Corporate Report 2019 Enhancing patient care and improving convenience Highlights Business Corporate Corporate Overview Responsibility Governance
Our purpose is to save lives by leading the fight against infections. Our goal is to lead the fight against infections by providing anti-infective solutions against multidrug-resistant microorganisms.
Highlights
03 Xellia at a glance 05 CEO’s statement 07 Financial highlights 09 Spotlight on Cleveland, Ohio
Visit us online xellia.com
01 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Novel anti-infective treatments
Specialty pharmaceutical company Read about Xellia’s focused on providing important anti- continued expansion infective treatments against serious and growth of its commercial structure and often life-threatening infections. in North America
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Business Overview Corporate Responsibility Corporate Governance
12 Industrial 18 Corporate responsibility 30 Corporate Governance 13 Institutional 19 Economic sustainability 31 Board of Directors 15 Innovation 20 Health and safety 33 Scientific Advisory Board 16 Antimicrobial resistance 21 Environmental responsibility 34 Executive Management and antibiotic stewardship 23 Social responsibility 28 SOS Children’s Villages
Forward-looking statement This report contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of New Xellia Group A/S (“Xellia”). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future.
Xelia Corporate Report 2019 02 Highlights Business Corporate Corporate Overview Responsibility Governance Xellia at a glance Positioned for growth
2019 was a successful year for Xellia with record revenue of 363.8 MUSD (15% increase compared to 2018) following a strong performance in our global industrial (B2B) anti-infective business and substantial growth in the newly established US institutional (B2i) business. In addition, we successfully launched VANCO READY™ in the Xellia’s R&D team is Xellia first launched providing innovative United States, the first product from our evolving Over 1,700 employees several of its own-label solutions to develop in 8 countries around innovative product pipeline. products to the US value-added anti- the world hospital market in 2018 infectives from core portfolio products
Over 100 years’ Supply of anti-infective Leading supplier of experience in the products to more than important anti-infectives development, 500 pharmaceutical vancomycin and manufacture and supply companies in over colistimethate sodium of fermented and semi- 70 countries (CMS) synthetic APIs and FDFs
03 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
Where we operate
Europe Asia North America Copenhagen, Denmark Bangalore, India Chicago, US Corporate Headquarters. The largest operational site CMO and commercial group established to manage growing North American Headquarters and commercial office. manufacturing sterile APIs and FDFs. Provides lyophilized and network of CMOs and to capitalize on emerging market dry powder fill vials, release as well as stability testing and opportunities. Xellia’s Global IT Service Center. Cleveland, US packaging. Acquired in 2015, the site will significantly strengthen Xellia’s Hyderabad, India manufacturing capacity for sterile injectable products. Budapest, Hungary Local Quality and Global Procurement and External Supply office. Manufacturing site for specialized APIs and provides Centralized Laboratory Services for Xellia. Shanghai, China Key Corporate Commercial organization supporting the work with partners Sales offices/ Headquarters in Oslo, Norway in the Chinese market. Representative offices Copenhagen, Denmark State-of–the-art R&D Center of Excellence focused on API Manufacturing sites research and development as well as process optimization. Taizhou, China Owned by Established in 2008 as a partnership with Zhejiang Hisun Research & Development sites Zagreb, Croatia Pharmaceutical Company, Ltd. manufactures APIs. Product and Innovation R&D Center of Excellence focused on innovative formulation technologies and FDFs. Tokyo, Japan Commercial organization handling the Japanese market.
