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ANNUAL REPORT 2014 We’ve got a story to tell 1 The financial year in brief 2 Sobi’s revenues 4 Business highlights 2014 6 CEO’s statement Patients 8 This is Sobi 10 Who we work for guide us 16 Where we are Read more! 22 What we do Rare Sobi’s vision is closely 24 Business area – Haemophilia linked to the rare disease patient journey. 30 Business area – Inflammation diseases 32 Business area – Genetics & Metabolism 34 Business area – Partner Products page 12 37 Business area – Manufacturing | ReFacto page 20 38 How we innovate 42 Sustainability 46 The Sobi share 48 Five-year summary “2014 was a 50 Directors’ Report pivotal year” 57 Directors’ Report – Risk management 59 Consolidated statement of comprehensive income CEO and President Geoffrey McDonough summarises the year. 60 Consolidated balance sheet 61 Consolidated statement of changes in equity page 6 63 Consolidated cash flow statement 65 Parent Company statement of comprehensive income 66 Parent Company balance sheet 67 Parent Company statement of changes in equity 68 Parent Company cash flow statement 69 Notes How we 103 Corporate Governance Report 110 Board of Directors innovate 112 Executive Leadership Team Pioneering 114 Auditors’ Report Three questions guide in haemophilia our innovation. 115 GRI Index 119 2015 Annual General Meeting Our long-acting coagulation factors in page 38 120 Definitions and glossary development will once approved offer the possibility of a step forward in the standard of care for people with haemophilia. page 24 Disclaimer In order to utilise the ’Safe Harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995, Swedish Orphan Biovitrum is providing the following cautionary statement. This presentation contains forward-looking statements with respect to the financial Growing with condition, results of operations and businesses of Swedish Orphan Biovitrum. By their nature, forward-looking statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from that expressed or partners implied by these forward-looking statements. These factors include, among other things, the loss or expiration of patents, marketing exclusivity or trademarks; exchange rate fluctuations; the risk that R&D will not yield new products that achieve commercial success; the impact of Our integrated platform enables access to competition, price controls and price reductions; taxation risks; the risk of substantial product niche medications for patients in Europe. liability claims; the impact of any failure by third parties to supply materials or services; the risk of delay to new product launches; the difficulties of obtaining and maintaining governmental approvals for products; the risk of failure to observe ongoing regulatory oversight; the risk page 34 that new products do not perform as we expect; and the risk of environmental liabilities. Cover: Kevin is 14 and living with Heriditery Tyrosinaemia type 1. See page 13. The financial year in brief • Total revenues 2014 were SEK 2,607 M, an increase KEY FIGURES of 20 per cent. SEK M 2012 2013 2014 Total revenues 1,923 2,177 2,607 • Product revenues were SEK 1,989 M, an increase Gross profit 1,040 1,284 1,548 Gross margin, % 54 59 59 of 28 per cent. Operating expenses 1,095 1,351 1,873 EBITA 367 211 –43 Adjusted EBITA 404 211 307 – • EBITA amounted to SEK 43 M. Figures for 2014 EBIT –55 –67 –325 include write-downs for Kiobrina® and Multiferon® Profit/loss for the year –101 –93 –268 totalling SEK 350 M. Earnings per share, SEK –0.38 –0.35 –1 Cash flow from operations 406 186 234 Equity per share, SEK 18 18 17 • Adjusted EBITA, excluding write-downs realting Equity assets ratio, % 77 73 71 Dividend 0.0 0.0 0.0 to Kiobrina and Multiferon, was SEK 307 M. No. of employees 514 546 589 The figures for 2014 include write-downs of SEK 325 M for Kiobrina and SEK 25 M for Multiferon. • The gross margin remained stable at 59 per cent. SEK M 2,607 2,500 2,177 2,000 1, 923 1,873 1,548 1,500 1, 284 1,351 1,040 1,095 1,000 404 500 307 211 0 Revenue Gross proﬁt Operating Adjusted EBITA1 expenses 2012 2013 2014 1 The figures for 2012 include revenues of SEK 308 M from the sale of co-promotion rights to Pfizer. SOBI ANNUAL REPORT 2014 1 SOBI’S REVENUES Our revenues... ... by business area Growth at constant exchange rates compared with 2013. EARLY-STAGE +40% DEVELOPMENT PROGRAMMES HAEMOPHILIA SEK 31 M USD 5 M GENETICS & INFLAMMATION +3% METABOLISM SEK 609 M SEK 666 M USD 89 M USD 97 M PARTNER PRODUCTS SEK 682 M +21% USD 99 M REFACTO –1% SEK 618 M USD 90 M Total revenues 2013 2014 SEK M 2,177 2,607 USD M 317 380 Exchange rate USD 1 = SEK 6.8577 (average rate for the period). 2 SOBI ANNUAL REPORT 2014 SOBI’S REVENUES ... by region Share of total annual sales 2014, excluding revenues from ReFacto®. 