Multiple Myeloma �� P.12 Consolidated Statement Difference for Patients.” of Changes in Equity �� P.56 Read More on Page 4

ANNUAL REPORT 2020

Bringing HOPE through Celebrating science 20 years This is Oncopeptides ��p.1 Remuneration Report �� p.41 Marty J Duvall, CEO 2020 in brief ��p.2 Directors’ Report �� p.43 “This past year has been a transformational one Letter from the CEO �� p.4 Corporate Governance for Oncopeptides highlighted by the FDA accep- Report �� p.48 Oncopeptides 20 Years ��p.6 tance and priority review of our NDA submission Consolidated statement for melflufen, leading to the FDA approval in Corporate goals 2021 �� p.8 of comprehensive income �� p.54 the beginning of 2021. Not many emerging bio- Value creation model �� p.9 Consolidated statement tech companies cross the finish line in terms of Equity story �� p.10 of financial position�� p.55 launching a product that can make a significant Multiple myeloma �� p.12 Consolidated statement difference for patients.” of changes in equity �� p.56 Read more on page 4. Patient story �� p.14 Consolidated statement Cl Melflufen �� p.16 of cash flows �� p.56 The multiple myeloma Parent Company Cl Cl market �� p.18 income statement ��p.57 Launch ready in the US �� p.20 N Parent Company statement Cl Peptide drug conjugate of comprehensive income . ��p.57 Melflufen N N Cl Cl platform �� p.22 Parent Company Melfufen is our first in class anti-cancer Patents and intellectual balance sheet �� p.58 O peptide drug conjugate, PDC, targeting H O O

Content property �� p.24 aminopeptidases and rapidly releases H H Parent Company statement N N N H N H N Regulatory roadmap ��p.27 of changes in equity �� p.59 alkylating agents into tumor cells. 2 O H2N O 2 O Read more on page 15. HCl O Clinical development Parent Company HCl O HCl O program �� p.28 statement of cash flow �� p.59 Notes to the consolidated and Sustainability �� p.32 F F Parent Company financial The share �� p.36 statements �� p.60 F Glossary �� p.38 Certification �� p.82 Auditor’s Report �� p.83 Cl Cl Board of Directors �� p.86 Management �� p.88 A unique technology platform Celebrating Our proprietary PDC-platform gives us a N N Welcome to Cl Cl 20 years the 2021 AGM �� p.90 unique competitive advantage because it enables us to build a robust flexible drug O O of dedicated candidate pipeline. H H N N research and clinical Read more on page 22. H N H2N O 2 O development HCl O HCl O

F F 2020 in Brief

In brief Oncopeptides brings hope to patients through passionate Oncopeptides is a global biotech company people, innovative science, and focused on the development of targeted transformative medicines. therapies for difficult-to-treat hematological diseases. The company uses its proprietary peptide-drug conjugate (PDC) platform to develop compounds that rapidly and selectively deliver cytotoxic agents into cancer cells.

Key figures

(SEK thousand) 2020 2019 Net sales – – Operating loss -1,591,279 -739,392 Loss before tax -1,592,442 -739,920 Loss for the period -1,594,693 -740,705 Earnings per share before and after dilution (SEK) -25.57 -14.33 This is Cash flow from operating activities -1,296,509 -690,566 Cash and cash equivalents at the end of the period 840,255 926,186 Research & development costs/operating Oncopeptides expenses, % 54% 74%

On February 26 2021, the U.S. Food and Drug Administration, FDA, approved PEPAXTO® (melphalan flufenamide) known as melflufen during clinical development, in combination with dexamethasone, for the treatment of adult patients with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy.

ONCOPEPTIDES | ANNUAL REPORT 2020 1 (90) 2020 in Brief

appointed General Manager of our US Business Unit. Prior to joining Oncopeptides, Mohamed 2020 – A year headed the commercial organization in the US. During 2020, our US organization grew from just 16 to 136 employees. This includes of TRANSFORMATION a sales organization of around 50 people who have extensive com- 2020 was a transformational year for Oncopeptides. The major mile- mercial experience in hematology and oncology. The establishement of our drug development laboratory stones were the submission of melflufen for accelerated approval and will help the build-up of future drug pipeline. FDA's descision to do a priority review. We made significant progress in PAVING THE WAY FOR EARLIER our research and development programs, advanced our organizational LINES OF THERAPY We advanced our clinical devel- capabilities, strategic direction, and company culture. In 2020, we deliv- opment program significantly multiple myeloma – was well FDA accepted our IND applica- ered on all major milestones, despite exceptionally challenging condi- during 2020 by building the tolerated and had a similar tion to initiate clinical studies data sets needed to support safety profile as when used as a in OPD5. tions caused by the ongoing global pandemic. These milestones include: the potential use of melflufen doublet regimen. in earlier lines of therapy in FOUNDATIONS LAID FOR multiple myeloma. The first patient was enrolled in GEOGRAPHIC EXPANSION STRENGTHENED a priority review with a target proprietary PDC-platform and our phase 3 LIGHTHOUSE study We announced the decision to FINANCIAL POSITION date of February 28, 2021. broaden our scientific agenda Patient enrolment in the phase in multiple myeloma. The study submit an application for con- We completed a directed share beyond melflufen. 3 OCEAN study was completed will evaluate the efficacy and ditional marketing authoriza- issue of SEK 1,414M (USD 144M) STRENGTHENED COMMERCIAL with 495 patients. The study is a safety of the combination ther- tion of melflufen in the EU in Q2 to leading life science inves- AND SCIENTIFIC LEADERSHIP INDICATION BEYOND MYELOMA direct comparison with pomalid- apy with melflufen and subcuta- of 2021. tors in May and secured a EUR The day after the NDA sub- In the fall, we initiated the omide in patients with relapsed neous daratumumab, compared 40M loan agreement with the mission to the FDA, Marty J phase 1/2 ASCENT study in AL refractory multiple myeloma. to daratumumab alone. ADVANCED COMPANY CULTURE European Investment Bank in Q3. Duvall was appointed CEO amyloidosis, which is the first Top line results are expected in Our number of co-workers grew of Oncopeptides, and Jakob melflufen study outside multiple Q2 2021. NEW CLINICAL CANDIDATE from 88 to 280 in 2020. We also PRIORITY REVIEW GRANTED Lindberg assumed the role of myeloma. AL amyloidosis is a FROM PDC PLATFORM improved our organizational We submitted an NDA to the Chief Scientific Officer. Marty rare clonal plasma cell disease. We presented phase 2 ANCHOR During the third quarter, we capabilities and further devel- FDA for accelerated approval of brings extensive global com- There is currently a significant data at the American Society established a preclinical drug oped our strong company culture melflufen in combination with mercialization skills from senior unmet medical need. Patients of Hematology (ASH) annual development laboratory, with a new vision and core val- dexamethasone in adult patients executive roles in pharma and have poor prognosis and limited meeting. This data showed that a with leading researchers to ues that leverage our heritage with triple-class refractory biotech including unique expe- treatment alternatives. triplet regimen – with melflufen strengthen the proprietary PDC and support our continued multiple myeloma by the end of rience from the hematology and and dexamethasone in combi- platform and build future drug growth. We are a science-driven June. The submission was based oncology segments. Jakob will PREPARING FOR MARKET nation with daratumumab or pipeline. We progressed with company, passionate about mak- on data from the pivotal phase 2 lead the development of our R&D LAUNCH IN THE US bortezomib in heavily pretreated OPD5, the second drug to come ing a difference for patients. HORIZON study and was granted strategy to fully leverage the In Q3, Mohamed Ladha was patients with relapsed refractory out of our PDC platform, and the

ONCOPEPTIDES | ANNUAL REPORT 2020 2 (90) 2020 in Brief Q2 Q3 April 1-June 30 July 1-September 30 Q1 • NDA for accelerated approval • Marty J Duvall appointed of melflufen submitted to FDA CEO, effective July 1; Jakob January 1-March 31 Lindberg became Chief • A preclinical drug devel- Scientific Officer • Top line results from pivotal opment laboratory was phase 2 HORIZON study pre- established to strengthen PDC • FDA granted priority review of sented, including 26% Overall technology platform and build Mohamed Ladha, General melflufen in patients with tri- Eva Nordström, COO Response Rate of melflufen in future pipelines Manager US and Marty J Duvall, CEO ple-class refractory multiple myeloma. Target review date triple-class refractory multi- • Directed share issue of SEK (PDUFA) was set for February ple myeloma patients 1,414M (USD 144M) to leading 28, 2021 • The Lancet Hematology pub- life science investors. • Patient enrolment in phase Q4 lished detailed results from • Enrolment in phase 3 OCEAN 3 OCEAN study completed; international multi¬center study continued after the 495 patients enrolled October 1–December 31 study, O-12-M1 initial recruitment of 450 • We announced that Covid- patients to ensure number of • First patient enrolment in • First patient enrolled in phase 19 would not significantly disease progression events phase 1/2 ASCENT study in AL 3 LIGHTHOUSE combination affect ongoing pivotal studies, needed to complete the study amyloidosis, first melflufen study in multiple myeloma trial outside multiple myeloma temporary pause to recruit- • Final data from pivotal phase • New phase 2 ANCHOR data, ment for new and explorative 2 HORIZON study presented • Phase 2 PORT study evaluat- 11 abstracts, including an oral studies to European Hematology ing alternative administration presentation presented at the • Management team strength- Association of melflufen and dexameth- annual ASH meeting asone in multiple myeloma ened with senior leaders • Patient enrolment in explor- • Announcement that a condi- started appointed within legal, reg- atory clinical studies that was tional marketing authorization ulatory and communication paused in March due to Covid- • We strengthened our global application of melflufen in EU appointments 19 pandemic, was resumed and US organizational struc- will be submitted in Q2 2021 after two months tures and appointed Mohamed • IND application to initiate Ladha as General Manager of clinical studies with OPD5 our US business unit accepted by FDA • Capital markets day arranged with more than 250 online participants • Full data set from phase 2 HORIZON study published in Journal of Clinical Oncology • EUR 40M loan agreement made with European Investment Bank • Performance-based long- term incentive program for “We made progress with OPD5, the second drug “We are passionate to make Rolf Gulliksen, Global US employees introduced to come out of our PDC platform.” a difference for patients.” Head of Communications.

ONCOPEPTIDES | ANNUAL REPORT 2020 3 (90) Letter from the CEO Bringing hope VIEW VIDEO through science This past year has been a transformational one for Oncopeptides highlighted by the FDA acceptance and priority review of our NDA submission for melflufen which resulted in accelerated approval and US launch in the beginning of 2021. Not many emerging biotech companies cross the finish line in terms of launching a product that can make a significant difference for patients.

From an idea back in 2000 to the technology, or simply the the unmet needs of patients Not many emerging biotech being on the verge of a prod- science, that first attracted me. with cancer have been a lifelong uct launch at the end of 2020 Oncopeptides' peptide drug pursuit. And finally, joining the companies cross the finish line it is quite an achievement and conjugate platform, its unique company was about the people. in terms of launching a product speaks to the perseverance and characteristics, and the consid- My thanks and gratitude to the commitment of a core group of erable opportunities it offers to talented, passionate, and collab- that can make a significant leaders at the company. Across develop multiple drug candidates orative people at Oncopeptides. difference for patients. 2020, we focused on the key is exciting. Secondly, it was the I would once again like to thank milestones, and delivered as broad development program of Jakob Lindberg for his fantastic CEO, Marty J Duvall one global team. The progress melflufen. With the data on the work with Oncopeptides. Without made to date is a source of product already looking likely to Jakob the company would not be pride for our team and further result in regulatory approval – it where it is today. bolsters our commitment to do subsequently received acceler- more, focused to fully realize the ated approval by the FDA by the And the people are fantastic. promise of our technology. end of February 2021 – it was We have a highly skilled group exhilarating to join the company of talented individuals focused Thinking back to my decision knowing that we were nearing a on a shared goal: transforming to join an emerging oncology potential launch. To play a part science into hope for patients. company last year, Oncopeptides in building a global biotech com- Furthermore, our expertise was the perfect match. It was pany to launch drugs to meet and our technological platform

ONCOPEPTIDES | ANNUAL REPORT 2020 4 (90) Letter from the CEO ensured that we were able to testament to the perseverance of For all of us at Oncopeptides, the hematologists to manage. The Looking ahead, we remain largely mitigate the effects of our team. well-being of our colleagues and benefit-risk profile of melflufen focused on bringing new prod- the pandemic and keep on track the societies in which we oper- enables us to compete with ucts forward. We already have with our efforts to ensure that RAPID GROWTH TO SUPPORT ate is of utmost importance and much larger rivals on the market a second drug in early clinical we alleviate suffering in a grow- US LAUNCH it influences our daily choices. because our product address a development stage – OPD5 – ing population of patients in the During 2020 we had a rapid Operating sustainably as a com- substantial unmet medical need and we have an internal commit- years ahead. growth of our employee base pany means that we play a posi- – and we have a smart, experi- ment to bring new indications to ensure launch readiness. We tive societal role and that we are enced team in place to ensure to clinical trials in the years RESILIENCE IN THE FACE welcomed physicians, clini- committed to make a difference that we make an impact on ahead. We continue to build the OF THE PANDEMIC cians, and technicians, as well for people and the planet. Going the market. pipeline through our pre-clini- While the pandemic did of as an experienced commercial forward, we aim at developing cal drug development group to course impact us in 2020, we team. Our personnel growth has our work in all environmental, ENSURING THAT PATIENTS create the next candidate drugs were able to mitigate its most further broadened the diversity social, and governance-related AROUND THE WORLD BENEFIT to bring forward. We also want severe consequences on the of thought and expertise in the areas, striving to make beneficial FROM OUR DRUGS to improve the peptide drug company. We experienced some company and offers fantastic contributions to society, while In 2021, we will continue our conjugate itself, making it an impact on our clinical stud- opportunities. During the year, minimizing our environmen- commercialization efforts even more effective at damag- ies and their execution and we took steps to align our US tal footprint and ultimately to in the US, and work towards ing tumor cells and minimizing we paused studies for sev- and Swedish teams in terms of bring hope to patients through launching in European markets. impact on healthy cells. eral months during the spring. shared vision and values, one our science. We recently hired a General However, we were able to exe- common culture and work- Manager for Europe and a Head More broadly, we want to expand make an impact on the market. cute on all our near-term goals, ing routines. A UNIQUE PRODUCT, GREAT of Medical Affairs Europe who into other geographies, by part- In short, we have all the right including the NDA submission PEOPLE, AND A HIGH UNMET are heading dedicated teams nership outside Europe and the elements in place for the next of melflufen for accelerated Despite our rapid growth in NEED with extensive experience in US, so that we keep ensuring phase of our growth journey. approval in the US in June. headcount, we remain focused Our first drug candidate, the multiple myeloma space that more patients around the on maintaining our biotech melflufen – known commer- and we recently submitted the world can benefit from our drugs Lastly, I would like to thank In terms of our OCEAN clini- start-up advantages. Being cially as PEPAXTO – has a unique file for a Conditional Marketing once approved. all our physicians, partners, cal study, we were particularly small, nimble, and function- capability to focus on cancer Authorization with the European patients, and colleagues for their concerned about the impact of ing as a learning organization cells, deliver toxic “payloads” Medicines Agency. DRIVEN BY THE SCIENCE fantastic efforts in what was a patients’ ability to visit oncol- will continue to be key com- into these cells, and mini- We have a unique drug develop- uniquely challenging year. I would ogy and hematology clinics. We ponents of our company going mize effects on healthier cells. We will complete our phase 3 ment platform and strong pipe- also like to express my gratitude mitigated that risk by extending forward. The right company Melflufen is easy to administer OCEAN study with the ambi- line, our first regulatory approval to our shareholders for your con- patient enrolment to ensure that culture retains people. We want requiring only a 30-minute infu- tion to file a supplemental new under our belts, and more data tinued support. Together, driven we could meet the statistical our people to feel that they can sion every 28 days which makes drug application of melflufen to sets on a variety of indications by the science, we have the tools needs of the trial and complete play a role in our future success, it a convenient treatment option the FDA. If approved, this may set to emerge in the months we need to fulfill our potential the study within a reasonable and they can leverage the size for healthcare professionals and potentially make the prod- and years ahead. We have a and become a commercial global timeframe. But, ultimately, the of a small company. So, we patients. uct available for treatments at great product that addresses biotech company, bringing hope impact was minimal and tem- ensure that our people see the earlier stages of the disease, a substantial unmet medical to growing numbers of patients. porary. The way we responded impact we are already having on Melflufen has a predictable thereby increasing the number need. And we have a smart, to the pandemic, and effec- patients and will continue to do impact on blood cells that of patients that can potentially experienced team, with skills April 26, 2021 tively minimize its impact, is a so in the future. are easy for oncologists and benefit from PEPAXTO. and expertise to ensure that we Marty J Duvall, CEO

ONCOPEPTIDES | ANNUAL REPORT 2020 5 (90) Oncopeptides 20 Years 20 years of DEDICATED research and CLINICAL development

Something old, something new. When I joined as a CEO of Oncopeptides leading universities in Europe. European regulatory authorities. And in 2020, the US FDA granted in 2011, we were in a cramped basement room with one molecule. We These collaborations have The design of the phase 3 study a priority review for the submis- been vital to the development OCEAN was approved by the sion of a New Drug Application, knew we had something very special that could improve the lives of of melflufen, and convinced FDA through a Special Protocol seeking approval of melflufen in patients, even if not everyone shared our enthusiasm. Dr. Joachim Gullbo us to dedicate our research Assessment process. combination with dexametha- and development program to sone for treatment of multiple had synthesized a molecule called J1, that was not only an alkylator, multiple myeloma. In February 2017 – and in record myeloma. We also took fur- an old and effective drug, but also something new and unique. He had time – Oncopeptides was listed ther steps to build a commer- In 2012 and 2013, we initiated on the main Nasdaq Stockholm cial-stage biotech company with, added a peptide-link to a known alkylator to make it target cancer cells a phase 1/2 study in late-stage Stock Exchange, supported by the opening of our state-of-the- more effectively. This was the utterly science-based, albeit unglamorous multiple myeloma patients a majority of Swedish equity art drug development facility in start of Oncopeptides back in 2000. Big pharma it was not. And we’ve together with leading researchers funds. A key driver for the IPO Stockholm and the recruitment at Dana-Farber Cancer Institute was to finance the OCEAN and of more than 20 researchers always gone our own way, says Jakob Lindberg, CEO 2011–2020. and Harvard Medical School. HORIZON studies. from all over the world. Crucially, These studies were funded by we also focused on organiza- HealthCap, Industrifonden, and POISED FOR FUTURE GROWTH tional development to prepare Everything that Oncopeptides capital fund, Industrifonden, with Joachim racing between members of the Oncopeptides In the months following our for the commercial launch in has done since then builds and Karolinska Development. laboratories to keep things on board of directors and manage- stockmarket listing, we broad- the US. on Joachim’s breakthrough. Additional funding were raised track. Encourging data of J1 on ment team. In 2015, melflufen ened the strategic scope to For almost 10 years – and for to continue our clinical stud- solid tumors resulted in the was granted Orphan Designation evaluate melflufen and to initi- After 20 years of continuous much of that time in a sin- ies and life sciences venture development of melflufen and in the US and EU. ate a number of other studies. development – triggered by gle room, with virtually no capital fund HealthCap stepped confirmed what we knew all HORIZON successfully made the discovery of J1 and driven money, IKEA shelves groan- in. Both Industrifonden and along: the mechanism was sim- In 2016, the clinical research and the transition to pivotal study by passion, courage, trust, and ing under the weight of files, HealthCap are still shareholders ple, the mechanism worked. regulatory engagement con- based on data we generated and collaboration – Oncopeptides an aging computer, and with of Oncopeptides. tinued. The phase 2 part of our the expanded size and scope of is on the threshold of becom- our tiny but devoted team We rapidly made a name for our- O-12-M1 study was presented studies we were able to con- ing a reputed player in imultiple being forced to make phone BUILDING OUR REPUTATION selves and went about establish- at the European Hematology duct. Later in 2017 and the years myeloma, and potentially other calls from the restrooms – we The first clinical studies of J1 ing collaborations with leading Association Congress and after, we obtained additional cancers, for patients around the focused on pre-clinical devel- were conducted on solid tumors research institutions such as several meetings were held patent protection for the for- world. We’ve come a long way opment research. This work was at Uppsala Academic Hospital the Dana-Faber Cancer Institute with the US Food and Drug mulation of melflufen in Europe, from that Stockholm basement, funded by early-stage venture between 2009 and 2011, often at Harvard Medical School and Administration (FDA) and the US and Japan. but we’re not done yet.

ONCOPEPTIDES | ANNUAL REPORT 2020 6 (90) Oncopeptides 20 Years

Jakob Lindberg, Chief Scientific Officer who was CEO of the company during the pre-commercial phase from 2011 until the submission of the file in June 2020. View our 20 years journey of innovation: https://www.oncopeptides. com/en/company/our-history.

VIEW VIDEO

ONCOPEPTIDES | ANNUAL REPORT 2020 7 (90) Corporate Goals 2021

Product European Corporate Goals 2021: sales expansion Successfully launch Advance the EU regulatory EXCITING year ahead PEPAXTO on the US market. path while preparing a launch plan in Europe.

In our proud history as a com- biotech company with a passion- launch and delivery to patients, pany, no calendar year has been ate organization, dedicated to resulting in the first revenues. packed with such excitement, deliver to our key stakeholders, hope, and optimism as 2021. in particular patients, investors, Our already extensive clini- Clinical Financial Build product and employees. cal development program will From early research efforts expand into new areas and with development measures portfolio through to the commercial- The hard groundwork has been OPD5, the second product to Advance clinical devel- Strengthen the financial Identify two or more clinical ization of PEPAXTO, we have done and we are now in the come out of our PDC platform, opment of melflufen as position to finance the candidates and advance towards evolved into a fully integrated beginning of our first product we will now have two prod- planned and initiate clinical company through com- IND milestones. ucts in clinic trials. We will studies in indications outside mercial launch. advance our EU regulatory plan myeloma. and strive to provide patients across Europe early access. We are thrilled about the potential opportunities that OCEAN data may offer in Q2 2021. Expand Advance Expand scientific company melflufen Exciting pipeline advances are expected from our talented R&D share of voice culture opportunity team which, together with data from our clinical program, will Increase the number of Increase engagement and Build regulatory filing(s) based further expand our scientific publications and build a strong corporate on OCEAN data while establish- share of voice throughout congress abstracts. culture across the company. ing an approval path in Japan. the year.

“We are now in the beginning of our first product launch and delivery to patients.”

ONCOPEPTIDES | ANNUAL REPORT 2020 8 (90) Creating Value for Stakeholders Value creation

R&D/ Patient Innovation access

Input Drivers Output Sustainable capital provision • Large unmet medical need in myeloma Patient, society, and and other cancers with space and need healthcare providers An integrated biotech company for new treatment alternatives • Global access to new, innovative, • Innovative PDC platform and • Patients relapse as disease develops and high-quality treatments a peptide-drug conjugate with resistance to treatment, currently no unique Mode of Action • Increased value for patients and cure for multiple myeloma their families - better quality of • Broad clinical program targeting • Rapidly growing multiple myeloma life during treatment period and multiple myeloma market as patients stay on treatment potential of living longer • Skilled workforce; state-of-the- longer • Lower costs for healthcare ser- art laboratory • Patients live longer due to more acces- vices when treating patients with • Increased knowledge about the sible treatment options - need for new drugs with fewer side-effects disease and MoA of melflufen treatment options supporting better Regulatory • Job creation opportunities quality of life strategy Significant partnerships • Healthcare services require treatment Return on Investment and networks options that create greater patient value • Returns to shareholders • Close collaboration between in relation to treatment cost industry, academia, society • Profitability to re-invest for Patient sustainable growth

Operations • Comprehensive clinical program targeting more diseases than multiple myeloma • Broader R&D pipeline • Engaged employees and partners Commercial isation Clinical programs

ONCOPEPTIDES | ANNUAL REPORT 2020 9 (90) Cl

Cl Cl Equity Story N Cl N N Cl Cl O H O O H H N N N H N H N Equity story: an emerging GLOBAL 2 O H2N O 2 O HCl O HCl O HCl O biotech company F F F

Focused commercial and regulatory strategy Broad clinical program supporting Proprietary PDC platform lays Cl Cl with the first product on the market future growth and value creation foundation for future growth

N N Cl Cl Commercialization Rapidly growing market Comprehensive clinical Melflufen – a unique Peptide Drug Conjugate Investment profile O O phase • The number of patients diag- program mechanism of action Platform (PDC) • Significant milestones to be H H nosed with myeloma is increasing delivered over the coming years N N • Commericalization in the US • Clinical program designed to sup- • First anti-cancer peptide • PDC delivers fast and selective H N H2N O 2 O with a dedicated sales and • Improved treatment outcomes port potential use in a broader drug conjugate leveraging cytotoxic activity to cancer cells • Growing number of sharehold- HCl medical affairs organisation grow number of patients in later patient population and in earlier aminopeptidases. while protecting healthy cells ers. 17,000 shareholders O HCl O lines of therapy lines of therapy continues to provide high • Planned submission to EMA for • Comprehensive clinical program • Potential to develop targeted a conditional marketing autho- • The first confirmatory phase 3 liquidity in the stock • Resistance to therapy is designed to broaden label treatments for several forms F F rization of melflufen increasing study OCEAN designed to meet of cancers e.g AML and DLBCL. • Partnering strategy for Japan primary endpoint with a superiority or a non-inferiority result • Second drug candidate OPD5, entering clinical development • The LIGHTHOUSE phase 3 in stemcell transplantation in combination study may enable multiple myeloma Rapid US MM market melflufen to be used in combina- growth tion treatments • PDC platform validated through melflufen $23B $19B

HORIZON OCEANLIGHTHOUSEANCHOR BRIDGE

2020 2024 HORIZON OCEAN ANCHOR BRIDGE

ONCOPEPTIDES | ANNUAL REPORT 2020 10 (90) Equity Story

Broad clinical program supporting future growth and value creation for all our stakeholders

ONCOPEPTIDES | ANNUAL REPORT 2020 11 (90) About Myeloma Multiple myeloma is an incurable form of blood cancer that develops in the bone marrow. Bone marrow produces red blood cells to supply the body with oxygen, white blood cells to fight infections, and plate- lets to clot the blood. Some white blood cells are known as plasma cells and are among the most important components of the body’s immune system because they produce antibodies that fight infections. Multiple Multiple myeloma occurs when these plasma cells mutate into tumor cells and begin to divide uncontrollably. myeloma The biggest problem for mul- linked to substantial morbidity which multiple myeloma intro- tiple myeloma patients is that and mortality. duces new genetic information – uncontrolled cell division occurs “mutational burden” and “muta- in their bones, where their bone HOW DOES MULTIPLE MYELOMA tional frequency” – to grow marrow is. Bone marrow needs DIFFER FROM OTHER CANCERS? tumors, is among the highest of to create more space within to Multiple myeloma has two key all cancers. Multiple myeloma maintain a balance in its cell characteristics that distinguish composition. The only way to it from other cancers: the extent This has two main effects. First, – a cancer of the blood accomplish this is to dissolve and speed with which it mutates, because there are several anti- and the bone marrow the bone, so the bone marrow and the speed with which body-producing cancer cells actively dissolves its own tissue. patients become severely ill. active in multiple myeloma Despite this, the tumor typically patients at the same time, mul- Red marrow, where plasma continues to grow until there is MULTIPLE, MOVING TARGETS tiple myeloma treatment must cells are produced Normal plasma cells not enough bone marrow to sus- Multiple myeloma mutates to a target more than one tumor, tain life. Patients’ initial symp- greater extent and more rapidly each with their own character- Antibodies toms may be something as com- than virtually all other cancers. istics. This is known as clonal mon as back pain. The disease is The frequency and extent to evolution. In effect, treatment Multiple myeloma (mutated plasma cells)

Bone Overview of patient segments and clinical results Patient segment Median PFS1 Median OS1 ORR1 Median DOR1 Newly diagnosed 20–50 months 5 years 70–100% 20–50 months Relapsed and relapsed refractory (RRMM) 15–50 months 3 years 60–90% 15–50 months Late-stage relapsed re-fractory 3–4 months 1–1.5 years 20–30% 7–8 months Triple-refractory 2–3 months ~ 9 months ~ 20% ~ 5 months

Source: Published clinical data and internal analysis. 1) For definitions, refer to glossary on page 38.

ONCOPEPTIDES | ANNUAL REPORT 2020 12 (90) About Myeloma normal lives creates low accep- the average survival rate from tance of treatment side-effects three to about five years with Multiple myeloma that impact quality of life. a continued positive trend in in brief increased life expectancy for • Multiple myeloma is an incur- The number of multiple these patients. The introduction able form of blood cancer that must target multiple cancers at myeloma patients is increasing. of melflufen has the potential to develops in the bone marrow. the same time – an incredibly Approximately 250,000 peo- extend that period further. • Treatment outcomes vary tough challenge. Each clone may ple live with multiple myeloma considerably based on patient or may not be easy to target with in Europe and the US, 80,000 DISEASE TIMELINE VARIABLES age, health, genetics, and a specific drug. patients are diagnosed and Once diagnosed, treatment of other factors. 44,000 patients die from the multiple myeloma – which is • The time it takes to respond Second, as one drug treats or disease annually.1 The number of typically effective to begin with to treatment and the length perhaps kills one clone, that diagnoses is growing by nearly 1% – starts immediately. Treatment of disease-free periods are longer in earlier stages of the also creates the per- a year, mainly due to an aging options depend on a variety of disease and become shorter fect conditions in the population. There is no cure, factors including patient age, as the cancer changes form. body for a new type but long symptom-free general health, and comorbid- • Patients are treated with var- of clone, thereby periods can be attained ities, (two or more conditions ious drugs from four pharma- building the disease’s through treatment using occurring at the same time). patients in late-stage RRMM. ceases to respond to ongoing ceutical classes that may or resistance to further several different drugs or Treatment aims to kill as many These are patients who have and previous treatments. The may not work in combination treatment. Clonal evo- combination of drugs myeloma cells as possible. stopped responding to at least one common denominator is that with one another. lution occurs in all can- Patients with a good health sta- three classes of therapies, and the disease always comes back. • Patients are currently treated cers, but the speed with which TREATING MYELOMA tus may also be offered a bone where the disease is refrac- with several pharmaceuticals early in the disease. Sooner or it occurs in multiple myeloma On average, multiple myeloma marrow transplant as part of tory to at least one proteasome Multiple myeloma is treated later, patients develop resis- makes it especially hard to treat. patients are around 70 years of their therapy. inhibitor, one immunomodulatory with single drugs, (monotherapy), tance to treatment, to specific age. Currently, median overall Time between treatments agent and one anti-CD38 mono- or if possible, with a combi- drugs and/or pharmaceutical SUDDEN TIPPING POINT survival is just over five years varies considerably from patient clonal antibody. With limited nation of several drugs. Newly classes. In many cancers, the condition of from diagnosis, and average to patient. Therapies become treatment options remaining, diagnosed multiple myeloma • As patients become resis- patients worsens gradually. For survival rates are increasing. less effective each time patients prognoses at this point are poor. patients are usually treated with tant to treatment at different example, in breast cancer and There are considerable differ- relapse due to clonal selection It is currently for this severly a steroid combined with two times, it is vital to identify kidney cancer patients typically ences in patient outcomes. Some (see above). Although patients ill patient group PEPAXTO can drugs from different pharmaceu- which pharmaceutical class patients develop resistance. experience an extended period patients cope relatively well, experience symptom-free peri- serve as a treatment option. tical classes. In some cases, an of gradual decline. However, with others do not. Some live with the ods, relapses are inevitable, alkylating drug – which inter- • Treatment side-effects vary. Typically, patients become multiple myeloma, apart from disease for 20 years, others live because the disease develops The timeline of multiple feres with the division process more fragile and sensitive bone pain, possibly fractures, less than a year after diagnosis. resistance to the drugs used myeloma is divided into different of cancer cells – may be used at after several lines of and treatment side-effects, The number of people receiving over time. stages or segments, depending high dosage in conjunction with therapies. patients tend to feel well until treatment is rapidly increasing, on where a patient is along the stem-cell transplantation. Most they suddenly deteriorate. although approximately one in There are currently four main disease progression timeline. late-stage therapies involve one Multiple myeloma patients can four patients never respond to segments used to describe There is no direct correlation to drug and a steroid. Each time a live normal lives with many being any form of treatment. the myeloma timeline: “newly a specific “when” for any of the patient relapse, the risk of devel- fully active until just weeks prior In the past 15 years, several diagnosed”, “relapsed” (RMM), segments. The timeline depends oping resistance to treatment to death, which is usually caused new pharmaceutical treatments “relapsed refractory” (RRMM), on individual patients’ response increases. Ultimately, the patient by reduced bone marrow func- have been introduced. These and “late-stage relapsed refrac- to treatment. Therapy is changed will relapse while undergoing 1) The Global Cancer Observatory - https://gco.iarc.fr/, tion. The fact that many multiple have improved treatment results tory” (late-stage RRMM). Triple by switching drugs and pharma- treatment or close to completing National Cancer Institute -https://seer. myeloma patients live relatively nearly two-fold, increasing class refractory patients are ceutical classes, as the patient treatment. cancer.gov/