Xelia Corporate Report 2019 04 Highlights Business Corporate Corporate Overview Responsibility Governance CEO’s statement Positioned for growth
2019 was a successful year for Xellia with record revenue of Three additional strengths are under submission and are expected to be available in the US as early 363.8 MUSD (15% increase compared to 2018) following a as 2020, expanding the portfolio to a total strong performance in our global industrial (B2B) anti-infective of seven dosage strengths. business and substantial growth in the newly established US The product is the first of Xellia’s evolving innovative pipeline of formulation improvements institutional (B2i) business. In addition, we successfully launched for established drugs from our core portfolio. VANCO READY™ in the United States, the first product from our These products are designed to provide improved convenience and ease of use for evolving innovative product pipeline. healthcare professionals and enhance Carl-Åke Carlsson patient care. Chief Executive Officer Building momentum in the US hydrochloride, allowing Xellia to leverage its Major milestone passed with the institutional market capabilities, strengths and customer base to ability to commence manufacturing drive sales of the products to the institutional Over this year, we have leveraged the commercial market. The collaboration and opportunity to at Xellia Cleveland organization established in 2018 and launched work with eTon fits well with the ambition to bring At the start of 2020, the FDA performed a the existing portfolio of established anti- more ready-to-use products to the US market, comprehensive cGMP inspection of the infective products under the Xellia brand, where time and alignment to industry guidelines Cleveland, Ohio site as outlined in the Modified securing strong market positioning for key are critical to the patient, and our overall mission Consent Decree entered after Xellia’s acquisition products. to bring life-saving medicines that address of the site in 2015. In March 2020, the FDA In March 2019, we entered into a long-term patients’ unmet needs. notified Xellia of the successful outcome of the partnership with Civica Rx comprising several inspection. Subsequently, Xellia is now preparing important anti-infective injectables. Civica Rx is Successful launch of VANCO READY™ for commercial manufacture of aseptic a non-profit, non-stock corporation committed in the US injectables at the Cleveland site. The first to stabilizing supply of essential generic VANCO READY™ is the only ready-to-use and products to be manufactured will be lyophilized medications in a hospital setting and was room-temperature-stable vancomycin injection vancomycin vials, further strengthening Xellia’s established to reduce chronic generic drug currently available in the US. We launched the robust supply chain for this critical product. shortages in the US. In October we commenced first two dosage strengths in March 2019, after Since the acquisition of the Cleveland site supply of the first product (vancomycin receiving FDA approval for the product in towards the end of 2015, Xellia has made hydrochloride for injection, USP), which is now February. A total of four strengths were available significant investments to upgrade the aseptic available in the US under the Civica Rx label. in the US market by the end of the year following manufacturing facilities, implement a new quality additional launches in September and December, Post year end, in January 2020, we entered into management system and establish fully trained with more than 1,200 institutions across the a collaboration with eTon Pharmaceuticals, Inc. manufacturing and quality teams. country using the product. for the co-promotion of Biorphen®, the first ready-to-use formulation of phenylephrine
05 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
To read more about our vertical We will continue to invest in the site during However, we have also continued to see price integration strategy see page 12 2020 as we expand our capabilities to also pressure and increased competition from include ready-to-use bags. The manufacturing manufacturers operating in Asia. We have lines will be used both to produce VANCO been able to offset this pressure on revenue READY™ as well as other products requiring through increased sales of other products in production output of key products, as well as We continue to benefit from a strong and loyal aseptic fill capabilities. other markets. This serves to reinforce the a favorable product mix across the business. customer base, and on behalf of the Board and importance of our global business model and In 2019, we entered an agreement to divest our The net result for the year was 64.9 MUSD management team, I would like to thank them all vertical integration strategy, which enables us to Raleigh, North Carolina facility to Sagent (2018: 17.7 MUSD loss), which is a record for their continued support. I would also like to provide customers with both Active Pharmaceuticals. During the year, we prepared result for Xellia. thank the Board and Scientific Advisory Board Pharmaceutical Ingredients and Finished Dosage for the transition of site operations to Sagent, for their continued strategic input and counsel. Forms, as well as our continued focus on which took place in February 2020. This Financial outlook delivering performance excellence whilst Finally, a massive thank you to all our valued divestment will allow us to focus our attention The financial