HALF-YEAR REPORT 2019 Worldreginfo - F1b4840d-3Aaa-4093-82D3-3B7d6701d3b7

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VIFOR PHARMA HALF-YEAR REPORT 2019 WorldReginfo - f1b4840d-3aaa-4093-82d3-3b7d6701d3b7

Half Year Report 2019_English_1 1 05.08.2019 13:10:48 PATIENTS AT OUR CORE

About Andy Andy is a chef based in London with his wife Sarah and son Noah. He has lived with iron deficiency since being diagnosed at the age of 16.

Despite living with iron deficiency and Crohn’s disease, he leads an active life and has a passion for food. He successfully competes at international cooking competitions.

Andy recognises the signs and symptoms of iron deficiency and is able to proactively manage his iron levels with his physician, and the support of his wife. Today, Andy enjoys life without restrictions. WorldReginfo - f1b4840d-3aaa-4093-82d3-3b7d6701d3b7

Half Year Report 2019_English_1 2 05.08.2019 13:10:51 TABLE OF CONTENTS

04 Letter to shareholders 27 2019 Outlook and financial guidance 06 Highlights 09 Vision, mission and strategy 28 Consolidated interim financial statements 10 Performance overview 30 Consolidated statement of income 31 Consolidated statement of 12 Our products comprehensive income Key growth drivers 32 Consolidated statement of financial position 14 Ferinject®/Injectafer® 33 Consolidated statement of changes in equity 18 Vifor Fresenius Medical Care Renal Pharma 34 Consolidated statement of cash flows 18 RENAL ANAEMIA MANAGEMENT 35 Notes to the consolidated financial statements 18 – Erythropoiesis-Stimulating Agents (ESAs) 18 – Mircera® 42 Upcoming dates 18 – Retacrit™ 43 Contact information 18 – Venofer® 19 – Vadadustat 19 MINERAL AND BONE MANAGEMENT 19 – Velphoro® 19 – Rayaldee® 20 KIDNEY FUNCTION PRESERVATION 20 – Avacopan 20 – CCX140 20 CONDITIONS ASSOCIATED WITH KIDNEY IMPAIRMENT AND ITS TREATMENT 20 – CR845 22 Veltassa® 24 Other products 24 – Maltofer® 24 – VIT-2763 25 OM PHARMA 25 – Broncho-Vaxom® 25 – Uro-Vaxom® 25 – Doxium®

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LETTER TO SHAREHOLDERS

Etienne Jornod Stefan Schulze

DEAR SHAREHOLDER,

Vifor Pharma Group achieved a strong financial 25% and 30%. The progress achieved in the first and operating performance in the first half of half of 2019 also makes us confident to achieve 2019, building on the outstanding progress made our Milestone 2020 targets of more than CHF 2 in 2018. Through sustained focus on the execu- billion net sales and EBITDA in the range of tion of our three strategic growth drivers, we are CHF 700 million. on track to deliver our ambitious financial and business goals, and to realise our vision of Each of our three growth drivers, Ferinject®/ becoming global leader in iron deficiency, Injectafer®, the joint company Vifor Fresenius nephrology and cardio-renal therapies. Medical Care Renal Pharma, and Veltassa® delivered a strong performance in H1 2019. It is now more than two years since we created Vifor Pharma as a stand-alone company. We are very happy to report that the positive momen- FERINJECT®/INJECTAFER® tum continued into 2019 and we are well posi- tioned to achieve our objectives for both the full Ferinject®/Injectafer® expanded its position as year 2019 and Milestone 2020. Furthermore the global leader in intravenous (i.v.) iron in value, we are increasingly focused on the goals of with strong growth particularly in the areas of Objective 2025. gastroenterology in the US, and in chronic heart failure and patient blood management in Europe. During the first half of 2019, Vifor Pharma Group By June 2019, the product was approved in 81 further expanded its global leadership position countries, with more than 10 million years of in iron deficiency and continued to move patient experience. We continue to expect full towards leadership in nephrology and cardio- year reported growth of approximately 20% and renal therapies. Total net sales increased by in-market sales for Ferinject®/Injectafer® of 22.2% to CHF 913.3 million, compared to prior more than CHF 1 billion for the full year 2019. year, and reported EBITDA was up 32.6% at CHF 254.6 million compared to CHF 192.0 million in H1 2018. VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA (VFMCRP) We have raised our full year guidance for 2019 with net sales expected to exceed 15% and The partnership with Fresenius Medical Care reported EBITDA expected to grow between through the joint company VFMCRP is the basis

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Half Year Report 2019_English_1 4 05.08.2019 13:10:57 of our ambition to become the global leader imbursement negotiations and launches will in nephrology. The VFMCRP portfolio continued continue in line with individual reimbursement to grow in the first six months of 2019, due in timelines across Europe throughout 2019 and particular to the recent outstanding success of 2020. Veltassa® is on track to achieve growth in Velphoro® in the US. 2019 of approximately 50%.

Mircera® also continued to perform strongly, We are investing in studies that demonstrate exceeding all expectations, primarily due to Veltassa®’s benefits to both patients and clini- the conversion of existing long-acting erythro- cians. Positive results from the phase-II AMBER poiesis-stimulating agent (ESA) patients within study were announced in May 2019, demonstrat- mid-sized and independent dialysis organisations ing Veltassa®’s potential to help patients with in the US. resistant hypertension and CKD to maintain optimal treatment. The DIAMOND study, evaluat- Venofer® maintained its position as the world’s ing the potential of Veltassa® in combination with leading i.v. iron brand in volume terms, with more renin-angiotensin-aldosterone system inhibitors than 25 million patient years of experience. (RAASi) medications to improve patient out- The publication of the PIVOTAL study results in comes, enrolled its first patient in May 2019. Q4 2018 helped to confirm the tolerability of Venofer® as a key differentiator, one of the main reasons the brand retains strong demand after FERROPORTIN many decades on the market. Vifor Pharma also made important progress with In April, we further expanded our partnership its own in-house developed product. In January, with Akebia in the US for vadadustat, creating we reported positive phase-I results from VIT-2763, an opportunity for it to be provided to up to 60% an oral ferroportin inhibitor, which aims to of US dialysis patients, subject to FDA approval. treat diseases related to iron overload. This has provided a strong basis for a phase-II study Velphoro® grew significantly in the US in the first planned to begin in the second half of 2019. half of 2019. This growth was driven by the update of the KDIGO (Kidney Disease Improving Global Outcomes) guidelines in 2017, to recommend the ORGANISATION use of non-calcium-based phosphate binders. The Board of Directors was further strengthened In May, our partner Cara Therapeutics, Inc. in May by the election of Dr Sue Mahony and announced positive results from the first US Kim Stratton to the Board of Directors. We would phase-III trial of CR845 in haemodialysis patients like to express our gratitude to Daniela Boss- with moderate-to-severe pruritus associated with hardt-Hengartner, Dr Sylvie Grégoire and Fritz chronic kidney disease (CKD). The results showed Hirsbrunner who stepped down after many statistically significant improvements in both the years of distinguished service. primary and secondary endpoints, with top-line results from a second global phase-III trial Our success in the first half of 2019 was made expected in H2 2019. possible due to the support of our shareholders and dedicated, talented employees across Vifor Pharma Group, who continue to deliver our VELTASSA® company mission – helping patients around the world with severe and chronic diseases, lead Veltassa®, our third strategic growth driver, better, healthier lives. continued to transform the treatment of patients with hyperkalaemia in the first half of the year. By Yours sincerely, the end of June, Veltassa® had been prescribed to over 100,000 patients since launch in the US, and is among the fastest growing nephrology drugs in the last ten years.