ONCOPEPTIDES | ANNUAL REPORT 2020 13 (90) About Myeloma

greenhouse, go in and rest, and I on a pain scale of one to ten, this treatment with three relatively happily did that!” was a 12.” powerful drugs. Focused on a Once in hospital, medical “I had most problems with The extent to which myeloma staff noticed that something the cortisone. I couldn’t sleep, I patients can live normal, even was wrong with Kenneth’s hip became hyperactive – just ask active lives right up to a matter and leg which they thought had my wife – she certainly didn’t BETTER future of weeks before their condition been weakened by what they want me taking cortisone!” changes dramatically is brought assumed was myeloma. This This treatment paved the way for Living with myeloma. Sitting in the dappled sunlight of the home when Kenneth – a keen resulted in Kenneth getting a hip another kind of treatment, which greenhouse that he and his wife built by hand, former author runner – reveals that in August replacement. Kenneth describes as “the 2018 he completed a 10km race heavy stuff”. and journalist, Kenneth, might not immediately appear to be in Stockholm in his third best “I was so pleased that I didn’t someone who has an incurable disease. time in 15 years of competing in have the spasms anymore, I WANTED SOMETHING ELSE, the race. but then there was the new SOMETHING NEW Kenneth’s spasms persisted. problem, and that was the “I was rather worried about However, the 68-year-old father unchanged, which led Kenneth’s stride. However, on one frosty And they became more severe. myeloma. I had a very good stem cell transplants because of four and grandfather was doctors to conclude that nothing morning, he slipped. On April 3rd, with Kenneth’s doctor at Södersjukhuset, my I had a couple of friends who diagnosed with asymptomatic needed to be done, although “Suddenly, I just slipped a condition worsening, they called hospital in Stockholm, and she had received similar treatments, multiple myeloma in 1997. Since they warned him that if anything little, like 20 centimeters, and I an ambulance. was so quick at getting me into and one of them couldn’t eat for then, he has undergone several did change and make felt that something happened “When I adjusted my body in treatment – I think my treat- seven weeks. He was severely ill different treatments. When we him ill, he would cer- to my whole leg. I assumed bed for the ambulance crew to ment started two days after speak to him on a video link tainly be aware of it. that it was my muscles,” more easily move me onto the the biopsy that showed I had from his country cottage, he Life then went on explains Kenneth. gurney, I got a spasm. And that myeloma.” shares his experiences of living largely as normal for He carried on working on spasm was a big one. I kicked with multiple myeloma and Kenneth. And in fact, the greenhouse for another so hard that I broke my femoral This was May 2019, at which why he believes research is so a medical examina- two months, but after hav- neck [thigh bone]. I can tell you, point Kenneth started induction important. tion he took in 2016 ing more and more trouble when he retired showed with his hip, he had an X-ray, but Back in 1997, when Kenneth that his m-component was this showed nothing. His phys- took a medical examination slightly lower than at the begin- iotherapist thought it must be after starting a new job, doctors ning of the 2000s. something to do with his bones noticed a minor abnormality in rather than his muscles. his blood: an m-component, or We fast forward to January asymptomatic myeloma. He was 2019, when much of Kenneth’s He started experiencing spasms subsequently closely monitored and his wife’s time was devoted on a regular basis, with the pain We’re dependent on your and underwent a series of tests to building their greenhouse. intensifying and his leg less able in the following three years. This involved lifting heavy to support him. work; our lives are in your Throughout this time, the oak beams – something that “At the end of March, my wife Kenneth Kauppi m-component remained Kenneth usually took in his said you can’t go on building this hands. ONCOPEPTIDES | ANNUAL REPORT 2020 14 (90) About Myeloma

I’m very happy to live in the 2000s and have the possibility to get new drugs working for us – for me and my friends.

and had to take nutritional sup- Luckily, Kenneth “When I received the “We’re dependent on your work; plements in beverages and drips, recovered and could stronger cytostatic che- our lives are in your hands. I’d and his muscles wasted away, so successfully com- motherapy I had to eat say we’re pretty anxious that I was really uncertain about this plete the stem cell ice for about an hour, but research continues into finding treatment.” extraction. And six that didn’t bother me – I new solutions. Huge progress weeks later he got his come from north of the has been made in the 2000s. “I wanted something else, stem cells back after Arctic Circle, so I could eat When I was diagnosed in ’97, something new. I’d heard about another, even stronger, cyto- ice for four hours a day if I had there were very few treatment new treatment options but my static chemotherapy. to! I think my experience is per- options. So I’m very happy to live doctor insisted, especially as I “I was surprised that it didn’t haps exceptional compared to in the 2000s and have the pos- had started the induction treat- affect me more than it did. I was my friends who have had bad sibility to get new drugs working ment which included stem cell a little more tired, but nothing experiences.” for us – for me and my friends.” transplants.” more than that. I went out for walks every day even when my OUR LIVES ARE IN YOUR HANDS “I’m positive about the future. So in August, a couple of immune system was low – it was When asked whether he has any I have an orchard of 200 apple weeks before Kenneth would at zero, in fact, but I didn’t get reflections about current clin- trees, so at the moment I’m undergo two days of stem any infections. ical research, Kenneth remains planning to make my own cider!” cell extraction, his condition “I basically lead a normal upbeat, jovial even, but he worsened because his immune life, although I’m no longer able makes an impassioned plea: As we round off our call, Kenneh system had been weakened due to jog on asphalt. The soles of invites a saxophone player to play to cytostatic chemotherapy my feet often go numb, and in his greenhouse, a sound that that was conducted just prior to sometimes it’s the same for Kenneth has been longing to hear stem cell collection. A process my hands, but these are minor for years. He smiles as the music that also caused hair loss. problems.” fills his beloved greenhouse.

ONCOPEPTIDES | ANNUAL REPORT 2020 15 (90) About Melflufen

The ROLE of melflufen We are targeting aminopeptidases in multiple myeloma to treat cancer. Melflufen is an anti-cancer peptide-drug conjugate – a drug designed for targeted cancer therapies – that rapidly delivers a cytotoxin, into tumors. Results from clinical studies of melflufen in heavily Melflufen is an abbreviation of pre-treated patients, show that melflufen has clinically meaningful the international non-proprietary name (INN) melphalan efficacy and manageable toxicity. flufenamide. Since February 26 Klaas Bakker, 2021, melflufen is approved as PEPAXTO, by the US FDA. VP and Chief Medical Officer, CMO

WHAT MELFLUFEN OFFERS that are normally resistant to phase patients abandon treat- We have taken melphalan and alkylators, (and the toxins within ment to getting a break from linked a peptide to it. A peptide them), are not resistant to drug treatment rather than the Treatments in the myeloma timeline is a molecule comprising a chain melflufen. This may suggest that illness itself. Lenalidomide, bortezomib, Pomalidomide and clinical carfilzomib and daratumumab investigational medical products of amino acids. Our peptide we are circumventing import- Melflufen is a once-monthly, directs more of the alkylating ant resistance mechanisms in 30-minute infusion. Usually treatment with two com- Usually treatment with one drug payload – drugs that damage the multiple myeloma and thereby Our ongoing clinical studies, bined drugs in conjunction with at a time. diagnosis, and thereafter, usually There is no direct correlation to DNA of cancer cells – to tumors. some key features of the clonal as illustrated in the picture to one drug at a time. We use the most efficient drug selection process. This means the right shows how melflufen “when” for each of these seg- class available in multiple that we potentially can improve potentially could move upwards Nearly half of the patients undergo ments. The timeline depends on a bone-marrow transplant as the individual patient’s response myeloma treatment – an alkyla- treatment for patients. in the treatment landscape. treatment. to treatment. nt tor – and improve it by lever- me eat aging the delivery of toxin into Melflufen has proven to have th tr tumor cells. clinically meaningful efficacy and n wi nnectio manageable toxicity with a low Tumor growth in co This on its own would be effec- incidence of non-hematologic tive enough to expand treatment toxicities. Medical staff are used options for multiple myeloma to monitoring such side-effects Newly diagnosed Relapsed Relapsed refractory Late-stage relapsed refractory patients. However, we also see and use this as the basis for LIGHTHOUSE a different molecular response selecting appropriate treatment OCEAN HORIZON to the drug. So, cancer cells options. Roughly a third of late

ONCOPEPTIDES | ANNUAL REPORT 2020 16 (90) About Melflufen

The multiple myeloma cell

Melfufen is our first in class anti- cancer PDC that targets amino peptidases and rapidly releases alkylating agents into tumor cells. Aminopeptidases are a group of enzymes over expressed in tumor cells, including multiple myeloma cells. The binding of Melflufen to aminopeptidases results in the release of a toxic payload that damages DNA and kills cancer cells.

ONCOPEPTIDES | ANNUAL REPORT 2020 17 (90) The Myeloma Market

RAPIDLY GROWING MARKET IN THE US The Standard of Care The global myeloma market Multiple myeloma is primarily treated with drugs from four different amounted to USD 19 billion in pharmaceutical classes. The basis of all treatments is steroids. 2019 and is expected to grow The MULTIPLE rapidly over the coming years. Following recent drug launches, the growing number of patients IMiDs in later lines of therapy is myeloma MARKET expected to increase the overall number of patients receiving Multiple myeloma is a blood and bone marrow cancer. It forms in plasma treatment, and thus the value of PIs Anti- cells, accumulates in the bone marrow, and crowds out healthy blood the market. CD38 cells. There is currently no cure. And while patients being treated for The European myeloma market was estimated to be worth USD Multiple myeloma experience symptom-free periods, they eventually Alkylators 3.8 billion in 2019. The EU tends relapse as they become resistant to treatment. to be more conservative about the adoption of new treatments, and consequently adoption takes NEW TREATMENT OPTIONS undergone several lines of ther- other underlying medical con- longer time. Antibody drugs Immunomodulatory INCREASE SURVIVAL RATES apy has increased significantly, ditions, limit the use of several (Anti-CD38) drugs (IMiDs) The prevalence of Multiple and is expected to continue to drugs used in MM treatment. RESISTANCE AND LINES Antibody drugs used in treat- Immunomodulatory drugs are myeloma is increasing as the grow, as new treatment options OF THERAPY ment of Multiple myeloma con- derivatives of thalidomide and population ages, and new treat- and algorithms are introduced. MORE TREATMENT A patient undergoing myeloma sist of monoclonal antibodies, have an effect on different sys- ment regimens are introduced OPTIONS ARE NEEDED therapy can become resistant i.e., proteins that are designed tems in the body. IMiDs inhibit on the market. Approximately Despite therapeutic advances The rapid growth of resistance in to the two primary classes of to identify and bind to spe- myeloma cells from dividing and cific receptors on cancer cells, stimulate the immune system to 250,000 patients live with and the use of new treatment Multiple myeloma and associ- enabling the immune system to target cancer cells. Multiple myeloma in Europe options earlier in the disease, ated diseases means that most kill them. and the US. Every year, 80,000 Multiple myeloma remains incur- myeloma patients lack treatment $23B patients are diagnosed with able. As more patients than ever options when they finish their $19B Multiple myeloma and 44,000 are living with the disease and second line of therapy. After Alkylators Proteasome 1 patients die from the disease . are becoming resistant to treat- first line therapies, the myeloma inhibitors (PIs) The number of patients diag- ment, there is a significant need market is fragmented, and there Alkylators are a form of cyto- toxins that kill cancer cells Proteasome inhibitors impact nosed is growing by almost one for additional treatment options. is an unmet need of new and and thereby reduce or disrupt percent a year. Patients may innovative treatment options. cancer cell function and growth. tumor growth. Melflufen is the Myeloma cells usually con- experience long disease-free The pharmaceutical classes Even though patients are staying first anti-cancer peptide-drug tain large amounts of proteins periods by using different phar- consist of several drugs and offer on treatment longer, and survival 2020 2024 conjugate that uses aminopep- compared to healthy cells. maceutical classes and combi- different therapeutic options. rates are increasing, the need for Source: EvaluatePharma tidases and rapidly delivers an Proteasome inhibitors can alkylating payload into tumor 1) The Global Cancer Observatory – prevent the breakdown of these nation therapies. However, resistance develop- new therapies enabling a better cells. Aminopeptidases are over- The number of patients with ment, where patients become quality of life is growing. https://gco.iarc.fr/, proteins in cancer cells. National Cancer Institute – expressed in cancer cells. Multiple myeloma who have resistant to their therapy and https://seer.cancer.gov/

ONCOPEPTIDES | ANNUAL REPORT 2020 18 (90) AboutThe Myeloma Myeloma Market

Newer products on top of older Triple-class refractory patients, Clinical program to support label expansion as survival improves by% Line of Treatment Need80,000 of new treatment options, US MM % of Total Patients by Product Antibody80 drugs used in treatment of Multiple myeloma consist of % 70,000 70

60,000 60

50,000 50

40,000 40 TCR RRMM 20,000+ 30,000 30

20,000 20 3L+ RRMM 2L+ RRMM 10,000 10 Single drug use Comb. use 25,000 20,000+ 0 0 Jan-18 Apr-18 Jul-18 ct-18 Jan-19 Apr-19 Jul-19 ct-19 Jan-20 Apr-20 Jul-20 ct-20 2016 2018 2020 evlimid elcade Darzalex Pomalyst Kyprolis Ninlaro 2L 3L 4L Cytoxan Empliciti elphalan arydak Xpovio Blenrep Sarclisa EMD Source: Patient claims data, company market research 18,000 Source: Intrinsiq MAT, December 2020 pharmaceuticals, IMiDs and PIs, or later lines of therapy exceeds refractory (TCR) patients has the treatment of adult patients after the first line of therapy. If the growth in the first line. grown and continues to grow with relapsed or refractory patients have also been treated Treatment is related to the substantially. In the US, there multiple myeloma who have with an anti-CD38 inhibitor, number of treatment cycles are approximately 20,000 TCR received at least four prior lines Average duration of therapy they are defined as triple-class carried out in the various lines of patients as illustrated in the fig- of therapy and whose disease 3–4 months 6–9 months 10–14 months refractory patients. Patients therapy, which in turn is related ure to the right. is refractory to at least one pro- respond differently to therapy, to the degree of resistance and teasome inhibitor, one immu- and this has resulted in the patients’ overall health. As an Growth in the triple-class nomodulatory agent, and one Clinical program supports label expansion development of personalized example, a newly diagnosed refractory market is the result of CD38-directed monoclonal treatments. Consequently, it is patient may undergo 12 treat- the introduction of new products antibody. This indication has Approval in triple-class refractory (TCR) patients who have received at least 4L of treatment therefore important to under- ment cycles or more, while a and therapeutic options. The fig- been granted under acceler- HORIZON OCEAN ANCHOR BRIDGE stand the role of resistance, in triple class refractory patient ure above show that newer prod- ated approval based upon the addition to what line of treat- undergoes four to six cycles. ucts are being used in addition HORIZON study. Further studies ment the patients has under- to older ones as survival rates in the clinical program may lead Head-to-head study with pomalidomide may gone, to estimate the mar- In the US, the bulk of growth has improve, and that new drugs are to expansion of the label and HORIZON OCEAN ANCHORenableBRIDGE single agent 3L+ use ket potential for a particular historically been in the num- driving market growth. thus potentially reaching more indication. ber of patients treated in the patients. The graph to the right second or later lines of therapy. MELFLUFEN’S ROLE IN THE illustrates the patient popula- Combination with proteasome inhibitor or PROLONGED TREATMENT As new products supplement MULTIPLE MYELOMA MARKET tion in relation to the clinicalHORIZON OCEAN ANCHOR BRIDGEantibody drugs may enable 2L+ combination treatment DRIVES US MARKET GROWTH existing ones, all products help On February 26 2021, the FDA programs. LIGHTHOUSE In the US, market growth of to broaden treatment options. approved PEPAXTO, in combi- patients treated in the second The market for triple-class nation with dexamethasone, for

ONCOPEPTIDES | ANNUAL REPORT 2020 19 (90) Commercialization LAUNCH ready in the US In 2020, we were laser-focused on establishing a US organization that will be ready to successfully launch melflufen once it received FDA approval.

BUILDING OUR US office and field-based profes- GROWING OUR NAME AND ORGANIZATION sionals with extensive oncology REPUTATION IN THE US MARKET We submitted an NDA to the launch experience and a genuine In 2020, the US team, with FDA for accelerated approval of commitment to patients. Our support from our global melflufen in adult patients with ability to scale up quickly during organization, worked hard to triple-class refractory multiple the global pandemic, and to build awareness and interest myeloma in June. The NDA was secure seasoned oncology pro- in Oncopeptides among key granted priority review with a fessionals, underscores belief in stakeholders. “We grew from 16 to Prescription Drug User Free Act Oncopeptides and melflufen. A 136 employees in the (PDUFA) set for February 28, shared vision and aspiration to We received expert advise US during 2020.” 2021. Melflufen was approved help patients has unified our US through more than 10 adboards Mohamed Ladha, as PEPAXTO on February 26, team even though many employ- and held more than 20 seminars. General Manager, 2021 and commercially launched ees have yet to meet each other We also shared data at all of the US Business Unit. in March. in person. major U.S. oncology scientific meetings including the American We are quickly building our name We are committed to bringing Society of Hematology (ASH) in the US as a great place to hope to patients through science where we had 12 abstracts. The cornerstone of our work has always work. We pride ourselves on hav- and innovation. In October 2020, ing a values-driven culture and we initiated a US Expanded DELIVERING VALUE TO welcome people with different Access Program, sEAPort, to PATIENTS AND HEALTHCARE been – and continues to be – bringing backgrounds and perspectives. provide access to melflufen as a PROVIDERS In 2020, we grew from 16 to potential treatment for eligible We have taken a considered patients the care they need and the 136 employees in the US. We patients while our application and strategic approach to how welcomed more than 100 home was under review by the FDA. to build out and structure and hope they deserve. ONCOPEPTIDES | ANNUAL REPORT 2020 20 (90) Commercialization

optimize our US organization to ENSURING SUPPLY AND PERSPECTIVES FROM MEMBERS OF OUR US LEADERSHIP TEAM optimize the customer experi- ACCESS AT LAUNCH ence. We want to deliver a seam- A critical part of any product less customer experience, so we launch is ensuring drug supply is have built our teams with a cen- available. Upon launch in March tralized point of contact, with 2021, we were ready to ensure the support of an integrated, supply and distribution to the dynamic, and co-ordinated field market. We have implemented force team. a supply chain and distribution strategy to optimize access, con- We are leveraging data analytics trol, and customer support. in innovative ways to gain customer insights and shape our Another critical factor to a suc- approach. Prior to our commer- cessful launch is securing strong CHRIS BLACK, US HEAD JACOB LAI, PHD, VP, BUSINESS MATT SMITH, HEAD OF U.S. SARAH DONOVAN cial launch, we have established coverage and access. In 2020, OF SALES STRATEGY AND OPERATIONS MARKET ACCESS HEAD OF US MARKETING, a sophisticated dashboard that our experienced market access “Over the course of my “When I joined Oncopeptides “Despite therapeutic advances, BUSINESS PLANNING AND provides our field-based teams team partnered with medical career, I’ve seen tremendous in 2018, the Company was well multiple myeloma remains OPERATIONS access to high quality data in affairs and engaged payers rep- advances in cancer care and established in Sweden but incurable,” said Matt Smith, “Collaboration across functions real-time. This will enhance resenting more than 95 percent I’m excited about bringing didn’t have a US footprint. At Head of U.S. Market Access. is critical to a successful our ability to deliver value of covered medical lives. Further- forward a new and innovative the time, I was excited by the “My team is responsible for launch,” said Sarah Donovan, for healthcare providers and more, we established a plan to treatment option to health- thought of helping to build our making sure that patients have Head of US Marketing, Business their patients. deliver patient services that will care providers and patients in US strategy and infrastruc- access PEPAXTO, our new and Planning and Operations. meet or exceed industry stan- the near future. It has been ture. Now, we are ready and innovative therapy. That means “Here are Oncopeptides, we’ve Throughout the year, our team dards. We are dedicated to pro- an honor to build our sales have just started the launch of everything from ensuring that leveraged the expertise of our worked diligently to prepare viding continuous support along organization over the past six our first commercial product the supply chain is in place so team to establish a strong a robust and compelling suite the patient journey, from access, months. We’ve been able to Together with my team, I’m that drug is available in the launch strategy that takes into of personal and non-personal to affordability and adherence, recruit talented and expe- working hard to ensure we have market to making sure there account the complex Multiple sales promotional materials in through resources such as a rienced professionals with a very thorough understand- is coverage and reimburse- Myeloma market and most anticipation of the US launch. Patient Assistance Program (PAP) extensive oncology and launch ing of the market based upon ment. We are also committed importantly, the needs of the These materials are intended to for uninsured or rendered unin- experience. That is a testa- business analytics. While I’ve to establishing robust patient Health Care Providers the drive awareness and adoption sured, which provides Pepaxto ment to Oncopeptides and our seen Oncopeptides evolve over assistance programs. These patients they treat. We have of a new treatment for difficult- free of charge for eligible innovative pipeline.” the past few years one thing foundational initiatives are an established a dynamic and to-treat multiple myeloma patients as well as co-pay cards, remains the same – we are pas- important part of preparing for nimble culture that empowers patients. and educational materials. sionate about helping patients. a successful U.S. launch.” us to make decisions and bring Patients are at the heart of forward innovative solutions.” every decision that we make.”

ONCOPEPTIDES | ANNUAL REPORT 2020 21 (90) Research & Development PDC: a UNIQUE technology PLATFORM We use our proprietary peptide-drug conjugate platform, PDC, to develop multiple drug candidates. Melflufen and our drug candidate, OPD5, stem from the PDC platform. Melflufen entered clinical studies in 2013 and OPD5 is expected to start clinical studies during the first half of 2021. Our goal is to establish a stream of new clinical candidates going forward. In 2021, we expect to select two new candidate drugs, and start toxicology studies before year end.

The PDC platform We are exploring innovative UNIQUE PDC + IN-HOUSE or kill tumors, while minimizing candidates and treatments for EXPERTISE + ACTIVE noise – harm – to healthy cells. multiple hematological diseases COLLABORATIONS = MULTIPLE gives us a unique – not only myeloma. The plat- NEW CLINICAL CANDIDATES IMPROVING PATIENT OUTCOMES form gives us a unique com- The platform allows us to con- Developing pharmaceuticals is competitive advantage petitive advantage because it centrate toxins in cancer cells by a gradual, time-consuming, and enables us to build a robust, exploiting differences between capital-intensive process. The because it enables flexible drug candidate pipeline. cancer cells and healthy cells. By latter phases of developing a This, combined with our collab- doing this, we can deliver more drug are especially costly in us to build a robust orations with leading research and different types of cytotoxic financial terms. A typical phase 3 centers worldwide, enables us activity to cancer cells while study often costs more than all to further leverage the PDC plat- protecting healthy cells. This is the research that has gone into flexible drug form and expand our portfolio of known as “signal to noise”. This a candidate drug up to that point treatment for difficult-to-treat means that we get more signal combined. candidate pipeline. hematological conditions. – toxin – into cells to damage Fredrik Lehmann, Head of Research and CMC

ONCOPEPTIDES | ANNUAL REPORT 2020 22 (90) Research & Development

Research & Development

At Oncopeptides, we start our the PDC platform. The opening in-house discovery efforts at the of the laboratory is a key part of very beginning of the drug devel- our continued professionaliza- opment process. We stay right at tion of the company’s infrastruc- the forefront of current state-of- ture, preparing Oncopeptides for the-art hematology techniques, future growth. (the study of blood in relation to health and disease). We combine During the year, we recruited these techniques with our exten- more than 20 pre-clinical sive experience of and expertise researchers from all around the in PDCs. world to work at the new facility. The researchers were drawn This provides us with an excel- from a diverse set of back- lent foundation on which to ini- grounds, nationalities, ages, and tiate and develop first-in-class professional experience, adding and best-in-class drug projects to the rich and varied set of skill that will potentially improve out- sets and specializations we have comes for patients. in the company.

Our research is not limited in LOOKING AHEAD terms of “modality”, i.e., we do Our unique PDC platform, our not restrict ourselves to one advanced drug development type of method to deliver toxin facility in Solna and in-house payloads to tumors. So, rather expertise devoted to cutting-edge first of what we hope to be sev- than focusing all our efforts on, discovery research and drug eral effective PDC-based treat- for example, small molecules development, along with our ments for multiple myeloma. Our or peptides or antibodies, we active engagement in academic goal is to establish melflufen as actively adapt our approaches to collaborations with top-tier uni- a cornerstone for the treatment what makes sense clinically. versities in Europe and the US, of relapsed-refractory multiple mean that we are ideally posi- myeloma (RRMM). Melflufen is STATE-OF-THE-ART RESEARCH tioned to establish a continuous the first anticancer peptide-drug FACILITY ESTABLISHED flow of new drug candidates going conjugate targeting aminopepi- In 2020, we opened our state-of- forward. dases for patients with relapsed the-art drug development facility or refractory multiple myeloma in Solna, outside Stockholm, After many years of hard work, and has the potential to address Sweden. The laboratory will play we are now set to start fulfilling several market segments in mul- a vital role in further developing our true potential and launch the tiple myeloma.

ONCOPEPTIDES | ANNUAL REPORT 2020 23 (90) Research & Development

Research & Development

PATENTS and 41 INTELLECTUAL granted patents property

The patent work is of high importance and the future success is dependent on the company’s capacity to protect its current and future intellectual property rights. During 2020, 12 new patents were approved, and seven new 55 applications were submitted. The company’s intellectual property portfolio consists of granted patents and patent applications, as well as trademarks. patent Patents are granted only for a limited term of in general 20 years. applications

Oncopeptides has an active addition to these substance to the expiration of the patent patent strategy encompassing patents, the company holds sev- family. As previously mentioned, all major geographic markets, eral additional patents and filed melflufen has, in addition to including the U.S., Europe, patent applications that protect the patent, been classified as Canada, Japan and China. The other aspects of the product an orphan drug by the FDA and 11 company has secured 11 patent candidate, such as formulation, the European Commission. This families, consisting of granted manufacturing processes and means that if melflufen obtains patents and pending patent one new, as-yet unpublished marketing authorization as an patent applications. The number has patent application. The patents orphan medical product, it may increased considerbly over the will expire as shown in the table potentially be granted seven- families previous years. below. In addition, the possibil- and 10-years’ market exclusivity ity exists for extending a patent in the U.S. and EU respectively Melflufen is already protected family by up to five years, at (upon demonstrating significant by a granted patent that includes least in the U.S., EU and Japan, if benefit based on the outcome of the active ingredient in the U.S., the product candidate achieves the ongoing pivotal trials). Europe, Canada and Japan. In marketing authorization prior

ONCOPEPTIDES | ANNUAL REPORT 2020 24 (90) Research & Development

Research & Development

The company’s patent rights Type Patent’s estimated expiration Region Status Melphalan derivatives and their use as cancer chemotherapeutic drugs Substance 2000 (USA 2022 & RoW 2021)1 USA, EP, CA and JP Granted Lyophilized preparation of cytotoxic dipeptides Formulation 2011 (2032) US*, EP*, CA*, JP*, AU*, BR, CN, HK, IN, MX*, Pending/*Granted KR, RU*, ZA*, IL* and NZ* Lyophilized preparation of melphalan flufenamide Formulation 2012 (USA 2032; RoW 2033) US*, EP*, CA, JP*, AU*, BR, CN*, HK*,IN*, Pending/*Granted MX*, KR*, ZA, IL*, RU* and NZ* Process for preparation of nitrogen mustard derivatives API Process 2015 (2036) US*, EP*, CA, JP, AU*, BR, CN, HK, IL, IN, Pending/*Granted KR, MX, NZ, RU*, SG*, ZA Melflufen dosage regimens for cancer Dosage 2015 (2036) US, EP*, CA, JP, AU, BR, CN, HK, IL, IN, Pending/*Granted KR, MX, NZ, RU*, SG, ZA Compounds containing deuterium Substance 2018 (2039) PCT; national phase being entered April 2021 Pending Treatment of amyloidosis with melflufen Treatment 2019 (2040) PCT; national phase entry due late 2021 Pending Confidential Novel formulations comprising melflufen Formulation 2019 (2040) PCT; national phase entry due late 2021 Priority applica- Pending tion in the UK is being processed Melflufen formulations and their use in the treatment or prophylaxis of osteosarcoma Treatment 2019 (2040) PCT; national phase entry due early 2022 Pending New Invention 1 Confidential 2020 (2041) Priority application in the US is being processed Pending New Invention 2 Confidential 2021 (2041) PCT, AR and TW Pending 1) Without extensions of the patent time.

ONCOPEPTIDES | ANNUAL REPORT 2020 25 (90) Research & Development

Regulatory

ONCOPEPTIDES | ANNUAL REPORT 2020 26 (90) Research & Development

Regulatory Regulatory ROADMAP FDA approval in February, 2021, of PEPAXTO in combination with dexamethasone for the treatment of adult patients with relpsed or refractory multiple myeloma who have received at least four prior lines of therapy and whose disease is refractory to at least one proteasome inhibitor, one immunomodulatory agent, and one CD38-directed monoclonal antibody is based on our HORIZON study data. This is the first step to establishing melflufen as a myeloma treatment. This accelerated approval needs to be confirmed by clinical data from a randomized study.