performance in 2020 is anticipated maintaining cost competitiveness. employees – or Xellians as we call ourselves – and future investments on our two main sterile to be impacted due to several factors, outlined below, with a return to more sustainable revenue for their hard work, without which the injectables facilities in Cleveland and Leadership team appointments and profitable growth in following years. transformation of our business from a supplier Copenhagen through 2020 and into 2021, and In order to better execute the Xellia’s general of established anti-infective drugs to a company to strengthen and build new capabilities that strategy, some changes in the leadership team The year 2020 will be a transitional period with its own products on the market, would not are aligned with our innovative product portfolio. were implemented. Daniel Schwartzlose has been for Xellia from a financial perspective. We have been achieved. will see adverse effects from the discontinuing Strong demand for Xellia’s product portfolio appointed as President of Xellia’s International Business Unit, and Senior Vice President Gaël operations at our previous Raleigh, North We have continued to see strong demand for Bernard has been appointed to assume Carolina facility combined with investments our portfolio across all geographic markets responsibility for the Asian markets. Post year in the start-up of commercial production at our throughout the year, and we have maintained end, as of 1 January 2020, Hera Bragadottir has new Cleveland, Ohio site. In addition, we expect our focus on the reliable supply of anti-infectives been appointed as Vice President of R&D and to see increased price pressure and persistent to our customer base. Carl-Åke Carlsson Strategic Projects. competition for certain products, particularly Chief Executive Officer As a leading global industry supplier of several from Asian manufacturers (based in China and established anti-infective products, including Record financial performance in 2019 India). We therefore anticipate a reduction in vancomycin, colistimethate sodium (CMS), In line with expectations for the year, the 2019 both revenue and profitability in 2020 compared bacitracin and daptomycin, our customers include financial performance showed significant to the 2019 results. improvements in both revenue and profitability. over 500 branded, specialty and generic Looking beyond 2020, Xellia expects to return to Revenue grew by 15% to 363.8 MUSD (2018: pharmaceutical companies across 70 countries. sustainable and profitable growth as we bring our 315.7 MUSD) following a strong performance These customers rely on us to ensure continued Cleveland, Ohio site into action and continue to both in the global industrial business and the supply and consistent quality. expand manufacturing capacity and capabilities, newly launched US institutional business. grow our VANCO READY™ franchise and launch In addition to the continued strong demand for Profitability was substantially increased with new products from our pipeline of innovative key products from our core portfolio, we have EBITDA of MUSD 106.8 (2018: 62.1 MUSD). The anti-infective products. experienced demand from new customers in improved profitability builds on good operational geographic markets previously less in focus, performance throughout the year and increased such as China, Latin America and the Middle East.
Xelia Corporate Report 2019 06 Highlights Business Corporate Corporate Overview Responsibility Governance Financial highlights 2019 financial highlights
Key figures Revenue and EBITDA (MUSD) API: FDF ratio (as % of total sales) MUSD 2019 2018
Revenue 363.8 315.7 450 Revenue 80 API
EBITDA 106.8 62.1 400 EBITDA FDF 363.8 70 Operating profit (loss) / EBIT* 95.6 -0.1 350 60.0 317.1 315.7 60 Net profit (loss)* 64.9 -17.7 53.0 51.0 51.0 300 49.0 Total assets 907.7 799.1 257.4 50 47.0 49.0 250 40.0 Equity attributable to shareholders of the 40 parent company 323.8 274.9 200 Free cash fl ow before acquisition -16.1 -45.9 30 150 Total number of full-time employees 1,784 1,642 106.8 20 100 86.5 63.6 62.1 * The 2019 Net Result profit is positively impacted with an amount of 21.3 MUSD related 50 10 to the divestment of Raleigh, North Carolina manufacturing facility. ** The 2018 Net Result was affected by an impairment charge of 27.7 MUSD. During 2018, 0 0 management made the decision to change the estimation approach for valuation of 2016 2017 2018 2019 2016 2017 2018 2019 on-going and future research and development projects. The company continues to be compliant with IAS 38 Intangible Assets and will also continue to capitalize development projects when IAS criteria are met. However, due to uncertain conditions inherent in the generic injectable marketplace, specifically associated with anticipated prices and competition, the company has elected to take a more risk-based approach to the analysis Investment in R&D (MUSD) of these projects which currently results in fewer projects qualifying for capitalization.
Key ratios Percentage (%) 2019 2018 $31.9m $37.8m $35.8m $32.1m EBITDA margin 29 20 EBIT margin 26 0 Equity ratio 38 37 2016 2017 2018 2019
07 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
Revenue by region in 2019 Europe Asia Other North 24.8% 6.1% 4.5% America 64.5%
We have continued to see strong demand for our portfolio across all geographic markets throughout the year, and we have maintained our focus on the reliable supply of anti- infectives to our customer base.
