Expanding Opportunities
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Expanding opportunities Annual and Sustainability Report 2020 Contents Introduction This is Sobi 2 Year in brief 4 From the CEO 6 Market 8 Business overview Business model 10 Strategy 11 Haematology 12 Immunology 15 Specialty Care 17 Geographical expansion 18 Research & Development 20 Sustainability 23 Investment case 28 The share 30 Five-year summary 32 Reporting Directors’ report 34 Financial statements 44 Notes 54 Auditor’s report 92 Corporate governance Letter from the Chairman 96 Corporate Governance Report 97 Auditor’s report on the Corporate Governance statement 103 The Board 104 Executive Committee 106 Sustainability Sustainability report 108 Sustainability notes 122 GRI Index 129 Auditor’s report on the statutory Sustainability statement 132 Additional information 2021 Annual General Meeting 133 Glossary 134 Definitions 136 This is Sobi’s Annual and Sustainability Report 2020. The audited Annual Report includes pages 34–91. The Sustainability Report is on pages 23–27 and 108–131 and consists of the Company and the Group’s legally required sustainability report according to the Annual Accounts Act. The report is also Sobi’s Commu- nication on Progress (COP) to the UN Global Compact. Rare strength Sobi is an international biopharmaceutical company specialising in rare diseases. We bring something rare to rare diseases – a rare expertise and a strength in access that allows us to be a partner in care for those otherwise overlooked. This is Sobi Specialising in rare diseases, we develop and provide access to innovative treatments in the areas of haematology, immunology and specialty care. 15,261 Total revenue, SEK million 10 & 25% Increase in haemophilia A and B patients respectively during 2020 • Two therapeutic areas – Haematology • We focus on where we can have the and Immunology – and products within greatest impact, on clinical research & Specialty Care development, and on patient access and • Strong portfolios of on-market products commercialisation and pre-market assets • Global Head Office in Stockholm, Sweden, • Our extended half-life factor replacement with offices in over 30 countries, delivering treatments Elocta® and Alprolix® are the treatments to patients in more than 70 most prescribed extended half-life treat- countries ments for haemophilia A and B respec- • Sobi share (STO:SOBI) listed in the Large tively in several markets Cap segment of Nasdaq Stockholm 6,301 Adjusted EBITA, SEK million 1,509 Number of employees (FTE) Strong suite of pre-market assets and strong portfolio of on-market products Haematology Immunology BIVV001/efanesoctocog alfa1 Gamifant/emapalumab – sHLH – haemophilia A Gamifant/emapalumab – aGF Pre-market Pegcetacoplan2 – PNH Nirsevimab3 – RSV Pegcetacoplan – ALS SEL-2124 – chronic refractory gout Elocta® – haemophilia A Kineret® – several indications On-market Alprolix® – haemophilia B Synagis® – RSV Doptelet® – ITP, CLD Gamifant® – pHLH 1. Developed and, if approved, will be commercialised in collaboration with Sanofi 2. In collaboration with Apellis. 3. Financial interest only, in collaboration with AstraZeneca. 4 Strategic licensing agreement with Selecta. Solid revenue and double-digit growth in both core areas Full-year revenue up 8 per cent at CER Total revenue and adjusted EBITA Revenue per business area Revenue per geographic region SEK M SEK M SEK M , , , , , , , , , , , , , Total revenue Adjusted EBITA Haematology Immunology Europe North America Specialty Care Rest of the world Royalty YEAR IN BRIEF Year in brief The COVID-19 pandemic had a significant effect on Sobi, and the rest of the world. Many stakeholder interactions moved online, operations adapted to the restrictions, and extraordinary efforts were made to get medicines to patients in lockdown. Despite these circumstances, Sobi made significant progress in all strategy areas. Business strategy Lead in Grow Go global Capture the value Haematology Immunology of our pipeline Sustainability strategy Commitment Responsible to patients behaviour Continued solid patient growth was seen in the haemophilia area, although the pandemic affected sales, with fewer surgeries and lower levels of patient activity leading to lower consumption of replacement factor. Read more, p 12 Doptelet was brought to Europe with the product launch for chronic liver disease (CLD) and approval for the treatment of chronic immune thrombocytopenia (ITP). Read more, p 12–13 Sobi signed a collaboration agreement with Apellis for the development and commercialisation of systemic pegcetacoplan, a targeted C3 therapy, outside the US. The companies will jointly advance systemic pegcetacoplan in five parallel registrational programmes. Read more, p 21–22 Sobi and Selecta signed a strategic licensing agreement for SEL-212, a phase 3-ready novel treatment for chronic refractory gout. SEL-212 subsequently entered the phase 3 study. Read