Our OCEAN and LIGHTHOUSE as the basis for an indepen- statistically powered to show for a conditional marketing phase 3 studies evaluate dent application for marketing superiority of melflufen over authorization for melflufen in relapsed refractory multiple authorization in markets outside pomalidomide based on histori- the EU. myeloma patients who are in the US and Europe. In OCEAN, cal data for the two compounds. earlier stages of the disease we compare the efficacy of The submission is expected to compared to patients in the melflufen in combination with The recently initiated take place in Q2 2021. As the HORIZON study. OCEAN and the steroid dexamethasone with LIGHTHOUSE phase 3 study is NDA submission in the US, the LIGHTHOUSE may lead to label pomalidomide and dexameth- investigating the combination EU submission will be based on updates and approval in different asone. The objective of the treatment of melflufen with the pivotal phase 2 HORIZON territories pending study results. OCEAN study is to establish daratumumab and dexameth- study in RRMM. Another inter- whether melflufen has similar asone in RRMM patients who esting market for us is Japan The OCEAN study is expected to or better efficacy than poma- are in the earlier stages of the and preparations for interac- lay the foundations for applica- lidomide. This will result in one disease. tions with authorities there are tions to potentially broaden the of four outcomes, i.e., melflufen ongoing. indication for melflufen in 2022 is superior, non-inferior (the During 2020, we informed the and act as a confirmatory study. same), inconclusive, or inferior to European Medicines Agency Karin Eklund Vanderpol, The study can also be used pomalidomide. OCEAN has been (EMA) of our intention to apply Head of Regulatory Affairs

ONCOPEPTIDES | ANNUAL REPORT 2020 27 (90) Research & Development

Clinical Development company, we have a unique type triple-class refractory multiple multiple myeloma, the other markets. We will continue to of drug pipeline and have all the myeloma, but also in a subset of being pomalidomide. develop the candidates we have pillars in place to address areas patients with extra-medullary in our pipeline and broaden our of rapidly growing unmet medical disease (EMD). These are patients The LIGHTHOUSE study aims to clinical studies to include AML need. At this stage of our devel- who have the least favorable broaden the indication to include and DLBCL, which are two other opment, most emerging biotech prognosis. Based on HORIZON's use of melflufen in combination. indications with high unmet companies would only have results – in patients with high In addition, if OCEAN fails to meet medical need. Our clinical devel- Clinical one compound under clinical unmet medical need – we plan certain regulatory standards, opment platform and its unique development. We have two, with to initiate a further study in the LIGHTHOUSE may be used to ful- breadth makes us uniquely posi- several more planned. third quarter of 2021, LANTERN, fill our regulatory requirements, tioned to become a major player which will focus exclusively thereby de-risking OCEAN. in hematological malignancies. DEVELOPMENT The FDA’s recent accelerated on this group of patients. With approval of PEPAXTO validates LANTERN, Oncopeptides will OPPORTUNITIES TO the concept and thinking behind be one of few companies in the BROADEN LABEL program our PDC platform. Melflufen – world to conduct studies in only The continued success of OCEAN approved in the US as PEPAXTO EMD patients. and LIGHTHOUSE are set to drive – is the first PDC on the market considerable market potential We have developed a broad, proprietary, PDC and represents the first step OCEAN is our largest study. It is in the US, Europe, and other towards realizing the opportu- a randomized, global, phase 3 candidate platform which is unique for a nities to get more peptide-drug study, involving 495 patients. It company of our size and the only PDC pipeline conjugated drugs into clinical compares melflufen head-to- development. head with pomalidomide, which for targeting cancer. This maximizes our ability EXPANDING IN MYELOMA EXPANDING IN NEW INDICATIONS is one of the most widely used to deliver new and multiple clinical entities for COMPREHENSIVE CLINICAL drugs in relapsed refractory PROGRAM LIMITS RISK multiple myeloma treatment, • Combination bortezomib- • Acute Myeloid Leukemia (AML) a wide range of hematological diseases. melflufen-dexamethasone in • High unmet medical need Our clinical development pro- thereby addressing a market cur- soft-tissue extra medullary – limited survival – Overall gram is underpinned by several rently valued at more than USD disease (EMD) studies being conducted in par- 3 billion in the US alone. Initial Survival less than a year • Phase 2 study LANTERN Our first drug candidate – drug (OPD5) which is currently allel to one another. The broad- high-level results are expected in • Phase 1/2 study in relapsed melflufen, was granted accel- in phase 1, (our COAST study), based structure of the program Q2 2021. This is a very important • Building on positive HORIZON patients data in EMD erated approval in the US in to study the effect of OPD5 further strengthens our ability study for us, as it acts as a con- • FPI expected H2 2021/Q1 2022 February 2021 for the treatment in the stem-cell transplant to address unmet medical need. firmatory study for our acceler- • FPI 1 expected H2 2021 of adult patients with relapsed setting. ated approval. refractory multiple myeloma. HORIZON is our pivotal, phase We are also working on expand- FDA APPROVAL OF PEPAXTO 2, single-arm study. It forms the LIGHTHOUSE is another random- ing the breadth of indications VALIDATED THE CONCEPT OF basis of the FDA’s recent accel- ized, open-label phase 3 study of • Combination study with a • Relapsed Diffuse Large B-cell BCMA-targeted therapy– to Lymphoma (DLBCL) we work with. For example, OUR PDC PLATFORM erated approval of melflufen. We melflufen and dexamethasone in enable label expansion in • High unmet medical need – with our ongoing ASCENT study We have all the necessary expe- use the study to evaluate the combination with daratumumab combination treatments in AL Amyloidosis treatment, rience at our advanced research safety and efficacy of melflufen compared to daratumumab limited survival • In planning and with our planned signal facility in Solna to enable us to in combination with the steroid alone in patients with relapsed • Phase 1/2 study in relapsed seeking trials in Diffuse Large deliver new PDCs independently. dexamethasone in patients with refractory multiple myeloma. high-risk patients B-cell Lymphoma (DLBCL) and We also have all the chemi- relapsed refractory multiple Daratumumab is one of the two • FPI expected H2 2021 Acute Myeloid Leukemia (AML). cal tools we need in-house. myeloma. The study has not only fastest-growing products in the Then we have a second PDC So, although we are a small shown encouraging results in treatment of relapsed refractory 1) First Patient In. ONCOPEPTIDES | ANNUAL REPORT 2020 28 (90) Research & Development

ResearchClinical Development & Development OCEAN – phase 3 study for potential label expansion

Head-to-Head study with melflufen versus pomalidomide Patients have failed 2–4 lines Melflufen + N = 495 dexamethasone of prior therapy, Primary and are refractory endpoint: PFS to lenalidomide within 18 months Lenalidomide- refractory or have progressed Secondary multiple on lenalidomide endpoint:

myeloma Randomization within 60 days of Pomalidomide + ORR, OS randomization. patients dexamethasone

The OCEAN study may lay the to demonstrate that melflufen foundation for applications has non-inferior or superior Two ways to meet the primary endpoint in OCEAN which may broaden the indi- efficacy compared with poma- cation for melflufen in 2022. lidomide. The outcome from the Superiority Area Non-Inferiority Area Non-Conclusive Area Inferiority Area Outcome FDA EMA The application may act as a OCEAN study will be analyzed confirmatory study after the by comparing PFS (Progression Primary endpoint Superiority √ √ accelerated approval in February Free Survival) for melflufen met – Superiority 2021. Data from the study can with the PFS for pomalidomide. also be used as the basis for This comparison can simplis- Regulatory an independent application for tically result in four different implications Primary endpoint Non-Inferiority Data √ market authorization in other outcomes i.e. that melflufen is met driven geographic markets outside superior, non-inferior or inferior – Non-Inferiority the US. In the phase 3 OCEAN to pomalidomide, or that the study, the efficacy of melflufen study is inconclusive. Depending OUTCOMES POTENTIAL Primary endpoint X X in combination with dexametha- on the results, OCEAN may lead Melflufen better Pomalidomide better not met sone is compared with pomalid- to regulatory approval/label omide and dexamethasone. The updates in the US, EU and other 0.8 1.0 1.2 objective of the OCEAN study is markets. HAZARD RATIO

ONCOPEPTIDES | ANNUAL REPORT 2020 29 (90) Research & Development

Clinical Development

MELFLUFEN CLINICAL DEVELOPMENT PROGRAM Potential to provide data in different patient populations

O-12-M1

HORIZON US US EU EU

OCEAN

ANCHOR Phase 1 Phase 2

Multiple Myeloma Multiple BRIDGE

PORT

LIGHTHOUSE

ASCENT 2016 2017 2018 2019 2020 2021 2022 Other indications Phase 1 and 2: Phase 2: Phase 3: Phase 1 and 2: Phase 2: Phase 2: Phase 3: Phase 1 and 2: single-arm study single-arm study randomized head- triple-combination study in renally open-label, randomized single-arm study in in late stage RRMM in late stage RRMM to-head study vs study (ANCHOR) impaired patients randomized, cross- daratumumab AL-amyloidosis (O-12-M1) (HORIZON) pomalidomide (BRIDGE) over study (PORT) combination study (OCEAN) (LIGHTHOUSE)

The arrows show First Patient In (FPI) and estimated Last Patient In (LPI). Regulatory submission Potential market authorization

ONCOPEPTIDES | ANNUAL REPORT 2020 30 (90) Research & Development

Clinical Development

ONCOPEPTIDES | ANNUAL REPORT 2020 31 (90) Sustainability We are on a JOURNEY Oncopeptides is on a journey. We know where we need to be in terms of sustainability and corporate responsibility and we are taking substantive steps to get there. We are an open and transparent company and 2020 snapshot are currently preparing to measure key indicators that demonstrate how Despite the pandemic, Oncopeptides grew rapidly in we actively reduce our environmental impact and conduct business 2020. We welcomed many new employees, opened our state- responsibly. of-the-art lab in Stockholm, and made crucial progress toward having our first product SUSTAINABILITY AT ensuring that we operate fairly, a member at the time of writing, the natural environment, and to the company. This will help launched on the US market. ONCOPEPTIDES transparently, and to high ethical we support the United Nations responsible consumption. focus our efforts on sustain- All these activities brought with Being a responsible, sustainable standards. Global Compact, a voluntary ability, lead to more formal them added risks and responsi- company is of paramount impor- initiative based on commitments The SDGs recognize that ending treatment of sustainability, and bilities and intensified the need tance to us. In our relationships To achieve this comprehensive made by company CEOs to poverty and other inequali- further improve our focus on risk to address issues in which we are most able to effect change. toward employees, in how the ESG approach, we have drawn up implement universal sustainabil- ties need to be combined with management. We stepped up our sustainabil- company operates, and in terms a set of policies. A key component ity principles. strategies that improve health ity efforts in 2020 and will con- of the environment and wider of this process was – and remains and education, reduce inequality, We are currently conducting tinue to accelerate our sustain- society. – engaging with stakeholders to AGENDA 2030 and spur economic growth at the dialogs with stakeholders that ability work in the years ahead. ensure that we address relevant The 2030 Agenda for same time as tackling climate will help shape our sustainability Sustainability is integrated into our strategic thinking and day- We adopt an environmen- issues. We do not currently report Sustainable Development, change and working to preserve work and ESG focus. By incor- to-day operations, in the way tal, social, governance (ESG) in accordance with sustainabil- adopted by the UN General the world’s oceans and forests. porating stakeholders’ views and we work together within the approach to our sustainability and ity measurement frameworks Assembly in 2015, is a blueprint We have selected two SDGs expectations we can maintain organization, and in terms of sustainability reporting efforts. such as the Global Reporting for peace and prosperity to be with which we think we have the our awareness and continuous our role in society. We focus on each of these three Initiative (GRI) and Sustainability achieved by 2030. The 2030 most impact and can help drive development by addressing rele- areas separately. We minimize Accounting Standards Board Agenda includes 17 Sustainable positive change. vant issues and how to prioritize our environmental footprint; we (SASB). Development Goals, (SDGs), and integrate them into our ESG work on Human Resources and which cover a wide spectrum of LOOKING AHEAD work. 2021 should be considered social issues with employees and However, we do aim to align with policy areas ranging from pov- In 2021, we plan to conduct a as a baseline year from which we in a broader societal context; and key metrics of global sustain- erty, education, gender equal- materiality analysis to identify will establish KPIs that will help address governance issues by ability frameworks. Though not ity, to fair working conditions, areas that are the most material formalize our ESG efforts.

ONCOPEPTIDES | ANNUAL REPORT 2020 32 (90) Sustainability

Canada, and Sweden where environmental standards are high, and we screen suppliers ENVIRONMENTAL before working with them.

GOING FORWARD We will continue to improve the responsibilities transparency of our environmental initiatives and perfor- Oncopeptides operates in a highly regulated space, where environ- mance. For example, we plan to mental impacts are tightly controlled. However, we continue to improve formalize our work and measure impacts. Our intention is to pres- our understanding of our environmental footprint and thereby reduce it ent the first of these measure- further. In 2020, we took steps towards establishing key performance ments in our 2022 annual report. We will continue to encourage indicators and making the reduction of environmental impacts an integral our suppliers and contractors component of our decision-making processes. training courses and congresses. Due to the rapid growth in head- to align with our environmen- We are likely to continue to count in 2020, under normal cir- tal standards and transparency develop greater use of digital cumstances we may have looked through contractual obligations We continually strive to minimize 2020, is effectively a closed sys- ENVIRONMENTAL EFFORTS platforms going forward. If for larger offices. However, we and supplier agreements. Lastly, the environmental impact of our tem with virtually no impact on IN 2020 employees do fly for work in have decided to adopt a more at a company level and on an own operations and those of our the local environment. As with The need for action to reverse future, they will be encouraged flexible approach to working individual level, we will continue suppliers. Our Environmental all modern-day labs in highly severe damage to the climate to ensure that such trips have from home to enable us to con- to make decisions that minimize Policy, adopted in 2017 and which regulated geographies such as took on renewed urgency in multiple purposes and are tinue to use our existing office our environmental impact. all employees are expected to the EU, chemical handling and 2020, and we accelerated our absolutely necessary. On a local space. This also reduces emis- follow, states that environmen- disposal and waste disposal is efforts to reduce environ- level, employees are encouraged sions in terms of people travel- tal impact should be part of tightly controlled. mental impacts in response. to take public transport where ling to and from the office. the company’s decision-making Furthermore, environmental possible. processes and that our products However, much of the company’s issues are likely to become During the year, our safety rep- should not consume more nat- environmental impact is embed- increasingly commercially We conduct clinical studies at resentative conducted checks at ural resources than necessary. ded in our products. Therefore, important and a potential approximately 130 hospitals in our Stockholm laboratory on a We strive to prevent pollution, we focus on our suppliers and differentiator. 25 countries and our drugs are regular basis to ensure the safety reduce carbon emissions, and select Contract Manufacturing of course transported, which of employees and that environ- work actively to minimize waste Organizations (CMOs) and other Even before the travel restric- causes carbon emissions. We mental standards were upheld. and energy and water use. vendors based in countries tions brought due to the pan- therefore include environmental where regulatory standards are demic, we limited the use of impact in decisions related to In terms of our supply chain, we Goal 13: Our state-of-the-art pharma- similar to those in Sweden. We flights where possible and this shipping and where possible continued to work with CMOs on Climate Action ceutical development laboratory encourage all our suppliers to will continue. We held many select companies that are more their management of environ- Take urgent action to combat in Stockholm, which became align with appropriate standards virtual meetings during the year, environmentally aware and mental impacts. We cur rently climate change and its impacts. fully operational in September to minimize impacts. and employees attended virtual transparent. use suppliers in Belgium,

ONCOPEPTIDES | ANNUAL REPORT 2020 33 (90) Sustainability LOOKING AHEAD For 2021 and beyond, we will continue to focus on attract- Number of ing the right talent from diverse employees national and professional back- 300 grounds to ensure our continued success as a global pharmaceu- 250 SOCIAL tical company. 200 136 In line with SDG 3, the wellbeing of our employees, patients, 150 medical professionals, suppliers, 100 16 responsibility and all stakeholders will remain 144 6 the defining feature of our social 50 72 41 Social responsibility: Why social issues responsibility efforts. In terms 0 2020: GROWING AND CARING a fantastic response from every- of Covid-19 more specifically, we 2020 2019 2018 matter to Oncopeptides. Swedish organization Despite the pandemic, body. For Multiple Myeloma will continue to focus on helping Oncopeptides continued to grow Awareness Month, we were the working environment and US organization Oncopeptides takes its role and we attach to this aspect of our in 2020 – and rapidly, register- closely involved in the Miles for supporting employees at what responsibilities in society very operations is reflected in the ing its fastest rate of growth in Myeloma 5K Run/Walk run. remains a challenging period seriously. We strive to have pos- fact that we continually have a terms of employee numbers on with for example ergonomist and Gender ratio itive impacts wherever we are low degree of staff turnover. record, to 280 co-workers. We COVID RESPONSE stress coach lectures. present – in the local commu- are now 136 in Sweden and 144 Naturally, the Covid-19 pandemic We will continue to review nities where we conduct sales, We believe that diversity, inclu- in the US. complicated our recruitment our social sustainability policies, research, and manufacturing, sivity, and equality are key fac- Substantive steps were taken drive in Sweden and the US. expand work on our core values, with our employees, suppliers, tors that determine a stimulating on establishing and formaliz- However, through extensive use further develop our routines in and all other stakeholders. Our work environment as well as ing our core corporate values, of digital technologies, we were terms of training and documen- overall approach is centered the success of our business. We based on an employee survey able to fill all the positions we tation, as well as expand the on wellbeing for all, and aligns operate in a global environment, that was sent to all employees needed to during the year. The range of key performance indi- Women, 63% Men, 37% with the UN’s Agenda 2030, and with customers, suppliers, and and workshops that involved pandemic also required us to cators we apply in this area to Sustainable Development Goal other stakeholders come from a everyone in the company to cap- support our existing workforce. enable us to better benchmark (SDG) 3, to “ensure healthy lives wide variety of backgrounds. The ture the views and preferences We took steps to ensure that our performance with other Employee and promote well-being for all at company has a diverse work- from cross-functional and mixed employees received the support companies. distribution all ages”. force in terms of nationalities, globally. The results from these that they needed during this time We understand the impor- backgrounds, and age range. We initiatives were collected by a through, for example, flexible tance of having a deeply rooted also have a good gender balance project group that worked out working and financial support for culture in our working environ- between women and men in the an engagement platform that physical and mental wellbeing. ment – one that is flexible and organization. includes five of our core values. Even before the outbreak of the open-minded with a focus on The allocation of employee In the run-up to Christmas, Covid-19 pandemic, ergonomist international collaboration. It is stock options is made in addition our entire US organization and stress coach lectures were also vital that we offer attractive to current industry-standard came together to donate gifts offered. We also conducted a Goal 3: career opportunities. Our ability remuneration. Stock option allo- and money to children in need survey among employees spe- Good health and well-being Admin, 41 R&D, 118 to attract and retain world-class cation to co-workers are made through local organisations close cifically about Covid-19 and its Ensure healthy lives and promote M&S, 121 talent remains of the utmost annually and are decided by the to our sites in California and effects on the working environ- well-being for all at all ages. importance. The importance Board of Directors. Massachusetts and we received ment and routines.

ONCOPEPTIDES | ANNUAL REPORT 2020 34 (90) Sustainability on preparing anti-corruption greater rigor in supplier agree- policy measures. We have hired ments in terms of ethical a Head of US Legal & Compliance matters. Companies that supply and additional members to Oncopeptides with drug prod- the legal team such as Legal ucts are already required to meet and Compliance Directors, to strict regulatory obligations as prepare a compliance program well as ethical standards. We Responsible with focus on interactions with will review the ethical commit- healthcare providers and orga- ments in our standard service nizations, and to ensure that we contracts, realting to labor law, operate within the applicable environmental legislation, and GOVERNANCE legal framework. UN conventions on corruption, child labor, and human rights. We believe that we should operate responsibly through business ethics During the year, we appointed Karolina Vilval, and a policy framework to build a sustainable organization. This benefits a Global Head of Corporate Anti-corruption is always a key General Counsel Communications who will drive area for the pharmaceutical society and creates value for our shareholders and other stakeholders. the improvement of communi- industry and is an area we treat Furthermore, good governance helps us attract and retain talent, manage cation and pro-actively manage with the utmost seriousness. It support our continued efforts to reputaional risks, as well as is an area in which we are highly mitigate risk for the company. costs, and build trust with employees, customers, patients, suppliers, establish our long-term com- focused and have developed a and stakeholders. munication strategy. Our new detailed program, including an Oncopeptides is a rapidly growing Director of Training will sup- anti-corruption policy. organization, and that can create port internal communication, risk. We work closely with external To ensure good governance, The Head of US Commercial vision, a common set of core val- decision making, and career We reviewed our Code of partners, such as with academia, we need systems in place that Operations became General ues (Science, Passion, Courage, development. Conduct in the beginning of universities and healtcare pro- control how the company takes Manager of the US Business Unit Collaboration and Trust) and a 2021 and we plan to improve viders, which may increase risk. decisions, meets its legal obliga- during the year and we removed commitment to further improve Efforts tomitigate the effects of employee engagement with However, we remain committed tions, and achieves its opera- the role of CEO of Oncopeptides, how we work together across the the pandemic included shipping it through, for example, the to our efforts to developing the tional requirements. We have Inc., which is no longer a des- company for the benefit of all more product to our testing sites use of e-learning. We will also structures we need to ensure that an ethical, value-driven culture ignated Company function. stakeholders. ahead of time to reduce poten- strengthen our legal team with we operate and grow our business in which issues are addressed This change streamlines our tial disruption. This incurred the addition of a position to responsibly and sustainably. swiftly and transparently. We do organization while improving We worked more broadly on increased costs but success- this through a culture based on the efficiency of our US regional establishing standardized rou- fully reduced risk and minimized dialogue, respect, and integrity. operation and the interface tines by, for example, preparing disruption to our clinical trials. between the US Business Unit for regulatory inspections with The company introduced a PREPARING FOR THE FUTURE and our global headquarters in pre-mock trials to minimize the whistleblower hotline during the In 2020, we continued to develop Stockholm. Furthermore, our risk of a submission of a file year. No serious incidents were our governance structures and structure is now scalable as for one of our candidates being reported in 2020. routines. We recruited a new we build an EU Business Unit rejected. We also conducted General Counsel, the focus of with a similar connection into quality audits of our drug prod- LOOKING HEAD whom has been on building up the global headquarters. At uct suppliers to ensure that they We will continue to improve the the clear foundations we need Oncopeptides, we are continuing met contractual obligations. quality of our supply chain and to ensure rapid, responsible to build a strong, unified culture On the US side of the busi- plan to further standardize our growth. with the establishment of a clear ness, we continued our work relationships with suppliers with

ONCOPEPTIDES | ANNUAL REPORT 2020 35 (90) ONCOPEPTIDES | ANNUAL REPORT 2020 The Share holder base as a result. aresult. as base holder share alarger with investors increased the interest among been incremental. This has also approved on the US market has product first its with company towards a commerical biotech over the year. The transformation positively to develop continued States United the and Europe in both investors institutional interest in among Oncopeptides analysts. The knowledge and investorsshareholders, and with relationships its build and efforts to maintain, develop its continued company The GREAT INTEREST CREATED HAVE COMPANY TOWARDS A COMMERCIAL THE TRANSFORMATION sector participated. sector in which well-known several investors in the specialist and institutions Incompany out adirected investors. 2020,private the share carried issue drivenby compared essentially previous to the year was percent, 88 This growth, shareholders. end of company yearthe the the had 16,570 year. number The of shareholders continued to grow during at and 2020 Mcompared to SEK 7,031 SEK 11,529 of was close 2020 previous Mthe 2017. in February IPO the company’s The market at capitalization the listed been has company The

- • • • • • • • • actively: Oncopeptides lysts are currently following ana their and banks Eight COVERAGE CURRENT ANALYST Christopher Uhde Winston SEB, Suzanne Van Voorthuizen Co, & Kempen Welford Peter Jefferies, Robert Burns LLC, &Co., Wainwright H.C. Ling Patrik ASA, Bank DNB Peaker Boris LLC, Company, and Cowen Hultgård Erik Carnegie, Sundberg Viktor Collier, Sundal ABG on Nasdaq Stockholm Mid Cap List since since List Mid Cap Stockholm on Nasdaq

- SEK 169. of price aclosing on based M, 11,529 SEK was capitalization ket mar company’s the year-end, At 2020. in percent 33 by increased price share The 18. March on 79.8 SEK was paid price lowest the and 23, October on 173 SEK was year the during paid price highest The 169. SEK was price At year-end 2020, the share SHARE PRICE DEVELOPMENT scope during 2021. the broaden to ambitions with International banks during 2020 ferences of other Nordic and con investor as well as banks conferences hosted by these We in participated various virtual - - of SEK 0.11. In accordance with with accordance In 0.11. SEK of value aquotient with shares tributed between 67,939,715 dis 7,548,857, SEK totalled At year-end, the share capital SHIP STRUCTURE SHARE CAPITAL AND OWNER individuals. private by held was percent 12.2 remaining the while institutions, percent of these were financial holders at year-end 2020. 87.8 Oncopeptides had 16,570 share OWNERSHIP STRUCTURE votes. 67,939,715 to responding shares, cor ordinary registered Oncopeptides had 67,939,715 At December 31, 2020, SHARE DATA - - - - liquidation. of event the in surplus the of percentage a and profits ny’s compa the of share equal an to entitled are shares All zations. organi and individuals of shares the registers and register share company’s the administers AB means that Euroclear Sweden which AB, Sweden Euroclear with registered are shares ny’s compa the and provision, day record- a contains Association of shares. Oncopeptides’ Articles a maximum of 88,000,000 of 22,000,000 shares and a mini between distributed 9,600,000, SEK of maximum a and 2,400,000 SEK of minimum share capital may comprise a the Articles of Association, the

mum mum 36 - - (90)

- The Share

Ownership by 80catagory DIVIDEND POLICY AND will be determined based on the as the company generates sus- 25 Largest Holders (grouped) Capital (%) 0Holdings (%) PROPOSED DIVIDEND company’s long-term growth, tainable profitability. The Board Healthcap VI LP 16.7% Oncopeptides will continue to earnings performance and cap- of Directors proposes that the 60 focus on further developing and ital requirements. Insofar as Annual General Meeting resolves Stiftelsen Industrifonden 10.9% 12.2 50 expanding the company’s assets dividends are proposed, they that no dividend will be paid for Swedbank Robur Fonder 6.4% 48.7 and project portfolio. Available will be considered with respect the financial year. Handelsbanken fonder 5.5% 40 financial resources and recog- to the company’s objectives, nized profit are therefore to be scope and risk. Accordingly, Fjärde AP-fonden 4.8% 30 reinvested in the operations to the Board of Directors does not JP Morgan Bank Luxembourg S.A. 4.7% 20 finance the company’s long-term intend to propose any dividend State Street Bank and Trust Co, W9 4.0% strategy. Any future dividends to shareholders until such time 10 Gladiator 3.5% 0 Oncopeptides utveckling och omsttning 201-02-22-2020-12-31 Morgan Stanley and Co Llc, W9 2.1% Swedish owners, 60.9% No. of shares traded, thousands, per month Försäkringsaktiebolaget, Avanza Pension 2.0% SEK whereof Share price trend an turnover 2017–2020 Afa Försäkring 2.0% 220 15,000 Natural persons, 12.2% Seb-Stiftelsen, Skand Enskilda 2.0% Legal entities, 48.7% 200 AMF - Försäkring och Fonder 1.8% Non-Swedish owners, 39.1% 180 12,000 Jp Morgan Chase Bank N.A. 1.7% 160 Andra AP-fonden 1.4% Ownership by SEB AB, Luxembourg Branch, W8IMY 1.1% 140 country 9,000 Länsförsäkringar fondförvaltning AB 1.1% Holdings (%) 120 Tin Ny Teknik 0.8%

100 Lindberg, Jacob 0.8% 6,000 SEB Investment Management 0.8% 80 Nordic and Europe health Invest AS 0.8% 60 Nordnet Pensionsförsäkring AB 0.7% 3,000 40 Hulme, William Alan 0.5% Futur Pension 0.5% 20 JP Morgan Bank Luxembourg S.A. 0.5% Sweden, 61.0% 0 0 Switzerland, 17.4% 201 2018 2019 2020 United States, 7.6%

Oncopeptides No. of shares traded, thousands, per month Luxembourg, 6.8% OM Stockholm Pharmaceuticals & Biotechnology PI United Kingdom, 3.5% Nasdaq Biotech Inde OM Stockholm PI Källa: ONCOPEPTIDES | ANNUAL REPORT 2020 37 (90) ONCOPEPTIDES | ANNUAL REPORT 2020 Glossary Anti-CD38 over-represented in cancer cells. are These peptides. hydrolyze Aminopeptidases cytotoxic chemotherapy. Alkylator AE CBR 38. CD to targeted body to grow. to begins it until reduction tumor to the period from an initial DOR roid used in cancer treatment. Dexamethasone organization. CRO CR and patients. efficacy on healthy volunteers and anddoses evaluate safety studies Clinical cancer cells. kill to drug more or one involving Chemotherapy and manufacturing organization. CDMO tumor mass. 25lost percent or more of their have who myeloma multiple with patients of number the sures Adverse events. Complete tumor Complete response. Clinical benefit rate, mea rate, benefit Clinical Contract research Duration of response refers Contract development development Contract A broad spectrum spectrum broad A A monocloncal anti Cancer treatment Cancer Studies to define define to Studies A powerful ste powerful A Enzymes that that Enzymes - - - myeloma. relapsed refractory multiple Late-stage RRMM name. etary INN candidate. a drug enable clinical development of IND-submission IND ongoing trials. Interim results myeloma. multiple of treatment the in used drugs, IMiDs similar sub-diseases. ease comprising different but Heterogeneous disease anemia. sickle-cell and lymphoma, leukemia, philia, includingmalignancies, hemo treatment of blood disorders and the includes It diseases. blood blood, blood-forming organs, and Hematology Administration. FDA cell. a inside stays payload alkylator Entrapped Agency. EMA Association. EHA drugs. two Double-refractory Investigational New Drug. New Investigational International non-propri US Food and Drug European Hematology European Medicines Immunomodulatory imide imide Immunomodulatory How a hydrophilic How a hydrophilic The science of Partial results Partial in Application to to Application Late-stage Late-stage Resistant to to Resistant A dis A - - -

several different drugs. Multi-refractory percent tumor25–50 reduction. MR system’s on attacks cancer cells. enhance, or mimic the immune tute antibodies that restore, substi as engineered to serve Laboratory-produced molecules Monoclonal antibodies blood cells. marrow and crowd out healthy bone the in accumulate cells Cancerous plasma cells. plasma in forms that cancer blood MM above) name for melflufen. Melphalan flufenamide cells. tumor into and agents releases alkylating gate aminopeptidases targeting peptide druganti-cancer conju- Melflufen Application. MAA small molecules. of uptake cell determines that Lipophilicity etc. therapy, of line asecond by followed therapy, of line first the as known is attempt the patient, the firsttreatment and decisiondiagnosis to treat cancer a After therapy of Lines Minimal response refers to a Multiple myeloma, a rare arare myeloma, Multiple Marketing Authorization A first-in-class first-in-class A is a key parameter parameter akey is Resistant to to Resistant

INN (see - therapeutic doses. therapeutic istered in untargeted forms at admin to be toxic too are that Payload treatment. the of start the from survives apatient time OS tumor mass. 50lost percent or more of their have who patients of number ORR approved. once exclusivity, market as such teria to benefitfrom incentives cri certain fulfil must disease rare the and drug The eases. dis rare for medicines market and develop to companies age economic incentives to encour provide often Governments disease. arare for drug tional investiga an to assigned tus Orphan designation small patient populations. very in diseases or diseases ing threaten life disease, a rare Orphan drug platform. conjugate drug peptide the of out coming OPD5 NDA based cancer. Multiple myeloma Overall survival, the length of of length the survival, Overall Overall response rate, Overall the New Drug Application. Drug New The second drug candidate Highly active molecules A drug used to treat treat to used drug A A rare blood- rare A A sta A ------

Phase 2 healthy volunteers. candidate in and evaluate safety adrug of doses appropriate tify Phase 1 ofphases development. clinical Various 3(studies) 2, 1, Phase body. uted and metabolized in the distrib is adrug how describe Pharmacokinetics percent. 25 least at by grown treatment until the tumor has apatient’s of start the from time of length the measures PFS bute of melflufen. attri key A acids. amino of chain Peptide down peptides. Peptidases OPD5. and melflufen includes that agents of class The PDC percent. 25 least at by grown has mass tumor the PD treatments. other with candidates drug pares patientlarger groups and com in 2processes phase repeats Phase 3 3. phase of ahead patients in candidate drug a of safety and efficacy ate Progressive disease, where Progression-free survival, survival, Progression-free Peptide-drug conjugate. A clinical study to iden to study clinical A A molecule comprising a a comprising molecule A A clinical study that that study clinical A A clinical study to evalu to study clinical A Enzymes that break Enzymes Data that that Data 38 - - (90) - - - Glossary

PI Proteasome inhibitor used in Relapse Recurrence of e.g., multiple myeloma treatment. a tumor. Pivotal study A clinical study Resistance development Tumor to demonstrate the safety and development causing worse or efficacy of a new drug to obtain no response to treatment. marketing approval from regula- RRMM Relapsed refractory mul- tory authorities. tiple myeloma. PK Pharmacokinetics, how a drug SD Stable disease, where a is distributed and metabolized in tumor has neither increased nor the body. decreased in size by more than PR Partial response refers to 25 percent. a tumor reduction of 50 to 90 Single-arm study Clinical study percent. in which patients receive the Pre-clinical studies Early same treatment. research during which feasibil- Target protein Protein to which a ity, iterative testing and drug drug binds to release a pharma- safety data are collected. This ceutical effect. determines a safe starting dose TCR Triple-class refractory, for first-in-human studies and patients are refractory to or assesses potential toxicity. intolerant of at least one immu- Progression-free No tumor nomodulating drug, at least one growth. proteasome inhibitor, and at Proteasome inhibitor Substance least one anti-CD38 monoclonal used in multiple myeloma antibody. treatment. Tumor response rate Percentage Quad- and penta-refractory of patients whose tumors A patient whose disease is respond to treatment. refractory to four or five differ- VGPR Very good partial ent treatments. response. Randomized clinical trial A study in which patients are randomly divided into different groups. Refractory Resistant to treatment.

ONCOPEPTIDES | ANNUAL REPORT 2020 39 (90) Contents

Remuneration report �� p. 41 Notes to the consolidated and Note 16 Financial Certification �� p. 82 Parent Company financial non-current assets ��p. 72 Auditor’s Report �� p. 83 statements Note 17 Interests in subsidiaries, ANNUAL REPORT 2020 Board of Directors �� p. 86 Note 1 General information �� p. 60 Parent Company ��p. 72 Directors’ report �� p. 43 Management �� p. 88 Note 2 Summary of significant Note 18 Financial instruments Corporate Governance accounting policies �� p. 60 by category, Group ��p. 73 Welcome to Report �� p. 48 the 2021 AGM �� p. 90 Note 3 Financial risk Not 19 Inventory ��p. 73 management �� p. 64 Note 20 Other current Consolidated financial statements Note 4 Critical accounting receivables ��p. 73 estimates and judgments �� p. 65 Consolidated statement of Note 21 Prepaid expenses comprehensive income �� p. 54 Note 5 Other operating and accrued income ��p. 74 income �� p. 65 Consolidated statement of Note 22 Cash and cash financial position ��p. 55 Note 6 Other operating equivalents ��p. 74 expenses �� p. 65 Consolidated statement of Note 23 Share capital and other changes in equity �� p. 56 Note 7 Consolidated operating contributed capital ��p. 74 expenses by type of cost �� p. 66 Consolidated statement of Note 24 Earnings per share ��p. 75 cash flows �� p. 56 Note 8 Audit fees �� p. 66 Note 25 Other current Note 9 Leases �� p. 66 liabilities ��p. 75 Parent Company financial Not 10 Employees and Note 26 Accrued expenses ��p. 75 statements personnel costs ��p. 67 Note 27 Share-based Parent Company Note 11 Financial income payments ��p. 76 income statement ��p. 57 and expenses ��p. 70 Note 28 Related-party Parent Company statement of Note 12 Tax on transactions �� p. 80 comprehensive income ��p. 57 profit for the year ��p. 70 Note 29 Pledged assets �� p. 81 Parent Company Note 13 Intangible Note 30 Contingent liabilities �� p. 81 balance sheet �� p. 58 fixed assets �� p. 71 Note 31 Events after the end Parent Company statement of Note 14 Property, of the reporting period �� p. 81 changes in equity �� p. 59 plant and equipment �� p. 71 Parent Company Note 15 Deferred statement of cash flow �� p. 59 tax assets ��p. 72

ONCOPEPTIDES | ANNUAL REPORT 2020 40 (90) Remuneration report

Introduction or share price-related remuneration. The satisfaction of criteria for suitable candidates in an international environment on market terms This report describes the guidelines for remuneration to members awarding variable cash remuneration shall be measured over a period and was capped at 200 percent. of senior management of Oncopeptides AB, as adopted by the 2020 of one year. No claim for repayment of remuneration has been made. In addi- AGM and implemented in 2020. The report also includes information The variable cash remuneration shall be linked to predetermined tion to the remuneration encompassed by these guidelines, the com- on the remuneration to the CEO as well as a summary of the com- and measurable criteria which can be financial or non-financial. They pany’s AGMs pass resolutions on the implementation of long-term pany’s share-based and share price-related incentive programs out- may be individualized, quantitative or qualitative objectives. The cri- share-based incentive programs. standing. The report was prepared in accordance with the Swedish teria shall be designed so as to contribute to the company’s business For information about the guidelines applicable until the 2021 AGM, Companies Act and the rules on remuneration issued by the Swedish strategy and long-term interests, including its sustainability, by for refer to the Corporate governance report on pages 48–54 of the 2020 Corporate Governance Board. example being clearly linked to the business strategy or promote the Annual Report. More information on remuneration to members of senior manage- executive’s long-term development. ment is available in Note 10 Employees and personnel costs on pages These guidelines enable the company to offer the members of Share-based remuneration 67-70 of the 2020 Annual Report. Information on the work of the senior management a competitive total remuneration. Variable cash Share-based incentive programs outstanding Remuneration Committee in 2020 can be found in the Corporate gov- remuneration covered by these guidelines shall aim at promoting the The objective of share-based incentive programs is to promote ernance report, which is on pages 53–55 in the 2020 Annual Report. company’s business strategy and long-term interests, including its the company’s long-term interests by motivating and rewarding Remuneration to the Board of Directors is not encompassed by this sustainability. the company’s senior management, founders and other personnel. report. Such remuneration is resolved by the AGM and published in Long-term share-based incentive programs have been imple- Oncopeptides currently has nine active programs encompassing Note 10 on page 68 in the 2020 Annual Report. mented in the company. Such programs have been resolved by the management, certain Board members, founders and employees. general meeting and are therefore excluded from these guidelines. “Employee Option Program 2016/2023” was introduced in 2016. “Co- Performance in 2020 The programs include senior management, Board members, founders worker LTIP 2017” was introduced in 2017. At the 2018 AGM, two incen- The CEO provides a summary of the company’s overall performance and other personnel, and are reported under Note 27, Share-based tive programs were introduced: “Co-worker LTIP 2018” and “Board LTIP on page 10 of the 2020 Annual Report. remuneration on pages 76-80 of the 2020 Annual Report. For more 2018”. At an EGM in December 2018, “Board LTIP 2018.2” was intro- information about these programs, including the criteria determining duced, and at the 2019 AGM, it was resolved that two new incentive The company’s remuneration guidelines: applicable areas, outcomes, refer to https://oncopeptides.se/en/remuneration/ programs were to be introduced: “Co-worker LTIP 2019” and “Board objectives and deviations The guidelines are reported on pages 67-70 in the 2020 Annual LTIP 2019”. At the 2020 AGM, a resolution was passed to introduce the Oncopeptides is a global biotech company focused on the develop- Report. In 2020, Oncopeptides deviated from the guidelines in the program “Board LTIP 2020”, and at the EGM in December 2020 AGM, it ment of targeted therapies for difficult-to-treat hematological dis- recruitment of a new CEO, whose variable remuneration amounted to was resolved to introduce the program “US Co-worker LTIP 2020”. eases. The U.S. Food and Drug Administration, FDA, recently granted more than the level of 50 percent as decided by the general meet- The options are allotted free of charge and have a three-year vest- PEPAXTO (melphalan flufenamide, also known as melflufen) accel- ing. The decision to deviate from the guidelines was made to attract ing period calculated from the allotment date, provided that, with erated approval for the treatment of relapsed or refractory multiple myeloma. Oncopeptides conducts operations from the head office Total remuneration to the CEO, 2020 (SEK thousand)1 in Stockholm, Sweden and its offices in Boston, Massachusetts and Variable Pension Share-based Mountain View, California, USA. 2020 Basic salary Invoiced fees remuneration expense2 remuneration3 Total A prerequisite for the successful implementation of the compa- CEO, Marty J Duvall (from July 2020) 2,329 – 1,127 – – 3,456 ny’s business strategy and safeguarding of its long-term interests, including its sustainability, is that the company is able to recruit CEO, Jakob Lindberg (until June 2020) 1,918 – 647 226 49,375 52,166 and retain qualified personnel. To this end, it is necessary that the Total 4,247 – 1,774 226 49,375 55,622 company offers competitive remuneration. The remuneration shall 1) With the exception of Multi-year variable remuneration, the table presents remuneration that accrues for 2020. Multi-year variable remuneration is presented to the extent it be on market terms and may consist of the following components: vested in 2020 pursuant to that stated in the following table presenting the CEO’s Option programs. This applies irrespective of whether payment has, or has not, been made in fixed cash salary, variable cash remuneration, pension benefits and the same year. 2) Pension expenses, which are defined-contribution and pertain entirely to basic salary, have been fully recognized as fixed remuneration. other benefits. Additionally, the general meeting may – irrespective 3) Vested share awards as presented below in the CEO’s Option programs. The remuneration is disclosed at market value according to the stock exchange’s closing price as of of these guidelines – resolve on, among other things, share-related December 30, 2020.