Xelia Corporate Report 2019 08 Highlights Business Corporate Corporate Overview Responsibility Governance
Spotlight on Cleveland, Ohio
Since acquiring our Cleveland site in Expanding 2015, we have been making significant investments to create a modern and world- class facility that will allow us to continue to Xellia’s provide a reliable and consistent supply of our injectable vital anti-infective products across the US. manufacturing network
09 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
In the spotlight
Following the successful outcome of a Aseptic fill-finish for lyophilized and liquid vials comprehensive cGMP inspection by the FDA at will commence in 2020. The first product to be the start of 2020, aseptic injectable products can commercially manufactured will be lyophilized now be commercially manufactured at our vancomycin vials, reinforcing Xellia’s robust Cleveland, Ohio site. The inspection confirms that supply of this vital product. the FDA has found the methods, facilities, We will continue to expand our capabilities across processes and controls used by Xellia to 2020 to also include aseptic fill-finish of premix manufacture, process, pack, hold and distribute bags, the facilities for which are currently being drugs at Phases IV and V to be in conformity with installed. Once operational, the manufacturing the Federal Food, Drug and Cosmetic Act. lines will be used to produce a range of products This marks a major milestone as the ability to that require aseptic fill capabilities, including manufacture our innovative injectable products VANCO READYTM (our ready-to-use vancomycin at the site will further strengthen our ability to injection premix, launched in March 2019). consistently and reliably supply critical, In addition to growing and scaling our own life-saving medicines to the US market. innovative pipeline and dedicated production Now that the Cleveland facility is fully lines, expanding our US commercial and operational, it will function alongside Xellia’s manufacturing structure will also enable us to existing sterile injectable manufacturing site in widen our offering of CMO services for Copenhagen, Denmark. third-party injectable products. Expanding the production of our The evolution of Xellia’s commercial innovative products manufacturing structure We have made significant investments at the The last year was a transitional period for Xellia. Cleveland site since it was acquired to maximize In addition to the progress made at our Cleveland our capacity to manufacture, package, label site, we also entered an agreement to divest our and distribute sterile aseptic injectables. Raleigh, North Carolina facility to Sagent The increased capacity offered by the new Pharmaceuticals during 2019. The transitioning $200m facilities will be used to maximize the production of our Raleigh operations to Sagent will enable us investment of Xellia’s established and innovative injectable to focus our investments on both Cleveland and drug products. Copenhagen as our two main sterile injectable facilities, allowing Xellia to strengthen and build new capabilities at these sites in alignment with our innovative product portfolio.
Xelia Corporate Report 2019 10 Highlights Business Corporate Corporate Overview Responsibility Governance
Since opening our North American Commercial Office in 2018, we have made significant investments in Xellia’s US operations and secured a leading market presence in generic injectable anti-infectives. The integration of the Cleveland, Ohio site into our manufacturing chain offers a great opportunity to strengthen our supply of critical products in the US market, while also expanding our own innovative anti-infective pipeline and offering of contract manufacturing services. Peter Baker, Chief Commercial Officer
The history of the Cleveland site Xellia first acquired the Cleveland site as a 2020 onwards non-operational facility from Hikma Successful FDA inspection. Xellia was informed of the successful outcome of a comprehensive Pharmaceuticals in 2015. In 2016, FDA- cGMP inspection conducted at the site by the FDA in January 2020. This confirms that the FDA has >200 permitted packaging, labelling and distribution found the methods, facilities, processes and controls used by Xellia to manufacture, process, pack, employees of sterile injectables (manufactured at other hold and distribute drugs at Phases IV and V to be in conformity with the Federal Food, Drug and sites) commenced, making it the primary Cosmetic Act. centre for all sterile injectable anti-infective products being distributed to customers in Commercial manufacturing. Xellia’s fully operational site now offers manufacturing, packaging, the US. In the years that followed, Xellia has labelling and distribution capabilities for sterile anti-infective injectables. made significant investments at the site, Building Xellia’s development pipeline. Xellia will use the increased manufacturing capacity including full integration of a quality provided by the site to grow its own innovative pipeline and dedicated production lines. management system and completion of major manufacturing enhancements and upgrades, Ongoing investments and growth. Xellia continues to invest in the facility and is currently and built a fully trained team with more than installing new pre-mixed bag aseptic fill-finish capabilities at the site. 200 employees. Contract manufacturing services. Xellia will utilize the full production suite capacity and leverage its excellent experience and know-how in aseptic fill-finish operations to offer third-party CMO services.