In May 2019, the Act on the Reform of the Market Etienne Jornod Stefan Schulze for Medicinal Products (AMNOG) process Executive Chairman of President of the for Veltassa® in Germany was completed, with the Board of Directors Executive Committee Veltassa® now fully reimbursed. Further re- and COO

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Half Year Report 2019_English_1 5 05.08.2019 13:10:57

HIGHLIGHTS

NET SALES MILLION CHF 913.3+22.2%

EBITDA MILLION CHF 254.6+32.6%

CORE EARNINGS¹ CASH FLOW FROM PER SHARE OPERATING ACTIVITIES EQUITY RATIO

2.11 CHF 197.9 MILLION CHF 74.0% –20.7% +159.6 million CHF –0.8 p.p.

1 Core earnings are defined as reported earnings after minorities adjusted for proportionate amortisation of intangible assets.

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Half Year Report 2019_English_1 6 05.08.2019 13:10:57 TOTAL FERINJECT®/ INJECTAFER® NET SALES MILLION CHF 273.4+19.4%

MIRCERA® NET SALES MILLION CHF 276.2+29.0%

VELTASSA® NET SALES MILLION CHF 62.6+69.9%

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Half Year Report 2019_English_1 8 05.08.2019 13:10:58 VISION, MISSION AND STRATEGY

Our vision To be global leader in iron deficiency, nephrology and cardio-renal therapies. The partner of choice for specialty pharmaceuticals and innovative, patient-focused solutions.

Our mission We strive to help patients around the world with severe and chronic diseases lead better, healthier lives.

Our strategy Building on our history of global leadership in the treatment of iron deficiency, we have used our expertise in research and development, in-licensing, manufacturing, regulatory affairs and commercialisation to expand into the complementary fields of nephrology and cardio-renal therapies. By focusing on in-licensing new products, in-house development using our expertise in iron-based therapies and building strong partnerships, we bring innovative products and services to patients around the world.

Our three strategic growth drivers Ferinject®/Injectafer® Vifor Fresenius Medical Care Renal Pharma (VFMCRP) Veltassa®

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Half Year Report 2019_English_1 9 05.08.2019 13:10:58

PERFORMANCE OVERVIEW

KEY PROFIT AND LOSS FIGURES Investments in R&D amounted to CHF 109.4 million compared to CHF 91.9 million in the prior Vifor Pharma Group net sales grew to CHF 913.3 period. The increase was driven by the initiation 485.1 million, a strong increase of 22.2% compared to of the DIAMOND study for Veltassa®. the previous year or 21.0% on a constant currency basis. EBITDA increased to CHF 254.6 million General and administration expenses amount- compared to CHF 192.0 million in the prior ed to CHF 83.8 million compared to CHF 82.3 period, an increase of 32.6%. This increase was million in the prior period. The increase is mainly largely due to the strong growth in sales com- attributable to higher personnel cost. bined with cost containment. The average number of full-time employees The application of the new leasing standard (FTE) amounted to 2,764 in H1 2019, compared to (IFRS 16) resulted in a higher EBITDA in H1 2019 of 2,658 in H1 2018. The increase of 106 FTEs is CHF 8.5 million. IFRS 16 was not retrospectively driven by an expansion of Vifor Pharma’s com- applied and thus the comparative 2018 reporting mercial and production workforce. period was not restated. Depreciation and amortisation amounted to Other operating income declined to CHF 20.4 CHF 106.0 million compared to CHF 76.7 million million from CHF 41.0 million in the prior period. in the prior period and are mainly included in cost This was primarily due to the expected decrease of sales (84% and 89%, respectively) as intangible of royalty payments from CellCept® as well as assets amortisation, principally for Veltassa® and lower income from partnering activities. Mircera® rights.

Cost of sales amounted to CHF 373.3 million The net financial result amounted to an expense compared to CHF 288.1 million in the prior of CHF 8.9 million in H1 2019 compared to period, resulting in a gross profit margin of an income of CHF 41.8 million in H1 2018. The 60.0% compared to 63.5% in H1 2018. The strong decrease compared to H1 2018 is mainly due to growth of higher margin products such as the material foreign exchange gain of CHF 42.9 Ferinject®/Injectafer® was offset by decreasing million in H1 2018 on USD denominated inter- CellCept® royalties, lower partnering income company loans which were settled on 30 June as well as increasing asset amortisation related 2018. to Mircera® rights. Tax expense amounted to CHF 13.8 million in Marketing and distribution expenses amounted H1 2019 corresponding to an effective tax rate of to CHF 218.5 million, up 3.6% from the prior 9.9%. The approval of the Swiss tax reform in period. The main drivers were the investments May 2019 did not have a material impact on the in pre-launch activities and the commercial tax expense in 2019. organisations to further grow Ferinject®, as well as the continued rollout of Veltassa®.

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Half Year Report 2019_English_1 10 05.08.2019 13:10:58 Net profit after minorities for H1 2019 de- FINANCIAL POSITION creased to CHF 65.2 million compared to CHF 118.0 million in the prior period. The de- Goodwill and intangible assets amounted to crease is mainly due to the exceptional foreign CHF 2,643.0 million at the end of H1 2019 exchange gain on USD denominated inter compared to CHF 2,676.0 million at the end of company loans of CHF 42.9 million in the prior 2018, representing 59.0% of total assets (end year as well as higher tax expenses. of 2018: 59.5%).

Core earnings per share amounted to CHF 2.11 Net debt was CHF –242.8 million resulting in H1 2019, a decrease of 20.7% compared to in a net-debt-to-EBITDA ratio of 0.54 at the end CHF 2.66 in H1 2018. The decrease is due to the of H1 2019. This is compared to net debt of exceptional foreign exchange gain of CHF 42.9 CHF –179.7 million at the end of 2018. The million as well as tax gains due to unrecognised increase was driven by the dividend distributions tax losses of CHF 22.4 million in the previous year. of CHF 174.7 million in H1 2019. Excluding these exceptional impacts in H1 2018 core earnings increased by 27.8%. Core earnings With CHF 3,311.7 million of shareholders’ equity, are defined as reported earnings after minorities Vifor Pharma Group had a strong equity ratio of adjusted for proportionate amortisation of 74.0% at the end of H1 2019 compared to 74.8% intangible assets of CHF 71.9 million in H1 2019 at the end of 2018. The slight decrease is mainly (H1 2018: CHF 54.5 million). due to the recognition of lease liabilities with the adoption of IFRS 16. The return on equity after CASH FLOWS minorities amounted to 2.2% in H1 2019, compared to 3.9% in H1 2018. Cash flow from operating activities amounted to CHF +197.9 million compared to CHF +38.4 million in the prior period. The increase is due to the strong operating result of Vifor Pharma in H1 2019 as well as an optimised net working capital.

Cash flow from investing activities amounted to CHF –71.1 million due to upfront and milestone payments for in-licensing agreements of CHF –52.4 million, mainly in respect of the extension of commercialisation rights of Mircera® of CHF –37.7 million.

Cash flow from financing activities amounted to CHF –202.9 million and was mainly influenced by dividend distributions of CHF –174.7 million, whereof CHF –45.0 million was paid to Fresenius Medical Care and CHF –129.7 million was distrib- uted to shareholders of Vifor Pharma in May 2019.

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Half Year Report 2019_English_1 11 05.08.2019 13:10:58 KEYHALF-YEAR GROWTH REPORT DRIVERS 2019 OUR PRODUCTS

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Half Year Report 2019_English_1 12 05.08.2019 13:10:58 TABLE OF CONTENTS

Key growth drivers 14 Ferinject®/Injectafer® 18 Vifor Fresenius Medical Care Renal Pharma 18 RENAL ANAEMIA MANAGEMENT 18 – Erythropoiesis-Stimulating Agents (ESAs) 18 – Mircera® 18 – Retacrit™ 18 – Venofer® 19 – Vadadustat 19 MINERAL AND BONE MANAGEMENT 19 – Velphoro® 19 – Rayaldee® 20 KIDNEY FUNCTION PRESERVATION 20 – Avacopan 20 – CCX140 20 CONDITIONS ASSOCIATED WITH KIDNEY IMPAIRMENT AND ITS TREATMENT 20 – CR845 22 Veltassa® 24 Other products 24 – Maltofer® 24 – VIT-2763 25 OM PHARMA 25 – Broncho-Vaxom® 25 – Uro-Vaxom® 25 – Doxium®

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Half Year Report 2019_English_1 13 05.08.2019 13:10:58 KEY GROWTH DRIVERS FERINJECT®/INJECTAFER®

Our first key growth driver Ferinject®/Injectafer® (ferric carboxymaltose) is the market-leading intravenous (i.v.) iron therapy. Ferinject® is commercialised in the US and Belgium under the brand name Injectafer®. By the end of June 2019, the product held the leadership position in i.v. iron therapy, with market approval in 81 countries and over 10 million patient years of experience.