ONCOPEPTIDES | ANNUAL REPORT 2020 41 (90) Remuneration report customary exceptions, the participants remain as employees of, or CEO’s performance during the reported fiscal year: variable cash remuneration continue to provide services to, Oncopeptides. The share awards will be allotted free of charge to participants in a) Recorded performance and the program. The share awards are vested over approximately three Description of criteria pertaining to variable remuneration b) actual remuneration years and are also subject to performance-based vesting, based on Goals linked to launch the performance of Oncopeptides’ share price during the period from - Apply for “accelerated approval” with the FDA the allotment date up to and including the final vesting date. For fur- - Continued build-up of a launch-ready organization ther information about these programs, refer to Note 27 in the 2020 - Establish external awareness of melflufen as a new treatment class a) 95.2% Annual Report. Goals linked to strategy b) SEK 1,774 thousand The full utilization of granted options and share awards as of - Raise external capital and broaden the shareholder base December 31, 2020, corresponding to 3,406,054 shares, would result - Recruit patients pursuant to the set goals in a dilution for shareholders of 4.8 percent. The full utilization of all - Continue to build a global organization while retaining the company’s fundamental values resolved options corresponding to a total of 5,365,429 shares (including unallotted employee options and performance shares as well as warrants intended for hedging of social security contributions) would Comparative information pertaining to changes in remuneration and the company’s performance result in a dilution for shareholders of 7.3 percent. Changes in remuneration and the company’s performance over the last five reported fiscal years (SEK thousand) Income state- Application of performance criteria for variable remuneration 2016 vs 2015 2017 vs 1016 2018 vs 2017 2019 vs 2018 2020 vs 2019 ment 2020 The performance criteria for variable remuneration to the CEO were Total remuneration to the CEO +285 (+15%) +2,332 (+106%) +461 (+10%) +1,007 (+22%) +5,232 (+70%) 10,999 chosen to help realize the company’s strategy and to encourage ownership aligned with the company’s long-term interests. The strate- Consolidated operating result -53,350 -114,482 -306,731 -410,963 -739,392 -1,591,279 gic goals together with the short- and long-term business priorities for 2020 were considered when selecting the performance criteria. Average remuneration based on the number of FTEs employed1 in the company 0 (0%) +145 (+3%) -34 (0%) +357 (+3%) +136 (0%) 220,973 Moreover, the non-financial performance criteria contribute to sus- 1) Excluding members of Group management. tainability adaptation and to the company’s values. Information for the reported fiscal year CEO option programs End of Final Program Vesting Allotment subscription vesting Exercise Exercise Options Jan Allotted Exercised Options CEO title Subtitle date date period date period price 1, 2020 2020 2020 Dec 31, 2020 Vested % Employee Jun 30, 2020– Jakob Lindberg Option Programs 2016/2023:2 2016–2020 Nov 22, 2016 Jun 30, 2020 Jun 30, 2020 Nov 31, 2023 0.11 175 – – 21 100.00% May 18, 2020– Jakob Lindberg Co-worker LTIP 2017:1 2017–2020 May 18, 2017 May 18, 2020 May 18, 2020 May 18, 2024 44.48 181,000 – – 181,000 100.00% Feb 21, 2025– Jakob Lindberg Co-worker LTIP 2017:3 2018–2021 Feb 21, 2018 Feb 21, 2021 Feb 21, 2021 Feb 21, 2025 79.77 23,190 – – 23,190 95.26% May 3, 2022– Jakob Lindberg Co-worker LTIP 2018:2 2019–2022 May 3, 2019 May 3, 2022 May 3, 2022 May 3, 2026 126.09 45,860 – – 45,860 55.52% Jan 2, 2023–Jan Jakob Lindberg Co-worker LTIP 2019:3 2020–2023 Jan 2, 2020 Jan 2, 2023 Jan 2, 2023 2, 2027 128.68 – 65,373 – 65,373 33.27% Jul 8, 2023–Jul Marty J Duvall Co-worker LTIP 2019:6 2020–2023 Jul 8, 2020 Jul 8, 2023 Jul 8, 2023 8, 2027 131.93 – 243,212 – 243,212 16.15% Total 250,225 308,585 – 558,656 1) the total market value of the underlying shares at the allotment date was SEK 56,463 thousand. The total exercise price was SEK 56,182 thousand.

ONCOPEPTIDES | ANNUAL REPORT 2020 42 (90) Directors’ Report

Group and Parent Company known as melflufen) accelerated approval for the treatment of re- American Society of Hematology (ASH) meeting. The full data set The Board of Directors and CEO of Oncopeptides, corporate registra- lapsed or refractory multiple myeloma. was also published in the Journal of Clinical Oncology. tion number 556596-6438, with its registered office in Stockholm, During the year, a directed share issue raised a total of SEK 1,413.9 • In December 2020, the first patient was enrolled in the phase 3 hereby present the Annual Report and consolidated financial state- M before issue costs. The Group consists of the Parent Company, LIGHTHOUSE combination study in multiple myeloma. ments for the 2020 fiscal year. Figures in parentheses pertain to the Oncopeptides AB, as well as the Swedish subsidiary, Oncopeptides preceding year. All amounts are expressed in SEK thousand, unless Incentive AB, and the US subsidiary, Oncopeptides Inc. The Swedish Sales and earnings otherwise indicated. subsidiary, Oncopeptides Incentive AB, conducts no operating In 2020, the Group’s net sales totaled SEK 0.0 M (0.0) as permits to activities. market PEPAXTO have yet to be obtained. Oncopeptides’ operations Oncopeptides’ research and development costs for the year Oncopeptides is a global biotech company focused on the devel- Significant events in 2020 amounted to SEK 866.2 M (548.3). The cost increase was primarily opment of targeted therapies for difficult-to-treat hematological • In March 2020, Oncopeptides announced the overall response rate attributable to increased clinical expenses stemming from intensified diseases. of melflufen in the pivotal HORIZON study. activity in the ongoing OCEAN and HORIZON pivotal clinical studies. Multiple myeloma is a cancer that impacts plasma cells, a type of • In June 2020, full top-line results were presented from the pivotal Marketing and distribution costs for the year totaled SEK 456.5 M white blood cell which produces antibodies to help fight infection. phase 2 HORIZON study in triple-class refractory multiple myeloma (127.4). Administrative expenses for the year amounted to SEK 197.7 Multiple myeloma causes cancer cells to accumulate in the bone patients at the European Hematology Association (EHA) meeting. M (72.0). The main reason behind the increase in expenses was the marrow. Approximately 250,000 patients live with multiple myeloma • In June 2020, Oncopeptides submitted an application to the FDA for continued expansion of the medical affairs and marketing functions in Europe and the US. Some 80,000 patients are diagnosed every year accelerated approval in triple-class refractory multiple myeloma ahead of the company’s expected launch of PEPAXTO in the US. and 44,000 patients die from the disease annually.* Although pa- patients Operating expenses include costs for share-based incentive pro- tients who are treated for multiple myeloma will have periods with- • In June 2020, the Board appointed Marty J Duvall as CEO. Marty J grams, which are non-cash items, amounting to SEK 68.2 M (37.8). out symptoms, relapses are inevitable, since the disease develops Duvall replaced Jakob Lindberg who served as CEO since the re- The company reported a net loss for the year of SEK 1,594.7 M a resistance to the drugs that are administered. When the disease start of the company in 2011. Jakob Lindberg took over the role as (loss: 740.7), corresponding to negative earnings per share, before reaches its later stages, patients suffer from symptoms including Chief Scientific Officer, CSO. and after dilution, of SEK 25.57 (neg: 14.33). fractures and infections caused by a weakened immune system, • In July 2020, a directed share issue was completed encompassing and side effects of currently available medications. At this stage of 12,295,000 shares at a subscription price of SEK 115 per share. The Cash flow and investments the disease, patient care is focused on prolonging and improving the share issue raised SEK 1,413.9 M before issue costs. Cash flow from operating activities during the year amounted to a quality of life. • In July 2020, Oncopeptides took over a laboratory for drug develop- negative SEK 1,296.5 M (neg: 690.6), primarily due to the expansion of In 2020, the company’s primary focus was to continue the devel- ment in Solna and reinforced its preclinical research capacity. the clinical program and of the medical affairs and marketing func- opment of melflufen. Melflufen has previously undergone both pre- • In August 2020, Oncopeptides started the phase 2 PORT study. tions. Cash flow from investing activities amounted to a negative SEK clinical studies and clinical phase 1 and 2 studies with good results in • In August 2020, the first study with melflufen outside multiple 20.1 M (neg: 2.6), and primarily related to equipment for the new pre- terms of both safety and efficacy on patients with multiple myeloma. myeloma was also started and the first patient in the phase 1/2 AL clinical laboratory facility taken over in Solna in July. Cash flow from Based on these results, the next logical step was to further develop amyloidosis study ASCENT was enrolled. financing activities amounted to SEK 1,323.5 M (1,236.3). In May 2020, melflufen that is currently being tested in the ongoing phase 3 stud- • In August 2020, the FDA granted priority review of melflufen for pa- a decision was taken to conduct a directed share issue in two steps, ies OCEAN and LIGHTHOUSE. tients with triple-class refractory multiple myeloma. in May 2020 and in July 2020, which raised SEK 1,413.9 M before issue The aim of the melflufen clinical development program is to • In September 2020, Oncopeptides completed the extended enroll- costs of SEK 85.2 M.Total cash flow for the year amounted to SEK 6.8 demonstrate improved treatment outcomes in comparison with ment for the pivotal phase 3 OCEAN study in relapsed refractory M (543.1). other established alternatives for the treatment of patients suffering multiple myeloma – 495 patients were included. from multiple myeloma. Melflufen could potentially provide physi- • In October 2020, Oncopeptides entered into a loan agreement of Financial position cians with a new treatment option for patients suffering from this EUR 40 M with the European Investment Bank (EIB). At December 31, 2020, the company’s cash and cash equivalents difficult-to-treat disease. In February 2021, the U.S. Food and Drug • In December 2020, Oncopeptides presented new data from the amounted to SEK 840.3 M (926.2), and equity to SEK 576.9 M (797.0). Administration, FDA, granted PEPAXTO (melphalan flufenamide, also phase 2 ANCHOR combination study in multiple myeloma at the In October 2020, Oncopeptides entered into a loan agreement with

ONCOPEPTIDES | ANNUAL REPORT 2020 43 (90) Directors’ Report

Multi-year summary, Group Effects of COVID-19 A decision was taken in March to apply a temporary pause to patient recruitment in a few of the company’s ongoing exploratory clinical studies and starts were deferred for a few studies. SEK thousand 2020 2019 2018 2017 2016 Patient recruitment resumed in May for those studies that had Net sales – – – – – been paused. Otherwise, COVID-19 had no direct impact on the com- Operating loss -1,591,279 -739,392 -410,963 -306,731 -114,482 pany’s accounts. Loss before tax -1,592,442 -739,920 -410,965 -306,731 -114,446 Parent Company Loss after tax -1,594,693 -740,705 -411,112 -306,731 -114,446 The Group’s Parent Company is Oncopeptides AB. Since the opera- Earnings per share before and after dilution (SEK) -25.57 -14.33 -9.58 -7.96 -4.88 tions of the Parent Company are consistent with those of the Group Cash flow from operating activities -1,296,509 -690,566 -333,727 -271,497 -104,262 in all material respects, the comments for the Group are also largely relevant for the Parent Company. Equity 576,897 797,013 265,004 358,894 26,337 Cash and cash equivalents at the end of the period 840,255 926,186 375,617 404,050 40,251 OTHER INFORMATION Environment Oncopeptides works proactively to reduce the company’s negative the European Investment Bank (EIB). This provides Oncopeptides “Board LTIP 2018.2” was implemented, and at the 2019 AGM, it was environmental impact and to develop as a sustainable company. with access to an unsecured loan facility of up to EUR 40 M. The resolved that two new incentive programs were to be introduced: Since the company does not have any sales, its products do not loan facility is divided into three tranches, each with a maturity of up “Co-worker LTIP 2019” and “Board LTIP 2019”. At the 2020 AGM, a res- have any environmental impact. Oncopeptides’ areas of environmen- to five years. These will become available provided that the com- olution was passed to introduce the program “Board LTIP 2020”, and tal impact pertain instead to the purchase of goods and services, en- pany reaches certain milestones related to the commercialization of at the EGM in December 2020 AGM, it was resolved to introduce the ergy consumption and transportation. The company’s objective is to melflufen in the US and the EU, respectively. If the company utilizes program “US Co-worker LTIP 2020”. contribute to sustainable development, and it thus works proactively the facility, the EIB will be entitled to a predetermined number of For information about these programs, refer to Note 27 on pages to improve its environmental performance insofar as this is econom- warrants in Oncopeptides, in excess of interest on the loan amount. 67–70. ically feasible. The warrants are divided into three tranches and assuming full draw- In 2020, 668,885 share awards and 775,572 options were allotted. down under the loan facility, the EIB will be entitled to warrants cor- A total of 3,944 share rights were withdrawn and 21,266 share awards Share capital and ownership structure responding to 0.7 percent of the total number of shares in the com- exercised. Options corresponding to 200,700 shares were exercised Oncopeptides’ share capital totaled SEK 7,548,857, distributed among pany on a fully diluted basis. To date, the loan facility is unutilized. and options corresponding to 382,670 shares have lapsed. Allotted 67,939,715 shares with a quotient value of about SEK 0.11. Pledged assets at the end of period amounted to SEK 13.1 M (0.9). options and share awards at December 31, 2020 corresponded to a The overall number of shares outstanding at December 31, 2020 total of 3,406,054 shares. was 67,939,715 ordinary shares with one vote each. Share-based incentive programs The cost for the share-based incentive programs was SEK 68.2 M At December 31, 2020, HealthCap VI LP and Stiftelsen The purpose of share-based incentive programs is to promote the (37.8), of which SEK 29.5 M (5.9) comprised provisions and payments Industrifonden were the single largest shareholders in Oncopeptides, company’s long-term interests by motivating and rewarding the for social security contributions and SEK 38.7 M (31.9) comprised with a total of 11,322,400 and 7,420,805 shares, respectively, corre- company’s senior management, Board members, founders and other costs for share-based payments. These costs had no impact on cash sponding to 16.7 percent and 10.9 percent of the votes and capital. co-workers. flow. The company has issued warrants that are used to cover social Oncopeptides currently has nine active programs encompass- security contributions arising from the exercise of granted employee Co-workers ing management, certain Board members, founders and employees. options. Oncopeptides’ organization comprises co-workers (employees and “Employee Option Program 2016/2023” was introduced in 2016. The consultants) with key skills in pharmaceutical development, who col- incentive program “Co-worker LTIP 2017” was introduced in 2017. At lectively cover all aspects relevant to the development and commer- the 2018 AGM, two incentive programs were introduced: “Co-worker cialization of melflufen. At year-end, the total number of co-workers LTIP 2018” and “Board LTIP 2018”. At an EGM in December 2018, was 280 (88). The average number of employees during the year was 182 (39).

ONCOPEPTIDES | ANNUAL REPORT 2020 44 (90) Directors’ Report

The Board’s proposals for guidelines for remuneration to of 200 percent for the CEO and a target-based variable remunera- Criteria for awarding variable cash remuneration, etc. senior management tion of between 25 and 50 percent for other senior management with The variable cash remuneration shall be linked to predetermined and The CEO and the other members of senior management fall within capped at a maximum of 1.5 times the target-based remuneration. measurable criteria which can be financial or non-financial. They may the provisions of these guidelines The guidelines are forward-looking, For the CEO, provisions will take place in the 401k pension plan be individualized, quantitative or qualitative objectives. The crite- i.e. they are applicable to remuneration agreed, and amendments to subject to a cap of not more than USD 26,500. For other members of ria shall be designed so as to contribute to the company’s business remuneration already agreed, after adoption of the guidelines by the senior management employed in Sweden, pension benefits, includ- strategy and long-term interests, including its sustainability, by for AGM 2021. The guidelines do not apply to any remuneration decided ing health insurance, should be defined-contribution. Variable cash example being clearly linked to the business strategy or promote the or approved by the general meeting. remuneration is not pensionable. The pension premium for defined executive’s long-term development. contribution pensions is based on the individual’s age and fixed cash To which extent the criteria for awarding variable cash remuneration The guidelines’ promotion of the company’s business strategy, renumeration and shall amount to not more than 24 percent of the has been satisfied shall be determined when the measurement period long-term interests and sustainability fixed annual cash salary. has ended. The Remuneration Committee is responsible for the evalu- Oncopeptides is a global biotech company focused on the devel- Other benefits may include, for example, life insurance, medical ation so far as it concerns variable remuneration to the CEO. For vari- opment of targeted therapies for difficult-to-treat hematological insurance (Sw:sjukvårdsförsäkring) and company cars. Such benefits able cash remuneration to other executives, the CEO is responsible for diseases. Oncopeptides conducts operations from the head office may amount to not more than two percent of the fixed annual cash the evaluation. For financial objectives, the evaluation shall be based in Stockholm, Sweden and its offices in Boston, Massachusetts and salary. on the latest financial information made public by the company. Mountain View, California, USA. The pension commitments for other members of senior manage- A prerequisite for the successful implementation of the compa- ment outside Sweden are to follow the market-based terms of their Salary and employment conditions for employees ny’s business strategy and safeguarding of its long-term interests, respective countries. In the preparation of the Board of Directors’ proposal for these remu- including its sustainability, is that the company is able to recruit For employments governed by rules other than Swedish, pension neration guidelines, salary and employment conditions for employees and retain qualified personnel. To this end, it is necessary that the benefits and other benefits may be duly adjusted for compliance with of the company have been taken into account by including informa- company offers competitive remuneration. These guidelines enable mandatory rules or established local practice, taking into account, to tion on the employees’ total income, the components of the remu- the company to offer the members of senior management a compet- the extent possible, the overall purpose of these guidelines. neration and increase and growth rate over time, in the Remuneration itive total remuneration. Long-term share-based incentive programs Committee’s and the Board of Directors’ basis of decision when have been implemented in the company. Such programs have been Termination of employment evaluating whether the guidelines and the limitations set out herein resolved by the general meeting and are therefore excluded from The notice period may not exceed twelve months if notice of ter- are reasonable. these guidelines. The programs encompass management, Board mination of employment is given by the company. Fixed cash salary members, founders and other personnel. For more information about during the period of notice and severance pay may together not The decision-making process to determine, review and implement these programs, including the criteria determining outcomes, refer exceed an amount equivalent to the CEO’s fixed cash salary for two the guidelines to the Corporate governance report on pages 51–52. Variable cash years, and one year for other senior management. The notice period The Board of Directors has established a Remuneration Committee. remuneration covered by these guidelines shall aim at promoting the may not exceed six months without any right to severance pay when The committee’s tasks include preparing the Board of Director’s company’s business strategy and long-term interests, including its termination is made by the executive. decision to propose guidelines for executive remuneration. The sustainability. Additionally, remuneration may be paid for non-compete under- Remuneration Committee has, with the help of external consultant takings. Such remuneration shall compensate for loss of income Deloitte, carried out a comparative analysis of levels of remuneration Forms of remuneration etc. and shall only be paid in so far as the previously employed executive and components thereof for individuals who are a part of executive The remuneration shall be on market terms and may consist of the is not entitled to severance pay. The remuneration shall be based management. following components: fixed cash salary, variable cash remuneration, on the fixed cash salary at the time of termination of employment, The Board of Directors shall prepare a proposal for new guidelines pension benefits and other benefits. Additionally, the general meet- unless otherwise provided by mandatory collective agreement pro- at least every fourth year and submit it to the AGM. The guidelines ing may – irrespective of these guidelines – resolve on, among other visions, and be paid during the time the non-compete undertaking shall be in force until new guidelines are adopted by the general things, share-related or share price-related remuneration. applies, however not for more than 12 months following termination meeting. The Remuneration Committee shall also monitor and eval- The satisfaction of criteria for awarding variable cash remunera- of employment. uate programs for variable remuneration for the executive manage- tion shall be measured over a period of one year. The variable cash ment, the application of the guidelines for executive remuneration as remuneration consists of a target-based variable remuneration of 50 well as the current remuneration structures and compensation levels percent of the fixed annual cash salary with capped at a maximum in the company.

ONCOPEPTIDES | ANNUAL REPORT 2020 45 (90) Directors’ Report

The members of the Remuneration Committee are independent of shares at a subscription price of SEK 158 per share, which means that diseases is dependent on the confirmation of positive results from the company and its executive management. The CEO and the other Oncopeptides will receive gross proceeds of approximately SEK 1,106 the clinical studies. A setback in the development of melflufen in the members of the executive management do not participate in the M (approximately USD 130 M) before issue costs. form of, for example, delays, rejections, inconclusive or insufficient Board of Directors’ processing of and resolutions regarding remuner- In April 2021, Oncopeptides submitted an application to the data from clinical studies or if sales of the approved indication are ation-related matters in so far as they are affected by such matters. European Medicines Agency, EMA, for conditional marketing authori- lower than anticipated could adversely impact the company’s opera- zation of melflufen (melphalan flufenamide) in the EU. tions, financial position and earnings. Derogation from the guidelines The Board of Directors may temporarily resolve to derogate from RISKS Reliance on key individuals the guidelines, in whole or in part, if in a specific case there is spe- Oncopeptides’ operations are impacted by a number of factors Oncopeptides is reliant on several key individuals in a range of fields. cial cause for the derogation and a derogation is necessary to serve whose effects on the company’s earnings and financial position are, The ability to recruit and retain qualified co-workers is of material the company’s long-term interests, including its sustainability, or in certain respects, entirely or partly beyond the company’s control. importance to ensure the level of expertise in the company. to ensure the company’s financial viability. As set out above, the When evaluating the company’s future performance, it is important Remuneration Committee’s tasks include preparing the Board of to factor in these risks alongside its potential earnings growth. Regulatory approval Directors’ resolutions in remuneration-related matters. The following is a description of significant risks and uncertainties Oncopeptides is exposed to regulatory decisions such as the permits (not in order of priority) deemed to be most critical to the company’s required to commercialize pharmaceuticals and regulatory changes Description of material changes to the guidelines and how the future development. with regard to pricing, reimbursement and discounting of pharmaceu- shareholders’ have been taken into consideration ticals, or altered conditions for prescribing a particular pharmaceuti- During 2020, a new CEO has been employed whose variable remu- Clinical studies cal product. neration has been set above the 50 percent level resolved upon by Prior to launching a product candidate in the market, Oncopeptides the AGM. The reason for the deviation from the guidelines was to at- must carry out preclinical and clinical studies to document and Production tract suitable candidates in an international environment on market prove that the product gives rise to significant efficacy and has an Since Oncopeptides has no proprietary production facilities, the terms. For 2021, it is proposed that variable remuneration consist of acceptable safety profile. Oncopeptides is unable to predict with company is dependent on sub-suppliers for the production of phar- a target-based variable remuneration up to 50 percent of the fixed any certainty when planned clinical studies can be started or when maceuticals. Substances and products must be produced in suffi- annual salary with a maximum of 200 percent for the CEO and a ongoing studies can be completed since these are circumstances cient quantities and be of adequate quality. Although none of the target-based variable remuneration of between 25 and 50 percent that are affected by numerous factors that are beyond Oncopeptides’ company’s current manufacturers are sufficiently important to be for the other members of senior management with a maximum of 1.5 direct control, for example, regulatory approval, ethical review, ac- considered indispensable, the company is dependent on them, since times the target-based variable remuneration. cess to patients and clinical study units, and the implementation of switching manufacturers could be costly and time consuming. There For information about the guidelines applicable until the 2021 AGM, the clinical study at the study unit. It is also difficult to accurately is a risk the company may not find suitable manufacturers who offer refer to the Corporate governance report on pages 50–51. predict the costs associated with clinical studies. The actual costs the same quality and quantity at terms and conditions that are ac- for carrying out a study may significantly exceed the estimated and ceptable to the company. Events after the end of the fiscal year budgeted costs. Clinical studies may also give rise to results that do PEPAXTO® (melphalan flufenamidem also known as melflufen), in not confirm the intended treatment efficacy or an acceptable safety Product liability combination with dexamethasone, was granted accelerated approval profile due to undesirable side effects or an unfavorable risk-benefit With respect to the nature of Oncopeptides’ operations, it is relevant by the FDA on February 26 for the treatment of adult patients with assessment of the product. to consider its product liability, which arises from the company’s relapsed or refractory multiple myeloma who have received at least product development and commercialization. Given the nature and four prior lines of therapy and whose disease is refractory to at least Dependence on a specific product scope of the operations, the company’s management is of the opinion one proteasome inhibitor, one immunomodulatory agent, and one At present, the company is primarily focusing on the development that Oncopeptides’ current insurance coverage is adequate. However, CD38-directed monoclonal antibody. of its leading product candidate, melflufen, which has been granted the company will need to review its insurance coverage for each Oncopeptides commenced marketing of PEPAXTO immediately to conditional market approval under the product name PEPAXTO in planned clinical study, and it is highly probable that for every future healthcare personnel in the US. the US but has yet to be granted approval in any other market. The planned study, the extent of insurance coverage and payout amounts In March 2021, the Board of Directors of Oncopeptides, based on company has invested considerable resources in the development will be subject to limitations. Accordingly, there are no guarantees the issue authorization granted by the annual general meeting on of melflufen, and expanding the use of melflufen in the chain of that Oncopeptides’ insurance coverage will be adequate to fully cover May 26, 2020, resolved on a directed share issue of 7,000,000 new treatment for myeloma in new geographical locations and for other any future regulatory requirements, which could adversely impact Oncopeptides’ operations and earnings. ONCOPEPTIDES | ANNUAL REPORT 2020 46 (90) Directors’ Report

Competition ans commercialization Proposed appropriation of profits for the 2020 fiscal year Oncopeptides’ competitors include international pharmaceutical companies and biotech companies. Some competitors have substan- The following amounts are at the disposal of the AGM (SEK): tial financial, technical and staffing resources as well as considerable Share premium reserve 3,822,968,120 manufacturing, distribution, sales and marketing capacities. There is also a risk that Oncopeptides’ products may be subject to competi- Retained earnings -1,671,577,555 tion from entirely new product concepts that provide greater added Loss for the year -1,599,619,728 value to patients. In addition, the commercialization of pharma- 551,770,837 ceutical products is dependent on a number of operational factors such as promotional effectiveness so there is a risk that the product uptake does not reach expected levels even if the product profile is The Board of Directors proposes that SEK 551,770,837 be competitive. carried forward.

Currency risks The company’s reporting and functional currency is SEK. The company’s development costs for melflufen are mainly in USD and EUR. Therefore, the company is exposed to exchange-rate risks with respect to payment flows within and beyond Sweden and the euro- zone, such as fluctuations where the exchange rate in effect when payment is due deviates from the contractually agreed amount at the time of agreement. In accordance with the company’s policy for financial risk, the company exchanges cash into USD and EUR at a level of 70 to 100 percent of the expected cash flow in each currency.

Financing risk Pharmaceutical development is normally capital-intensive, and Oncopeptides’ planned clinical studies and development projects en- tail significant expenses. The company is thus dependent on its continued capacity to acquire sufficient capital. Any delays with respect to clinical studies, or a slower increase in the pace of sales than expected, could result in cash flow being generated later than planned. Future capital requirements could also be contingent upon the company’s ability to achieve partnerships/co-financing. Oncopeptides will need to acquire additional capital moving forward, depending on the amount of income that can be successfully generated in relation these costs. The company’s ability to acquire additional capital, achieve partnerships or obtain other co-financing cannot be guaranteed. This could cause a temporary suspension of development or force Oncopeptides to conduct its operations at a less than optimal rate, which could result in delayed or failed commercialization and income.

