceding the A = nominal value of each share after the change, and relevant transaction. B = nominal value of each share before the change 5.10 If the adjusted exercise price and/or the adjusted number Merger and split: of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. If LifeCycle Pharma merges as the continuing company, warrants shall remain unaffected unless, in connection 5.7 with the merger, the capital is increased at a price other Payment of dividend: than the market price and in that case warrants shall be adjusted in accordance with clause 5.5. If it is decided to pay dividends, the part of the dividends exceeding 10 per cent of the equity capital shall lead to adjustment of the exercise price according to the following formula:

173 If LifeCycle Pharma merges as the terminating company or 6. Transfer, pledge and enforcement is split, the continuing company may choose one of the following possibilities: 6.1 ssued warrants shall not be subject to charging orders, • The Warrant Holder may exercise all non-exercised transfer of any kind, including in connection with division warrants (inclusive of warrants not yet vested) imme- of property on divorce or legal separation, for ownership diately before the merger/split, or or as security without the consent of the Board of Direc- • tors. The Warrant Holder’s warrants may, however, be New share instruments in the continuing company/ transferred to the Warrant Holder’s spouse/cohabitant companies of a corresponding fi nancial pre-tax value and/or issue in the event of the Warrant Holder’s death. shall replace the warrants. On split the continuing companies may decide in which company/companies 7. Subscription for new shares by exercise of the Warrant Holders shall receive the new share warrants instruments. 7.1 5.11 Subscription for new shares by exercise of issued war- Sale and exchange of shares: rants must be made through submission by the Warrant Holder no later than the last day of the relevant exercise If more than 50 per cent of the share capital in LifeCycle period at 16:00 to LifeCycle Pharma of an exercise notice Pharma is sold or is part of a share swap, LifeCycle drafted by LifeCycle Pharma. The exercise notice shall be Pharma may choose one of the following possibilities: fi lled in with all information. The company must have received the exercise price for the new shares, payable as • The warrant scheme shall continue unchanged. a cash contribution, by the last day of the relevant exercise period. • The Warrant Holder may exercise all non-exercised warrants that are not declared null and void (inclusive 7.2 of warrants not yet vested) immediately before the If the limitation period set forth in clause 7.1 expires as a sale/swap of shares. Furthermore, the Warrant Holder result of LifeCycle Pharma not having received the fi lled-in shall undertake an obligation to sell the acquired exercise notice or the payment by 16:00 of the last day shares on the same conditions as the other share- of the exercise period, the subscription shall be deemed holders (when selling). invalid, and in this situation the Warrant Holder shall not be considered as having exercised his/her warrants for a • Share instruments in the acquiring company of a cor- possible subsequent exercise period. responding pre-tax value shall replace the issued warrants. 7.3 Warrants not exercised by the Warrant Holder during the 5.12 last exercise period, cf. above, shall become null and void Common provisions regarding 5.9-5.11: without notice or compensation.

If one of the transactions mentioned above is made, Life- 7.4 Cycle Pharma shall inform the Warrant Holder hereof by When the capital increase caused by exercise of warrants written notice. Upon receipt of the written notice, the has been registered with the Danish Commerce and Com- Warrant Holder shall have 2 weeks – in cases where the panies Agency, the Warrant Holder shall receive proof of Warrant Holder may extraordinarily exercise warrants, see his shareholding in LifeCycle Pharma. 5.9-5.11 – to inform LifeCycle Pharma in writing whether he/she will make use of the offer. If the Warrant Holder 8. The rights of new shares has not answered LifeCycle Pharma in writing within the limit of 2 weeks or fails to pay within the ﬁ xed time, war- New shares subscribed for by exercise of issued warrants rants shall become null and void without further notice or shall in every respect have the same rights as the present compensation. shares in LifeCycle Pharma in accordance with the Articles of Association for LifeCycle Pharma in force from time to The warrant holder’s rights in connection with decisions time. For the time being, the following shall apply: made by any competent company body, see 5.9-5.11, shall be contingent on subsequent registration of the relevant decision with the Danish Commerce and Companies • the value of each share shall be DKK 1 or multiples Agency provided that registration is a condition of its hereof, validity. • the shares are bearer shares, but may be recorded on name in the Company’s share register,

174 • the shares shall be negotiable instruments, 10. Tax implications

• the shares are issued through the VP Securities Ser- 10.1 vices The tax implications connected to the Warrant Holder’s subscription for or exercise of warrants shall be of no • no shares shall carry special rights. concern to LifeCycle Pharma.