With a favourable benefit-risk profile, Ferinject®/ Injectafer® continues to unlock the broad unmet Ferinject® in-market medical need for the treatment of iron deficiency sales in CHF potentially and iron deficiency anaemia, in key therapy areas such as chronic heart failure, nephrology, patient

BILLION already in 2019 blood management (PBM), women’s health and 1 gastroenterology.

Clinical guidelines support the need for i.v. iron and in particular for Ferinject®/Injectafer® in countries where a number of disease areas. These include cardiol- Ferinject®/Injectafer® ogy guidelines (European Society of Cardiology for the diagnosis and treatment of acute and has been approved chronic heart failure) and gastroenterology 81 guidelines (European Consensus on the Diagno- sis and Management of Iron Deficiency and Anaemia in Inflammatory Bowel Diseases).

Ferinject®/Injectafer® is on track to achieve in-market sales in excess of CHF 1 billion on years of a rolling annual basis in the second half of 2019, a year earlier than previously anticipated. 10 MILLION patient experience

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Half Year Report 2019_English_1 14 05.08.2019 13:10:59 REPORTED NET SALES IN H1 2019 IMPORTANT AWARENESS ACTIVITIES OUTSIDE THE US In H1 2019, overall reported net sales of Ferinject®/Injectafer® increased to CHF 273.4 In line with our commitment to further build million, up 19.4% from CHF 229.0 million versus awareness, improve diagnosis and ensure the same prior-year period. This is in line with treatment of the unmet medical need, we Vifor Pharma’s commitment to full year growth in launched several key initiatives during the first excess of 20% at constant exchange rates. half of 2019. Among them were global awareness raising efforts on iron deficiency in chronic heart failure, including a strong presence at the GLOBAL IN-MARKET SALES European Society of Cardiology (ESC) congress on Heart Failure (HFA) in Athens in May 2019 and Vifor Pharma closely monitors in-market sales to the European Renal Association-European determine actual growth rates for the product. Dialysis and Transplant Association ERA-EDTA The latest available IQVIA data from March 2019 in Budapest in June 2019. indicates global moving annual total (MAT) sales of Ferinject®/Injectafer® of approximately In addition, our awareness initiatives highlight CHF 946 million, an increase of 27% versus the and promote the fact that ESC guidelines for the same prior-year period. This strong growth diagnosis and treatment of acute and chronic was primarily driven by gastroenterology and heart failure reference Ferinject® as the recom- women’s health in the US, and by chronic heart mended treatment option for chronic heart failure failure and PBM in Europe. patients with iron deficiency. Vifor Pharma also continues to support online education of health- care professionals (HCPs) who treat iron deficiency INJECTAFER® (US) with a particular focus in chronic heart failure.

Injectafer® continues to drive the growth of the i.v. iron market in the US. Vifor Pharma’s US GEOGRAPHIC EXPANSION partner American Regent, Inc., a member of the Daiichi-Sankyo Group, recorded net sales of In March 2019, our partner in Japan, Zeria USD 215.9 million in H1 2019, an increase of 19.4% Pharmaceutical Co., Ltd. received the certificate compared to H1 2018. This strong double-digit of approval for manufacture and sale of Ferinject®, net sales growth occurred despite the one-time which is a key step in building access to the sales gains in the same period for 2018 due to Japanese market. Ferinject® will be launched in a general US market shortage of INFeD®. In the Japan in H2 2019, pending reimbursement US, Vifor Pharma received a portion of American pricing approval. Ferinject® will be the first high Regent’s reported Injectafer® net sales, resulting dose i.v. iron available on the Japanese market, in reported net sales of CHF 73.6 million in where there is a significant unmet need in H1 2019, a 23.7% increase compared to CHF 59.5 women’s health and gastroenterology. million in H1 2018.

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Half Year Report 2019_English_1 15 05.08.2019 13:10:59 KEY GROWTH DRIVERS

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Half Year Report 2019_English_1 16 05.08.2019 13:11:00 LIFE CYCLE MANAGEMENT FAIR-HF21 is an investigator-initiated study, led by the University Medical Center Hamburg- Ferinject®/Injectafer® has been studied and Eppendorf, Germany, and supported by The proven in 28 published randomised intervention- German Centre for Cardiovascular Research and al clinical trials. Vifor Pharma continues to invest by an unrestricted educational grant from Vifor in additional clinical studies, including its own Pharma. The objective of this study is to show that trials and investigator-initiated trials, to demon- treatment of patients with systolic heart failure strate the safety and efficacy of Ferinject®/ and iron deficiency with intravenous (i.v.) iron Injectafer® treatment on various patient groups. (Ferric Carboxymaltose, FCM) versus placebo (i.v. NaCl) can reduce the rate of the combined A key focus area for ongoing clinical trials is endpoint of recurrent heart failure hospitalisa- chronic heart failure, as up to 50% of patients with tions and cardiovascular death during at least this condition are iron deficient. Iron deficiency 12 months follow-up. Approximately 1,200 patients in chronic heart failure is associated with reduced are expected to be enrolled in several countries. quality of life, lessened exercise capacity and Results of this study are expected in 2020. increased risk of hospitalisation. Previous clinical studies (FAIR-HF, CONFIRM-HF, EFFECT-HF) have Vifor Pharma’s US partner, American Regent, Inc. demonstrated significant beneficial effects of is conducting one of the largest studies of i.v. iron Ferinject® on symptoms, quality of life and in heart failure, the HEART-FID study. HEART-FID exercise capacity. As part of its ongoing commit- is a randomised, double-blind, multi-centre, ment to improving the lives of heart failure prospective, placebo-controlled study to enrol patients, Vifor Pharma supports two large over 3,000 patients to assess the efficacy and mortality and morbidity outcomes studies in safety of Injectafer® in heart failure with iron chronic heart failure – the AFFIRM-AHF study and deficiency and reduced ejection fraction. Results the FAIR-HF2 study. Vifor Pharma’s US partner, are expected in 2022. American Regent, is conducting the HEART-FID study.

The AFFIRM-AHF study, conducted by Vifor Pharma, is a multi-centre, randomised, controlled trial with 1,100 patients. AFFIRM-AHF is designed as the first study to evaluate the benefit of Ferinject®, in patients hospitalised due to acutely decompensated heart failure receiving Ferinject® treatment after stabilising from the acute episode and prior to exiting the hospital. Results from this study are expected by the end of 2020, which will add to the wealth of evidence that the European Society of Cardiology uses to define and promote its guidelines – particularly around the role of iron in chronic heart failure.

1 Clinicaltrials.gov

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Half Year Report 2019_English_1 17 05.08.2019 13:11:00 KEY GROWTH DRIVERS VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA (VFMCRP)

The second strategic growth driver is Mircera® is a long-acting ESA, licensed from Vifor Fresenius Medical Care Renal Pharma, F. Hoffmann-La Roche to treat symptomatic anaemia associated with chronic kidney disease our joint company with Fresenius Medical (CKD). Vifor Pharma has exclusive rights to com- Care. VFMCRP is dedicated to addressing the mercialise Mircera® in the US and its territories. needs of chronic kidney disease (CKD) patients, both in pre-dialysis and dialysis. RETACRIT™ Reported net sales of Retacrit™ (epoetin alfa- epbx) in H1 2019 amounted to CHF 2.9 million, following the initiation of commercial activities in November 2018.