more, p 20–21 Presence in the Asia-Pacific expanded beyond China with the establishment of offices in Japan and Australia. In Russia, the offering to patients was expanded with the launch of Elocta (to be sold as Eloctate). Read more, p 18–19 Sobi and Sanofi renewed their 2014 commitment to the World Federation of Hemophilia Humanitarian Aid Program, and pledged a further 500 million international units (IU) of extended half-life replacement clotting factor therapy. Read more, p 14, p 23–25 Sobi launched a Responsible Sourcing Programme, including the introduction of a Partner Code of Conduct, and sustainability screening and management. Read more, p 22–25 4 SOBI ANNUAL AND SUSTAINABILITY REPORT 2020 YEAR IN BRIEF Significant progress 8% 41% in all strategy areas. Revenue growth at CER Adjusted EBITA margin Revenue per geographic region Revenue per business area EBITA per business area n Europe 50% n North America 36% n Haematology 57% n Immunology 35% n Haematology 64% n Immunology 28% n Rest of the world 6% n Royalty 8% n Specialty Care 8% n Specialty Care 8% Key figures SEK M 2016 2017 2018 2019 2020 Total revenue 5,204 6,511 9,139 14,248 15,261 Gross profit 3,651 4,657 6,723 10,913 12,036 Gross margin1, % 70 72 74 77 79 Operating expenses 2,518 3,057 3,601 6,430 7,575 EBITA1 1,543 2,053 3,571 5,933 6,700 Adjusted EBITA 1,2 1,543 2,053 3,571 6,145 6,301 EBIT 1,133 1,600 3,122 4,533 4,818 Profit/loss for the year 802 1,149 2,148 3,304 3,245 Earnings per share, before dilution, SEK 2.99 4.27 8.97 11.29 11.01 Earnings per share, before dilution, SEK adjusted 1,2,3 2.99 4.27 8.97 11.89 9.66 Cash flow from operations 343 1,333 2,090 3,634 5,214 Equity per share 1,2,3 SEK 19.8 24.6 33.1 56.4 66.5 Equity assets ratio, % 54 61 53 37 42 No. of employees (full-time equivalents) 760 800 902 1,335 1,509 1. Alternative Performance Measures (APMs). 2. EBITA 2020 excluding non-recurring item; other operating income related to the reversal of the CVR liability of SEK 399 M. EBITA 2019 excluding non-recurring items; transaction costs related to the acquisition of Dova of SEK 92 M, restructuring costs of SEK 157 M and gain from divestment of SOBI005 in of SEK 37 M. 3. EPS 2020 excluding the reversal of the CVR liability of SEK 399 M. EPS 2019 excluding impairment of intangible assets of SEK 18 M related to restructuring. SOBI ANNUAL AND SUSTAINABILITY REPORT 2020 5 FROM THE CEO Thoughtful pathway to growth Sobi is accelerating its growth trajectory and aims for revenue of SEK 25 billion by 2025. In 2020, we continued to take major We expect to see more research into the Strategy for growth steps in the transformation of the effects of Kineret, particularly in the area To maintain our strategy for growth, company and expanded beyond our of hyperinflammation. we are building on the foundation traditional stronghold in haemophilia. Alprolix, Kineret and Synagis performed of pipeline development in our two We achieved solid growth during the well. The pandemic affected sales of core therapeutic areas and the further year, and broadened the foundation of Elocta, mainly due to restrictions on internationalisation of the company. This the company to align with our ambition physical activity resulting in reduced indi- strategy will position Sobi well to achieve of becoming a global leader in rare vidualised consumption at patient level. our ambition of SEK 25 billion in revenue diseases. On the other hand, Elocta proved very by 2025. competitive against other therapies as we • We expect to achieve the primary Milestones continued to gain significant patient num- growth from our launch products Our launch products are becoming bers and increase our share of patients. and late-stage pipeline in the US meaningful contributors to the overall Not everything has gone according and Europe, mostly from Doptelet, financials of the Group. We continue to to plan. It is fair to say that our launch Gamifant, pegcetacoplan, SEL 212 and increase the scale of absolute growth products were affected by the reduction BIVV001. Around 60–70 per cent of for Doptelet in a difficult launch envi- in face-to-face interactions with health- our future growth will come from this ronment, and our market share in the care professionals. The negative opinion products. chronic immune thrombocytopenia on emapalumab for primary HLH in • The second-largest growth driver will (ITP) market was around 7 per cent Europe and the phase 3 data for Doptelet be our development in international by the end of 2020. in CIT surprised both us and key experts markets. In particular, Russia, China, With Gamifant, we experienced more in the field. Japan, Central & Eastern Europe, and than 50 per cent volume growth, while Yet as an agile organisation, we our Middle East-North Africa (MENA) our sales growth was solid due to the were able to turn these setbacks into region are expected to contribute positive impact of the previous year’s price strengths.