• no shareholder shall be obliged to have his shares 11. Governing Law and Venue redeemed in whole or in part by the Company or others. 11.1 Acceptance of warrants, the terms and conditions thereto • LifeCycle Pharma’s shareholders shall hold no pre- and the exercise, and terms and conditions for future emptive rights to subscribe for warrants; subscription for shares in LifeCycle Pharma shall be governed by Danish law. • LifeCycle Pharma’s shareholders shall hold no preemptive rights to subscribe for new shares issued on 11.2 the basis of warrants; Any disagreement between the Warrant Holder and Life- Cycle Pharma in relation to the understanding or imple- • new shares issued as a result of exercise of warrants mentation of the warrant scheme shall be settled amica- shall carry the right to dividend and other rights in bly by negotiation between the parties. LifeCycle Pharma from the time of registration of the capital increase with the Danish Commerce and Com- 11.3 panies Agency. If the parties fail to reach consensus, any disputes shall be settled in accordance with “Rules for hearing of cases 8.1 in the Copenhagen Arbitration”. The Copenhagen Arbitra- LifeCycle Pharma shall pay all costs connected with grant- tion shall appoint one arbitrator who shall settle the dis- ing of warrants and later exercise thereof. LifeCycle Phar- pute according to Danish law. ma’s costs in connection with issue of warrants and the related capital increase are estimated to DKK 45,000. 11.4 In the event of discrepancies between the English and 9. Other provisons the Danish text the Danish text shall prevail.

9.1 28.02.2008 The value attached to the subscription right shall not be included in the Warrant Holder’s salary, and any agree- ********* ment made between the Warrant Holder and LifeCycle Pharma regarding pension or the like shall therefore not include the value of the Warrant Holder’s warrants.

9.2 If a relevant authority should establish that the issuance and/or exercise of warrants shall be considered a salary allowance with the consequence that LifeCycle Pharma shall pay holiday allowance or the like to the Warrant Holder on the basis of the value of warrants, the subscription price shall be increased in order to compensate LifeCycle Pharma for the amounts that have been paid to the Warrant Holder in the form of holiday allowance or the like.

9.3 The fact that LifeCycle Pharma offers warrants to Warrant Holders shall not in any way obligate LifeCycle Pharma to maintain the employment.