Retacrit™ injection is a short-acting ESA and the first and only biosimilar ESA approved for marketing in the US. Vifor Pharma licensed rights The expanding product portfolio of VFMCRP is from Pfizer to commercialise Retacrit™ in the focused on distinct comorbidities and complica- US dialysis and non-hospital nephrology market, tions in CKD patients. This includes renal anaemia enabling Vifor Pharma to offer customers a management, mineral and bone disease manage- full range of ESA treatment options addressing ment, kidney function preservation and improve- patient needs. ment, CKD-associated complications and cardio-renal management including hyperkalaemia and iron deficiency. VFMCRP is a unique VENOFER® company that combines Vifor Pharma’s pharmaceutical expertise with Fresenius Medical Care’s In H1 2019, net sales of Venofer® increased by experience in dialysis patient care. 9.6% versus prior year to CHF 65.4 million. The majority of Venofer® sales continue to be in the US where it is the market leading intravenous (i.v.) RENAL ANAEMIA MANAGEMENT iron in haemodialysis usage.

ERYTHROPOIESIS-STIMULATING AGENTS (ESAs) Venofer® (iron sucrose (iron (III)-hydroxide (MIRCERA®, RETACRIT™) sucrose complex) is the trusted gold standard in iron therapy for anaemic dialysis patients and is MIRCERA® the originator i.v. iron sucrose product. During the first half of 2019, Venofer® continued to be the Net sales of Mircera® (methoxy polyethylene leading i.v. iron brand in terms of volume world- glycol-epoetin beta) continued to increase in wide with more than 25 million patient years’ H1 2019 to CHF 276.2 million, an increase experience by the end of H1 2019. of 29.0% compared to the prior year period. Venofer® is a nanomedicine and recognised The increase in sales was primarily driven by by the US FDA as a non-biological complex drug. gaining additional market share in both H2 2018 The positive experience of generations of and H1 2019, with mid-sized and independent physicians and patients compared to other dialysis organisations in the US. nanoparticle-based iron products (iron sucrose similars) has helped to secure the position of

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Half Year Report 2019_English_1 18 05.08.2019 13:11:00 Venofer® in the highly competitive environment MINERAL AND BONE MANAGEMENT of low-dose i.v. iron products. The tolerability of Venofer® is a key differentiator and one of the VELPHORO® main reasons the brand retains strong demand after many decades on the market. Net sales of the phosphate binder, Velphoro® increased by 126.6% in H1 2019 to CHF 81.1 million, from CHF 35.8 million in 2018. The strong VADADUSTAT growth is mainly driven by the US market, where IN DEVELOPMENT in-market sales increased by 57.1% to CHF 197.4 million in Q1 2019. Vadadustat is an oral hypoxia-inducible factor (HIF) prolyl hydroxylase inhibitor, currently In 2017, KDIGO (Kidney Disease Improving Global in global phase-III development by Akebia Outcomes) who develop evidence-based clinical Therapeutics, Inc., a US NASDAQ quoted bio practice guidelines in kidney disease, updated pharmaceutical company, for the treatment their CKD-Mineral and Bone Disorder guidelines of anaemia associated with chronic kidney to recommend the use of non-calcium-based disease (CKD). phosphate binders for the control of phosphate levels. This has resulted in continued adoption In April 2019, Vifor Pharma and Akebia expanded by physicians. a previously signed licence agreement to sell vadadustat to Fresenius Medical Care North Velphoro® (Polynuclear Iron (III) – Oxyhydroxide, America, to also include a license to sell vadadus- Sucroferric Oxyhydroxide) is a non-calcium, tat to certain third-party dialysis organisations in iron-based, chewable phosphate binder approved the US. This amended licence extends the for the control of phosphate levels in the blood potential opportunity for vadadustat to access in adults with chronic kidney disease (CKD) on up to 60% of US dialysis patients. dialysis.

The licence, which is subject both to vadadustat’s Growing real-world evidence continues to approval by the US Food and Drug Administration demonstrate the benefits of Velphoro® for (FDA) and inclusion in the Centers for Medicare patients, with approximately twice as many and Medicaid (CMS) End Stage Renal Disease achieving and maintaining target serum phos- Prospective Payment System (ESRD PPS), will now phate levels with half the pill burden, when also be effective during the Transitional Drug switched from other phosphate binders. A lower Add-on Payment Adjustment (TDAPA) two-year pill burden can increase adherence and lead to period that is expected to precede the ESRD lower phosphate levels. Real life data also bundle period. suggests improved nutritional status which has been associated with improved quality of life Akebia’s phase-III clinical development pro- for dialysis patients.

gramme includes INNO2VATE, with the enrolment of approximately 3,900 dialysis patients complete.

Top-line readout of INNO2VATE is expected RAYALDEE® in Q2 2020. Akebia’s overall clinical programme PRE-COMMERCIAL includes evaluation of both daily and three-times- weekly dosing protocols in non-dialysis and Rayaldee® is an orally administered, extended- dialysis patients, respectively. Vadadustat is release formulation of calcifediol, a prohormone of an investigational therapy and is not yet approved the active form of vitamin D3, for the treatment of by the FDA or any regulatory authority. secondary hyperparathyroidism (SHPT) in patients

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Half Year Report 2019_English_1 19 05.08.2019 13:11:00 KEY GROWTH DRIVERS

with chronic kidney disease (CKD) with vitamin D VFMCRP has a licensing agreement with Chemo- insufficiency. Vifor Fresenius Medical Care Renal Centryx, Inc., a NASDAQ-quoted biotechnology Pharma (VFMCRP) obtained the rights from OPKO company, to commercialise avacopan outside Health Inc., for this indication in key European the US. markets and selected markets outside Europe.

In April 2019, European authorities accepted the CCX140 marketing authorisation application for Rayaldee® IN DEVELOPMENT for the treatment of secondary hyperparathyroidism in adult non-dialysis CKD patients. CCX140 is an orally administered small molecule VFMCRP is seeking marketing authorisation that is a highly potent and selective inhibitor through the decentralised procedure in selected of the chemokine receptor CCR2. VFMCRP and European countries. In June 2019, marketing ChemoCentryx have launched a joint clinical authorisation application was also submitted in development programme for CCX140 in patients Switzerland. Approvals are expected in 2020. with focal segmental glomerulosclerosis (FSGS). FSGS causes protein loss from the kidneys and progressive kidney failure. Inhibiting the actions KIDNEY FUNCTION PRESERVATION of the CCR2 receptor may reduce proteinuria and preserve renal function through podocyte AVACOPAN protection, as well as the reduction in mono- IN DEVELOPMENT cyte-driven inflammation.

Avacopan is an orally administered, highly selec- Two clinical trials LUMINA 1 and LUMINA 2 are tive inhibitor of the complement C5a receptor1 currently underway. The first trial in patients with (C5aR1), being developed for the treatment of moderate-to-severe protein loss in FSGS, and the orphan and rare renal diseases such as anti-neu- second in patients with severe protein loss and trophil cytoplasmic auto-antibody-associated clinical nephrotic syndrome primary FSGS. vasculitis (ANCA-associated vasculitis) and C3 Clinical readout is expected in 2020 and will glomerulopathy (C3G). Prior studies have shown determine the next steps in clinical development. the clinical and patient experience benefits of selectively blocking the C5aR1 which leads VFMCRP has a licensing agreement with Chemo- to pathological pro-inflammatory responses. Centryx, Inc. to commercialise CCX140 outside the US. The pivotal phase-III ADVOCATE trial data readout is expected in Q4 2019. This is the largest controlled trial in active ANCA-associated CONDITIONS ASSOCIATED WITH KIDNEY vasculitis, with more than 300 patients recruited IMPAIRMENT AND ITS TREATMENT globally during 52 weeks of treatment. CR845 ChemoCentryx has also advanced enrolment in IN DEVELOPMENT the randomised controlled clinical phase-IIb trial of avacopan in patients with the very rare kidney In the US, VFMCRP and Cara Therapeutics, disease C3G. C3G is a rare disorder most often Inc. will promote the investigational medicine to seen in younger patients which can progress to FMCNA (Fresenius Medical Care North America) end stage renal failure with risk of recurrent dialysis clinics under a profit-sharing arrange- disease after transplantation. There is currently ment. no approved treatment for this rare disease.