1) NCI SEER (https://seer.cancer.gov/) and WHO Globocan (https://gco.iarc.fr/)

ONCOPEPTIDES | ANNUAL REPORT 2020 47 (90) Corporate Governance Report

INTRODUCTION December 31, 2020, HealthCap VI LP and Stiftelsen Industrifonden Wennborg, Jarl Ulf Jungnelius, Per Samuelsson and Jennifer Oncopeptides is a Swedish public limited liability company with its were the single largest shareholders in Oncopeptides, with a total of Jackson were re-elected as Board members. Per Wold-Olsen was registered office in Stockholm, Sweden. The company's share has 11,322,400 and 7,420,805 shares, respectively, corresponding to 16.7 re-elected as Chairman of the Board. been listed on Nasdaq Stockholm since February 22, 2017 and is percent and 10.9 percent of the votes and capital. No shareholder • Ernst & Young AB was elected as the company’s auditor, with Björn traded under the ticker symbol ONCO. In addition to the rules laid other than HealthCap VI LP and Stiftelsen Industrifonden has a direct Olsson as auditor in charge. down by law or other regulations, Oncopeptides applies the Swedish or indirect shareholding that represents at least one-tenth of the • Remuneration to the Chairman of the Board and Board members Corporate Governance Code (the “Code”) with no exceptions. This voting rights of all shares in the company. Further information about elected by the AGM, and the auditor report pertains to the 2020 fiscal year and has been reviewed by the shareholders and the Oncopeptides share is available on pages 36-37. • Adoption of the proposed guidelines for remuneration to senior company’s auditors. The Articles of Association do not have any specific provisions management. regarding the appointment or dismissal of Board members or about • Implementation of one performance-based incentive program for Oncopeptides’ corporate governance amending the Articles. certain Board members The purpose of Oncopeptides’ corporate governance is to create a • Decision to issue warrants to secure the delivery of shares for the clear allocation of roles and responsibilities among the owners, the General meetings of shareholders incentive program Board of Directors and management. Corporate governance, man- The company’s highest decision-making body is the general meeting, • The AGM resolved in accordance with the Board’s proposals for agement and control of Oncopeptides are allotted among the general where shareholders may exercise their right to decide on the compa- guidelines for remuneration to members of senior management meeting, the Board of Directors, its elected committees and the CEO. ny’s affairs. The AGM is to be held within six (6) months of the end of • Authorization for the Board of Directors to resolve on new share the financial year. The AGM resolves, for example, on the election of issues with or without preferential rights for shareholders. The Examples of external regulations that affect corporate governance the Board of Directors and, where appropriate, the auditors as well authorization may be exercised on one or more occasions up until • The Swedish Companies Act as the principles for the appointment of the Nomination Committee, the 2021 AGM and the number of shares issued under the authori- • Regulatory framework for external statements and discharge from liability for the Board of Directors and the CEO zation may not, after full exercise of the authorization, correspond • Nasdaq Stockholm’s Rule Book for Issuers for the preceding year. Other issues to be resolved include the adop- to a dilution of more than 20 percent of the total number of shares • Swedish Corporate Governance Code tion of the Annual Report, the appropriation of profit or loss, direc- outstanding at the Annual General Meeting’s resolution on the pro- • Other applicable regulations and recommendations tors’ and auditors’ fees, guidelines for remuneration to the CEO and posed authorization. other members of senior management, and incentive programs for • Adoption of the balance sheet and income statement. Examples of internal regulations that are significant to corporate co-workers. • Discharge from liability for the Board of Directors and the CEO with governance The Articles of Association state that the AGM is to be held in regard to the 2020 fiscal year. • Articles of Association Stockholm. To attend and vote at general meetings, either in person • A new Articles of Association was decided on with only minor ad- • Board of Directors’ rules of procedure, including instructions to or through a proxy, shareholders must be registered in the share justments concerning notification to the AGM. Board committees register maintained by Euroclear no later than five (5) business days • Instructions for the CEO prior to the meeting and notify the company of their participation in The minutes and information from the AGM are available at • Guidelines for remuneration to senior management accordance with the notice convening the meeting. Official notice oncopeptides.com. • IT policy of general meetings is to be made in the form of an announcement • Financial manual in Post- och Inrikes Tidningar and on the company’s website (www. Nomination Committee for the 2021 AGM • Code of Conduct oncopeptides.se). Information regarding the notice shall also be ad- • Information policy vertised in Dagens Industri. Representatives Shareholders • Insider policy Staffan Lindstrand, Chairman HealthCap VI L.P. 2020 AGM Patrik Sobocki Stiftelsen Industrifonden Shareholders and the share • The AGM for 2020 was held on May 26, 2020 in Stockholm. About Oncopeptides had 16,570 shareholders at year-end 2020. The total 71 percent of the total votes were represented at the meeting. Ulrik Grönvall Swedbank Robur Funds number of shares was 67,939,715. There was only one share class. Attorney Johan Winnerblad was elected Chairman of the Meeting. Per Wold-Olsen Chairman of the Board of Oncopeptides AB Each share entitles the holder to one vote at the AGM, and all • The AGM passed resolutions including the following: shares carry equal rights to the company’s assets and earnings. At • Per Wold-Olsen, Brian Stuglik, Jonas Brambeck, Cecilia Daun

ONCOPEPTIDES | ANNUAL REPORT 2020 48 (90) Corporate Governance Report 2020 EGM in relation to the company and its management. Five of the Board In 2020, an anonymous survey-based evaluation was performed, The EGM on December 4, 2020 passed the following resolutions: members, together with the Chairman of the Board, are also con- through which all the Board members received the opportunity to • Implementation of one long-term performance-based incentive sidered independent in relation to major shareholders. Accordingly, express themselves about the work of the Board of the company. program for the company’s employees in the US. Oncopeptides fulfills the Code’s requirement with regard to This information has been collected and compiled in a report pre- • Decision to issue warrants to secure the delivery of shares in the independence. pared by the solicitor firm Vinge, as an independent party. The results incentive program. At the end of the fiscal year, Oncopeptides’ Board of Directors will be taken into consideration for the Board’s work in 2020. The comprised eight Board members: Chairman of the Board Per Wold- Nomination Committee, through the Chairman of the Board, has re- 2021 AGM Olsen and Board members Jonas Brambeck, Cecilia Daun Wennborg, ceived the evaluation report. The 2021 AGM will be held on Wednesday, May 26, 2021. Due to the Ulf Jungnelius, Per Samuelsson, Brian Stuglik and Jennifer Jackson. extraordinary situation resulting from the covid-19 pandemic, the For further information about the Board of Directors, see pages Board of Directors’ work and significant events in 2020 AGM will be carried out through advance voting (postal voting) pur- 86-87 or visit www.oncopeptides.com. The Board met on 20 occasions during the year, seven of which were suant to temporary legislation. No meeting with the possibility to held per capsulam. attend in person or to be represented by a proxy will take place. The Responsibility and duties of the Board of Directors The Board has primarily considered and made decisions on matters minutes of the AGM will be available at www.oncopeptides.com. After the general meeting, the Board of Directors is the compa- relating to the company’s strategic focus, melflufen project develop- ny’s highest decision-making body. The Board of Directors is to be ment, external reporting, budget and budget follow-up. The Board has Nomination Committee responsible for the organization and management of the company’s also been active in preparations and decisions on new share issues. The Nomination Committee represents the company’s shareholders affairs, for example, by establishing targets and strategies, ensuring and is charged with preparing the AGM’s resolutions on election and that procedures and systems are in place for monitoring set targets, Board committees remuneration matters. The Nomination Committee consists of four continuously assessing the company’s financial position and evaluat- The Board of Directors has set up two committees, the Audit members, three of whom are to represent the three largest share- ing its operational management. Committee and the Remuneration Committee, which both work ac- holders in the company on the last business day in September 2020, Furthermore, the Board of Directors is responsible for ensuring cording to procedures established by the Board. according to statistics from Euroclear Sweden AB. If any of the three that correct information is given to the company’s stakeholders, that largest shareholders chooses to waive their right to appoint a mem- the company complies with laws and regulations and that the com- Audit Committee ber of the Nomination Committee, this right passes to the share- pany prepares and implements internal policies and ethical guide- The Audit Committee’s role is primarily to monitor the company’s holder with the next largest shareholding after these shareholders. lines. The Board of Directors also appoints the company’s CEO and financial position, ensure the effectiveness of the company’s internal The fourth person is to be the Chairman of the Board of Directors. determines his or her salary and other remuneration on the basis of control, risk management and IT function. In addition, the committee The composition of the Nomination Committee is to be publicly an- the guidelines adopted by the general meeting. must ensure that the correct skills, processes and system support is nounced no later than six months prior to the AGM. The Board of Directors adheres to written rules of procedure which available in the economical function. The committee is to also remain The Nomination Committee observes the rules governing the in- are reviewed annually and adopted at the statutory Board meeting. informed about the audit of the Annual Report and consolidated finan- dependence of Board members according to the Swedish Corporate The rules of procedure govern, among other things, the practices and cial statements, and to review and monitor the auditor’s impartiality Governance Code. tasks of the Board of Directors, decision-making within the company, and independence. The Audit Committee also assists the Nomination The Nomination Committee jointly represents approximately 34 the Board’s meeting agenda, the Chairman’s duties and the alloca- Committee in preparing proposals for resolution on the election and percent of the number of shares and votes in the company based on tion of responsibilities between the Board of Directors and the CEO. remuneration of the auditors. The Audit Committee continues to con- shareholder information at the time of appointment. Instructions for financial reporting and instructions for the CEO are sist of the following members since the AGM on May 26, 2020: also determined in connection with the statutory Board meeting. • Cecilia Daun Wennborg (Chairperson) BOARD OF DIRECTORS The Board of Directors’ work is also carried out based on a yearly • Jonas Brambeck Composition and independence meeting schedule that fulfills the Board’s need for information. In • Per Samuelsson According to Oncopeptides’ Articles of Association, the Board of addition to Board meetings, the Chairman and the CEO maintain an • Per Wold-Olsen Directors is to consist of no fewer than three and no more than eight ongoing dialogue regarding the management of the company. members elected by the AGM for the term until the end of the next The Board of Directors meets according to a predetermined annual The committee was convened five times in 2020. Oncopeptides’ AGM. Seven Board members were elected at the 2020 AGM. schedule and at least five ordinary Board meetings are to be held be- auditors participated in four of these meetings, at which the topics According to the Code, the majority of the Board members elected tween each AGM. In addition to these meetings, extra meetings can discussed included the auditors’ planning of the audit, observations by the general meeting are to be independent of the company and be arranged to address matters which cannot be deferred to any of and examination of the company and its financial statements. The its management. All Board members are considered independent the scheduled meetings. fifth meeting concerned financing.

ONCOPEPTIDES | ANNUAL REPORT 2020 49 (90) Corporate Governance Report Remuneration Committee Board of Directors and the instructions for the CEO stipulate which As remuneration for committee work, it was resolved that the The Remuneration Committee’s role is primarily to prepare matters matters the Board is to resolve upon, and which matters fall within Chairman of the Audit Committee would receive SEK 75,000 and for recommendation to the Board regarding remuneration and other the CEO’s area of responsibility. Furthermore, the CEO is responsible other members of the Audit Committee SEK 25,000 each. It was also terms of employment for the CEO and CFO and to review with the for preparing reports and necessary information for decision-mak- resolved that the Chairman of the Remuneration Committee would CEO the plans for remuneration for other members of senior man- ing prior to Board meetings and presenting the material at Board receive SEK 50,000 while the other members of the Remuneration agement. The Remuneration Committee also formulates the remu- meetings. Committee would receive SEK 25,000 each. neration report and the CEO’s bonus plan, and monitors ongoing and Oncopeptides’ management team consisted, as per December The fees determined in 2020 to Board members elected by the completed programs for variable remuneration to the company’s 31, 2020 of eleven individuals. In addition to the CEO, management AGM are shown in the table below. management as well as monitors and evaluates the implementation comprises the company’s Chief Financial Officer, Chief Scientific of the guidelines for remuneration to senior management adopted Officer, Chief Operating Officer, Head of Regulatory Affairs, Head of Remuneration to members of senior management by the AGM. Following the AGM on May 26, 2020, the Remuneration Research & CMC, Chief Commercial Officer, Global Head of Corporate Issues pertaining to remuneration to members of senior management Committee consists of the following members: Communications, General Counsel, Chief Medical Officer and General are addressed by the Board’s Remuneration Committee. The Board • Per Wold-Olsen (Chairman) Manager US Business Unit. decides on the CEO’s remuneration based on the proposal presented • Jonas Brambeck For information on the management team, see pages 88-89 or visit by the Remuneration Committee. Remuneration and terms for mem- • Per Samuelsson the company’s website, www.oncopeptides.com. bers of senior management are to be based on market conditions and consist of a balanced mix of fixed salary, variable remuneration, pen- The Remuneration Committee was convened nine times in 2020. At REMUNERATION TO THE BOARD OF DIRECTORS sion benefits and terms upon termination. For the 2020 fiscal year, these meetings, the committee discussed the company’s existing AND MEMBERS OF SENIOR MANAGEMENT the CEO and other members of senior management received salary remuneration systems and proposed guidelines for the remuneration Remuneration to Board members and other remuneration as set out in Note 10 in the Annual Report. of the CEO and members of senior management as well as the aims, The AGM on May 26, 2020 resolved that fees to Board members for terms and conditions of the incentive programs adopted by the AGM the period up to and including the end of the 2021 AGM should com- Guidelines for remuneration to senior management on May 26, 2020. prise SEK 625,000 to the Chairman of the Board and SEK 250,000 Guidelines were adopted at the 2020 AGM valid for the period up to to each of the other Board members. In addition to fees for regular the closing of the 2021 AGM. The main points were as follows. CEO AND MANAGEMENT Board work, it was resolved that each Board member residing in the Oncopeptides’ starting point is that salary and other terms and The role of the CEO is subordinate to the Board of Directors. The US should receive an extra fee of SEK 90,000 and that each Board conditions should always enable Oncopeptides to attract and retain CEO’s main task is to carry out the company’s ongoing management member residing in Europe outside the Nordic region should receive qualified members of senior management at a reasonable cost for and the daily activities of the company. The rules of procedure for the an extra fee of SEK 45,000. the company. Remuneration to members of senior management is to

Reporting period January 1–December 31, 2020 Independent in relation to Remuneration, SEK thousand3 Attendance1 The company and its Major Audit Remuneration Board of Audit Remuneration Board member Function management shareholders Board fees Committee Committee Total Directors2 Committee Committee2 Per Wold-Olsen Chairman Yes Yes 670 25 50 745 13/13 5/5 9/9 Jonas Brambeck Board member Yes No 250 25 25 300 13/13 5/5 9/9 Cecilia Daun Wennborg Board member Yes Yes 250 75 – 325 13/13 5/5 – Per Samuelsson Board member Yes No 250 25 25 300 13/13 5/5 9/9 Ulf Jungnelius Board member Yes Yes 295 – – 295 13/13 – – 1) Figures in table show the total number of meetings attended/total number of Brian Stuglik Board member Yes Yes 340 – – 340 13/13 – meetings. 2) Excluding per capsulam meetings. Jennifer Jackson Board member Yes Yes 340 – – 340 13/13 – – 3) Fee set by the AGM, excluding social security contributions for the May 2020 Total 2,395 150 100 2,645 to May 2021 fiscal year.

ONCOPEPTIDES | ANNUAL REPORT 2020 50 (90) Corporate Governance Report be decided in accordance with Oncopeptides’ remuneration policy, It is the general meeting that resolves upon such incentive pro- equivalent to the weighted average price that the company’s shares which is adopted annually by the Board and comprises a supplement grams. Incentive programs are to promote long-term value growth were traded for on Nasdaq Stockholm during the five trading days to the guidelines. and align the interests of participating members of senior manage- preceding the allotment date. Remuneration to members of senior management consists of a ment with those of the shareholders. fixed salary, variable remuneration, pension and other benefits. To New share issues and transfers of securities resolved upon by the Co-worker LTIP 2018 avoid unnecessary risks being taken by members of Oncopeptides’ general meeting in accordance with the rules of Chapter 16 of the The options were allotted free of charge to participants of the pro- senior management, there should be a fundamental balance between Swedish Companies Act are not covered by the guidelines insofar as gram. The options have a three-year vesting period calculated from fixed and variable remuneration. Furthermore, Oncopeptides’ AGM the AGM has taken, or will take, such decisions. the allotment date, provided that, with customary exceptions, the may, if so ordered, offer long-term incentive programs, such as share participants remain as employees of, or continue to provide services or share price-related incentive programs. SHARE-BASED INCENTIVE PROGRAMS to, Oncopeptides. Once the options are vested, they can be exercised Each member of senior management is to be offered a mar- Oncopeptides currently has nine active programs encompassing within a four-year period. ket-level fixed salary based on the degree of difficulty of the work management, certain Board members, founders and employees. Each vested option entitles the holder to acquire one share in the and the individual’s responsibilities, experience and performance. “Employee Option Program 2016/2023” was introduced in 2016. The company at a predetermined price. The price per share is to be equiv- In addition, each member of senior management may, from time to incentive program “Co-worker LTIP 2017” was introduced in 2017. At alent to the weighted average price that the company’s shares were time, be offered variable remuneration (bonus) to be paid in cash. the 2018 AGM, two incentive programs were introduced: “Co-worker traded for on Nasdaq Stockholm during the five trading days preced- Variable remuneration is to be based on clear predetermined and LTIP 2018” and “Board LTIP 2018”. At an EGM in December 2018, ing the allotment date. measurable performance criteria and financial results as well as “Board LTIP 2018.2” was implemented, and at the 2019 AGM, it was predetermined individual objectives and business objectives, and is resolved that two new incentive programs were to be introduced: Co-worker LTIP 2019 to be designed to promote Oncopeptides’ long-term value creation. “Co-worker LTIP 2019” and “Board LTIP 2019”. At the 2020 AGM, a res- The options were allotted free of charge to participants of the pro- Variable remuneration is to be paid in cash and is not to exceed 50 olution was passed to introduce the program “Board LTIP 2020”, and gram. The options have a three-year vesting period calculated from percent of annual fixed salary for the CEO and the interval of 30–50 at the EGM in December 2020, it was resolved to introduce the pro- the allotment date, provided that, with customary exceptions, the percent of annual fixed salary for other members of senior man- gram “US Co-worker LTIP 2020”. A brief description of the programs participants remain as employees of, or continue to provide services agement. Members of senior management are to be offered pension follows below. See Note 27 in the 2020 Annual Report for further to, Oncopeptides. Once the options are vested, they can be exercised terms that are in accordance with market practice in the country information on the incentive programs. within a four-year period. where the individuals are domiciled. Non-monetary benefits are to Each vested option entitles the holder to acquire one share in the facilitate the work of senior management and are to correspond to Employee Option Program 2016/2023 company at a predetermined price. The price per share is to be equiv- what is considered reasonable in relation to market practice. Employee options were allotted free of charge to participants. Allotted alent to the weighted average price that the company’s shares were In 2020, Oncopeptides deviated from the guidelines in the recruit- employee options are vested gradually over a four-year period calcu- traded for on Nasdaq Stockholm during the five trading days preced- ment of a new CEO, whose variable remuneration amounted to more lated from the starting date (aside from 60 options in the series that ing the allotment date. than the level of 50 percent as decided by the general meeting. The vest and are allotted over a period of 12 months). Vesting requires that decision to deviate from the guidelines was made to attract suitable the holder remain employed by the company and that the employment US Co-worker LTIP 2020 candidates in an international environment on market terms and was is not terminated as per the day of vesting of each employee option. The share awards were allotted to participants free of charge and capped at 200 percent. The variable remuneration for the current Each vested option entitles the holder to subscribe for 900 new shares entitle the holder to shares in Oncopeptides. The share awards are CEO amounted to 90.4 percent for 2020. in the company up to and including November 30, 2023 at the latest. subject to performance-based vesting, based on the performance of The fixed salary during the notice period, together with severance Oncopeptides’ share price during the period from the allotment date pay, may not exceed 24 months’ fixed salary. Co-worker LTIP 2017 up to and including the third day calculated from the allotment date. If The Board of Directors is entitled to deviate from the guidelines in The options were allotted free of charge to participants of the pro- Oncopeptides’ share price has then increased by over 60 percent, 100 individual cases should there be special reasons for doing so. Before gram. The options have a three-year vesting period calculated from percent of the share awards will be vested, and if the share price has in- every AGM, the Board of Directors is to consider whether or not ad- the allotment date, provided that, with customary exceptions, the creased by 20 percent, 33 percent of the share awards will be vested. In ditional share or share price-related incentive programs should be participants remain as employees of, or continue to provide services the event of an increase in the share price by 20 to 60 percent, the share proposed to the general meeting. to, Oncopeptides. Once the options are vested, they can be exercised awards will be vested in a linear manner. If the share price increases by within a four-year period. less than 20 percent, there will be no vesting. Each vested share award Each vested option entitles the holder to acquire one share in entitles the holder to obtain one share in Oncopeptides free of charge, the company at a predetermined price. The price per share is to be provided that the holder, is still employed at Oncopeptides on the final

ONCOPEPTIDES | ANNUAL REPORT 2020 51 (90) Corporate Governance Report vesting date. In certain customary exceptional cases, vesting is possible Vested share awards are automatically exercised the day after the price by 20 to 60 percent, the share awards will be vested in a linear even if the participant is no longer employed at Oncopeptides on the final final vesting date. manner. If the share price increases by less than 20 percent, there vesting date. Vested share awards are automatically exercised as soon as will be no vesting. Each time-based and performance-based vested possible after the final vesting date. Board LTIP 2019 share award entitles the holder to obtain one share in Oncopeptides The share awards were allotted to participants free of charge. Share free of charge. Board LTIP 2018 awards are vested over approximately three years until either the Vested share awards are automatically exercised the day after the The share awards were allotted to participants free of charge. Share 2022 AGM or June 1, 2022 (whichever occurs first) with one-third per final vesting date. awards are vested over a three-year period, with one-third per year year during the period from one AGM to the date immediately before The table is a summary of the total number of shares to which during the period from one AGM to the next. The share awards are also the next AGM or the final vesting date. The share awards are also allotted employee options and share awards may entitle the holder at subject to performance-based vesting, based on the performance of subject to performance-based vesting, based on the performance December 31, 2020. Oncopeptides’ share price during the period from the date of the 2018 of Oncopeptides’ share price during the period from the allotment AGM up to and including the date of the 2021 AGM. The share price’s date up to and including the day before the final vesting date. The Number of shares to which granted instruments may performance will be measured as the volume-weighted average price share price’s performance will be measured as the volume-weighted entitle the holder to as per December 31, 2020 of the company’s share 30 trading days immediately after the 2018 AGM average price of the company’s share 10 trading days immediately and 30 trading days immediately before the 2021 AGM. If Oncopeptides’ after the allotment date and 10 trading days immediately before the - Employee Option Program 2016/2023 246,600 share price has then increased by over 60 percent, 100 percent of the final vesting date. If Oncopeptides’ share price has then increased share awards will be vested, and if the share price has increased by 20 by over 60 percent, 100 percent of the share awards will be vested, - Co-worker LTIP 2017 1,353,933 percent, 33 percent of the share awards will be vested. In the event of and if the share price has increased by 20 percent, 33 percent of the - Co-worker LTIP 2018 328,649 an increase in the share price by 20 to 60 percent, the share awards share awards will be vested. In the event of an increase in the share - Co-worker LTIP 2019 166,017 will be vested in a linear manner. If the share price increases by less price by 20 to 60 percent, the share awards will be vested in a linear Total number of shares to which granted employee than 20 percent, there will be no vesting. Each time-based and per- manner. If the share price increases by less than 20 percent, there options may entitle the holder 2,684,001 formance-based vested share award entitles the holder to obtain one will be no vesting. Each time-based and performance-based vested share in Oncopeptides free of charge. share award entitles the holder to obtain one share in Oncopeptides - Board LTIP 2018 30,451 Vested share awards are automatically exercised the day after the free of charge. 2021 AGM. Vested share awards are automatically exercised the day after the - Board LTIP 2018.2 2,170 final vesting date. - Board LTIP 2019 23,491 Board LTIP 2018.2 - Board LTIP 2020 26,931 The share awards were allotted to participants free of charge. Share Board LTIP 2020 awards are vested over a three-year period, with one-third per 12- The share awards were allotted to participants free of charge. Share - US Co-worker LTIP 2020 639,010 month period after the allotment date. The share awards are also awards are vested over approximately three years until either the Total number of shares to which allotted share subject to performance-based vesting, based on the performance of 2023 AGM or June 1, 2023 (whichever occurs first) with one-third per awards may entitle the holder 722,053 Oncopeptides’ share price during the period from the allotment date up year during the period from one AGM to the date immediately before to and including the final vesting date. The share price’s performance the next AGM or the final vesting date. The share awards are also Total number of shares to which granted employee options and share awards may entitle the holder 3,406,054 will be measured as the volume-weighted average price of the compa- subject to performance-based vesting, based on the performance ny’s share 10 trading days immediately after the allotment date and 10 of Oncopeptides’ share price during the period from the allotment trading days immediately before the final vesting date. If Oncopeptides’ date up to and including the day before the final vesting date. The Dilution share price has then increased by over 60 percent, 100 percent of the share price’s performance will be measured as the volume-weighted To ensure the delivery of shares to participants in the company’s share awards will be vested, and if the share price has increased by 20 average price of the company’s share 10 trading days immediately incentive programs as well as to cover social security contributions percent, 33 percent of the share awards will be vested. In the event of after the allotment date and 10 trading days immediately before the when options, share awards and employee options are exercised, the an increase in the share price by 20 to 60 percent, the share awards final vesting date. If Oncopeptides’ share price has then increased Parent Company has issued warrants to its subsidiary Oncopeptides will be vested in a linear manner. If the share price increases by less by over 60 percent, 100 percent of the share awards will be vested, Incentive AB, which entitle holders to subscribe for a total of than 20 percent, there will be no vesting. Each time-based and per- and if the share price has increased by 20 percent, 33 percent of the 5,279,995 shares in the Parent Company. formance-based vested share award entitles the holder to obtain one share awards will be vested. In the event of an increase in the share The full utilization of granted options and share awards as of share in Oncopeptides free of charge. December 31, 2020, corresponding to 3,406,054 shares, would result

ONCOPEPTIDES | ANNUAL REPORT 2020 52 (90) Corporate Governance Report in a dilution for shareholders of 5 percent. The full utilization of all re- applicable laws and regulations are followed, and that the require- and through examination and monitoring of the company’s steering solved warrants corresponding to a total of 5,279,995 shares (including ments imposed on listed companies are complied with. documents related to risk management. The effectiveness of the unallotted employee options and hedging of social security contribu- In addition to the aforementioned internal control, there is also an control activities is assessed annually and the results from these tions) would result in a dilution for shareholders of 7.8 percent. internal, business-specific control of data as regards research and assessments are reported to the Board of Directors and the Audit development as well as quality control including systematic monitor- Committee. In agreements with sub-suppliers, the company has se- EXTERNAL AUDITOR ing and evaluation of the company’s development and manufacturing cured the right to audit each respective sub-supplier’s fulfillment of Oncopeptides’ auditor is the accounting firm Ernst & Young AB (EY), operations and the company’s products. relevant services, including quality aspects. with authorized public accountant Anna Svanberg as auditor in charge. At the 2019 AGM, EY was reelected as the auditor for Control environment Information and communication Oncopeptides, which still applied until the end of 2020. In order to create and maintain a functioning control environment, The company has information and communication channels to pro- The auditor performs a review engagement of the quarterly re- the Board has adopted a number of policies and steering documents mote the accuracy of the financial reporting and to facilitate report- port for the third quarter, and audits the annual and consolidated governing financial reporting. These documents primarily comprise the ing and feedback from the operations to the Board and senior man- financial statements. The auditor also comments on whether this rules of procedure for the Board of Directors, instructions for the CEO agement, for example, by making corporate governance documents, Corporate Governance Report has been prepared and whether cer- and instructions for financial reporting. The Board has also adopted such as internal policies, guidelines and instructions regarding the tain information herein is consistent with the annual and consoli- special authorization procedures and a financial policy. The company financial reporting, available to the co-workers concerned and ensur- dated financial statements. The auditor reports on the results of its also has a financial manual which contains principles, guidelines and ing the co-workers are familiar with them. The Board of Directors has audit of the Annual Report and consolidated financial statements process descriptions for accounting and financial reporting. also adopted an information policy governing Oncopeptides’ disclo- and review of the Corporate Governance Report via the Auditor’s Furthermore, the Audit Committee’s main task is to monitor the sure of information. Report as well as a separate opinion on the compliance with guide- company's financial position and the effectiveness of the company’s in- lines for remuneration to senior management, which the auditor ternal control, internal audit and risk management, to remain informed Monitoring, evaluation and reporting submits to the AGM. In addition, the auditor issues detailed state- about the audit of the Annual Report and consolidated financial state- Compliance with and effectiveness of the internal controls are ments on the audits performed to the Audit Committee two times ments, and to review and monitor the auditor's impartiality and inde- constantly monitored. The CEO ensures that the Board of Directors per year as well as to the Board in its entirety once per year. The pendence. Responsibility for the ongoing work of the internal control continuously receives reports on the development of the company's fees invoiced by the auditor in the last two fiscal years are disclosed over financial reporting has been delegated to the company’s CEO. The activities, including the development of the company’s earnings and in Note 8 on page 66. CEO regularly reports to the Board of Directors in accordance with the financial position, as well as information on important events, such established instructions for the CEO and the instructions for financial as research results and important contracts. The CEO also reports INTERNAL CONTROL AND RISK MANAGEMENT reporting. The Board also receives reports from the company’s auditor. on these matters at each Board meeting. The company’s compli- The Board of Directors’ responsibility for internal control is gov- ance with all relevant steering documents and guidelines is assessed erned by the Swedish Companies Act and the Swedish Corporate Risk assessment annually. The results from these assessments are compiled by the Governance Code. Internal control primarily consists of the following Risk assessment includes identifying risks that may arise if the basic company’s CFO and then reported to the Board of Directors and the five components: control environment, risk assessment, control ac- requirements for the financial reporting of the company are not met. Audit Committee. tivities, information and communication, and monitoring. Oncopeptides’ management team has, in a specific risk assessment The Board deems that the internal controls are effective in all Among other tasks, the Board is responsible for ensuring that document, identified and evaluated the risks that arise in the compa- material respects and, on this basis, has determined that there is no Oncopeptides has sufficient internal control and formalized proce- ny's operations, and has assessed how these risks can be managed. need to establish a special internal-audit function. dures to ensure that established principles for financial reporting and Within the Board of Directors, the Audit Committee is primarily re- internal control are adhered to and that there are appropriate sys- sponsible for continuously assessing the company's risk situation as EXTERNAL AUDIT tems in place to monitor and control the company’s operations and it related to the company’s financial reporting. The Board also con- The company’s auditor is appointed by the AGM for the period until the risks associated with the company and its operations. ducts an annual review of the risk situation. the end of the next AGM. The auditor examines the Annual Report The overall purpose of the internal control is to ensure that the and accounts as well as the Board of Directors’ and the CEO’s ful- company’s operating strategies and targets are monitored and that Control activities fillment of their fiduciary duties and responsibilities. Following each the owners’ investments are protected, to a reasonable degree. Control activities limit identified risks and ensure accurate and re- fiscal year, the auditor submits an Auditor’s Report to the general Furthermore, the internal control is to ensure, with reasonable cer- liable financial reporting. The Board of Directors is responsible for meeting. Each year, the company’s auditor reports his observations tainty, that the external financial reporting is reliable and prepared the internal control and monitoring of the company’s management. from the audit and his assessment of the company’s internal control in accordance with generally accepted accounting principles, that This is done through both internal and external control activities, to the Board of Directors.

ONCOPEPTIDES | ANNUAL REPORT 2020 53 (90) Consolidated statement of comprehensive income

SEK thousand Note 2020 2019

Net sales – – Gross profit – –

Operating expenses Research and development costs 9, 10 -866,214 -548,273 Marketing and distribution costs 9, 10 -456,529 -127,409 Administrative expenses 8, 9, 10 -197,662 -72,046 Other operating income 5 – 8,336 Other operating expenses 6 -70,874 – Operating loss -1,591,279 -739,392

Financial income 11 322 – Financial expenses 11 -1,485 -528 Loss before tax -1,592,442 -739,920 Income tax 12 -2,251 -785 Loss for the year -1,594,693 -740,705

Other comprehensive income Items that may be reclassified to profit or loss Exchange-rate differences from restatement of foreign operations -1,544 -20 Other comprehensive income for the year after tax -1,544 -20 Comprehensive income for the year 23 -1,596,238 -740,725

The loss for the year is fully attributable to Parent Company shareholders.