175 Appendix 2 to the Articles of Association of LifeCycle Pharma A/S

Pursuant to authorisation in the articles of association 3. Vesting the Board of Directors has resolved that the following terms and conditions shall apply to warrants which are 3.1 granted to the management, other employees, consul- The provisions of this clause 3 regarding vesting of war- tants, advisors and board members according to the rants shall not apply to warrants, which are granted to authorisation: such Warrant Holders (hereinafter referred to as ”Salaried Employees”) who are comprised by the Danish Act on use 1. General of purchase rights and subscription rights regarding shares etc. in employments (in Danish: lov om brug af 1.1 køberet eller tegningsret til aktier m.v. i ansættelsesfor- LifeCycle Pharma A/S (hereinafter ”LifeCycle Pharma”) has hold) (the ”Stock Option Act”). Warrants granted to Sala- decided to introduce an incentive scheme for LifeCycle ried Employees are deemed vested in full upon the time Pharma ’s management, other employees, consultants, of grant; however, the exercise of the warrants is subject advisors and board members (hereinafter collectively to restrictions laid down in clause 4. referred to as “Warrant Holders”). The scheme is based on issuance of options, also called warrants (hereinafter 3.2 only referred to as “warrants”), which are not subject to The warrants shall be vested with 1/48 per month from 1 payment. January 2006, however from 1 November 2005 for War- rant Holders who are board members, irrespective of the 1.2 date of grant of the warrants covered by this Appendix 2. A warrant is a right, but not an obligation, during fi xed periods (exercise periods) to subscribe for new shares in 3.3 LifeCycle Pharma at a price fi xed in advance (the exercise If the stipulated fraction does not amount to a whole price). Each warrant carries the right to subscribe for number of warrants, the number shall be rounded down nominal DKK 1 share in LifeCycle Pharma against payment to the nearest whole number. of an exercise price of DKK 36.3725. 3.4 1.3 Warrants shall only be vested to the extent the Warrant Warrants will be offered to the management, other Holder is employed by LifeCycle Pharma, cf. however employees, consultants, advisors and board members in clause 3.5 to 3.7 below. LifeCycle Pharma as decided by the general meeting and/ or at the discretion of the Board of Directors after sug- 3.5 gestion from the management. The number of warrants In the event that the Warrant Holder terminates the offered to each individual shall be based on an individual employment contract and in the event that LifeCycle evaluation of the Warrant Holder’s duties. It shall appear Pharma terminates the employment contract (notwith- from the individual Warrant Holder’s warrant certifi cate standing the reason), then the vesting of warrants shall how many warrants have been granted to the Warrant cease from the time the Warrant Holder actually resigns Holder and what the exercise price for the warrant is. from his position, notwithstanding whether the Warrant Holder still is entitled to salary from LifeCycle Pharma. In 2. Granting/subscription of warrants addition hereto the Warrant Holder’s right, if any, to receive warrants granted after termination of the employ- 2.1 ment shall cease. Warrant Holders who wish to subscribe the offered warrants shall sign a Warrant Certifi cate with this Appendix G 3.6 attached and a Shareholders Agreement regulating the Should the Warrant Holder materially breach the terms of relationship between the Warrant Holders and LifeCycle the employment, the vesting of warrants shall cease from Pharma’s other shareholders. the date when the Warrant Holder is dismissed due to the material breach. 2.2 The subscription of warrants granted shall not be subject 3.7 to payment from the Warrant Holders. Warrants issued to consultants, advisors and board members only vest to the extent that the consultant, advisor 2.3 or board member acts on behalf of LifeCycle Pharma as a LifeCycle Pharma shall keep records of granted warrants consultant, advisor or board member, meaning that the and update the records on a continuous basis. vesting of warrants shall cease from the time where

176 (a) the consultant/adviser informs LifeCycle Pharma or subscription price per share, which is used in connec- receives information from LifeCycle Pharma that the party tion with a later issue of shares. concerned shall no longer be a consultant/advisor to Life- Cycle Pharma or such earlier date when it becomes appar- If the Change of Control Event occurs after listing of Life- ent to the consultant/advisor that the relationship is ter- Cycle Pharma’s shares on the stock exchange, and the minated and where (b) the board member resigns from Change of Control Event is carried out on the basis of a the board of directors. total value of LifeCycle Pharma, which is

3.8 - higher than 150 % of the valuation of LifeCycle If the Warrant Holder takes leave – other than maternity Pharma, which was established in connection with the leave – and the leave exceeds 60 days, the dates when listing of the shares on the stock exchange based on the warrants shall be vested shall be postponed by a the IPO-price per share (hereinafter referred to as the period corresponding to the entire duration of the leave. “IPO-Value”), then 100 % of the Warrant Holder’s warrants shall vest in full upon the occurrence of the 3.9 Change of Control Event. If, prior to listing of LifeCycle Pharma’s shares on the stock exchange, - between 100 % and 150 % (inclusive) of the IPO- Value, then 75 % of the Warrant Holder’s warrants, (i) LifeCycle Pharma mergers with another company, or which have not yet vested, shall vest in full upon the the share capital of LifeCycle Pharma is part of a share occurrence of the Change of Control Event. swap, on conditions whereby the then current shareholders of LifeCycle Pharma do not control a majority The provisions of this clause 3.9 shall only apply to War- of the shares of the company resulting from the rant Holders who, upon the grant of the warrants, are merger or the share swap; or registered members of LifeCycle Pharma’s management board and Board of Directors and to LifeCycle Pharma’s (ii) more than 50 % of the share capital in LifeCycle Chief Scientiﬁ c Ofﬁ cer, Vice President (Medical Affairs) and Pharma is sold to a third party Vice President (Commercial Operations).