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Half Year Report 2019_English_1 20 05.08.2019 13:11:00 CR845 is a peripherally restricted kappa opioid In May 2019, Cara Therapeutics, Inc. announced agonist that targets the peripheral neurons and positive results from the KALM-1 US phase-III trial, immune cells. Chronic kidney disease-associated with statistically significant improvements in the pruritus (CKD-aP) is a devastating systemic primary and all secondary endpoints in subjects itching condition that occurs with high frequency undergoing haemodialysis with CKD-aP. CR845 and intensity in patients with chronic kidney was generally well tolerated with a safety profile disease undergoing haemodialysis. It affects consistent with that seen in earlier clinical trials. approximately 60–70% of all patients on dialysis. Moderate-to-severe CKD-aP is associated with A second phase-III trial (KALM-2) continues to poor quality of life, depression, and reflects enrol haemodialysis patients with CKD-aP an independent predictor of mortality among globally, with top line data expected in H2 2019 haemodialysis patients. There are currently based on current enrolment expectations. If no approved therapies in Europe or the US for approved, CR845 will be the first medicine for treatment of CKD-aP. this indication outside of Japan.

CR845 has demonstrated significant reductions Vifor Fresenius Medical Care Renal Pharma in itch intensity and improvement in quality of (VFMCRP) has a licensing agreement with Cara life measures in haemodialysis patients with Therapeutics, Inc., a NASDAQ-quoted bio moderate-to-severe CKD-aP. It has been specifi- technology company, to commercialise CR845 cally designed to mitigate the drawbacks or side (difelikefalin) for the treatment of CKD-aP in effects typically observed with opiates. patients undergoing dialysis globally, excluding the US, Japan and South Korea.

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Half Year Report 2019_English_1 21 05.08.2019 13:11:01 KEY GROWTH DRIVERS VELTASSA®

Our third strategic growth driver is Veltassa® (patiromer), a treatment for hyperkalaemia (elevated serum potassium levels). Hyperkalaemia is often asymptomatic and can lead to arrhythmia, hospitalisation and sudden death. Hyperkalaemia is frequently associated with chronic kidney disease (CKD) and chronic heart failure and with the use of life-saving renin-angiotensin-aldosterone system inhibitors (RAASi) medications.

In H1 2019, net sales of Veltassa® increased to CHF 62.6 million compared with CHF 36.8 million in H1 2018, an increase of 69.9% (or 65.3% on a constant currency basis), where growth was mostly driven by the US. Net sales in the US were CHF 59.4 million (USD 59.4 69.9% million), a significant increase compared to net sales increase CHF 36.3 million (USD 37.4 million) in H1 2018.

The H1 2019 net sales performance of Veltassa® confirms our expectation that Veltassa® will grow by approximately 50% on a full year basis in 2019.

more than Since FDA approval and launch in 2015, Veltassa® has experienced steady and sustained growth, while also driving the expansion of the US potassium binder market from CHF 172.8 million in 2016 to CHF 253.9 million in 2018. More than 15,000 physicians had prescribed Veltassa® to more than 100,000 patients since launch in the 100,000 US at the end of H1 2019, making among the patients treated fastest growing drugs in nephrology in the last ten years.

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Half Year Report 2019_English_1 22 05.08.2019 13:11:01 REIMBURSEMENT AND REGULATORY Vifor Pharma is also now investing in the DIAMOND APPROVALS phase-IIIb study which is designed to evaluate the potential of Veltassa® in combination with RAASi In May 2019, the AMNOG process for Veltassa® medications. DIAMOND is an outcome-based in Germany completed, with Veltassa® now study addressing cardiovascular mortality and successfully reimbursed. Reimbursement was hospitalisation rates. The first patient was also gained in Belgium and, most recently, in enrolled in the DIAMOND study in May 2019. The Spain. As of 30 June 2019, Veltassa® has been study is a global, multicentre, double-blind, launched in Sweden, Norway, Denmark, placebo-controlled trial aiming to study approxi- Belgium and Germany. Further reimbursement mately 2,400 patients in over 400 sites. DIAMOND negotiations and launches will continue in line will include patients with heart failure (with or with individual reimbursement process timelines without CKD) and either current hyperkalaemia at across Europe throughout 2019 and 2020. screening, or a history of hyperkalaemia in the past year, which led to a reduction or discontinua- tion of RAASi therapy. The primary endpoint of TRANSFORMING THE TREATMENT the study is the time-to-first occurrence of OF HYPERKALAEMIA cardiovascular death or cardiovascular hospitalisation. Top-line results are expected in 2022. Veltassa® is the first drug to offer an effective and well tolerated innovation for cardiologists and In June 2019, the European Medicines Agency nephrologists in the long-term management of (EMA) approved a supplemental new drug hyperkalaemia in CKD and chronic heart failure application to enable the use of Veltassa® with patients. or without food, potentially providing patients with greater flexibility in incorporating Veltassa® Vifor Pharma is committed to investing in data in their daily treatment regimen. The label generation programmes to drive evidence-based update was based on results from the phase-IV best practice using Veltassa® in this patient TOURMALINE study, which showed no statisti- population. The AMBER study, a phase-II trial, was cally significant difference between the groups presented in May 2019 at the National Kidney taking Veltassa® with or without food in achieving Foundation Congress in Boston, USA. The study serum potassium levels within the target range demonstrated that a significantly higher propor- (3.8 to 5.0 mEq/L). The Federal Drug Administra- tion of patients with CKD and resistant hyper tion (FDA) had previously approved the label tension taking Veltassa®, remained on guideline update based on the TOURMALINE results in recommended spironolactone therapy, com- May 2018. pared to patients taking placebo at week 12.

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Half Year Report 2019_English_1 23 05.08.2019 13:11:01 OUR PRODUCTS OTHER PRODUCTS

In addition to the leading intravenous (i.v.) iron therapies, Ferinject®/Injectafer® and Venofer®, Vifor Pharma develops and commercialises other products for iron deficiency and more recently for iron overload.

MALTOFER® VIT-2763 IN DEVELOPMENT Net sales of Maltofer® decreased by 13.2% compared to the prior year to CHF 29.6 million. Vifor Pharma is using its expertise in understanding This decrease reflects a change in the order the chemistry and biology of iron to develop schedule of our partners compared to the prior VIT-2763, the first oral ferroportin inhibitor with the year, mainly in Saudi Arabia, Kuwait, the potential for treating diseases with ineffective United Arab Emirates, Qatar, Bahrain, Oman erythropoiesis and iron overload conditions, such and Latin America. as beta-thalassemia.

Maltofer® (Iron polymaltose complex) plays a Following the positive phase-I study results key role in the management of patients with iron reported at the beginning of 2019, Vifor Pharma deficiency. It is the originator oral iron poly will start a phase-II trial in beta-thalassemia in the maltose complex (IPC) and is a widely accepted second half of 2019. This randomised, controlled, and well-tolerated oral iron therapy for infants, multinational trial will be conducted in patients children, adolescents and pregnant women. with non-transfusion-dependent beta-thalassemia and documented iron overload.

In June 2019, both the FDA and the EMA granted an orphan drug designation for VIT-2763.

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Half Year Report 2019_English_1 24 05.08.2019 13:11:01 OM PHARMA PRODUCTS Uro-Vaxom® (lyophilized bacterial extract) is an extract of the bacterium Escherichia coli for We continue to optimise our infectious diseases the treatment and prevention of recurrent urinary and over-the-counter and prescription product tract infections. It stimulates the immune system (ID/OTx) portfolio to deliver value to a focused and the body’s natural defences against urinary group of patients with high unmet medical need. pathogens. There is a high medical need to prevent recurrent urinary tract infections, with The three leading products in the ID/OTx port Uro-Vaxom® listed in various international and folio are Broncho-Vaxom®, Uro-Vaxom® and local guidelines. Doxium®.