Earnings per share before and after dilution (SEK) 24 -25.57 -14.33

ONCOPEPTIDES | ANNUAL REPORT 2020 54 (90) Consolidated statement of financial position

SEK thousand Note Dec 31, 2020 Dec 31, 2019 SEK thousand Note Dec 31, 2020 Dec 31, 2019

ASSETS EQUITY AND LIABILITIES Equity 23 Non-current assets 18 Share capital 7,549 6,157 Intangible assets 13 1,830 2,111 Additional paid-in capital 3,919,036 2,544,306 Property, plant and equipment 14 17,273 2,499 Reserves -1,542 2 Right-of-use assets 9 21,057 14,693 Retained earnings (including loss for the year) -3,348,146 -1,753,452 Deferred tax assets 15 8,175 2,262 Total equity attributable to 576,897 797,013 Financial non-current assets 16 3,622 1,035 Parent Company shareholders Total non-current assets 51,957 22,600 LIABILITIES

Current assets 18 Long-term liabilities 18 Inventory 19 8,665 – Provision for social security contributions, incentive programs 27, 28 8,530 23,052 Other current receivables 20 23,229 6,976 Other long-term liabilities 9, 18 6,929 8,243 Prepaid expenses 21 22,650 37,726 Total long-term liabilities 15,459 31,295 Cash and cash equivalents 22 840,255 926,186 Total current assets 894,799 970,888 Current liabilities 18 Provision for social security contributions, incentive programs 27, 28 47,202 10,733

TOTAL ASSETS 946,756 993,488 Trade payables 3, 18 136,135 80,986 Other current liabilities 25 35,045 12,319 Accrued expenses and deferred income 26 136,018 61,142 Total current liabilities 354,400 165,180

Total liabilities 369,859 196,475

TOTAL EQUITY AND LIABILITIES 946,756 993,488

ONCOPEPTIDES | ANNUAL REPORT 2020 55 (90) Consolidated statement of changes in equity Consolidated statement of cash flow Retained earnings SEK thousand Note 2020 2019 Additional Trans- (incl. loss Share paid-in lation for the Total Operating activities SEK thousand Note capital capital reserves period) equity Loss before financial items -1,591,279 -739,392 Opening balance at Jan 1, 2019 4,899 1,272,830 22 -1,012,747 265,004 Adjustment for non-cash items 22 160,906 -8,187 Loss for the year – – – -740,705 -740,705 Interest received 322 – Other comprehensive income for the year – – -20 – -20 Interest paid -1,485 -528 Comprehensive income for the year – – -20 -740,705 -740,725 Tax paid -7,243 -1,158 Cash flow from operating activities before change in working capital -1,438,779 -749,265 Transactions with shareholders New issue of ordinary shares 23 1,085 1,272,340 – – 1,273,425 Change in working capital Increase/decrease in inventory -429 – Cost attributable to new share issue – -76,595 – – -76,595 Increase/decrease in operating receivables -7,747 -29,962 Value of service by participants in the incentive programs 27 – 32,493 – – 32,493 Increase/decrease in trade payables 55,149 55,716 Exercise of warrants under the company’s Increase/decrease in other current operating liabilities 95,297 32,945 incentive program 27 173 43,238 – – 43,411 Total change in working capital 142,270 58,699 Total transactions with shareholders 1,258 1,271,476 – – 1,272,734 Cash flow from operating activities -1,296,509 -690,566 Closing balance at Dec 31, 2019 23 6,157 2,544,306 2 -1,753,452 797,013 Investing activities Investments in intangible fixed assets 13 – -2,111 Opening balance at Jan 1, 2020 6,157 2,544,306 2 -1,753,452 797,013 Investments in property, plant and equipment 14 -17,180 -517 Loss for the year – – -1,594,693 -1,594,693 Repaid deposits 16 184 – Other comprehensive income for the year – – -1,544 – -1,544 Investments in financial non-current assets 16 -3,131 – Comprehensive income for the year – – -1,544 -1,594,693 -1,596,238 Cash flow from investing activities -20,127 -2,628

Cash flow from financing activities Transactions with shareholders New issue of ordinary shares 23 1,413,925 1,273,425 New issue of ordinary shares 23 1,366 1,412,559 – – 1,413,925 Exercise of warrants under the Cost attributable to new share issue – -85,231 – – -85,231 company’s incentive program 9,027 43,411 Value of service by participants in the Cost attributable to new share issue -85,231 -76,595 incentive programs 27 – 38,398 – – 38,398 Repayment of lease liabilities -14,260 -3,956 Exercise of warrants under the company’s Cash flow from financing activities 1,323,461 1,236,285 incentive program 27 26 9,004 – – 9,030 Cash flow for the period 6,825 543,091 Total transactions with shareholders 1,392 1,374,730 – – 1,376,122 Closing balance at Dec 31, 2020 23 7,549 3,919,036 -1,542 -3,348,145 576,897 Cash and cash equivalents at beginning of period 926,186 375,617 Change in cash and cash equivalents 6,825 543,091 Equity is fully attributable to Parent Company shareholders. Foreign exchange difference in cash and cash equivalents -92,756 7,478 Cash and cash equivalents at end of year 22 840,255 926,186

ONCOPEPTIDES | ANNUAL REPORT 2020 56 (90) Parent Company income statement Parent Company statement of comprehensive income

SEK thousand Note 2020 2019 SEK thousand Note 2020 2019

Net sales – – Loss for the year -1,599,620 -744,138 Gross profit – – Other comprehensive income – – Other comprehensive income for the year after tax – – Operating expenses Research and development costs 9, 10 -866,509 -548,419 Comprehensive income for the year -1,599,620 -744,138 Marketing and distribution costs 9, 10 -460,860 -131,992 Administrative expenses 8, 9, 10 -201,751 -72,104 Other operating income 5 – 8,336 Other operating expenses 6 -70,874 – Total operating expenses -1,599,994 -744,179

Operating loss -1,599,994 -744,179

Financial income 11 390 56 Financial expenses 11 -16 -15 Loss before tax -1,599,620 -744,138 Income tax 12 – – Loss for the year -1,599,620 -744,138

ONCOPEPTIDES | ANNUAL REPORT 2020 57 (90) Parent Company balance sheet

SEK thousand Note Dec 31, 2020 Dec 31, 2019 SEK thousand Note Dec 31, 2020 Dec 31, 2019

ASSETS EQUITY AND LIABILITIES Equity 23 Non-current assets Restricted equity Intangible fixed assets 13 Share capital 7,549 6,157 Other intangible assets 1,830 2,111 Statutory reserve 10,209 10,209 Total intangible fixed assets 1,830 2,111 Total restricted equity 17,758 16,366

Property, plant and equipment 14 Non-restricted equity Machinery and equipment 12,097 2,472 Share premium reserve 3,822,968 2,486,636 Total property, plant and equipment 12,097 2,472 Retained earnings -1,671,578 -965,837 Loss for the year -1,599,620 -744,138 Financial non-current assets 16 Total non-restricted equity 551,770 776,661 Interests in subsidiaries 17 7,813 50 Other non-current receivables 851 851 Total equity 569,528 793,027 Total financial non-current assets 8,664 901 Total non-current assets 22,591 5,484 LIABILITIES Provisions Current assets Provision for social security contributions, incentive programs 27, 28 8,404 23,052 Inventory 19 8,665 – Total provisions 8,404 23,052 Other current receivables 20 10,668 6,915 Prepaid expenses 21 17,057 37,192 Current liabilities Cash and cash equivalents 22 785,972 921,535 Provision for social security contributions, incentive programs 27, 28 46,997 10,733 Total current assets 822,362 965,642 Trade payables 115,574 79,864 Liabilities to Group companies 11,466 10,507 TOTAL ASSETS 844,953 971,126 Other current liabilities 25 19,537 2,923 Accrued expenses and deferred income 26 73,447 51,020 Total current liabilities 267,021 155,047

Total liabilities 275,425 178,099

TOTAL EQUITY AND LIABILITIES 844,953 971,126

ONCOPEPTIDES | ANNUAL REPORT 2020 58 (90) Parent Company statement of changes in equity Parent Company statement of cash flow

Restricted equity Non-restricted equity SEK thousand Note 2020 2019 Stat Share Share utory premium Retained Loss for Total Cash flow from operating activities SEK thousand capital reserve reserve earnings the year equity Loss before financial items -1,599,994 -744,179 Opening balance at Jan 1, 2019 4,899 10,209 1,247,653 -586,660 -411,671 264,430 Adjustment for non-cash items 22 139,212 -12,366 Appropriation in accordance with AGM -411,671 411,671 – Interest received 322 – Loss for the year -744,138 -744,138 Tax paid -16 -15 Other comprehensive income for Cash flow from operating activities the year – – – – – – before change in working capital -1,460,476 -756,560 Comprehensive income for the year – – – – -744,138 -744,138 Change in working capital Transactions with shareholders Increase/decrease in inventory -429 – New issue of ordinary shares 1,085 – 1,272,340 – – 1,273,425 Increase/decrease in operating receivables 16,452 -30,132 Cost attributable to new share issue – – -76,595 – – -76,595 Increase/decrease in trade payables 35,710 56,603 Value of service by participants Increase/decrease in other current operating liabilities 31,761 30,904 in the incentive programs – – – 32,493 – 32,493 Total change in working capital 83,494 57,375 Exercise of warrants under the company’s incentive program 173 – 43,238 – – 43,411 Cash flow from operating activities -1,376,982 -699,185 Total transactions with shareholders 1,258 – 1,238,983 32,493 – 1,272,734 Investing activities Closing balance at Dec 31, 2019 6,157 10,209 2,486,636 -965,838 -744,138 793,026 Investments in intangible fixed assets 13 – -2,111 Opening balance at Jan 1, 2020 6,157 10,209 2,486,636 -965,838 -744,138 793,026 Investments in property, plant and equipment 14 -10,605 -470 Appropriation in accordance with AGM -744,138 744,138 – Cash flow from investing activities -10,605 -2,581 Loss for the year -1,599,620 -1,599,620 Cash flow from financing activities Other comprehensive income for the year – – – – – – New issue of ordinary shares 23 1,413,925 1,273,425 Comprehensive income for the year -1,599,620 -1,599,620 Exercise of warrants under the company’s incentive program 9,027 43,411 Transactions with shareholders Cost attributable to new share issue -85,231 -76,595 New issue of ordinary shares 1,366 – 1,412,559 – – 1,413,925 Cash flow from financing activities 1,337,721 1,240,241 Cost attributable to new share issue – – -85,231 – – -85,231 Cash flow for the period -49,866 538,475 Value of service by participants in the incentive programs 38,398 – 38,398 Cash and cash equivalents at beginning of period 921,534 375,513 Exercise of warrants under the Change in cash and cash equivalents -49,866 538,474 company’s incentive program 26 – 9,004 – – 9,030 Foreign exchange difference in cash and cash equivalents -85,696 7,547 Total transactions with shareholders 1,392 – 1,336,332 38,398 – 1,376,122 Cash and cash equivalents at end of year 22 785,972 921,534 Closing balance at Dec 31, 2020 7,549 10,209 3,822,968 -1,671,578 -1,599,620 569,528

ONCOPEPTIDES | ANNUAL REPORT 2020 59 (90) Notes to the consolidated and Parent Company financial statements

Note 1 General information 2.1.1 Amendments to accounting policies and disclosures Transactions and balance-sheet items The Group and the Parent Company have applied the new and Transactions in foreign currencies are translated to the functional Oncopeptides AB (publ), corporate registration number 556596-6438, amended standards and interpretations that are to be applied for currency at the exchange rate prevailing on the transaction date. is the Parent Company of the Oncopeptides Group (“Oncopeptides”). fiscal years beginning January 1, 2020 or later for the first time. Foreign-exchange gains and losses arising from such transactions Oncopeptides AB (publ) has its registered office in Stockholm at No changes during the year have had any significant impact on the and upon translation of monetary assets and liabilities in foreign Västra Trädgårdsgatan 15, SE-111 53 Stockholm, Sweden. The compa- financial reporting for the Group or the Parent Company. No new or currency at closing rates are recognized in operating profit/loss in the ny’s share has been listed on Nasdaq Stockholm since February 22, amended IFRS have been applied early. income statement. 2017. The Group’s principal operation is the development of pharma- Exchange rate gains or losses in operating receivables, cash and ceutical drugs. 2.1.2 Future standards and new interpretations cash equivalents, and operating liabilities are recognized in operating On April 21, 2021, the Board approved this Annual Report and con- None of the changes that have been published are assessed to have profit/loss, while exchange rate gains or losses on financial receiv- solidated financial statements, that will be proposed for adoption at any significant impact on the financial reporting for the Group or the ables and liabilities are recognized as financial items. the AGM on May 26, 2021. Parent Company. Other new or altered standards or interpretations that the IASB Translation of foreign operations has published are not expected to have any significant impact on the Assets and liabilities in foreign operations are translated from the financial statements for the Group or the Parent Company. foreign operation’s functional currency to the Group’s presentation Note 2 Summary of significant accounting policies currency, SEK, at the exchange rate prevailing on the balance-sheet 2.2 Consolidation date. Income and expenses in foreign operations are translated to The most significant accounting policies applied in the preparation Subsidiaries SEK using an average exchange rate that is an approximation of of this year’s consolidated financial statements are described below. All companies over which the Group exercises a controlling influence the exchange rates prevailing on each individual transaction date. Unless otherwise stated, these policies were applied consistently for are classified as subsidiaries. The Group controls a company when Translation differences that arise in currency translations of for- all years presented. it is exposed to or has the right to a variable return on its interest in eign operations are recognized in “Other comprehensive income” All amounts are reported in SEK and rounded to the nearest thou- the company and is able to influence the return through its interest and accrued in a separate equity component, called the translation sand (SEK thousand), unless otherwise stated. Figures in parentheses in the company. reserve. refer to the preceding year. Subsidiaries are included in the consolidated financial statements All notes refer to both the Parent Company and the Group, unless as of the date on which the controlling interest is transferred to the 2.4 Intangible assets otherwise specified. Group. They are excluded from the consolidated financial statements Other intangible assets as of the date on which the controlling interest ceases to exist. The Group’s intangible assets comprise computer software and 2.1 Basis of presentation of financial statements Intercompany transactions, balance-sheet items, income and licenses for computer software. The consolidated financial statements have been prepared in accor- expenses from transactions between Group companies are eliminated. Intangible assets with a determinable useful life are recognized dance with the International Financial Reporting Standards (IFRS) Gains and losses resulting from intercompany transactions which have at cost less accumulated depreciation and any impairment losses. as adopted by the European Union (EU). The preparation of financial been recognized in assets are also eliminated. Where applicable, the Intangible assets are amortized systematically over the asset’s statements in compliance with IFRS requires the use of certain criti- accounting policies for subsidiaries have been amended to guarantee a assessed useful life. The useful life is reviewed at the end of each cal accounting estimates. Management is also required to make cer- consistent application of the Group’s policies. fiscal year and adjusted if necessary. When the amortization for the tain judgments in applying the Group’s accounting policies. Areas that asset is determined, the asset’s residual value is taken into account involve a high degree of judgment, are complex or where assumptions 2.3 Translation of foreign currency if applicable. and estimates have a material impact on the consolidated financial Functional currency and presentation currency statements are described in Note 4.1. The Parent Company’s functional currency is the Swedish krona Development costs The Parent Company applies the Swedish Annual Accounts Act and (SEK), which is also the Group’s presentation currency. This means The Group conducts the research and development of pharmaceu- Recommendation RFR 2 Accounting for Legal Entities of the Swedish that the financial statements are presented in SEK. All amounts, tical drugs. The overall risk associated with ongoing development Financial Reporting Board. unless otherwise specified, are stated and rounded to the nearest projects is high. The risks consist of technical and production-re- thousand (SEK thousand). lated risks, safety and effect-based risks that could arise in clinical

ONCOPEPTIDES | ANNUAL REPORT 2020 60 (90) Notes Note 2 continued studies, regulatory risks relating to applications for approval of Amortization methods The Group classifies its financial instruments into the following clinical studies and marketing authorization as well as intellectual Intangible fixed assets are amortized from the day when they are categories: property risks related to approval of patent applications and the ready for use. • Financial assets recognized at amortized cost maintenance of patents. All development work is therefore deemed Amortization is applied on a straight-line basis as follows: • Financial liabilities at amortized cost to be research (as the work does not meet the criteria listed below) Other intangible assets – 5 years until the product has received marketing authorization. Expenditure The Group does not conduct active trading with financial instruments for research is expensed as incurred. 2.5 Property, plant and equipment that are not related to the Group’s commercial operations. As a result Expenses directly attributable to the development and testing of Property, plant and equipment are recognized at cost less accumu- of this, the financial assets and liabilities recognized in the balance identifiable and unique products that are controlled by the Group are lated depreciation and any impairment losses. Assets are depreciated sheet are primarily cash and cash equivalents, trade payables and recognized as intangible assets when the following criteria are met: on a straight-line basis over their expected useful lives. accrued expenses pertaining to the Group’s suppliers. During the • it is technically feasible to complete the product so that it will be fiscal year or the comparable year, the Group has not held any finan- available for use. Depreciation is applied on a straight-line basis as follows: cial instruments measured at fair value, whether it be through profit • the company intends to complete the product for use or sale. Equipment and computers – 5 years or loss or other comprehensive income. • there is reason to expect that the company will be able to use or Machinery – 10 years Financial assets classified at amortized cost are initially valued at sell the product. fair value with the addition of transaction costs. After initial recogni- • it can be shown that the product will generate probable future Gains and losses on the sale of an item of property, plant and equip- tion, the assets are valued in accordance with the effective interest economic benefits. ment is determined by comparing the sale proceeds and the carrying method. Assets classified at amortized cost are held in accordance • adequate technical, financial and other resources are available for amount, whereby the difference is recognized in other operating with the business model to collect contractual cash flows, which completing the development and for using or selling the product, expenses in the income statement. consist solely of payments of principal and interest on the principal and amount outstanding. Expected credit losses are assessed as negligi- • the costs attributable to the product during its development can be 2.6 Impairment of non-financial non-current assets ble, since the company’s financial assets essentially consist of bank reliably measured. Assets which are depreciated or amortized are tested for impairment deposits at banks with high credit ratings. when an event or change of circumstance indicates that the carrying Financial liabilities recognized at amortized cost are initially mea- Capitalized assets that have met the above capitalization criteria amount may not be recoverable. The difference between the carrying sured at fair value including transaction costs. After initial recogni- have a limited useful life and are recognized at cost less accumu- amount and recoverable amount is recognized as an impairment loss. tion, they are measured at amortized cost in accordance with the lated amortization. Assets are amortized from the day when they The recoverable amount is the higher of the fair value of the asset effective interest method. are ready for use. Straight-line amortization is used to distribute the less selling expenses and its value in use. In testing for impairment, cost of the in-house developed intangible assets over their estimated assets are grouped to the lowest levels at which there are sepa- 2.8 Inventory useful life, which is the same as the remaining patent term for the rate identifiable cash flows (cash-generating units). For previously Inventory is recognized as the lower of the acquisition cost and the product. Directly attributable expenditure that is capitalized includes impaired assets, impairment testing is conducted at each bal- net realizable value. The acquisition cost for completed goods and development expenditure as well as expenditure for employees plus ance-sheet date to determine if a reversal is required. goods being manufactured comprises raw materials and other direct a reasonable portion of indirect costs. Other development expendi- costs and applicable indirect manufacturing costs (based on normal ture that does not meet the above criteria is expensed as incurred. 2.7 Financial instruments manufacturing capacity). The net realizable value is the estimated Previously expensed development expenditure is not capitalized in Financial instruments are recognized in the balance sheet when the sale price in operating activities. By continuously monitoring inven- later periods. Group becomes party to the contractual terms and conditions of the tory, we ensure that it is dispatched based on its shelf life. When Oncopeptides’ expenditure for drug development was not deemed instrument. A receivable is reported when the company has per- necessary, impairment of inventory is performed within the frame of to meet the criteria for capitalization and has therefore been charged formed its obligations and there is a contractual obligation for the normal business operations and is recognized in costs of goods sold. to expenses. counterparty to pay. A liability is reported when the counterparty has performed its obligations and there is a contractual obligation to 2.9 Cash and cash equivalents pay. The business model for which the financial asset or liability was Cash and cash equivalents comprise bank deposits. acquired or entered into as well as the nature of the contractual cash flows are decisive for classification.

ONCOPEPTIDES | ANNUAL REPORT 2020 61 (90) Notes Note 2 continued 2.10 Equity 2.13 Employee benefits When entering an agreement, the Group determines whether the Ordinary shares are classified as equity. Transaction costs which are Retirement benefit obligations agreement comprises, or contains, a lease, that is to say if the agree- directly attributable to the issue of new ordinary shares or warrants The Group has defined-contribution pension plans. Defined- ment includes the right to control the use of an identified asset for a are recognized, net of tax, in equity as a deduction from the proceeds contribution pension plans are post-employment benefit plans under fixed time in exchange for compensation. of the issue. When warrants are exercised, the company issues new which the Group pays fixed contributions to a separate legal entity. The Group recognizes lease liabilities for future remaining lease shares. Payments received are credited to share capital (quotient The Group has no legal or informal obligations to pay additional con- payments and right-of-use assets that represent the right to use value) and additional paid-in capital. tributions if this legal entity does not have sufficient assets to pay underlying assets. all the benefits to employees in connection with the employees’ ser- 2.11 Trade payables vices during the present or previous periods. Right-of-use assets Trade payables are financial instruments and refer to obligations to The Group recognizes right-of-use assets on the commencement pay for goods and services purchased from suppliers in the ordinary 2.14 Share-based payments date of the lease, at the time that the underlying asset is available for course of business. Trade payables are classified as current liabilities The Group has a number of share-based remuneration plans. The use. Right-of-use assets are valued at cost less accumulated depre- if they fall due within one year. If not, they are recognized as long- cost for the remuneration that is recognized in a period is dependent ciation and any impairment losses, and are adjusted for any revalu- term liabilities. on the original valuation that was made on the date on which the ation of lease liabilities. The cost of right-of-use assets includes an Trade payables are initially stated at fair value and subsequently at contracts with the participants in the incentive programs were con- amount for recognized lease liabilities, initial direct expenses and amortized cost by applying the effective interest method. cluded, the number of months of service required for vesting of their lease payments that are paid at or before the commencement date, options (accruals are made over this period), the number of options after deductions for any benefits that are received in conjunction 2.12 Current and deferred tax that are expected to be vested under the terms of the plans and a with signing the lease. The tax expense for the period comprises current and deferred tax. continuous reassessment of the value of the tax benefits for the par- Right-of-use assets are depreciated on a straight-line basis over The current tax expense is calculated based on the tax rules that ticipants under the plans (for determining provisions for social secu- the asset’s expected lease period, amounting to 2 to 3 years. have been enacted by the balance-sheet date. rity expenses). Those estimates which affect the cost in a period and Deferred tax is recognized, in accordance with the balance sheet the corresponding increase in equity mainly refer to inputs for the Lease liabilities liability method, for all temporary differences between the carrying valuation of the options. Vested options are settled in shares. When The Group recognizes lease liabilities as the expected present value amounts and tax bases of assets and liabilities in the consolidated the options are exercised, the company issues new shares. Payments of all remaining lease payments over the expected useful life at the financial statements. Deferred income tax is calculated by applying received, after deduction for any directly attributable transaction commencement date. Lease payments comprise fixed fees minus any tax rates that have been enacted or announced at the balance-sheet costs, are credited to the share capital and additional paid-in capital. lease incentives that can be received and variable lease payments date and that are expected to apply when the deferred tax asset is linked to an index or an interest rate. When calculating the present realized or the deferred tax liability is settled. 2.15 Interest income value of all remaining lease payments, the Group uses its incremental Deferred tax assets arising from tax losses are recognized to the Interest income is recognized by applying the effective interest borrowing rate. The recognized value of lease liabilities is remeasured extent that it is probable that future taxable profits will be available method. When the value of a receivable in the loans and receivables upon any changes to the lease period or lease payments (including against which the tax losses can be used. category has been impaired, the Group writes down the carrying indexation). Deferred tax assets and liabilities are offset when there is a legally amount to the recoverable amount, which is defined as the esti- enforceable right of set-off for the tax assets and tax liabilities con- mated future cash flow discounted by the original effective interest Short-term and low-value leases cerned, the deferred tax assets and tax liabilities relate to income rate for the instrument, and continues to eliminate the effect of dis- The Group applies an exception for leases with a lease period less taxes levied by the same taxation authority and refer to either the counting as interest income. Interest income on impaired loans and than 12 months (short-term leases) and low-value leases. Low-value same taxable entity or different taxable entities and there is an receivables is recognized using the original effective interest rate. leases in the Group are essentially those concerning office equip- intention to settle the balances on a net basis. ment. Short-term and low-value leases are recognized as a straight- 2.16 Leases line cost over the lease period. Leases in the Group recognized as assets and liabilities in the balance sheet comprise rented premises. Other leases are classified as short-term agreements or low-value leases.

ONCOPEPTIDES | ANNUAL REPORT 2020 62 (90) Notes Note 2 continued 2.17 Statement of cash flows consolidated financial statements, mainly with respect to financial The statement of cash flows has been prepared using the indirect income and expense, and equity. method. The recognized cash flow only includes transactions involving incoming or outgoing payments. Interests in subsidiaries Interests in subsidiaries are recognized at cost less any impairment. 2.18 Segment information When there is an indication that interests in subsidiaries are The financial information that is reported to the chief operating deci- impaired, an estimate is made of the recoverable amount. If the sion maker, and used as a basis for the distribution of resources and recoverable amount is less than the carrying amount, an impairment the assessment of the Group’s results, is not broken down by operat- loss is recognized. Impairment losses are recognized in the item ing segment. The Group thus constitutes a single operating segment. “Profit/loss from holdings in Group companies”.

2.19 Accounting policies of the Parent Company Shareholder contributions and Group contributions The Parent Company applies other accounting policies than the Group contributions from the Parent Company to subsidiaries and Group in the cases indicated below. The annual accounts for the Group contributions received by the Parent Company from subsidiar- Parent Company have been prepared in accordance with RFR 2 ies are recognized as appropriations. Shareholder contributions paid Financial Reporting for Legal Entities and the Swedish Annual are recognized as an increase in the carrying amount of the interest Accounts Act. This Annual Report has been prepared in accordance in the Parent Company and as an increase in equity in the receiving with the cost method. entity. Preparing financial statements in compliance with RFR 2 requires the use of critical accounting estimates. Management is also required Leases to make certain judgments in applying the Parent Company’s The Parent Company applies the exemption that exists in RFR 2 for accounting policies. Areas which involve a high degree of assessment, Legal Entities and reports all leases as a linear cost over the lease are complex or where assumptions and estimates have a material period. impact on the annual accounts are described in Note 4 of the consolidated financial statements. Financial instruments Through its operations, the Parent Company is exposed to various IAS 9 is not applied in the Parent Company and financial instruments types of financial risk: market risk (currency risk), credit risk and are measured at cost. In subsequent periods, financial assets that liquidity risk. The Parent Company’s overall risk management policy have been acquired with the intention of being held for the short is focused on the unpredictability of financial markets and strives to term are recognized at the lower of cost or market value. minimize potential adverse effects on the Group’s financial results. At each balance-sheet date, the Parent Company assesses For more information about financial risks, see Note 3 of the consoli- whether there is any indication of impairment of financial non-cur- dated financial statements. rent assets. An impairment loss is recognized if the decline in value The Parent Company applies accounting policies that differ from is deemed to be permanent. Impairment losses on interest-bearing those of the Group in the cases indicated below: financial assets measured at amortized cost are calculated as the difference between the carrying amount of the asset and the present Presentation formats value of management’s best estimate of future cash flows dis- The format of the income statement and balance sheet are com- counted at the asset’s original effective interest rate. The impairment pliant with the Swedish Annual Accounts Act. While the statement loss for other financial non-current assets is defined as the differ- of changes in equity is compliant with the Group’s format, it also ence between the carrying amount and the higher of fair value less includes the columns stipulated by the Swedish Annual Accounts selling expenses and the present value of future cash flows (based Act. This also entails a difference in terminology, compared with the on management’s best estimate).

ONCOPEPTIDES | ANNUAL REPORT 2020 63 (90) Notes

Note 3 Financial risk management

3.1 Financial risk factors Through its operations, the Group is exposed to various types of sufficient cash assets to meet its operational requirements. financial risk: market risk (currency risk), credit risk and liquidity risk. The following table shows an analysis of the Group’s financial liabil- The Group has decided not to manage its risks actively through the ities by remaining maturity on the balance-sheet date. The amounts use of derivatives or by other means. indicated in the table are the contractual, undiscounted cash flows. All three risk categories are monitored on an ongoing basis in the Group. The dominant risk for the Group is liquidity risk, which is man- Between aged in dialogue among management, the Board and the owners. Less than 3 months December 31, 2020 3 months and 1 year a) Market risk Trade payables 136,135 – The most significant risk for the Group with respect to market risk Other current liabilities 25,726 9,320 is currency risk, which is addressed in a separate section below. The interest rate risk is limited within the Group, since the Group has no Accrued expenses 104,820 31,198 long-term borrowing or long-term interest-bearing investments. Between i) Currency risk Less than 3 months December 31, 2019 3 months and 1 year Currency risks arise when future business transactions are expressed in a currency that is not the functional currency of the company. The Trade payables 80,986 company is impacted by currency risk due to payments for develop- Other current liabilities 7,330 4,989 ment expenses largely being made in EUR and USD. Accrued expenses 50,576 10,566 The Group’s risk management policy is to hedge between 70 percent and 100 percent of anticipated cash flows in USD and EUR through translations into these currencies. 3.2 Management of capital The Group’s goal in respect of capital structure is to secure the b) Credit risk Group’s ability to continue its operations with a view to generating a Credit risk arises through cash and cash equivalents and deposits return for the shareholders and benefits for other stakeholders, and with banks and financial institutions, and through credit exposures to maintain an optimal capital structure in order to keep the costs to customers, including outstanding receivables and agreed trans- for capital down. actions. The credit risk is deemed to be low, as there were no trade Financial measures cannot be used to assess shareholder return. receivables at the balance-sheet date and because only banks and The company’s ability to generate a return is dependent on the qual- financial institutions which have been assigned a credit rating of ity and value of generated research results. The value and quality of “AA-” by Standard & Poor are accepted. For further information about the company’s R&D activities are evaluated on an ongoing basis by the company’s cash and cash equivalents, refer to Note 22 “Cash and management and the Board of Directors. cash equivalents”. c) Liquidity risk Liquidity risk refers to the risk that it will be impossible to fulfill payment obligations due to insufficient liquidity. Cash flow forecasts are prepared by the Group’s operating companies. The Group finance function carefully monitors rolling forecasts for the Group’s liquidity reserve to ensure that the Group has

ONCOPEPTIDES | ANNUAL REPORT 2020 64 (90) Notes

Note 4 Critical accounting estimates and judgments Note 5 Other operating income

Estimates and judgments are evaluated continuously and based period is affected by an estimate of the number of individuals whose Other operating income totaling SEK 0 thousand (8,336) for the Group on historical experiences and other factors, including expecta- options are expected to vest. Through the human resources activities and SEK 0 thousand (8,336) for the Parent Company pertain primarily tions of future events that are deemed reasonable under existing that are described in other parts of the Annual Report and historical to translation differences. circumstances. staff turnover rates, management has a very good basis for estimat- Group management makes estimates and assumptions concerning the number of participants that will complete the schemes. ing the future. The resulting accounting estimates will, by definition, Note 6 Other operating expenses seldom equal the related actual results. Estimates and assumptions Tax loss carryforwards which have a significant risk of causing a material adjustment to the The Group’s tax loss carryforwards have not been valued and have Other operating expenses totaling SEK 70,874 thousand (0) for the carrying amounts of assets and liabilities within the next fiscal year not been recognized as a deferred tax asset. These tax loss carryfor- Group and SEK 70,874 thousand (0) for the Parent Company pertain are addressed below. wards will be valued only when the Group has established a level of primarily to translation differences. earnings which management is confident will lead to taxable profits. Capitalization of intangible assets The Group capitalizes expenditure for the development of drugs to Inventory valuation the extent that such expenditure is deemed to meet the criteria of The valuation of the inventory and assessment of the risk for poten- IAS 38 on page 57. At December 31, 2020, Oncopeptides’ expenditure tial impairment based on continually updated sales forecasts and for drug development was not deemed to meet the criteria for cap- known and expected data concerning the durability of semi-com- italization and has therefore been charged to expenses. Drug devel- pleted and completed products. The durability of semi-completed opment expenditure is capitalized at the earliest in connection with and completed products is based on documented stability studies. marketing approval being obtained from the authorities. The reason All completed inventory is valued continually taking into regard the is that prior to this it is much too uncertain whether the expenditure limitations of the products’ shelf life. The shelf life of the products will generate future economic benefits and because the financing for in the inventory can vary over time. This can lead to an increased risk the completion of the asset has not been secured. of obsolescence when a sharp change in demand for a product or a changed shelf life leads to impairment. Products that do not pass a Incentive programs quality control check are expensed immediately. The Group has a number of share-based remuneration plans. The applicable accounting policies are described in Note 2. The cost for the remuneration that is recognized in a period is dependent on the original valuation that was made on the date on which the contract with the option holders was concluded, the number of months of service required for vesting of their options (accruals are made over this period), the number of options that are expected to be vested under the terms of the plans and a continuous reassessment of the value of the tax benefits for the participants under the plans (for determining provisions for social security expenses). Those estimates which affect the cost in a period and the corresponding increase in equity mainly refer to inputs for the valuation of the options. The models used for this purpose are the Black & Scholes model and a Monte Carlo simulation. Significant assumptions in these valuations are described in Note 26. Apart from the valuations, the cost in a

ONCOPEPTIDES | ANNUAL REPORT 2020 65 (90) Notes

Note 7 Consolidated operating expenses by type of cost Note 9 Leases

Operating expenses are presented in the statement of comprehensive income with a classification Group based on the functions of “Research and development costs,” “Marketing and distribution costs” and “Administrative expenses.” The total expenses classified by function are distributed in the following Right-of-use assets Dec 31, 2020 Dec 31, 2019 cost categories. Opening balance at Jan 1, 2019 18,853 8,053 Group Parent Company New contracts 20,055 10,774 2020 2019 2020 2019 Completed contracts -1,985 – Direct external expenses for drug development -446,737 -481,271 -446,737 -481,271 Translation differences -1,671 26 Other external expenses -660,318 -125,974 -894,796 -172,069 Closing accumulated cost 35,252 18,853 Personnel costs -398,947 -135,942 -186,340 -98,814 Depreciation and amortization -14,403 -4,540 -1,247 -361 Opening depreciation -4,160 – Other operating expenses Depreciation for the year -12,398 -4,160 (including translation differences) -70,874 – -70,874 – Completed contracts 1,985 – Total -1,591,279 -747,727 -1,599,994 -752,515 Translation differences 378 – Closing accumulated depreciation -14,195 -4,160

Note 8 Audit fees Closing carrying amount 21,057 14,693

Group Parent Company New agreements during the year pertain to office premises in the Group. Ernst & Young AB 2020 2019 2020 2019 Depreciation of right-of-use assets is included in the income statement in the sub-items Research and development costs SEK 4,507 thousand (1,896), Marketing and distribution costs SEK 4,440 Audit Committee 1,083 578 1,083 578 thousand (1,556) and Administrative expenses SEK 3,451 thousand (708). Audit activities beyond audit engagement 125 44 125 44 The Group’s leases that comprise right-of-use assets pertain to office premises. Leases are nor- Tax advisory services 445 190 445 190 mally contracted for between 2 to 3 years in the Group, with the possibility of extension in the Parent Company. Rental agreements in the Parent Company can be extended by 3 years unless any of the Total 1,653 812 1,653 812 parties gives notice on the lease at least nine months beforehand. Oncopeptides is not able to, with reasonable certainty, determine if the extension will occur taking into light the company’s development, and has therefore not counted on utilization after the contract period. Rent levels in leases increase according to an index or with a fixed annual rental increase specified in the lease. Indexation is included in lease liabilities when it enters force and is adjusted at that time against right-of-use assets.