(each of the above events hereinafter referred to as a 4. Exercise “Change of Control Event”), then the Warrant Holder’s warrants shall vest as set out below: 4.1 When a warrant has been vested, it may be exercised dur- If the Change of Control Event is carried out at a total ing the exercise periods. The exercise periods run for 21 price for the shares in LifeCycle Pharma, which is days from and including respectively the day after the Company’s publication of i) the annual report notifi cation > 1,25 * (A + B ) * C – or if such notifi cation is no published – the annual report and ii) the interim report (6 months report). The then 100 % of the Warrant Holder’s warrants shall vest in fi rst exercise period shall run from the publication of the full upon the occurrence of the Change of Control Event. annual report notifi cation for 2007 and the last exercise period shall run for 21 days following the date of the > (A + B ) * C but ≤ 1,25 * (A + B ) * C publication of the interim report for the fi rst 6 months of 2012. With respect to warrants granted 14 May 2008 or then 75 % of the Warrant Holder’s warrants shall vest in later, the exercise periods shall (in addition to i) and ii) full upon the occurrence of the Change of Control Event. above) run for 21 days from and including respectively the day after the Company’s publication of its interim Where: fi nancial report for the fi rst 3 months and the Company’s publication of its interim fi nancial report for the fi rst 9 A = the registered number of shares of nominally DKK 1 months of the year. in LifeCycle Pharma before exercise of warrants and other convertible share instruments 4.2 If the last day of an exercise period is Saturday or Sunday, B = the number of shares of nominally DKK 1 being the the exercise period shall also include the fi rst weekday result of the full exercise of all issued but not yet following the stipulated period. vested and/or exercised warrants and other share instruments entitling the holder to subscribe for 4.3 shares in LifeCycle Pharma When warrants have been vested, the Warrant Holder shall be free to choose, which exercise period to apply for C = the highest value of (i) the price per share, which was the vested warrants, cf. however, clause 4.5 (concerning used in connection with the issue of D-shares in Life- Warrant Holders who are not Salaried Employees) and Cycle Pharma in December 2005 or (ii) the highest clause 4.6 (concerning Warrant Holders who are Salaried

177 Employees) below. It is, however, a condition for exercise time shall become null and void without notice or com- that the Warrant Holder in a given exercise period exer- pensation If the material breach is committed prior to cises warrants, which give a right to subscribe minimum the dismissal the vesting and the right to exercise war- nominal DKK 1,000 shares. rants shall be deemed to have ceased at the time of the material breach. LifeCycle Pharm is in this case 4.4 entitled to decide that the Warrant Holder, after Warrants not exercised by the Warrant Holder during the demand from LifeCycle Pharma, shall be obligated to last exercise period, cf. above, shall become null and void sell to LifeCycle Pharma shares which have been sub- without further notice or compensation or payment of scribed though exercise of warrants, after the date of any kind to the Warrant Holder. the material breach. The shares shall be sold at a price corresponding to the subscription price paid by the 4.5 Warrant Holder. This clause 4.5 only applies to Warrant Holders who are not Salaried Employees. d. If the employment is terminated due to the death of the Warrant Holder all warrants not exercised by the The Warrant Holder’s exercise of warrants is in principle Warrant Holder shall become null and void. However, conditional upon the Warrant Holder being employed in the LifeCycle Pharma Board of Directors may grant an LifeCycle Pharma at the time when warrants are exer- exemption from this provision to enable the estate of cised. In case of termination of the employment the fol- the Warrant Holder to exercise the issued warrants lowing shall apply: whether they have been vested at the time of the death or not on the condition that exercise be effected a. In the event that the Warrant Holder is terminating the during the fi rst exercise period commencing after the employment contract and the termination is not a death. result of a material breach of the employment by Life- Cycle Pharma, and in the event that LifeCycle Pharma 4.6 terminates the employment contract and the Warrant This clause 4.6 only applies to Warrant Holders who are Holder having given LifeCycle Pharma good reason to Salaried Employees. do so,, the Warrant Holder is only entitled to exercise the warrants vested at the time of termination. Exer- In case the Salaried Employee resigns from his/her posi- cise shall take place during the fi rst coming exercise tion in the Company due to his/her own termination or period after termination of the employment, however due to the Company’s termination of the Salaried Employ- the Warrant Holder shall always have minimum 3 ee’s employment with the Company, the Salaried Employ- months from the date of termination to decide if war- ee’s position will be as laid down in sections 4 and 5 of rants shall be exercised. To the extent that the fi rst the Stock Option Act. coming exercise period commences within 3 months from the date of actual termination the Warrant Holder This implies the following: shall be entitled to exercise the warrants in the exercise period following the fi rst coming exercise period. a. In the event that the Salaried Employee resigns from All vested warrants not exercised by the Warrant his/her position in the Company due to his/her own Holder according to this clause shall become null and termination of the employment, the Salaried Employ- void without further notice or compensation or pay- ee’s right to exercise warrants that have been granted ment of any kind. to him/her will lapse. Warrants, where the exercise period has commenced prior to the termination of the b. In the event that the Warrant Holder terminates the employment, may, however, be exercised in the period employment contract and the termination is a result of until termination of the employment. a material breach of the employment by LifeCycle Pharma, or in the event that LifeCycle Pharma termi- b. In the event that the Salaried Employee resigns from nates the employment contract and the Warrant Holder his/her position in the Company due to the Company’s have not given LifeCycle Pharma good reason to do so, termination of the employment, which is not due to the Warrant Holder is entitled to exercise the warrants breach on the part of the Salaried Employee, the Sala- vested as if the Warrant Holder were still employed ried Employee will remain entitled to all warrants that with LifeCycle Pharma. Exercise shall take place in have been granted to him/her, irrespective of whether accordance with the general terms and conditions the exercise period has commenced prior to the termi- regarding exercise of warrants stipulated in clause 4.1 nation of his/her employment. The same applies in – 4.5. This provision shall apply if the employment those instances mentioned in the Stock Option Act, contract is terminated due to your retirement. section 4(2) (resignation due to age/retirement) and section 4(3) (resignation due to material breach on the c. If the employment is terminated as a consequence of part of the Company). summary dismissal of the Warrant Holder on grounds of material breach, all warrants not exercised at that