60% Europe SEK 1,196 M 9% 29% MENAR * SEK 181 M North America SEK 579 M 2% Rest of the world SEK 33 M * Middle East, North Africa and Russia SOBI ANNUAL REPORT 2014 3 BUSINESS HIGHLIGHTS 2014 Business highlights 2014 FIRST QUARTER • US Food and Drug Administration (FDA) approved Alprolix® [Coagulation Factor IX (Recombinant), Fc Fusion Protein]. • Sobi presented Kiobrina Phase 3 top-line results; primary endpoint not met. • Cometriq® approved in Europe for the treatment of progressive, unresectable, locally advanced or metastatic medullary thyroid carcinoma. • Health Canada approved Alprolix. Q1 • Sobi received EURORDIS Company Award 2014. Q2 SECOND QUARTER • Sobi initiated direct sales of Orfadin® • US FDA approved Eloctate. in North America. • Biogen and Sobi announced their intent • Sobi filed for EU approval of Xiapex® to donate 1 billion international units of for Peyronie´s disease. haemophilia clotting factor therapy for Enabled regulatory • Sobi and TiGenix entered partnership for humanitarian aid programmes. submission in the EU. the commercialisation of ChondroCelect. • Kirsti Gjellan appointed Senior Vice • Biogen and Sobi published positive top- President Manufacturing Operations. line results from Kids A-LONG Phase 3 • Sobi named Company of the Year at the paediatric trial for Eloctate® [Antihemo- European Medi science Awards 2014. philic Factor VIII (Recombinant), Fc Fusion Protein]. 4 SOBI ANNUAL REPORT 2014 BUSINESS HIGHLIGHTS 2014 THIRD QUARTER • Sobi expanded Haemophilia development portfolio by electing to include a potentially longer-acting haemophilia A candidate (rFVIIIFc VWF-XTEN Heterodimer) in collabora- tion agreement with Biogen. • Sobi opened new North American office in Waltham, Massachusetts, USA. Q3 Q4 FOURTH QUARTER • Sobi received positive opinion by the Committee for Medicinal Exclusive commercialisation Products for Human Use (CHMP) regarding Xiapex for the treat- and development rights for ment of Peyronie’s disease, which was followed by approval by Elocta transferred to Sobi. the EU Commission in January 2015. • Sobi exercised opt-in right for Elocta™ (rFVIIIFc). • Marketing Authorisation Application (MAA) for Elocta filed and validated for review by European Medicines Agency (EMA). • Orfadin approved in Japan. SOBI ANNUAL REPORT 2014 5 CEO’S STATEMENT CEO’s statement 2014 was a pivotal year for At Sobi we are inspired to pioneer a world in which our partners. One example is our partnership with patients with rare diseases are diagnosed at birth and Auxilium Pharmaceuticals Inc. where we collaborate Sobi. The commercial portfolio receive effective and sustainable therapy, enabling on the development and commercialisation of Xiapex. them to live full and healthy lives. We aim to develop This product, intended for treatment of Dupuytren’s delivered a strong performance, new medicinal products and therapies and, through contracture – a connective tissue deformity of the we made some tough decisions close dialogue with relevant stakeholders such as hand – has demonstrated potential also for the treat- authorities, healthcare providers and patient organisa- ment of Peyronie’s disease, for which it was approved regarding our R&D portfolio, tions, to build a sustainable model for ensuring that in Europe in early 2015. these products reach patients over a lifetime. Much and achieved critical milestones has been accomplished in the rare disease field in Difficult decisions in preparation for the potential recent years, but there is still much to be done. In The development of medicinal products involves con- Europe and North America alone there are an esti- tinuous risk, and sometimes involves difficult decisions. launch of Elocta and Alprolix, mated 60 million people who suffer from approxi- In 2014, we made decisions to put our phase 1 study mately 7,000 known rare diseases. Yet there are only of SOBI002 on clinical hold, and not to proceed with our long-acting factors for the about 200 treatments available and even these do an application for an expanded therapeutic indication European haemophilia market. not reach all of those in need. It is very clear to all of for Kepivance®. In addition we discontinued our us here that our mission requires a long-term develop ment of the enzyme replacement therapy approach. Kiobrina for preterm infants. Our phase 3 study to evaluate the impact on the growth and development Strong performance of preterm infants did not generate the expected In 2014, sales rose 20 per cent, with positive contrib- results. Our comprehensive and well-conducted utions from all parts of the business. ReFacto once study will nevertheless be of great benefit to further again delivered stable earnings. Sales of our main research in neonatology. We have gained cutting - products, Kineret® and Orfadin, rose 8 and 50 per edge knowledge that we will use to remain engaged cent, respectively, with the strong performance of in the field in the future.

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