Lease liabilities Dec 31, 2020 Dec 31, 2019 Long-term 6,929 8,243 Current 12,426 6,652 Total 19,355 14,895

ONCOPEPTIDES | ANNUAL REPORT 2020 66 (90) Notes

Note 9 continued Note 10 Employees and personnel costs Lease liabilities are included in the balance sheet under other long-term liabilities and other current liabilities. Salaries and other remuneration, pension expenses and social security expenses pertaining to the Changes to Lease liabilities, refer to Note 22 concerning reconciliation of liabilities from financing Board of Directors, members of senior management and other employees activities. Group Parent Company Group Salaries and other remuneration 2020 2019 2020 2019 Maturity analysis, future lease payments Dec 31, 2020 Dec 31, 2019 Board of Directors and members of senior management 68,662 44,339 47,286 39,340 <12 months 14,032 9,468 Other employees 221,271 57,437 67,073 30,859 1–2 years 7,193 6,562 Total 289,933 101,776 114,359 70,199 >2 years 184 3,720

21,409 19,750 Group Parent Company

Future lease payments in accordance with the above are undiscounted and include variable fees. Social security expenses and pension expenses 2020 2019 2020 2019 Pension expenses for the Board of Directors and members of senior management 2,768 1,793 2,582 1,696 2020 2019 Pension expenses for other employees 11,849 4,770 9,394 4,402 Interest expenses attributable to lease liabilities 1,469 512 Social security expenses 59,211 18,811 50,818 17,120 Expenses attributable to short-term leases 15 130 Total 73,828 25,374 62,794 23,218 Expenses attributable to leases where the underlying asset is of a low value 71 42 Recognized payroll expenses and social security contributions pertaining to share-based remuneration Expenses attributable to variable lease payments that are not included in totaled SEK 68,209 thousand (37,770). Social security contributions include both provisions and actual lease liabilities 1,360 349 payments for the utilization of granted options. The year’s lease payments in the Group 16,544 5,878

Parent Company Leases 2020 2019 Future total lease payments excluding variable lease payments, for non-cancellable leases in the of whom, of whom, Parent Company fall due as follows: Rental agreements in the Parent Company pertain essentially to Average number of employees Total men Total men office premises and a laboratory. Parent Company Parent Company Sweden 109 39 29 12 Future costs for leases (basic rent) 2020 2019 Within 1 year 8,564 7,379 Subsidiaries Between 1 and 5 years 4,570 11,357 USA 73 31 8 5 Total 13,134 18,736 Group total 182 70 37 17 Lease expenses for the year for leases in the Parent Company amount to: 9,643 4,228

ONCOPEPTIDES | ANNUAL REPORT 2020 67 (90) Notes Note 10 continued Gender distribution in the Group (including subsidiaries) for Board members and other members of senior management 2020 2019 Number at balance- Number at balance- sheet date sheet date of whom, of whom, Total men Total men Board members 7 5 8 6 Other members of senior management 10 6 8 5 CEO 1 1 1 1

Group total 18 12 17 12

Salaries, remuneration and fees to the CEO, Board of Directors and members of senior management

Basic salary Variable Pension Share-based 2020 Board fee1 Invoiced fees remuneration expenses remuneration Total Chairman of the Board Per Wold-Olsen 743 – – – 697 1,440 Board members Brian Stuglik 335 – – – 279 614 Cecilia Daun Wennborg 325 – – – 289 614 Jennifer Jackson 335 – – – 299 634 Jonas Brambeck 300 – – – – 300 Per Samuelsson 300 – – – – 300 Ulf Jungnelius 293 – – – 289 582 CEO, Marty J Duvall (from July 1, 2020) 2,329 – 1,127 – 3,190 6,646 CEO, Jakob Lindberg (until June 30, 2020) 1,918 – 647 226 1,562 4,353 Other members of senior management (8) 28,613 2,792 6,314 2,542 18,776 59,037 Of which, subsidiaries 17,295 – 2,316 187 1,765 21,562 Total 35,491 2,792 8,088 2,768 25,381 74,520

1) Board fees as resolved at the AGM, excluding social security contributions for the May 2020 to May 2021 fiscal year, including remuneration of Board committee work and country-based fees.

ONCOPEPTIDES | ANNUAL REPORT 2020 68 (90) Notes Note 10 continued Salaries, remuneration and fees to the CEO, Board of Directors and members of senior management

Basic salary Variable Pension Share-based 2019 Board fee1 Invoiced fees remuneration expenses remuneration Total Chairman of the Board Per Wold-Olsen 742 – – – 319 1,061 Board members Brian Stuglik 335 – – – 128 463 Cecilia Daun Wennborg 325 – – – 210 535 Jennifer Jackson 335 – – – 95 430 Jonas Brambeck 300 – – – – 300 Per Samuelsson 300 – – – – 300 Ulf Jungnelius 293 – – – 210 503 Olof Tydén (to May 2019) – – – – 80 80 CEO, Jakob Lindberg 2,777 – 1,048 543 1,707 6,075 Other members of senior management (8) 13,777 11,476 2,333 1,251 19,024 47,861 1) Board fees as resolved at the AGM, excluding social security contributions for Of which, subsidiaries 4,324 – 675 97 – 5,096 the May 2019 to May 2020 fiscal year, including remuneration of Board commit- Total 19,184 11,476 3,381 1,794 21,773 62,704 tee work and country-based fees.

Remuneration to members of senior management Pensions Remuneration to the CEO and members of senior management consists of a basic salary, pension All pension undertakings are defined-contribution plans. The age of retirement for the CEO is 65. The benefits, variable remuneration and participation in incentive programs. Some of the Group’s mem- pension premium amounts to 19 percent of the former CEO’s pensionable salary (Jakob Lindberg). For bers of senior management invoice their fees, which are included in operating expenses and recog- the CEO, Marty Duvall, provisions will take place in the 401k pension plan from 2021 with a ceiling of a nized in the tables above under the column “Invoiced fees.” At the balance-sheet date, other mem- maximum of USD 26,500. The pension commitments for other members of senior management are in bers of senior management referred to the ten (8) individuals who, together with the CEO, make up accordance with the company’s pension policy, and for foreign members of senior management, with Group management. Other members of senior management refer to the Chief Financial Officer, Chief the market-based terms of their respective countries. The age of retirement is 65 for other members Scientific Officer, Chief Operating Officer, Head of Regulatory Affairs, Head of Research and CMC, of senior management. Pensionable salary refers to basic salary. Chief Commercial Officer, Global Head of Corporate Communications, General Counsel, Chief Medical Officer and General Manager, US Business Unit. Variable remuneration Variable remuneration refers to variable bonuses based on the fixed portion of basic salary. The result is based on a vesting period of one year and is subject to a combination of predetermined personal targets and the company’s targets. The maximum result is 50 percent of basic salary for the former CEO Jakob Lindberg and 200 percent for the CEO Marty Duvall. For other members of senior management, variable remuneration amounts to 25–50 percent of the basic salary.

ONCOPEPTIDES | ANNUAL REPORT 2020 69 (90) Notes

Note 10 continued Note 12 Tax on profit for the year Share-based payments The Group’s incentive programs are aimed at creating a long-term commitment to Oncopeptides, Group Parent Company creating opportunities to attract and retain expertise, and delivering long-term shareholder value. Participants are allotted warrants that will only be earned on condition that specific performance 2020 2019 2020 2019 requirements are fulfilled. Participation in a program is decided by the Board of Directors and no indi- Current tax -9,247 -3,047 – – vidual is contractually entitled to participate in the plan or receive any guaranteed benefits. At year- Deferred tax 6,996 2,262 – – end 2020, Oncopeptides had nine active programs covering the company’s management, certain Board members, founders and other employees. For a description of the programs, refer to Note 27. Recognized tax -2,251 -785 – –

Severance pay Reconciliation of effective tax rate If notice is given by the company, the period of notice must not exceed twelve months. Fixed cash Loss before tax -1,592,442 -739,920 -1,599,620 -744,138 salaries during the period of notice and severance pay may not collectively exceed an amount corresponding to the fixed cash salary for two years for the CEO and one year for other members of senior Tax according to applicable tax rate for the management. If notice is given by the employee, the period of notice must not exceed six months, and Parent Company 21.4 percent (21.4). 340,783 158,343 342,319 159,245 there is no right to severance pay. Tax on deferred tax receivables not charged Additionally, remuneration for potential non-competition clauses can be payable. Such remunera- to profit or loss -342,222 -159,091 -342,223 -159,082 tion is to compensate for potential loss of income and is only payable insofar as the former employee Non-deductible expenses -418 -250 -96 -164 lacks any right to severance pay. Remuneration should be based on the fixed cash salary at the time Effect of other tax rates on foreign subsidiaries -72 14 – – of termination, unless mandatory collective provisions dictate otherwise, and is payable over the Tax attributable to previous years -322 199 – – duration of the non-competition clause, which may not exceed 12 months after the termination of employment. Recognized tax -2,251 -785 – –

The Group has tax items pertaining to costs attributable to new share issues that are recognized directly in equity, the tax effect amounted to SEK 18,239 thousand (16,201). Note 11 Financial income and expenses There are tax loss carryforwards for which no deferred tax assets have been recognized in the balance sheet, totaling SEK 3,535,574 thousand (1,851,177), and which are not subject to time limits. Group Parent Company Deferred tax assets have not been recognized for these items, since the Group does not have taxable profits. The recognized tax expense is fully attributable to foreign subsidiaries. For reconciliation of 2020 2019 2020 2019 deferred tax assets, refer to note 15. Interest income 322 0 390 56 Total financial income 322 0 390 56 Of which, interest income from Group companies – – 67 56

Interest expenses for lease liabilities -1,469 -512 – – Other interest expenses -16 -16 -16 -15 Total financial expenses -1,485 -528 -16 -15

ONCOPEPTIDES | ANNUAL REPORT 2020 70 (90) Notes

Note 13 Intangible fixed assets Note 14 Property, plant and equipment

Group Parent Company Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Other intangible assets 2020 2019 2020 2019 Equipment 2020 2019 2020 2019 Cost at beginning of year 2,111 – 2,111 – Cost at beginning of year 969 453 922 453 Purchases over the year – 2,111 – 2,111 Purchases over the year 12,548 516 5,974 469 Closing accumulated cost 2,111 2,111 2,111 2,111 Currency effect -757 – – – Closing accumulated cost 12,760 969 6,896 922 Opening amortization – – – – Amortization for the year -281 – -281 – Opening depreciation -250 -124 -230 -124 Closing accumulated amortization -281 – -281 – Depreciation for the year -1,265 -126 -508 -106 Closing carrying amount 1,830 2,111 1,830 2,111 Currency effect 89 – – – Closing accumulated depreciation -1,426 -250 -738 -230 Other intangible assets pertain to software and licenses. Machinery Cost at beginning of year 2,543 2,543 2,543 2,543 Purchases over the year 4,632 – 4,632 – Closing accumulated cost 7,175 2,543 7,175 2,543

Opening depreciation -763 -509 -763 -509 Depreciation for the year -473 -254 -473 -254 Closing accumulated depreciation -1,236 -763 -1,236 -763 Closing carrying amount 17,273 2,499 12,097 2,472

The increase in property, plant and equipment is primarily a result of equipment for the acquired pre-clinical laboratory in Solna and working tools for employees in the subsidiary. Depreciation of property, plant and equipment is included in the consolidated income statement in the sub-items Research and development costs SEK 788 thousand (254), Marketing and distribution costs SEK 128 thousand (20) and Administrative expenses SEK 1,103 thousand (106). Property, plant and equipment is attributable to Swedish companies SEK 12,097 thousand (2,472) and companies in the US SEK 5,176 thousand (27).

ONCOPEPTIDES | ANNUAL REPORT 2020 71 (90) Notes

Note 15 Deferred tax assets Note 16 Financial non-current assets

Group Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Deferred tax assets 2020 2019 Non-current receivables 2020 2019 2020 2019 Recognized amount for temporary differences attributable to: Opening cost 1,035 851 851 851 Non-current assets -1,087 16 Deposits made 3,131 184 – – Employee benefits 9,232 2,230 Repaid deposits -184 – – – Other items 30 16 Currency effect -360 – – – Total deferred tax assets 8,175 2,262 Total non-current receivables 3,622 1,035 851 851

Financial non-current assets pertain to restricted bank deposits and deposits for rental properties Changes to deferred tax in temporary differences SEK 3,571 thousand (984), Euroclear SEK 50 thousand (50) and SEK 1 thousand (1) which pertains to 1,000 shares in LFF Service AB (556197-9211). The share in LFF Service AB is pledged and gives Läkemedelsföreningens Service AB an option to Amount at the Recognized start of the in profit or Currency Amount at acquire the share at its quotient value (SEK 1 thousand) if Oncopeptides AB (publ) withdraws from the Group 2020 year loss effect year end share agreement. Non-current assets 16 -1,248 144 -1,088 Employee benefits 2,230 8,222 -1,219 9,233 Note 17 Interests in subsidiaries, Parent Company Other items 16 22 -8 30 2,262 6,996 -1,083 8,175 Dec 31, Dec 31, 2020 2019 Deferred tax assets are assessed to essentially be possible to utilize in 2021–2022. Cost at beginning of year 50 50 Paid additions1 7,763 – Amount at the Recognized Closing accumulated cost 7,813 50 start of the in profit or Amount at Group 2019 year loss year end Closing carrying amount 7,813 50

Non-current assets – 16 16 1) Paid additions corresponds to share-based remuneration recognized in the subsidiary Oncopeptides Inc. Employee benefits – 2,230 2,230 Other items – 16 16 % ordinary Corp. reg. no shares owned Share of Carrying Carrying – 2,262 2,262 Registered office No. of by the Parent the amount amount Name and country shares Company votes 2020 2019 Directly owned 555931-5491, Stockholm, Oncopeptides Incentive AB Sweden 50,000 100% 100% 50 50 Oncopeptides, Inc Delaware, USA 1,000 100% 100% 7,763 0 7,813 50

ONCOPEPTIDES | ANNUAL REPORT 2020 72 (90) Notes

Note 18 Financial instruments by category, Group Financial Total liabilities recognized Non-financial carrying Financial assets and liabilities at December 31, 2020 Liabilities in the statement of financial position at amortized cost liabilities amount Non-current provision for social security contributions, Financial Total incentive programs – 23,052 23,052 assets recognized Non-financial carrying Assets in the statement of financial position at amortized cost assets amount Other long-term liabilities 8,243 – 8,243 Other non-current assets – 48,335 48,335 Current provision for social security contributions, incentive programs – 10,733 10,733 Financial non-current assets 3,622 – 3,622 Trade payables 80,986 – 80,986 Other current receivables 12,227 11,002 23,229 Other current liabilities 6,652 5,667 12,319 Prepaid expenses – 22,650 22,650 Accrued expenses and deferred income 39,327 21,815 61,142 Cash and cash equivalents 840,255 – 840,255 Total 135,208 61,267 196,475 Total 856,104 81,987 938,091

Financial Total liabilities recognized Non-financial carrying Note 19 Inventory Liabilities in the statement of financial position at amortized cost liabilities amount Non-current provision for social security contributions, Group Parent Company incentive programs – 8,530 8,530 Dec 31, Dec 31, Dec 31, Dec 31, Long-term lease liabilities 6,929 – 6,929 2020 2019 2020 2019 Current provision for social security contributions, Raw materials and supplies 6,800 – 6,800 – incentive programs – 47,202 47,202 Completed goods 1,865 – 1,865 – Trade payables 136,135 – 136,135 Total 8,665 – 8,665 – Other current liabilities 12,426 22,619 35,045 Accrued expenses and deferred income 71,853 64,165 136,018 Total 227,343 142,516 369,859 Note 20 Other current receivables Financial assets and liabilities at December 31, 2019 Group Parent Company Financial Total Dec 31, Dec 31, Dec 31, Dec 31, assets recognized at Non-financial carrying 2020 2019 2020 2019 Assets in the statement of financial position amortized cost assets amount Current tax assets 2,198 576 2,198 576 Other non-current assets – 21,565 21,565 VAT receivables 7,486 5,655 7,486 5,655 Financial non-current assets 1,035 – 1,035 Short-term deposits 12,227 – – – Other current receivables – 6,976 6,976 Other receivables 1,318 745 984 684 Prepaid expenses – 37,726 37,726 Total 23,229 6,976 10,668 6,915 Cash and cash equivalents 926,186 – 926,186 Total 927,221 66,267 993,488

ONCOPEPTIDES | ANNUAL REPORT 2020 73 (90) Notes

Note 21 Prepaid expenses and accrued income Note 22 continued

Non-cash items Group Parent Company Reconciliation of liabilities from Currency Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, financing activities Jan 1, 2020 Cash flow New leases effect 2020 2020 2019 2020 2019 Lease liabilities 14,895 -14,260 19,491 -771 19,355 Prepaid expenses for research and development 13,693 34,299 13,693 34,299 14,895 -14,260 19,491 -771 19,355 Other prepaid expenses 8,957 3,427 3,364 2,893 Total 22,650 37,726 17,057 37,192 Non-cash items Reconciliation of liabilities from Currency Dec 31, Note 22 Cash and cash equivalents financing activities Jan 1, 2019 Cash flow New leases effect 2019 Lease liabilities 8,053 -3,956 10,774 24 14,895 Cash and cash equivalents, in the balance sheet and in the statement of cash flows, consist of the 8,053 -3,956 10,774 24 14,895 following: Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2020 2019 Note 23 Share capital and additional paid-in capital Bank balances 840,255 926,186 785,972 921,535 Total 840,255 926,186 785,972 921,535 No. of Share Additional shares capital paid-in capital Total Cash and cash equivalents pertain to bank deposits in USD amounting to SEK 374,244 thousand and At Jan 1, 2019 44,091,921 4,899 1,272,830 1,277,729 in EUR amounting to SEK 111,795 thousand as well as other in SEK. New share issue resolution passed in January 2019 4,750,000 528 514,313 514,841

Group Parent Company New share issue resolution passed in June 2019 5,015,000 557 682,321 682,878 Dec 31, Dec 31, Dec 31, Dec 31, Value of service by participants in the Cash flow, non-cash items 2020 2019 2020 2019 incentive programs – – 32,493 32,493 Exercise of warrants under the Depreciation and amortization 14,403 4,540 1,247 361 company’s incentive program 1,556,496 173 42,350 42,523 Exchange-rate differences 85,697 -7,547 85,697 -7,547 December 31, 2019 55,413,417 6,157 2,544,306 2,550,463 Value of service by participants in the incentive programs 38,919 32,493 30,637 32,493 New share issue resolution passed in May 2020 6,065,000 674 654,560 655,234 Provision for social security contributions, incentive programs 21,872 -37,673 21,616 -37,673 New share issue resolution passed in May 2020 6,230,000 692 672,771 673,463 Other items 15 – 15 – Value of service by participants in the incentive programs – – 38,398 38,398 160,906 -8,187 139,212 -12,366 Exercise of warrants under the company’s incentive program 231,298 26 9,001 9,027 December 31, 2020 67,939,715 7,549 3,919,036 3,926,585

ONCOPEPTIDES | ANNUAL REPORT 2020 74 (90) Notes

Note 23 continued Note 24 Earnings per share Share capital and share class The share capital comprises 67,939,715 shares with a quotient value of approximately SEK 0.11. Each Earnings per share before dilution are calculated by dividing earnings attributable to Parent Company share carries one vote. All shares issued by the Parent Company are fully paid up. shareholders by the weighted average number of outstanding shares during the period. There is no dilution effect for the employee stock option scheme, as earnings for the periods have been negative. Warrants: To ensure delivery of the company’s and Group’s incentive programs, warrants have been issued to Earnings per share before and after dilution 2020 2019 the wholly owned subsidiary Oncopeptides Incentive AB. At December 31, 2020, there were 5,119,103 warrants entitling the holders to a total of 5,365,429 shares. Of these, instruments corresponding to Profit/loss for the year (SEK thousand) attributable to the Parent Company’s shareholders. -1,594,693 -740,705 3,159,728 warrants entitling the holders to a total of 3,406,054 shares were allotted, 1,701,354 warrants entitling the holders to 1,701,354 shares were unallotted and the remaining 258,021 warrants Average number of ordinary shares outstanding (thousand) 62,369 51,701 entitling the holders to 258,021 shares were allotted as a hedge to cover social security contributions. Earnings per share (SEK) -25.57 -14.33

Translation reserve Reserves refer in their entirety to translation reserves. The translation reserve includes all exchange- rate differences arising from the translation of the financial statements of the Group’s foreign operations. Note 25 Other current liabilities

Dec 31, Dec 31, Group Parent Company 2020 2019 Dec 31, Dec 31, Dec 31, Dec 31, Opening carrying amount 2 22 2020 2019 2020 2019 Change for the year -1,544 -20 Current lease liabilities 12,426 6,652 – – Closing carrying amount -1,542 2 Current tax liabilities 3,046 2,036 – – Employee-related taxes and levies 11,194 3,442 11,194 2,923 Dividend Other current liabilities 8,379 189 8,343 – At the AGM in May 2021, it will be proposed that no dividend be distributed with respect to the 2020 fiscal year. Total 35,045 12,319 19,537 2,923

Note 26 Accrued expenses

Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2020 2019 Employee-related accrued expenses 62,396 21,132 22,834 11,058 Prepaid expenses for research and development 44,143 30,406 44,143 30,406 Accrued expenses to suppliers, other 27,711 8,921 5,363 8,874 Other accrued expenses 1,768 683 1,107 682 Total 136,018 61,142 73,447 51,020

ONCOPEPTIDES | ANNUAL REPORT 2020 75 (90) Notes

Note 27 Share-based payments Co-worker LTIP 2019 The options were allotted free of charge to participants of the program. The options have a three-year The Group’s incentive programs are aimed at creating a long-term commitment to Oncopeptides, vesting period calculated from the allotment date, provided that, with customary exceptions, the par- creating opportunities to attract and retain expertise, and delivering long-term shareholder value. ticipants remain as employees of, or continue to provide services to, Oncopeptides. Once the options Participants are allotted warrants that will only be earned on condition that specific performance are vested, they can be exercised within a four-year period. requirements are fulfilled. Participation in a program is decided by the Board of Directors and no indi- Each vested option entitles the holder to acquire one share in the company at a predetermined vidual is contractually entitled to participate in the plan or receive any guaranteed benefits. price. The price per share is to be equivalent to the weighted average price that the company’s shares Oncopeptides currently has nine active programs encompassing management, certain Board mem- were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date. bers, founders and employees. “Employee Option Program 2016/2023” was introduced in 2016. The incentive program “Co-worker LTIP 2017” was introduced in 2017. At the 2018 AGM, two incentive pro- Board LTIP 2018 grams were established: “Co-worker LTIP 2018” and “Board LTIP 2018”. At an EGM in December 2018, The share awards were allotted to participants free of charge. Share awards are vested over a three- “Board LTIP 2018.2” was implemented, and at the 2019 AGM, it was resolved that two new incentive year period, with one-third per year during the period from one AGM to the next. The share awards are programs were to be introduced: “Co-worker LTIP 2019” and “Board LTIP 2019”. At the 2020 AGM, a also subject to performance-based vesting, based on the performance of Oncopeptides’ share price resolution was passed to introduce the program “Board LTIP 2020”, and at the EGM in December 2020 during the period from the date of the 2018 AGM up to and including the date of the 2021 AGM. The AGM, it was resolved to introduce the program “US Co-worker LTIP 2020”. share price’s performance will be measured as the volume-weighted average price of the company’s share 30 trading days immediately after the 2018 AGM and 30 trading days immediately before Employee Option Program 2016/2023 the 2021 AGM. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the Employee options were allotted free of charge to participants. Allotted employee options are vested share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the gradually over a four-year period calculated from the starting date (aside from 60 options in the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the series that vest and are allotted over a period of 12 months). Vesting requires that the holder remain share awards will be vested in a linear manner. If the share price increases by less than 20 percent, employed by the company and that the employment is not terminated as per the day of vesting of there will be no vesting. Each time-based and performance-based vested share award entitles the each employee option. Each vested option entitles the holder to subscribe for 900 new shares in the holder to obtain one share in Oncopeptides free of charge. company up to and including November 30, 2023 at the latest. Vested share awards are automatically exercised the day after the 2021 AGM.

Co-worker LTIP 2017 Board LTIP 2018.2 The options were allotted free of charge to participants of the program. The options have a three-year The share awards were allotted to participants free of charge. Share awards are vested over a three- vesting period calculated from the allotment date, provided that, with customary exceptions, the par- year period, with one-third per 12-month period after the allotment date. The share awards are also ticipants remain as employees of, or continue to provide services to, Oncopeptides. Once the options subject to performance-based vesting, based on the performance of Oncopeptides’ share price during are vested, they can be exercised within a four-year period. the period from the allotment date up to and including the final vesting date. The share price’s perfor- Each vested option entitles the holder to acquire one share in the company at a predetermined mance will be measured as the volume-weighted average price of the company’s share 10 trading days price. The price per share is to be equivalent to the weighted average price that the company’s shares immediately after the allotment date and 10 trading days immediately before the final vesting date. were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will Co-worker LTIP 2018 be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be The options were allotted free of charge to participants of the program. The options have a three-year vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. vesting period calculated from the allotment date, provided that, with customary exceptions, the par- Each time-based and performance-based vested share award entitles the holder to obtain one share ticipants remain as employees of, or continue to provide services to, Oncopeptides. Once the options in Oncopeptides free of charge. are vested, they can be exercised within a four-year period. Vested share awards are automatically exercised the day after the final vesting date. Each vested option entitles the holder to acquire one share in the company at a predetermined price. The price per share is to be equivalent to the weighted average price that the company’s shares Board LTIP 2019 were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date. The share awards were allotted to participants free of charge. Share awards are vested over approximately three years until either the 2022 AGM or June 1, 2022 (whichever occurs first) with one-third per year during the period from one AGM to the date immediately before the next AGM or the final

ONCOPEPTIDES | ANNUAL REPORT 2020 76 (90) Notes Note 27 continued vesting date. The share awards are also subject to performance-based vesting, based on the perfor- Summary of the Group’s total cost for incentive programs mance of Oncopeptides’ share price during the period from the allotment date up to and including 2020 2019 the day before the final vesting date. The share price’s performance will be measured as the volume-weighted average price of the company’s share 10 trading days immediately after the allotment Share-based remuneration 38,693 31,885 date and 10 trading days immediately before the final vesting date. If Oncopeptides’ share price has Provision for social security contributions, incentive programs 21,910 -37,231 then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share Social security contributions for the utilization of allotted options. 7,606 43,116 price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If Total 68,209 37,770 the share price increases by less than 20 percent, there will be no vesting. Each time-based and performance-based vested share award entitles the holder to obtain one share in Oncopeptides free of charge. Summary of provisions for social security contributions for share-based remuneration Vested share awards are automatically exercised the day after the final vesting date. Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, Board LTIP 2020 Non-current provisions 2020 2019 2020 2019 The share awards were allotted to participants free of charge. Share awards are vested over approx- Social security contributions concerning share-based imately three years until either the 2023 AGM or June 1, 2023 (whichever occurs first) with one-third remuneration per year during the period from one AGM to the date immediately before the next AGM or the final Amount at the start of the year 23,052 14,858 23,052 14,858 vesting date. The share awards are also subject to performance-based vesting, based on the performance of Oncopeptides’ share price during the period from the allotment date up to and including Provisions for the year 6,801 8,194 6,675 8,194 the day before the final vesting date. The share price’s performance will be measured as the vol- Reclassification of current provisions -21,323 – -21,323 – ume-weighted average price of the company’s share 10 trading days immediately after the allotment 8,530 23,052 8,404 23,052 date and 10 trading days immediately before the final vesting date. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an Group Parent Company increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. Each time-based and per- Dec 31, Dec 31, Dec 31, Dec 31, formance-based vested share award entitles the holder to obtain one share in Oncopeptides free of Non-current provisions 2020 2019 2020 2019 charge. Social security contributions concerning share-based Vested share awards are automatically exercised the day after the final vesting date. remuneration Amount at the start of the year 10,733 56,600 10,733 56,600 US Co-worker LTIP 2020 Reclassification from non-current provisions 21,323 – 21,323 – The share awards were allotted to participants free of charge and entitle the holder to shares in Oncopeptides. The share awards are subject to performance-based vesting, based on the perfor- Provisions for the year 25,737 932 25,443 932 mance of Oncopeptides’ share price during the period from the allotment date up to and including Amounts claimed for the year -1,486 -43,116 -1,486 -43,116 the third anniversary day calculated from the allotment date. If Oncopeptides’ share price has then Reversals over the year -9,105 -3,683 -9,016 -3,683 increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price 47,202 10,733 46,997 10,733 has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share Total provisions 55,732 33,785 55,401 33,785 price increases by less than 20 percent, there will be no vesting. Each vested share award entitles the holder to obtain one share in Oncopeptides free of charge, provided that the holder, is still employed at Oncopeptides on the final vesting date. In certain customary exceptional cases, vesting is possible even if the participant is no longer employed at Oncopeptides on the final vesting date. Vested share awards are automatically exercised as soon as possible after the final vesting date. ONCOPEPTIDES | ANNUAL REPORT 2020 77 (90) Notes Note 27 continued Summary of allotted options and share awards according to plan 2020 2019 Calculation of fair value of employee option programs No. of shares No. of shares The fair value on the allotment date was calculated using an adapted version of the Black & Scholes covered covered valuation model, which takes into consideration the exercise price, the term of the options, share price by option by option Employee Option Programs programs programs on the allotment date and expected volatility in the share price, and risk-free interest for the term of the options. Since no listed prices were available for the underlying share prior to the IPO in February At Jan 1 2,491,799 3,190,333 Allotted 775,572 515,566 Forfeited -382,670 – Exercised -200,700 -1,214,100 At December 31 2,684,001 2,491,799

2020 2019 No. of shares No. of shares covered covered by option by option Share award program (US Co-worker LTIP) programs programs At Jan 1 – – Allotted 642,954 – Forfeited -3,944 – At December 31 639,010 –

2020 2019 No. of shares No. of shares covered covered by option by option Share awards program (Board LTIP) programs programs At Jan 1 77,378 57,131 Allotted 26,931 25,661 Forfeited – -5,414 Exercised -21,266 – At December 31 83,043 77,378

ONCOPEPTIDES | ANNUAL REPORT 2020 78 (90) Notes Note 27 continued 2017, the value up until that date is based on the most recently completed business transaction with the company’s preference share with an external party.

Fair value upon issue No. of shares covered Allotment date/start of the option pro- by option programs at Employee Option Programs date Maturity date gram, SEK Exercise price, SEK Volatility December 31, 2020 Vested Employee Option Program 2016/2023:1 November 22, 2016 November 30, 2023 8.82 0.11 20.72% 54,000 100% Employee Option Program 2016/2023:2 November 22, 2016 November 30, 2023 8.82 0.11 20.72% 192,600 100.00% Co-worker LTIP 2017:1 May 18, 2017 May 18, 2024 9.32 44.48 20.72% 556,000 100.00% Co-worker LTIP 2017:2 October 5, 2017 October 5, 2024 14.17 63.95 20.72% 136,000 100.00% Co-worker LTIP 2017:3 February 21, 2018 February 21, 2025 33.37 79.77 41.40% 129,038 95.26% Co-worker LTIP 2017:4 July 12, 2018 July 12, 2025 94.63 197.48 47.00% 277,895 82.41% Co-worker LTIP 2017:5 August 30, 2018 August 30, 2025 70.83 149.47 48.40% 20,000 77.94% Co-worker LTIP 2017:6 October 1, 2018 October 1, 2025 83.37 155.15 50.20% 235,000 75.02% Co-worker LTIP 2018:2 May 3, 2019 May 3, 2026 71.51 126.09 56.10% 328,649 55.52% Co-worker LTIP 2019:1 August 12, 2019 August 12, 2026 73.5 142.64 55.20% 58,190 46.31% Co-worker LTIP 2019:2 December 16, 2019 December 16, 2026 64.3 129.53 49.90% 14,571 34.82% Co-worker LTIP 2019:3 January 2, 2020 January 2, 2027 59.66 128.62 47.50% 399,420 33.27% Co-worker LTIP 2019:4 April 2, 2020 April 2, 2027 61.28 107.58 63.70% 31,394 25.00% Co-worker LTIP 2019:5 June 9, 2020 June 9, 2027 74.42 126.56 66.60% 8,032 18.80% Co-worker LTIP 2019:6 July 8, 2020 July 8, 2027 81.21 131.93 65.30% 243,212 16.15% 2,684,001

Calculation of fair value of share awards programs (Board LTIP 2017, 2018, 2019 and 2020) Calculation of fair value of share awards programs (US Co-worker LTIP 2020) The fair value on the allotment date was calculated using a Monte Carlo simulation of future share The fair value on the allotment date was calculated using a Monte Carlo simulation of future share price development. The simulated share price development has then been used to calculate the out- price development. The simulated share price development has then been used to calculate the outcome of the program and the value of each share at the acquisition date (present value adjusted to come of the program and the value of each share at the acquisition date (present value adjusted to the date granted). the allotment date). No. of shares No. of shares covered covered by Fair value upon by option Fair value upon option issue of the programs at issue of the programs at option program, December 31, Vested option program, December 31, Vested Allotment date Maturity date SEK 2020 Allotment date Maturity date SEK 2020 Board LTIP 2018 May 18, 2017 May 31, 2020 43.28 30,451 95.81% US Co-worker LTIP 2020:1 December 7, 2020 December 7, 2023 107.07 639,010 2.28% Board LTIP 2018.2 March 11, 2019 March 12, 2022 79.66 2,170 83.59% 639,010 Board LTIP 2019 July 12, 2019 July 13, 2022 86.57 23,491 74.26% Board LTIP 2020 July 15, 2020 July 15, 2023 75.21 26,931 31.23% 83,043

ONCOPEPTIDES | ANNUAL REPORT 2020 79 (90) Notes

Note 28 Related-party transactions

Information about transactions between the Group and other related parties is presented below. For remuneration to members of senior management and the Board of Directors, refer to Note 10. Parent Company Purchase of services: 2020 2019 Purchase of services from subsidiaries 416,754 57,751 Total 416,754 57,751

Recognition of allotted options issued through the company’s incentive programs to related parties at December 31, 2020

Employee Option Program Co-worker Co-worker Co-worker Co-worker Co-worker Co-worker Co-worker Co-worker Co-worker 2016/2023:2 LTIP 2017:1 LTIP 2017:3 LTIP 2017:6 LTIP 2018:2 LTIP 2019:1 LTIP 2019:3 LTIP 2019:4 LTIP 2019:5 LTIP 2019:6

No. of No. of No. of No. of No. of No. of No. of No. of No. of No. of shares shares shares shares shares shares shares shares shares shares covered by covered by covered by covered by covered by covered by covered by covered by covered by covered by the option the option the option the option the option the option the option the option the option the option programs Vested programs Vested programs Vested programs Vested programs Vested programs Vested programs Vested programs Vested programs Vested programs Vested

CEO, Jakob Lindberg, 2011–June 30, 2020 157,500 100.0% 181,000 100.0% 23,190 95.3% – – 45,860 55.5% – – 65,373 33.3% – – – – – – CEO, Marty J Duvall, Jun 1, 2020– – – – – – – – – – – – – – – – – – – 243,212 16.1% Other members of senior management 11,700 100.0% 219,000 100.0% 58,307 95.3% 200,000 75.0% 81,836 55.5% 58,190 46.3% 145,793 33.3% 6,916 25.0% 8,032 18.8% – – Total 169,200 400,000 81,497 200,000 104,416 58,190 192,727 6,916 8,032 243,212

Recognition of granted share awards issued through the company’s performance-based incentive programs to related parties at December 31, 2020

Board LTIP 2018 Board LTIP 2018.2 Board LTIP 2019 Board LTIP 2020 No. of shares No. of shares No. of shares No. of shares covered by the covered by the covered by the covered by the share award share award share award share award program Vested program Vested program Vested program Vested Chairman of the Board Per Wold-Olsen 13,051 95.8% – – 9,035 74.3% 10,359 31.2% Cecilia Daun Wennborg, Board member 5,220 95.8% – – 3,614 74.3% 4,143 31.2% Ulf Jungnelius, Board member 5,220 95.8% – – 3,614 74.3% 4,143 31.2% Brian Stuglik, Board member 5,220 95.8% – – 3,614 74.3% 4,143 31.2% Jennifer Jackson, Board member – – 2,170 83.3% 3,614 74.3% 4,143 31.2% Total 28,711 2,170 83.3% 23,491 26,931

ONCOPEPTIDES | ANNUAL REPORT 2020 80 (90) Notes

Note 29 Pledged assets

Group Parent Company Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2020 2019

Shares of LFF Service AB 1 1 1 1 Bank guarantees paid 13,077 850 850 850 Total 13,078 851 851 851

The share in LFF Service AB is pledged and gives Läkemedelsföreningens Service AB an option to acquire the share at its quotient value (SEK 1,000) if Oncopeptides AB (publ) withdraws from the share agreement. Bank guarantees paid, refer to Note 16 Non-current receivables.