178 c. In the event that the Salaried Employee resigns from by increase or reduction of the number of shares that can his/her position in the Company due to the Company’s be issued in accordance with a warrant and/or an increase termination of his/her employment, which is due to or reduction of the exercise price. breach on the part of the Salaried Employee, or the Salaried Employee is justly dismissed by the Company, 5.3 the Salaried Employee’s right to all warrants that have Warrants shall not be adjusted as a result of LifeCycle been granted to him/her will lapse upon termination of Pharma’s issue of employee shares, share options and/or the employment. Warrants, where the exercise period warrants as part of employee share option schemes has commenced prior to the termination of the Sala- (including options to Directors, advisors and consultants) ried Employee’s employment, may however be exer- as well as future exercise of such options and/or war- cised in the period until the termination of the employ- rants. Warrants shall, furthermore, not be adjusted as a ment. result of capital increases following the Warrant Holders’ and others’ exercise of warrants in LifeCycle Pharma. 4.7 If the Warrant Holder is a consultant, advisor or board 5.4 member the exercise of warrants is in principle condi- Bonus shares tional upon the Warrant Holder being connected to Life- Cycle Pharma in this capacity at the time when warrants If it is decided to issue bonus shares in LifeCycle Pharma, are exercised. In case that the consultant’s/advisor’s/ warrants shall be adjusted as follows: board member’s relationship with LifeCycle Pharma should cease (cf. clause 3.7), the Warrant Holder is only The exercise price for each warrant not yet exercised shall entitled to exercise the warrants vested at the time of be multiplied by the factor: termination. Exercise shall take place during the fi rst coming exercise period after termination of the relationship, ␣ = A however the consultant/advisor/board member shall (A+B) always have minimum 3 months from the date of termination to decide if warrants shall be exercised. To the and the number of warrants not yet exercised shall be extent that the fi rst coming exercise period commences multiplied by the factor: within 3 months from the date of actual termination the consultant/advisor/board member shall be entitled to 1 exercise the warrants in the exercise period following the ␣ fi rst coming exercise period. All vested warrants not exercised by the consultant/advisor/board member according where: to this clause shall become null and void without further notice or compensation or payment of any kind. A = the nominal share capital before issue of bonus shares, and In case that the consultant’s, advisor’s or board member’s relationship with LifeCycle Pharma should cease B = the total nominal value of bonus shares. without the consultant, advisor or board member having given good reason for this, the consultant/advisor/board If the adjusted exercise price and/or the adjusted number member is, however, entitled to exercise the warrants as of shares does not amount to whole numbers, each num- if the party concerned was still a consultant, advisor/ ber shall be rounded down to the nearest whole number. board member. Exercise shall take place in accordance with the general terms and conditions regarding exercise 5.5 of warrants stipulated in clauses 4.1 – 4.4 and 4.7. Changes of capital at a price different from the market price: 5. Adjustment of warrants If it is decided to increase or reduce the share capital in 5.1 LifeCycle Pharma at a price below the market price (in Changes in LifeCycle Pharma’s capital structure causing a relation to capital decreases also above the market price), change of the potential possibility of gain attached to a warrants shall be adjusted as follows: warrant shall require an adjustment of the warrants. The exercise price for each non-exercised warrant shall be 5.2 multiplied by the factor: Adjustments shall be made so that the potential possibility of gain attached to a warrant in so far as possible shall ␣ = (A_x K) + (B x T) remain the same before and after the occurrence of an (A+B) x K incident causing the adjustment. The adjustment shall be carried out with the assistance of LifeCycle Pharma’s and the number of non-exercised warrants shall be multi- external advisor. The adjustment may be effected either plied by the factor:

179 1 If the adjusted exercise price does not amount to a whole ␣ number, it shall be rounded down to the nearest whole number. where: The equity capital that shall form the basis of the adjust- A = nominal share capital before the change in capital ment above is the equity capital stipulated in the Annual B = nominal change in the share capital Report to be adopted at the General Meeting where divi- K = market price of the share prior to change in the share dends shall be approved before allocation hereof has capital, and been made in the Annual Report. T = subscription price/reduction price in relation to the change in the share capital 5.8 Other changes in LifeCycle Pharma’s capital position If the adjusted exercise price and/or the adjusted number of shares does not amount to whole numbers, each num- In the event of other changes in LifeCycle Pharma’s capi- ber shall be rounded down to the nearest whole number. tal position causing changes to the fi nancial value of warrants, warrants shall (save as provided above) be adjusted 5.6 in order to ensure that the changes do not infl uence the Changes in the nominal value of each individual share: fi nancial value of the warrants.

If it is decided to change the nominal value of the shares, The calculation method to be applied to the adjustment warrants shall be adjusted as follows: shall be decided by an external advisor appointed by the Board of Directors. The exercise price for each non-exercised warrant shall be multiplied by the factor: It is emphasized that increase or reduction of LifeCycle Pharma’s share capital at market price does not lead to ␣ = A an adjustment of the subscription price or the number of B shares to be subscribed. and the number of non-exercised warrants shall be multiplied by the factor: 5.9 Winding-up 1 ␣ Should LifeCycle Pharma be liquidated, the vesting time for all non-exercised warrants shall be changed so that where: the Warrant Holder may exercise his/her warrants in an extraordinary exercise period immediately preceding the A = nominal value of each share after the change, and relevant transaction. B = nominal value of each share before the change 5.10 If the adjusted exercise price and/or the adjusted number Merger and split of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. If LifeCycle Pharma merges as the continuing company, warrants shall remain unaffected unless, in connection 5.7 with the merger, the capital is increased at a price other Payment of dividend: than the market price and in that case warrants shall be adjusted in accordance with clause 5.5. If it is decided to pay dividends, the part of the dividends exceeding 10 per cent of the equity capital shall lead to If LifeCycle Pharma merges as the terminating company or adjustment of the exercise price according to the follow- is split, the continuing company may choose one of the ing formula: following possibilities:

E2 = E1 - U – Umax a. The Warrant Holder is give the opportunity to exercise A all non-exercised warrants (inclusive of all warrants not where: yet vested; clause 3.9 does not apply) immediately before the merger/split, or E2 = the adjusted exercise price E1 = the original exercise price b. New share instruments in the continuing company/ U = dividends paid out companies of a corresponding ﬁ nancial pre-tax value Umax = 10 per cent of the equity capital, and shall replace the warrants (including any modiﬁ ed vest- A = total number of shares in LifeCycle Pharma ing pursuant to clause 3.9 with respect to Warrant Holders who are not Salaried Employees). On split the