DOXIUM® BRONCHO-VAXOM® Net sales of Doxium® in H1 2019 were CHF 9.8 Net sales of Broncho-Vaxom® decreased 17.2% to million, a decrease of 9.4% compared to prior CHF 21.6 million in H1 2019 compared to the year. This decrease was due to the phasing of previous year. This decrease was primarily due to shipments in China. The overall in-market perfor- phasing in Russia which is a key market. However, mance in key emerging pharma markets such in-market sales of Broncho-Vaxom® were strong as Brazil, Turkey, Egypt and China was strong, with with an increase of 15% in volume during the past growth of 20% in volume (Q1 2018 vs Q1 2019 winter season (October 2018 to March 2019). moving annual total).

Broncho-Vaxom® (lyophilized bacterial lysates) is Doxium® (calcium dobesilate) is used for the oral an extract of different bacterial species used for treatment of diabetic retinopathy, signs of chronic the treatment and prevention of recurrent respira- venous insufficiency in the lower limbs (pain, tory infections. It stimulates the immune system cramps, paraesthesia, oedema, stasis dermatosis) and the body’s natural defences against a wide and haemorrhoidal syndrome. spectrum of respiratory pathogens.

URO-VAXOM®

Net sales of Uro-Vaxom® in H1 2019 were CHF 8.4 million, an increase of 9.2% compared to the previous year. Overall market profitability and market share have been increasing consistently in recent years.

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Half Year Report 2019_English_1 25 05.08.2019 13:11:01

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Half Year Report 2019_English_1 26 05.08.2019 13:11:02 2019 OUTLOOK AND FINANCIAL GUIDANCE

2019 OUTLOOK 2019 NET SALES EXPECTED GROWTH

MARKET ACCESS

Ferinject® is expected to be launched in Japan in H2 2019, subject to obtaining reimbursement. > 15%

The go-to-market strategy in China for Ferinject® will be announced before the end of 2019.

We expect to partner for the Japanese rights of CCX140 in H2 2019. 2019 EBITDA EXPECTED TO INCREASE

CLINICAL TRIALS The phase-II trial of VIT-2763 (ferroportin inhibitor) in beta-thalassemia patients is planned to start in H2 2019. 25–30%

The results of the global phase-III ADVOCATE study of avacopan for anti- neutrophil cytoplasmic auto-antibody-associated vasculitis (ANCA-associated vasculitis) are expected in Q4 2019.

The second global pivotal phase-III trial (KALM-2) of CR845 that is being conducted 2020 EXPECTED NET SALES by Cara Therapeutics, Inc. is expected to read-out by the end of 2019.

BUSINESS DEVELOPMENT > 2 BILLION One additional in-licensing, product acquisition or corporate transaction is CHF expected before the end of 2019.

FINANCIAL GUIDANCE 2020 EBITDA EXPECTED IN THE RANGE OF In 2019 at constant exchange rates, Vifor Pharma net sales are expected to exceed 15%, reported EBITDA is expected to grow between 25% and 30%. In 2020 net sales are expected to exceed CHF 2 billion and EBITDA to be MILLION in the range of CHF 700 million. Going forward the dividend is expected to 700 remain at the current level of CHF 2 per share. CHF

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Half Year Report 2019_English_1 27 05.08.2019 13:11:02 HALF-YEAR REPORT 2019 CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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Half Year Report 2019_English_1 28 05.08.2019 13:11:02 TABLE OF CONTENTS

30 Consolidated statement of income 31 Consolidated statement of comprehensive income 32 Consolidated statement of financial position 33 Consolidated statement of changes in equity 34 Consolidated statement of cash flows 35 Notes to the consolidated financial statements

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Half Year Report 2019_English_1 29 05.08.2019 13:11:02 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME

2019 2018 in million CHF — unaudited figures 1.1.—30.6. 1.1.—30.6.

Net sales 913.3 747.4 Other income 20.4 41.0 Cost of sales (373.3) (288.1) Gross profit 560.3 500.2

Marketing and distribution (218.5) (210.9) Research and development (109.4) (91.9) General and administration (83.8) (82.3) Operating profit (EBIT) 148.7 115.2

Financial income 5.9 47.5 Financial expenses (14.8) (5.7) Profit before income taxes (EBT) 139.8 157.0

Income taxes (13.8) 1.0

Net profit 126.0 158.0

Attributable to: ›› Shareholders of Vifor Pharma Ltd. 65.2 118.0 ››Non-controlling interests 60.9 40.0

Earnings per share in CHF Basic earnings per share 1.00 1.82 Diluted earnings per share 1.00 1.82

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Half Year Report 2019_English_1 30 05.08.2019 13:11:03 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

2019 2018 in million CHF — unaudited figures 1.1.—30.6. 1.1.—30.6.

Net profit 126.0 158.0

Hedging transactions ››Change in fair value (4.5) (0.6) ›› Realised in profit or loss 3.6 (0.7)

Translation differences 4.1 (10.9)

Items that will be reclassified subsequently to profit or loss 3.2 (12.2)

Remeasurements of the net defined benefit liability/asset (0.2) (0.7)

Change in fair value of equity securities measured through OCI (9.5) 15.7

Income taxes 0.7 (2.6)

Items that will not be reclassified to profit or loss (9.0) 12.4

Other comprehensive income (5.8) 0.2

Total comprehensive income 120.2 158.2

Attributable to: ›› Shareholders of Vifor Pharma Ltd. 61.2 108.7 ››Non-controlling interests 59.1 49.5

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Half Year Report 2019_English_1 31 05.08.2019 13:11:03 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION

2019 2018 in million CHF — unaudited figures 30.6. 31.12.

Cash and cash equivalents 321.5 400.3 Financial assets 0.8 2.4 Trade and other receivables 522.3 509.0 Income tax receivables 6.5 14.3 Inventories 319.4 281.7 Prepaid expenses and accrued income 40.3 41.2 Current assets 1,210.9 1,248.8

Property, plant and equipment 271.6 274.0 Right-of-use assets 1 70.1 - Intangible assets 2,643.0 2,676.0 Financial assets 199.3 208.2 Deferred tax assets 82.9 88.4 Non-current assets 3,266.9 3,246.7

Assets 4,477.8 4,495.5

Financial liabilities 100.4 116.2 Lease liabilities 1 14.7 - Trade and other payables 110.1 156.4 Income tax payables 83.0 80.6 Accrued expenses and deferred income 267.5 240.0 Provisions 5.5 1.3 Current liabilities 581.3 594.4

Financial liabilities 490.9 492.4 Lease liabilities 1 63.1 - Deferred tax liabilities 19.2 34.4 Employee benefit liabilities 9.7 9.0 Provisions 1.9 0.8 Non-current liabilities 584.8 536.5

Share capital 0.7 0.7 Reserves 2,984.5 3,051.5 Equity attributable to shareholders of Vifor Pharma Ltd. 2,985.1 3,052.1 Non-controlling interests 326.6 312.5 Shareholders' equity 3,311.7 3,364.6

Liabilities and shareholders' equity 4,477.8 4,495.5

1 As a result of the IFRS 16 adoption, new line items were included for the right-of-use assets and both current and non-current lease liabilities. The prior year was not restated, refer to note 5.3 for further details.