Note 30 Contingent liabilities

The Group and Parent Company had no contingent liabilities at December 31, 2020.

Note 31 Events after the end of the reporting period

PEPAXTO® (melphalan flufenamidem also known as melflufen), in combination with dexamethasone, was granted accelerated approval by the FDA on February 26 for the treatment of adult patients with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy and whose disease is refractory to at least one proteasome inhibitor, one immunomodulatory agent, and one CD38-directed monoclonal antibody. Oncopeptides plans to begin to market PEPAXTO immediately to healthcare personnel in the US. In March 2021, the Board of Directors of Oncopeptides, based on the issue authorization granted by the Annual General Meeting on May 26, 2020, resolved on a directed share issue of 7,000,000 new shares at a subscription price of SEK 158 per share, which means that Oncopeptides will receive gross proceeds of approximately SEK 1,106 million (approximately USD 130 million) after issue costs. In April 2021, Oncopeptides submitted an application to the European Medicines Agency, EMA, for conditional marketing authorization of melflufen (melphalan flufenamide) in the EU.

ONCOPEPTIDES | ANNUAL REPORT 2020 81 (90) The undersigned affirm that the annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden, and that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU. The annual accounts and the consolidated financial statements provide a true and fair view of the Parent Company’s and the Group’s financial position and results. The Directors’ Report for the Parent Company and the Group gives a true and fair overview of the development of the Parent Company’s and the Group’s activities, financial position and results, and describes the significant risks and uncertainties faced by the Parent Company and the companies included in the Group.

Stockholm April 21, 2021

Per Wold-Olsen Jonas Brambeck Cecilia Daun Wennborg Ulf Jungnelius Chairman of the Board Board member Board member Board member

Jennifer Jackson Brian Stuglik Per Samuelsson Marty J Duvall Board member Board member Board member CEO

Our Auditor’s Report was submitted on April 21, 2021. Ernst & Young AB Certification

Anna Svanberg Authorized public accountant

ONCOPEPTIDES | ANNUAL REPORT 2020 82 (90) ONCOPEPTIDES | ANNUAL REPORT 2020 Auditor’s Report with International Financial year then ended in accordance the for flow cash and mance 2020 and their financialperfor December 31 of as group the of respects, the financial position and present fairly, in all material Act Accounts Annual the with been prepared in accordance The consolidated accounts have Act. Accounts Annual the with year then ended in accordance the for flow cash and mance 2020 and its financialperfor December 31 of as company financial position ofthe parent in all material respects, the fairly, present and Act Accounts in accordance with the Annual accounts have been prepared document. this in 45-84 pages on included are company the of accounts dated annual accounts and consoli The statement on 50-55. pages for the corporate governance except 2020 year the for (Publ) accounts of AB Oncopeptides accounts and consolidated annual the audited We have Opinions and accounts consolidated onReport the annual accounts To the general meeting of of the shareholders AB Oncopeptides (Publ), number corporate 556596-6438 identity In our opinion, the annual - - - in the Auditor’s Responsibilities standards are described further under those responsibilities Our Sweden. in standards ing and generally accepted audit onStandards Auditing (ISA) accordance with International in audit our We conducted for Opinions Basis 11. Article (537/2014) dance with the Audit Regulation accor in committee audit ny's to thesubmitted parent compa thatadditional report has been the of content the with sistent consolidated accounts are con and accounts annual the on group. the and company parent the for statement sheet and balance holders adopts the income the general meeting of share accounts. accounts and consolidated annual the of parts other the is with consistent report tration adminis statutory The 50-55. governance statement on pages ions do not cover the corporate opin Our Act. Accounts Annual the and EU, the by adopted as (IFRS), Standards Reporting Our opinions in this report report this in opinions Our We therefore recommend that ------within the EU. the within companies controlled its or applicable, its parent company the audited company or, where to provided been have 5.1 Article the Audit Regulation (537/2014) hibited referred services to in pro no belief, and knowledge our of best the on based that, requirements. This includes these with accordance in ities our fulfilled ethical responsibil otherwise have and Sweden in for accountants ethics fessional group in accordance with pro the and company parent the of section. We are independent a whole, but we do not provide provide not do we but a whole, and consolidated accounts as ion thereon, the annual accounts opin our forming in of, and audit our of context the in addressed period. These matters were current the of accounts idated consol and accounts annual the of audit our in significance most professional were judgment, of our in that, matters those are audit the of matters audit Key matters audit Key a for basis our opinions. cient and appropriate to provide suffi is obtained have we dence We believe that the audit evi audit the that We believe ------we also take into account our our account into take also we In procedure this accounts. dated annual accounts and consoli materially inconsistent with the whether the information is identified above and consider information the read to is sibility solidated our accounts, respon con and accounts annual the of information. conclusion regarding this other assurance of form any express not do we and information other this cover not does accounts accounts and consolidated other information. this for responsible are Director of Directors and the Managing Board The 88-91. and 1-44 pages on found is and accounts dated annual accounts and consoli other information than the This document contains also dated accounts annual and accounts consoli Other information than the the auditor’s report. in communicated be to need that matters audit key no are there matters. a separate opinion on these In with connection our audit Our opinion on the annual We have determined that - - - - -

be materially misstated. information otherwise appears to the whether audit the and assess obtained in otherwise knowledge whether due to fraud or error. from material misstatement, free are that accounts idated consol and accounts annual of preparation the enable to essary nec is determine they as control responsible for such internal the Managing Director are also and Directors of Board The EU. the by adopted as IFRS with idated in accounts, accordance Act and, concerning the consol dance with the Annual Accounts accor in presentation afair give they that and accounts dated annual accounts and consoli the of preparation the for sible Managing Director are respon the and Directors of Board The Director Managing the and Directors of ofResponsibilities the Board regard. this in report to nothing have We fact. that report to required are we information, other this of misstatement amaterial is mation, conclude that there formed concerning this infor If we, based on the work per work the on based we, If 83 83 - - - (90) - - - - - Auditor’s Report

In preparing the annual is a high level of assurance, but as fraud may involve collusion, concern. If we conclude that a for the direction, supervision We describe these matters in the accounts and consolidated is not a guarantee that an audit forgery, intentional omissions, material uncertainty exists, we and performance of the group auditor’s report unless law or accounts, The Board of Directors conducted in accordance with misrepresentations, or the are required to draw atten- audit. We remain solely respon- regulation precludes disclosure and the Managing Director are ISAs and generally accepted override of internal control. tion in our auditor’s report to sible for our opinions. about the matter. responsible for the assessment auditing standards in Sweden • Obtain an understanding of the related disclosures in the of the company’s and the group’s will always detect a material the company’s internal control annual accounts and consol- We must inform the Board of Report on other legal and ability to continue as a going misstatement when it exists. relevant to our audit in order idated accounts or, if such Directors of, among other mat- regulatory requirements concern. They disclose, as appli- Misstatements can arise from to design audit procedures disclosures are inadequate, to ters, the planned scope and cable, matters related to going fraud or error and are considered that are appropriate in the modify our opinion about the timing of the audit. We must Opinions concern and using the going material if, individually or in the circumstances, but not for the annual accounts and consol- also inform of significant audit In addition to our audit of the concern basis of accounting. The aggregate, they could reason- purpose of expressing an opin- idated accounts. Our conclu- findings during our audit, includ- annual accounts and con- going concern basis of account- ably be expected to influence ion on the effectiveness of the sions are based on the audit ing any significant deficien- solidated accounts, we have ing is however not applied if the economic decisions of users company’s internal control. evidence obtained up to the cies in internal control that we also audited the administra- the Board of Directors and the taken on the basis of these • Evaluate the appropriateness date of our auditor’s report. identified. tion of the Board of Directors Managing Director intends to annual accounts and consoli- of accounting policies used and However, future events or con- We must also provide the and the Managing Director of liquidate the company, to cease dated accounts. the reasonableness of account- ditions may cause a company Board of Directors with a state- Oncopeptides AB (Publ) for the operations, or has no realistic As part of an audit in accordance ing estimates and related and a group to cease to con- ment that we have complied year 2020 and the proposed alternative but to do so. with ISAs, we exercise profes- disclosures made by the Board tinue as a going concern. with relevant ethical require- appropriations of the company’s The Audit Committee shall, sional judgment and maintain of Directors and the Managing • Evaluate the overall presenta- ments regarding independence, profit or loss. without prejudice to the Board professional skepticism through- Director. tion, structure and content of and to communicate with them We recommend to the general of Director’s responsibilities and out the audit. We also: • Conclude on the appropriate- the annual accounts and con- all relationships and other mat- meeting of shareholders that tasks in general, among other • Identify and assess the risks ness of the Board of Directors’ solidated accounts, including ters that may reasonably be the profit be appropriated in things oversee the company’s of material misstatement of and the Managing Director’s the disclosures, and whether thought to bear on our indepen- accordance with the proposal financial reporting process. the annual accounts and con- use of the going concern basis the annual accounts and con- dence, and where applicable, in the statutory administration solidated accounts, whether of accounting in preparing the solidated accounts represent related safeguards. report and that the members of Auditor’s responsibility due to fraud or error, design annual accounts and con- the underlying transactions From the matters com- the Board of Directors and the Our objectives are to obtain and perform audit procedures solidated accounts. We also and events in a manner that municated with the Board of Managing Director be discharged reasonable assurance about responsive to those risks, and draw a conclusion, based on achieves fair presentation. Directors, we determine those from liability for the financial whether the annual accounts obtain audit evidence that is the audit evidence obtained, • Obtain sufficient and appro- matters that were of most signif- year. and consolidated accounts as sufficient and appropriate to as to whether any material priate audit evidence regarding icance in the audit of the annual a whole are free from material provide a basis for our opinions. uncertainty exists related to the financial information of the accounts and consolidated Basis for opinions misstatement, whether due to The risk of not detecting a events or conditions that may entities or business activities accounts, including the most We conducted the audit in fraud or error, and to issue an material misstatement result- cast significant doubt on the within the group to express an important assessed risks for accordance with generally auditor’s report that includes our ing from fraud is higher than company’s and the group’s opinion on the consolidated material misstatement, and are accepted auditing standards in opinions. Reasonable assurance for one resulting from error, ability to continue as a going accounts. We are responsible therefore the key audit matters. Sweden. Our responsibilities

ONCOPEPTIDES | ANNUAL REPORT 2020 84 (90) Auditor’s Report

under those standards are fur- administration of the compa- which can give rise to liability administration and the proposed The auditor’s examination of the consolidated accounts and are ther described in the Auditor’s ny’s affairs. This includes among to the company, or appropriations of the company’s corporate governance statement in accordance with the Annual Responsibilities section. We are other things continuous assess- • in any other way has acted profit or loss is based primar- The Board of Directors is Accounts Act. independent of the parent com- ment of the company’s and the in contravention of the ily on the audit of the accounts. responsible for that the corpo- pany and the group in accor- group’s financial situation and Companies Act, the Annual Additional audit procedures rate governance statement on Ernst & Young AB, dance with professional ethics ensuring that the company's Accounts Act or the Articles of performed are based on our pro- pages 50-55 has been prepared Jakobsbergsgatan 24, for accountants in Sweden and organization is designed so that Association. fessional judgment with starting in accordance with the Annual Stockholm, was appointed audi- have otherwise fulfilled our ethi- the accounting, management point in risk and materiality. This Accounts Act. tor of Oncopeptides AB (Publ) cal responsibilities in accordance of assets and the company’s Our objective concerning the means that we focus the exam- Our examination of the cor- by the general meeting of the with these requirements. financial affairs otherwise are audit of the proposed appropri- ination on such actions, areas porate governance statement is shareholders on the 26 May 2020 We believe that the audit evi- controlled in a reassuring man- ations of the company’s profit and relationships that are mate- conducted in accordance with and has been the company’s dence we have obtained is suffi- ner. The Managing Director shall or loss, and thereby our opinion rial for the operations and where FAR´s auditing standard RevR 16 auditor since the 21 May 2019. cient and appropriate to provide manage the ongoing administra- about this, is to assess with deviations and violations would The auditor´s examination of the a basis for our opinions. tion according to the Board of reasonable degree of assurance have particular importance for corporate governance statement. Stockholm, 21 April 2021 Directors’ guidelines and instruc- whether the proposal is in accor- the company’s situation. We This means that our examina- Responsibilities of the Board tions and among other matters dance with the Companies Act. examine and test decisions tion of the corporate governance Ernst & Young AB of Directors and the Managing take measures that are nec- Reasonable assurance is a undertaken, support for deci- statement is different and sub- Director essary to fulfill the company’s high level of assurance, but is sions, actions taken and other stantially less in scope than an The Board of Directors is respon- accounting in accordance with not a guarantee that an audit circumstances that are relevant audit conducted in accordance Anna Svanberg sible for the proposal for appro- law and handle the management conducted in accordance with to our opinion concerning dis- with International Standards on Authorized Public Accountant priations of the company’s profit of assets in a reassuring manner. generally accepted auditing charge from liability. As a basis Auditing and generally accepted or loss. At the proposal of a div- standards in Sweden will always for our opinion on the Board of auditing standards in Sweden. idend, this includes an assess- Auditor’s responsibility detect actions or omissions that Directors’ proposed appropria- We believe that the examination ment of whether the dividend Our objective concerning the can give rise to liability to the tions of the company’s profit or has provided us with sufficient is justifiable considering the audit of the administration, and company, or that the proposed loss we examined whether the basis for our opinions. requirements which the com- thereby our opinion about dis- appropriations of the company’s proposal is in accordance with A corporate governance pany's and the group’s type of charge from liability, is to obtain profit or loss are not in accor- the Companies Act. statement has been prepared. operations, size and risks place audit evidence to assess with dance with the Companies Act. Disclosures in accordance with on the size of the parent compa- a reasonable degree of assur- As part of an audit in accor- chapter 6 section 6 the sec- ny's and the group’s equity, con- ance whether any member of dance with generally accepted ond paragraph points 2-6 of solidation requirements, liquidity the Board of Directors or the auditing standards in Sweden, the Annual Accounts Act and and position in general. Managing Director in any mate- we exercise professional judg- chapter 7 section 31 the second The Board of Directors is rial respect: ment and maintain professional paragraph the same law are responsible for the compa- • has undertaken any action or skepticism throughout the consistent with the other parts ny’s organization and the been guilty of any omission audit. The examination of the of the annual accounts and

ONCOPEPTIDES | ANNUAL REPORT 2020 85 (90) Per Wold-Olsen Brian Stuglik Cecilia Daun Wennborg Jarl Ulf Jungnelius MBA, Chairman of the Board. B.Pharm, Board member. MSc, Board member. MD, PhD, Board member. Elected in 2018. Elected in 2018. Elected in 2017. Elected in 2011. Per has extensive experience in Brian has a long and broad Cecilia has 14 years of experience Ulf is a licensed medical practi- the pharmaceutical industry and experience in the pharmaceutical from board positions in listed tioner and a specialist in a number has held many different positions industry. He has worked for 30 companies and 20 years of experi- of areas including oncology. He has at Merck & Co., Inc. He served in years and held several positions at ence from operational positions in published a number of scientific Merck’s executive management the pharmaceutical company Eli the insurance, bank, and care and articles and has more than 25 team from 1994 to 2006. Since Lilly, both with US as well as global healthcare sectors, including as years’ experience in leadership 2006, he has served on sev- focus and responsibilities. Over the CFO and CEO of Skandia Link, Head positions in both large academic eral boards, including Lundbeck, past 25 years, his work has been of Skandia Sverige, CFO of Carema and corporate institutions. Board of Board Pharmaset and Royal Dutch Numico. focused on product strategy and Vård & Omsorg AB and Ambea AB, He has been instrumental in the Per holds an MBA in finance commercialization for oncological CEO of Carema Vård & Omsorg AB development and registration of and administration from products. and Deputy CEO of Ambea AB. gemcitabine (Gemzar), preme-

Directors Handelshøyskolen BI and an MBA Brian has a Bachelor of Pharmacy Cecilia holds a MSc in business trexed (Alimta), Sunitinib (Sutent), in Management and Marketing from degree from Purdue University, US. and economics from Stockholm lenalidomide (Revlimid) and the the University of Wisconsin. Born: 1959 University. albumin bound nanoparticle pacli- taxel (Abraxane). Born: 1947 Holdings in Oncopeptides: Born: 1963 Board committees: Chairman of 12,977 share awards2 Board committees: Chairman of Born: 1951 the Remuneration Committee and Other current positions: the Audit Committee. Holdings in Oncopeptides: 57,750 member of the Audit Committee CEO of Verastem Inc. Founder Holdings in Oncopeptides: 11,800 shares and 12,977 share awards2 and Nomination Committee. of Proventus Healthcare shares and 12,977 share awards2 Other current positions: CEO of Holdings in Oncopeptides: 70,917 Solutions LLC and has served Isofol Medical AB. Senior Oncology 2 Other current positions: Board shares and 32,445 share awards as CEO of the company since member of Getinge AB, Bravida Advisor at Noxxon AG. Board Other current positions: Chairman 2016. Member of the American Holding AB, ICA Gruppen member of Biovica International of the Board of MMV (Medicines Society of Clinical Oncology, the AB, Loomis AB, Atvexa AB, AB, Ryvu Therapeutics and for Malaria Venture) and GN Store American Association for Cancer Insamlingsstiftelsen Oxfam HealthCom GmbH. Nord A/S. He is also a Board Research. Board member of Puma Sverige, Hotel Diplomat AB and Independent in relation to the member of Gilead Sciences, Inc. Biotechnology and member of the CDW Konsult AB. Member of the company and its management and International Association for the Swedish Securities Council. in relation to major shareholders. Independent in relation to the Study of Lung Cancer. company and its management and Independent in relation to the in relation to major shareholders. Independent in relation to the company and its management and company and its management and in relation to major shareholders. in relation to major shareholders.

ONCOPEPTIDES | ANNUAL REPORT 2020 86 (90) Jennifer Jackson Jonas Brambeck Per Samuelsson PhD, Board member. MSc, PhD, Board member. MSc, Board member. Elected in 2018. Elected in 2008. Elected in 2012. Jennifer is Senior Vice President Jonas is an Investment Director Per is a partner at HealthCap, a life of Regulatory Affairs and Quality at Industrifonden, a leading sciences venture capital business. Assurance and a member of the Nordic venture capital fund, and a Per has over 15 years’ investment executive leadership team at member of the Board of Directors banking experience, mainly with Tesaro INC. She has more than 25 of the life sciences companies Aros Securities in Sweden, where years of experience in global clin- Oxthera AB and Avidicare AB he served as Director, Corporate ical development and regulatory (deputy). Finance and Head of Equity work for small molecules and bio- He has previously held positions Research. Per holds an MSc in logics across multiple therapeutic in several life science companies, engineering from the Institute of areas including oncology. such as AstraZeneca, Bruker Technology at Linköping University. Jennifer has held several Instruments and Nobel. Born: 1961 senior positions at Cubist Jonas holds a PhD in organic Board committees: Member of Pharmaceuticals, Biogen, Vertex chemistry from the Royal Institute the Audit Committee and the and Bristol-Myers Squibb. of Technology in Stockholm. Remuneration Committee. Jennifer earned her Ph.D. in Born: 1958 Holdings in Oncopeptides: – Genetics at Cornell University and did her postdoctoral work Board committees: Member of the Other current positions: Board at Massachusetts Institute of Remuneration Committee and the member of Ancilla AB, Cantando Technology. She is a member of Audit Committee. AB, Cantando Holding AB, the American Society of Clinical Holdings in Oncopeptides: – HealthCap AB, HealthCap Annex Oncology. Fund I-II GP AB, HealthCap Orx Other current positions: Senior Holdings GP AB, HealthCap 1999 GP Born: 1953 Investment Director at Stiftelsen AB, HealthCap III Sidefund GP AB, Holdings in Oncopeptides: 9,927 Industrifonden. Board member Skipjack AB, SwedenBIO Service share awards2 of OxThera AB and OxThera AB, Nordic Nanovector ASA and Intellectual Property AB. Deputy Targovax ASA. Other current positions: SVP Board member of Avidicare AB and Regulatory Affairs and Quality Airsonett AB. Independent in relation to the Assurance at Tesaro. company and its senior manage- Independent in relation to the Independent in relation to the ment, but not in relation to major company and its senior man- shareholders. Partner in HealthCap company and its management and agement, but not in relation to in relation to major shareholders. and Board member of several com- major shareholders. Employee of panies in the HealthCap Group. Stiftelsen Industrifonden.

ONCOPEPTIDES | ANNUAL REPORT 2020 87 (90) Marty J Duvall Anders Martin-Löf Jakob Lindberg Eva Nordström Fredrik Lehmann CEO since 2020. MSc Med Lic MSc Pharm PhD Marty has extensive experience of CFO and Deputy CEO since 2018. CSO since 2020. Vice President, Chief Operating Head of Research and CMC since 2010. leading positions in drug develop- Anders was previously CFO of In addition to being CSO of Officer since 2020. Fredrik is also an independent con- ment and commercialization in the Wilson Therapeutics AB and Oncopeptides, Jakob is a Venture Eva Nordström was appointed Head sultant in preclinical research and global biotech and drug industries, RaySearch Laboratories AB, both Partner at Patricia Industries, part of Clinical Development in 2012 and CMC outside Oncopeptides. and unique experience from the listed on Nasdaq Stockholm. He of Investor AB. Chief Operating Officer in 2020. areas of oncology and hematology. Fredrik has previously held posi- held various business development Jakob served as CEO for Eva is responsible for strategic and tions at a number of life science Prior to his start at Oncopeptides, he positions for Swedish Orphan Oncopeptides AB between 2011 operational issues in Biostatistics, businesses including Pharmacia, served as CEO of Tocagen Inc. He has Biovitrum, where he also served and 2020. He has previously Clinical Operations, Data Personal Chemistry, Biovitrum and previously held positions as Executive as Director of Investor Relations. worked as an analyst for Merrill Management, Global Drug Supply Recipharm. He has also co-founded Vice President and Chief Commercial In addition, Anders has worked as Lynch & Co and as a consultant and Project & Process Management. six life science companies. Officer at ARIAD and led the compa- a management consultant at the for McKinsey & Co. Jakob also Eva has previously held the roles Fredrik holds a PhD in medicinal ny’s transition to an integrated global Boston Consulting Group and Cell co-founded Cellectricon, a pro- of Global Product Director and biotech company. Marty has been Network, and was the co-founder chemistry from the University of vider of cell-based screening ser- Vice President at Pharmacia and Gothenburg. Senior Vice President and General and CEO of the consultancy firm vices to accelerate drug discovery, AstraZeneca based both in Sweden Manager, Oncology at Merck & Co., ScienceCap. where he also served as CEO. and the USA. She has led inter- Born: 1976 Inc. Prior to this he was Senior Vice Anders holds an MSc in engineering national cross-functional teams Holdings in Oncopeptides: 13,000 President for Global Marketing and Jakob studied medicine at the physics from the Royal Institute of Karolinska Institute, where he through all phases of drug devel- shares (12,000 directly owned, International Commercial Operations Technology and a BSc in Business opment, including phase 3 and 1,000 indirectly owned through OT at Abraxis Bioscience, Inc. and gained a Med Lic in Molecular Administration and Economics Immunology and an MSc in pre- product launches. Eva has been Lehmann Holding AB), 13 employee Senior Vice President Commercial 1 2 from Stockholm University. clinical medicine. He also has a BA responsible for individual project options and 106,705 options . Operations at MGI Pharma. He has strategies including their imple- held a number of roles at Sanofi Born: 1971 in finance and administration from Other current positions: Management Stockholm University. mentation as well as therapy area Board member and CEO of OT within commercialization, marketing Holdings in Oncopeptides: 6,000 strategies, drug pipeline manage- and sales. shares and 274,376 options2. Born: 1972 Pharmaceuticals AB. Board member ment and in-licensing. of OT Lehmann Holding AB and Marty holds an MA in Chemistry Other current positions: Board Holdings in Oncopeptides: 560,831 Eva holds an MSc Pharm from Chairman of the Board of Synartro from Johns Hopkins University, an member of Cantargia AB and Board (545,531 directly owned, 15,300 Uppsala University and an AB. Board member of Sprint MBA from The University of Kansas member of Oncopeptides indirectly owned through Lindberg Executive MBA from Stockholm Bioscience and member of the and a BS in Chemistry Incentive AB. Life-Science AB), 175 employee School of Economics. Scientific Advisory Board of Akthelia from Muhlenberg College. options1 and 349,668 options2. Born: 1970 Pharmaceuticals. Born: 1962 Other current positions: Director of Affibody Medical AB and Lindberg Holdings in Oncopeptides: 120,200 Holdings in Oncopeptides: 8,800 shares and 156,407 options2. shares 406,262 options2. Life-Science AB. CEO of Lindberg Life-Science AB. Other current positions: Deputy Other current positions: Chairman of Board member of Utilica AB. Oncopeptides, Inc. Board member of Oncopeptides Incentive AB. ONCOPEPTIDES | ANNUAL REPORT 2020 88 (90) Andrea Passalacqua Karolina Vilval Klaas Bakker Mohamed Ladha Rolf Gulliksen General Manager, Europe since LL.M MD, PhD General Manager, US Business Unit, Global Head of Corporate March 2021. General Counsel since 2020. EVP and Chief Medical Officer since 2020. Communications since 2020. Andrea has commercial experience Karolina has been active as a Legal since 2019. Before Mohamed joined Rolf has a substantial background in the biotech and pharmaceutical Counsel in the pharmaceutical Klaas has held senior roles at Oncopeptides, he worked for over from leading communication industries and extensive knowledge industry for the past 15 years. AstraZeneca, most recently as Vice 17 years with oncology and spe- roles in the pharmaceutical, life of therapy areas hematology, oncol- President Medical Affairs for their cialist healthcare, and led teams science and consultant industries. ogy, inflammation and immunology. Prior to joining Oncopeptides, in sales, marketing, market access, Previous positions include Head Karolina worked at Gilead Global Tagrisso TDR franchise, with Before Andrea began at global responsibility in oncology. In commercialization and medical of Corporate Communications at Sciences, Nordic affiliates as affairs at various pharmaceutical Hansa Biopharma, SVP Corporate Oncopeptides, he served as General Associate Legal Director. this role he was responsible for the Manager at Bluebird bio in Italy, global launch of Osimertinib, the and biotech companies. Communications at Biovitrum, where he led the launch of gene Previously, Karolina has worked company’s largest asset across all Prior to joining Oncopeptides, Corporate Affairs Director at therapy products. He has previously at Biovitrum and Swedish Orphan therapeutic areas. Mohamed served as Group Vice Pfizer, VP Public Affairs and served as Business Unit Director for Biovitrum (Sobi) in various posi- President and Head of Commercial Communications in Europe for tions in Legal Affairs. Klaas holds an MD and is a Pharmacia and Pharmacia & Amgen Switzerland in inflamma- board-certified neurosurgeon from & Medical Affairs at Tocagen, a tion and immunology. He has also Karolina holds a law degree from gene therapy and immuno-oncol- Upjohn, as well as External Affairs the university of Groningen, the Manager at MSD. He has also been served as Business Unit Director Stockholm University. Netherlands, where he was clini- ogy company focused on cancer. for Celgene in Switzerland where Prior to this, he led the US focused responsible for life science oper- Born: 1979 cally active until 2015. In addition, ations at communication bureaus he was responsible for hematol- he holds a PhD in Hematology and franchise portfolio for lung cancer ogy, oncology, inflammation and Holdings in Oncopeptides: at Takeda Oncology, and the global such as Hallvarsson & Halvarsson 2 has authored over 40 publications immunology. At Celgene, Andrea 14,106 options . franchise portfolio for lung cancer Group, Springtime, InVivo and in international peer-reviewed Edelman Worldwide in Europe. held several senior international Other current positions: Board journals. at ARIAD Pharmaceuticals, that is positions: Business Unit Director member of Oncopeptides now a part of Takeda Oncology. Rolf has studied chemistry, biology, Born: 1982 Spain, Executive Director Pricing Incentive AB. Mohamed comes with extensive physics, geology, pedagogy and & Market Access Europe, Senior Holdings in Oncopeptides: 10,000 experience of commercial leader- methodology at Uppsala University. 2 Director Global Marketing Oncology shares and 136,815 options . ship and launches in oncology from Born: 1959 and Director European Oncology senior positions such as General Franchise. Before Andrea worked in Holdings in Oncopeptides: Manager for Biosimilars Business 5,499 options2. the biotech sector, he worked as a at Pfizer/Hospira and Global Brand/ consultant at McKinsey & Company. Portfolio Lead and Commercial Other current positions: CEO and Andrea hold an MBA from IESE Development at Schering-Plough/ Senior Advisor, Gulliksen Strategic Relations AB. Business School (University of Merck. 1) Each vested employee option entitles Navarra), and a Master of Science Born: 1970 the holder to acquire 900 shares per in Telecom Engineering from option in the company. Sapienza University of Rome. Holdings in Oncopeptides: 2) One share award entitles to one share 82,367 options2. Born: 1977 in accordance with existing terms. Holdings in Oncopeptides AB (publ) at Holdings in Oncopeptides: N/A March 30, 2021.

ONCOPEPTIDES | ANNUAL REPORT 2020 89 (90) Oncopeptides’ AGM will be held Shareholders who wish to par- May 26, 2021 Q1 interim report on Tuesday, May 26, 2021. Due ticipate at the Annual General May 26, 2021 AGM to the extraordinary situation Meeting, through advance August 26, 2021 Q2 interim report resulting from the covid-19 pan- voting, must be entered in the November 18, 2021 Q3 interim report demic, Oncopeptides’ Annual share register of the Company, General Meeting will be car- kept by Euroclear Sweden ried out through advance voting AB (the Swedish Central (postal voting) pursuant to tem- Securities Depository & Clearing porary legislation. No meeting Organisation), on Tuesday 18 with the possibility to attend in May 2021 and must notify their person or to be represented by a participation by casting their proxy will take place. Hence, the advance vote to the Company Annual General Meeting will be no later than on Tuesday 25 held without physical presence. May 2021. Contact Calendar 2021 AGM 2021

Oncopeptides AB Street address and postal address: Luntmakargatan 46, SE-111 37 Stockholm, Sweden Registered office: Västra Trädgårdsgatan 15, SE-111 53 Stockholm Telephone: +46 (0)8-615 20 40 E-mail: [email protected] Website: oncopeptides.com

ONCOPEPTIDES | ANNUAL REPORT 2020 90 (90)

Multiple Myeloma ���������������������� P.12 Consolidated Statement Difference for Patients.” of Changes in Equity ����������������� P.56 Read More on Page 4

Multiple Myeloma �� P.12 Consolidated Statement Difference for Patients.” of Changes in Equity �� P.56 Read More on Page 4