180 continuing companies may decide in which company/ 5.12 companies the Warrant Holders shall receive the new Common provisions regarding 5.9-5.11: share instruments. If one of the transactions mentioned above is made, Life- In the event that continuing company has chosen option Cycle Pharma shall inform the Warrant Holder hereof by (b) and the continuing company terminates the employ- written notice. Upon receipt of the written notice, the ment contract of a Warrant Holder, who is not a Salaried Warrant Holder shall have 2 weeks – in cases where the Employee, within 6 months from the fi nal completion of Warrant Holder may extraordinarily exercise warrants, see the merger/split and the Warrant Holder having not given 5.9-5.11 – to inform LifeCycle Pharma in writing whether the company good reason to do so, then the Warrant he/she will make use of the offer. If the Warrant Holder Holder may exercise all non-exercised warrants (including has not answered LifeCycle Pharma in writing within the warrants not yet vested) during the fi rst coming exercise limit of 2 weeks or fails to pay within the fi xed time, war- period after termination of the employment, however the rants shall become null and void without further notice or Warrant Holder shall always have minimum 3 months from compensation. the date of the termination to decide if warrants shall be exercised. To the extent that the fi rst coming exercise The warrant holder’s rights in connection with decisions period commences within 3 months from the date of made by any competent company body, see 5.9-5.11, actual termination the Warrant Holder shall be entitled to shall be contingent on subsequent registration of the rel- exercise the warrants in the exercise period following the evant decision with the Danish Commerce and Companies fi rst coming exercise period. All warrants not exercised by Agency provided that registration is a condition of its the Warrant Holder according to this clause shall become validity. null and void without further notice or compensation or payment of any kind. 6. Transfer, pledge and enforcement

5.11 6.1 Sale and exchange of shares Issued warrants shall not be subject to charging orders, transfer of any kind, including in connection with division If more than 50 per cent of the share capital in LifeCycle of property on divorce or legal separation, for ownership Pharma is sold or is part of a share swap, LifeCycle or as security without the consent of the Board of Direc- Pharma may choose one of the following possibilities: tors. The Warrant Holder’s warrants may, however, be transferred to the Warrant Holder’s spouse/cohabitant a. The warrant scheme shall continue unchanged (includ- and/or issue in the event of the Warrant Holder’s death. ing any modifi ed vesting pursuant to clause 3.9 with The Warrant Holder is obliged to ensure (e.g. by a mar- respect to Warrant Holders who are not Salaried riage settlement duly registered with the court of Århus) Employees). that issued warrants are the Warrant Holder’s separate estate (in Danish: særeje) in the event of separation or b. The Warrant Holder is given the opportunity to exercise divorce. all non-exercised warrants that are not declared null and void (inclusive of all warrants not yet vested; 7. Subscription for new shares by exercise of clause 3.9 does not apply) immediately before the warrants sale/swap of shares with the effect that the Warrant Holder at the same time becomes obliged to sell the 7.1 shares acquired by the Warrant Holder on the same Subscription for new shares by exercise of issued war- conditions as the other shareholders (when selling). rants must be made through submission by the Warrant Holder no later than the last day of the relevant exercise c. Share instruments in the acquiring company of a corre- period at 16:00 to LifeCycle Pharma’s board of directors sponding pre-tax value shall replace the issued war- represented by the management of an exercise notice rants (including any modifi ed vesting pursuant to drafted by LifeCycle Pharma. The exercise notice shall be clause 3.9 with respect to Warrant Holders who are not fi lled in with all information. The company must have Salaried Employees). received the exercise price for the new shares, payable as a cash contribution, by the last day of the relevant exer- In the event that LifeCycle Pharma has chosen option (a) cise period. or (c) and LifeCycle Pharma terminates employment contract of a Warrant Holder, who is not a Salaried Employee, 7.2 within 6 months from the completion of the sale/swap of If the limitation period set forth in clause 7.1 expires as a shares and the Warrant Holder having not given LifeCycle result of LifeCycle Pharma not having received the fi lled-in Pharma good reason to do so, then the provisions of exercise notice or the payment by 16:00 of the last day clause 5.10, last paragraph shall apply. of the exercise period, the subscription shall be deemed invalid, and in this situation the Warrant Holder shall not