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Half Year Report 2019_English_1 32 05.08.2019 13:11:03 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Foreign currency Non- Share Treasury Retained translation Fair value controlling Total in million CHF — unaudited figures capital shares earnings reserves reserves Total interests equity

1 January 2018 0.7 (17.7) 3,244.7 (155.7) 1.1 3,073.1 259.4 3,332.5 Net profit - - 118.0 - - 118.0 40.0 158.0 Other comprehensive income - - 2.9 (10.9) (1.3) (9.3) 9.5 0.2 Total comprehensive income - - 120.9 (10.9) (1.3) 108.7 49.5 158.2 Dividends - - (129.6) - - (129.6) (45.0) (174.6) Transactions on treasury shares - 0.7 (11.5) - - (10.8) - (10.8) Share-based payments - - 7.5 - - 7.5 - 7.5 30 June 2018 0.7 (17.0) 3,232.0 (166.6) (0.2) 3,048.9 264.0 3,312.9

31 December 2018 0.7 (18.4) 3,250.5 (182.1) 1.4 3,052.1 312.5 3,364.6 Adoption of IFRS 16 1 - - (0.9) - - (0.9) - (0.9) 1 January 2019 0.7 (18.4) 3,249.6 (182.1) 1.4 3,051.2 312.5 3,363.7 Net profit - - 65.2 - - 65.2 60.9 126.0 Other comprehensive income - - (7.1) 4.0 (0.9) (4.0) (1.8) (5.8) Total comprehensive income - - 58.0 4.0 (0.9) 61.2 59.1 120.2 Dividends - - (129.7) - - (129.7) (45.0) (174.7) Transactions on treasury shares - 1.8 (2.2) - - (0.4) - (0.4) Share-based payments - - 2.8 - - 2.8 - 2.8 30 June 2019 0.7 (16.6) 3,178.7 (178.0) 0.5 2,985.1 326.6 3,311.7

1 The adjustments arising from the IFRS 16 adoption, effective 1 January 2019, also include an opening retained earnings impact as the prior year was not restated. Refer to note 5.3 for further details.

At the Annual Shareholder Meeting held on 8 May 2019, a resolution was passed to pay a dividend of CHF 2.00 per share (previous year: CHF 2.00 per share), which corresponds to a payment of CHF 129.7 million for the financial year 2018. This was paid to the shareholders on 14 May 2019.

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Half Year Report 2019_English_1 33 05.08.2019 13:11:03 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS

2019 2018 in million CHF — unaudited figures 1.1.—30.6. 1.1.—30.6.

Net profit 126.0 158.0 Income taxes 13.8 (1.0) Depreciation and amortisation 106.0 76.7 Increase in provisions and employee benefit assets and liabilities 2.6 6.1 Net financial result 8.9 (41.8) Other non-cash items 10.4 12.3 Change in trade and other receivables (14.3) (103.7) Change in inventories (38.3) (42.9) Change in trade and other payables (32.8) (16.8) Change in other net current assets 27.9 35.3 Interest received 2.3 1.3 Interest paid (2.8) (5.5) Income tax paid (11.9) (39.7) Cash flow from operating activities 197.9 38.4

Investments in property, plant and equipment (19.6) (26.3) Investments in intangible assets (58.3) (143.6) Investments in financial assets and securities (1.0) (18.0) Proceeds from property, plant and equipment 4.0 0.6 Proceeds from financial assets and securities 3.9 1.5 Cash flow from investing activities (71.1) (185.8)

Dividends paid (174.7) (174.6) Purchase of treasury shares (4.7) (9.6) Proceeds from financial liabilities 0.5 134.9 Repayment of financial liabilities (15.5) (114.3) Repayment of lease liabilities (8.6) - Cash flow from financing activities (202.9) (163.6)

Effects of exchange rate changes on cash and cash equivalents (2.7) 0.5 Decrease in cash and cash equivalents (78.8) (310.6)

Cash and cash equivalents as at 1 January 400.3 425.1 Cash and cash equivalents as at 30 June 321.5 114.5

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Half Year Report 2019_English_1 34 05.08.2019 13:11:03 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

These are the consolidated interim financial statements of Vifor Pharma Ltd. and its subsidiaries (together referred to as “Vifor Pharma” or “the Group”). Vifor Pharma is a pharmaceutical company focused on the development, manufacture and distribution of pharmaceutical products.

KEY EVENTS AND TRANSACTIONS The financial position and performance of the Group was particularly affected by the following transactions during the reporting period:

(i) Mircera® commercialisation rights On 30 March 2019, the Group signed an agreement with Fresenius Medical Care for the extension of the Mircera® commercialisation rights for the first four months of 2020 for consideration of USD 19.5 million. The Group subsequently exercised its option for an additional USD 19.0 million to further extend the rights until the end of August 2020. The total payments were capitalised and will be amortised over the 8-month licence term.

The agreement includes options for Vifor Pharma to further extend the rights until the end of 2021.

(ii) Akebia Therapeutics expansion of licence agreement On 9 April 2019, the Group announced that the terms of the licence agreement with Akebia Therapeutics (“Akebia”) had been amended, allowing Vifor Pharma to sell vadadustat to certain third-party dialysis organisations, for use in the US. Under the terms of the amended agreement, Akebia is eligible to receive an additional USD 5.0 million payment, for a total of USD 25.0 million, upon approval of vadadustat by the FDA and the earlier of the Centres for Medicare & Medicaid’s (CMS) determination that vadadustat will be reimbursed under the Transitional Drug Add-on Payment Adjustment (TDAPA) or included in the End Stage Renal Disease (ESRD) bundle. These future commitments will be added to the cost of the intangible asset should they become payable.

ABOUT THESE NOTES AND FINANCIAL STATEMENTS The notes to these consolidated interim financial statements have been organised to help users find and understand the most relevant information. Certain information (e.g. basis of preparation and scope of consolidation, amendments to IFRS, etc.) has been placed at the end of the document and cross-referenced where necessary.

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Half Year Report 2019_English_1 35 05.08.2019 13:11:03 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1 OPERATING SEGMENT Financial information is reported in a manner consistent with the internal reporting provided to the Board of Directors (Chief Operating Decision Maker). It is presented to the Board of Directors on an aggregate basis for evaluating financial performance and allocating resources. Vifor Pharma continues to report a single operating segment.

2 NET SALES AND OTHER INCOME The table below shows the disaggregation of net sales by brand.

2019 2018 in million CHF 1.1.—30.6. 1.1.—30.6.

Ferinject®/Injectafer® 273.4 229.0 Venofer® 65.4 59.6 Maltofer® 29.6 34.1 Mircera® 276.2 214.0 RetacritTM 2.9 - Velphoro® 81.1 35.8 Veltassa® 62.6 36.8 Other Rx brands 45.3 53.2 Anti-infectives 52.7 57.1 Third-party production 24.2 27.8 Net sales 913.3 747.4

Geographic areas Revenues are attributed to countries (or regions) based on the country where the sale originates, as represented in the following table:

in million CHF Europe 2019 (excluding 1.1.—30.6. Switzerland Switzerland) USA Rest of world Group

Net sales 72.2 227.1 514.0 100.0 913.3 Other income 13.2 0.8 0.7 5.7 20.4 Total 85.4 227.9 514.6 105.7 933.7

2018 1.1.—30.6.

Net sales 75.7 216.4 359.9 95.4 747.4 Other income 18.4 0.8 0.4 21.3 41.0 Total 94.1 217.2 360.3 116.8 788.4

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3 EXPENSES BY NATURE AND RECONCILIATION TO EBITDA Expenses are presented by function in the statement of income and are presented by nature as follows:

2019 2018 in million CHF 1.1.—30.6. 1.1.—30.6.

Cost of materials 207.4 150.7 Personnel expenses 265.0 251.2 Marketing and advertising expenses 62.7 61.6 Other operating expenses 143.9 133.0 Depreciation and amortisation 106.0 76.7 Total 785.0 673.2

Depreciation and amortisation are allocated to expenses presented by function as follows:

2019 2018 in million CHF 1.1.-30.6. 1.1.-30.6. Depreciation Amortisation Depreciation Amortisation

Cost of sales 9.6 79.2 9.4 59.1 Marketing and distribution 4.1 0.5 0.9 0.2 Research and development 1.6 - 1.2 - General and administration 10.0 1.0 4.2 1.8 Total 25.2 80.7 15.7 61.0

Reconciliation from EBIT to EBITDA

2019 2018 in million CHF 1.1.—30.6. 1.1.—30.6.

Operating profit (EBIT) 148.7 115.2 Depreciation and amortisation 106.0 76.7 EBITDA 254.6 192.0

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4 FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE The Group’s financial instruments, measured at fair value at the reporting date, are shown in the tables below.