181 be considered as having exercised his/her warrants for a 9. Other provisons possible subsequent exercise period. 9.1 7.3 The value attached to the subscription right shall not be Warrants not exercised by the Warrant Holder during the included in the Warrant Holder’s salary and is not last exercise period, cf. above, shall become null and void included in the basis for calculation of holiday allowance without notice or compensation. and holiday supplement (in Danish: feriegodtgørelse og ferietillæg), and any agreement made between the War- 7.4 rant Holder and LifeCycle Pharma regarding pension or When the capital increase caused by exercise of warrants the like shall therefore not include the value of the War- has been registered with the Danish Commerce and Com- rant Holder’s warrants. panies Agency, the Warrant Holder shall receive proof of his shareholding in LifeCycle Pharma. 9.2 If a relevant authority should establish that the issuance 8. The rights of new shares and/or exercise of warrants shall be considered a salary allowance with the consequence that LifeCycle Pharma 8.1 shall pay holiday allowance or the like to the Warrant New shares subscribed for by exercise of issued warrants Holder on the basis of the value of warrants, the sub- shall in every respect have the same rights as the present scription price shall be increased in order to compensate shares in LifeCycle Pharma in accordance with the Articles LifeCycle Pharma for the amounts that have been paid to of Association for LifeCycle Pharma in force from time to the Warrant Holder in the form of holiday allowance or time. For the time being, the following shall apply: the like.

• the value of each share shall be DKK 1 or multiples 9.3 hereof, The fact that LifeCycle Pharma offers warrants to Warrant Holders shall not in any way obligate LifeCycle Pharma to • the shares are bearer shares, but may be recorded on maintain the employment. name in the Company’s share register, 10. Governing Law and Venue • the shares shall be negotiable instruments, 10.1 • the shares are issued through the VP Securities Ser- Acceptance of warrants, the terms and conditions thereto vices and the exercise, and terms and conditions for future subscription for shares in LifeCycle Pharma shall be gov- • no shares shall carry special rights. erned by Danish law.

• no shareholder shall be obliged to have his shares 10.2 redeemed in whole or in part by the Company or Any disagreement between the Warrant Holder and Life- others. Cycle Pharma in relation to the understanding or implementation of the warrant scheme shall be settled amica- • LifeCycle Pharma’s shareholders shall hold no pre- bly by negotiation between the parties. emptive rights to subscribe for warrants; 10.3 • LifeCycle Pharma’s shareholders shall hold no pre- If the parties fail to reach consensus, any disputes shall emptive rights to subscribe for new shares issued on be settled in accordance with “Rules for hearing of cases the basis of warrants; in the Copenhagen Arbitration”. The Copenhagen Arbitra- tion shall appoint one arbitrator who shall settle the dis- • new shares issued as a result of exercise of warrants pute according to Danish law. shall carry the right to dividend and other rights in LifeCycle Pharma from the time of registration of the 10.4 capital increase with the Danish Commerce and Com- In the event of discrepancies between the English and panies Agency. the Danish text the Danish text shall prevail. 01.12.2006 8.2 LifeCycle Pharma shall pay all costs connected with granting of warrants and later exercise thereof. LifeCycle Phar- ma’s costs in connection with issue of warrants and the related capital increase are estimated to DKK 25,000.

182 The company

LifeCycle Pharma A/S Kogle Allé 4, DK-2970 Hørsholm, Denmark

Joint Global Coordinators

Danske Markets Handelsbanken Capital Markets division of Danske Bank A/S) (business unit of Svenska Handelsbanken AB (publ)) Holmens Kanal 2-12, 1092 Copenhagen K, Denmark Havneholmen 29, 1561 Copenhagen V, Denmark

Legal advisers To the Company as to Danish law

Mazanti-Andersen, Korsø Jensen & Partnere St. Kongensgade 69, 1264 Copenhagen K, Denmark

To the Joint Global Coordinators

As to U.S. law As to Danish law

Jones Day Kromann Reumert 2, rue Saint-Florentin, 75001 Paris Sundkrogsgade 5, 2100 Copenhagen Ø, Denmark France

Auditors

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab Strandvejen 44, 2900 Hellerup, Denmark

Issuing agent

Danske Bank A/S Holmens Kanal 2-12, 1092 Copenhagen K, Denmark

Registrar of shareholders

Computershare A/S Kongevejen 418, 2840 Holte, Denmark LifeCycle Pharma Group

PARENT COMPANY SUBSIDIARY LifeCycle Pharma A/S LifeCycle Pharma Inc. (100% ownership) Kogle Allé 4 499 Thornall Street, 3rd Floor DK-2970 Hørsholm Edison, NJ 08837 Denmark USA

Phone: +45 7033 3300 Email: [email protected] www.lcpharma.com CVR-no. 26 52 77 67