2019 in million CHF 30.6. Level 1 Level 2 Level 3

Financial assets measured at fair value Publicly traded securities 139.3 139.3 Derivative financial instruments 0.5 0.5 Venture funds 57.6 57.6

Financial liabilities measured at fair value Contingent consideration liabilities from business combinations 12.1 12.1

2018 in million CHF 31.12. Level 1 Level 2 Level 3

Financial assets measured at fair value Publicly traded securities 148.6 148.6 Derivative financial instruments 2.2 2.2 Venture funds 55.6 55.6

Financial liabilities measured at fair value Derivative financial instruments 0.1 0.1 Contingent consideration liabilities from business combinations 12.2 12.2

The fair value of the level 3 financial assets and financial liabilities measured have not changed materially compared to the previous-year financial statements. The valuation methods applied have remained consistent.

5 OTHER DISCLOSURES Vifor Pharma Ltd. is a Swiss company limited by shares with its head office in St. Gallen. The registered office is at Rechenstrasse 37, 9014 St. Gallen, Switzerland. Vifor Pharma shares are traded on the SIX Swiss Exchange under securities no. 36474934 (ISIN CH0364749348).

The Board of Directors authorised the 2019 consolidated interim financial statements for publication on 8 August 2019.

5.1 Basis of preparation and scope of consolidation Except for the adoption of new standards effective as of 1 January 2019, as described below, the consolidated interim financial statements have been prepared using the same accounting principles as the annual financial statements for the year ending 31 December 2018 and comply with IAS 34 Interim Financial Reporting. Several other amendments and an interpretation apply for the first time in 2019, but do not have an impact on the consolidated interim financial statements of the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ending 31 December 2018 as they update previously published information. More detailed information about the accounting policies is given in the notes to the consolidated financial statements for 2018.

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5.2 Swiss tax reform On 19 May 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (TRAF) which will enter into force on 1 January 2020. The tax reform provides for an abolishment of the privileged tax regimes on cantonal level. At the same time, many cantons decided to reduce their corporate income tax (CIT) rate, and other cantons will decide about a reduction of the CIT in the second half of 2019. This required a revaluation of the deferred tax assets and liabilities to the newly enacted future tax rates. As a consequence the deferred tax assets recorded on the balance sheet were reduced by CHF –15.7 million and the deferred tax liabilities were reduced by CHF –16.4 million as at 30 June 2019. The net impact of the deferred tax revaluation resulted in a deferred tax income of CHF +0.7 million.

5.3 Amendments to IFRS This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 January 2019. The Group has adopted IFRS 16 using the simplified transition approach and has not restated comparatives for the 2018 reporting period. The adjustments arising from the new standard are therefore recognised in the opening balance sheet on 1 January 2019.

(i) Previously disclosed operating lease commitments and the lease liabilities On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average incremental borrowing rate (IBR) applied to the lease liabilities on 1 January 2019 was 2.4%.

2018 in million CHF 31.12.

Total operating lease commitments (IAS 17) 79.4 Discounted operating lease commitments (2.4% IBR) 74.5

The difference of CHF 4.6 million between the lease liabilities recognised as at 1 January 2019 and the discounted operating lease commitments disclosed as at 31 December 2018 is mainly due to the inclusion of certain lease extension options for IFRS 16 that are considered reasonably certain to be exercised.

in million CHF Lease liabilities

Carrying amounts as at 01.01.2019 79.1 Change in lease portfolio 6.5 Lease payments (8.5) Unwinding of discount 0.9 Translation differences (0.2) Carrying amounts as at 30.06.2019 77.8

Current lease liabilities 14.7 Non-current lease liabilities 63.1 Carrying amounts as at 30.06.2019 77.8

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(ii) Right-of-use assets and the transition impact The lease assets were measured retrospectively as if the new standard had always been applied, discounted using the incremental borrowing rate on 1 January 2019. The recognised amounts and movements in the reporting period are as follows:

in million CHF Operating buildings Vehicles Total

Net carrying amounts as at 01.01.2019 63.0 8.3 71.3 Change in lease portfolio 0.1 6.4 6.5 Depreciation (5.3) (2.3) (7.6) Translation differences (0.0) (0.2) (0.2) Net carrying amounts as at 30.06.2019 57.8 12.2 70.1

Cost 87.4 18.9 106.4 Accumulated depreciation (29.6) (6.7) (36.3) Net carrying amounts as at 30.06.2019 57.8 12.2 70.1

The cumulative effect of applying the standard on 1 January 2019 is recognised as an adjustment (reduction) to opening retained earnings. This adjustment of CHF 0.9 million (net of deferred tax) arises from the difference in the measurement of the lease liability and corresponding right-of-use asset on 1 January 2019.

(iii) Practical expedients applied In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard: –– the use of a single discount rate to a portfolio of leases with reasonably similar characteristics, –– the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases on a lease-by-lease basis, –– and the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.

(iv) Leasing activities and how these are accounted for The Group mainly leases office space and vehicles. Leases were previously classified as either finance or operating leases. Payments made under operating leases (net of any incentives received) were charged to profit or loss on a straight-line basis over the lease term. From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use. Each lease payment is allocated between the liability and finance cost. The right- of-use asset is depreciated over the shorter of the assets useful life and the lease term on a straight- line basis.

Critical judgement in determining the lease term In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. Potential future cash outflows of CHF 38.3 million have not been included in the lease liability because it is not reasonably certain that the leases will be extended.

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Half Year Report 2019_English_1 40 05.08.2019 13:11:04 The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

–– fixed payments (including in-substance fixed payments), less any lease incentives receivable –– variable lease payments that are based on an index or a rate –– the exercise price of a purchase option if the lessee is reasonably certain to exercise that option

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

–– the amount of the initial measurement of lease liability –– any lease payments made at or before the commencement date less any lease incentives received

The Group has elected not to separate lease and non-lease (service) components for leases of vehicles.

Payments associated with certain short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Leases of low-value assets comprise mainly IT-equipment and small items of office furniture.

5.4 Contingent liabilities and commitments Vifor Pharma has entered into strategic arrangements with various companies in order to gain access to potential new products. Future payments may become due to partners upon achievement of certain milestones as defined in the collaboration agreements. The maximum amount of future commitments for such payments amounts to CHF 1,877.3 million (31 December 2018: CHF 1,890.2 million).

5.5 Exchange rates The table below shows the exchange rates against the CHF of the main currencies of relevance for the consolidated interim financial statements.

2019 2018 2019 2018 30.6. 31.12. 30.6. 30.6. Half-year rate Year-end rate Average rate Average rate

USD 0.98 0.98 1.00 0.97 EUR 1.11 1.13 1.13 1.17

5.6 Subsequent events No significant transactions occurred between 30 June 2019 and 8 August 2019, the date on which the consolidated interim financial statements were authorised for publication, that would need to be disclosed.

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Half Year Report 2019_English_1 41 05.08.2019 13:11:04 VIFOR PHARMA UPCOMING DATES

Key corporate dates in 2020

12 March 2020 Annual Results 2019 Press conference Analyst conference — 14 May 2020 Annual Shareholder Meeting — 6 August 2020 Half-year Results 2020

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Vifor Pharma Ltd. Rechenstrasse 37 9014 St. Gallen

Switzerland Imprint Vifor Pharma Group Vifor Pharma Group This report is available to download at viforpharma.com Vifor Pharma Management Ltd. In the case of any discrepancy in the interpretation Flughofstrasse 61 of the short version of the French or German texts 8152 Glattbrugg of this report, the English text of the full version shall be authoritative. Switzerland Typeset and printed by Neidhart + Schön Group AG

2019 © Vifor Pharma Ltd. Phone +41 58 851 80 00 Mail [email protected] Legal disclaimer No part of this publication may be reproduced, stored MEDIA CONTACT in a retrieval system, or transmitted, in any form or by any means, without previous written approval [email protected] by Vifor Pharma Group. All Vifor Pharma Group’s intellectual rights, including copyright, are reserved by Vifor Pharma Group. INVESTOR CONTACT All other trademarks are the property of their respective [email protected] owners.

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