11 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Industrial Leading global, vertically integrated supplier of important anti-infectives
Our industrial (B2B) anti-infectives business manufactures and Global customer support Through our dedicated global customer service Xellia aims to be the preferred partner for the and technical support teams, we build strong and supplies Active Pharmaceutical Ingredients (APIs) and Finished global supply of anti-infectives for critical care lasting relationships with our broad customer Dosage Forms (FDFs) to over 500 pharmaceutical companies to the pharmaceutical industry. base by providing excellent quality and service. Our outstanding technical services team works across 70 countries. Our customers consist of branded, specialty and closely with customers to help them in developing generic pharmaceutical companies in more than their products for market entry launch and 70 countries. These customers rely on us to resolving technical challenges to support This business is rooted in a strong A focused core portfolio of established ensure continued supply of first-class products, business continuity and growth. long-standing heritage of manufacturing critical care, life-saving anti-infectives thereby protecting their reputation and patients. and supplying quality fermented and semi- synthetic APIs. Today, while API manufacturing Xellia is the world-leading provider of vancomycin continues to form the backbone of our business, and CMS and a leading provider of other Our industrial business model: a vertical integration approach Xellia is strongly focused on producing FDFs that important critical care anti-infectives, including provide added value to our customers. Our bacitracin, daptomycin and polymyxin B. Xellia Pharmaceuticals vertical integration strategy enables us to The majority of FDFs in Xellia’s portfolio R&D 2 internal locations Oslo provide customers with a “one-stop-shop” are injectables. However, Xellia also develops Zagreb by offering both APIs and FDFs in multiple other formulations of its key products, product forms, and improved supply security aiming to improve customer value and API 3 internal locations Budapest through redundancy. meet patient needs. Copenhagen Taizhou FDF 2 internal locations Cleveland, OH Copenhagen
Xelia Corporate Report 2019 12 Highlights Business Corporate Corporate Overview Responsibility Governance Institutional Moving closer to the patient and healthcare professionals through US institutional sales
2019 was Xellia’s first full year with the US institutional business, and many best-in-class milestones were achieved.
North American commercial organization Product launches In September 2018, we opened our North Xellia achieved a high number of launches during American headquarters and commercial office in 2019, with at least one drug or dose launched per Buffalo Grove, near Chicago, Illinois. Only a year month throughout the year. The products later, our commercial site has continued to thrive received high market interest, resulting in Xellia in 2019, solidifying our presence and impact in gaining leading market share and private labels the market. for many of the products. In addition, we expanded the presentations for our first Led by Craig Boyd, President of Xellia’s North value-added product, VANCO READYTM, a truly American operations, our commercial ready-to-infuse vancomycin injection premix. organization has a talented team of more than This launch was a defining moment for both Xellia 40 industry professionals with experience in and the pharmaceutical industry, as we marketing and selling injectable hospital reimagined ready-to-use. become the first company to partner with Civica manufacturing and sales capabilities within products. We have formed our own infrastructure Rx, an innovator in addressing generic drug the US, while also allowing us to retain our and sales force to support our North American Our partners and customers shortages, in a long-term supplier relationship. emphasis on ensuring the quality and security institutional business and drive our strong focus Xellia’s focus on secure product supply – made of supply and our long-term ambition of Through this partnership we aim to reduce drug on FDF products. possible by our vertical integration strategy mitigating anti-infective drug shortages. shortages by manufacturing essential antibiotics and an industrial backbone with more than 100 that are in short supply in US hospitals – including years of heritage – was the relief that partners vancomycin and daptomycin – for Civica’s and patients were looking for during a time member health systems. This will directly impact of US drug shortages. patient safety and public health by reducing In addition to securing long-term contract chronic generic drug shortages and providing positions with key Group Purchasing consistent access to key antibiotics for resistant Organizations (GPOs) and Integrated Delivery bacteria and difficult-to-treat and life- Networks (IDNs) to optimize customer access threatening infections. The partnership marks to our full portfolio during 2019, Xellia has also a key milestone in the expansion of our
13 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
In the United States, in one year, more than Our patients What makes our Sepsis is the third leading cause of death in t he US after heart disease and cancer, with over institutional business 1.7m 1.7 million people in the US developing sepsis per year. As the leading supplier of vancomycin 1 people had sepsis . That’s one person in the US, Xellia’s products are often used in the unique? every twenty seconds. treatment protocol. We are excited to offer these products directly with the purpose to aim to save lives. Our innovative, value-added medicines As many as are made possible through our team of Science 150 scientists working across Xellia’s 87% multiple R&D centers. of cases start in the community, not in the With four of our seven VANCO hospital as is widely believed1. READY™ presentations now Sepsis is the launched, Xellia is well on the way to be able to service the Our significant injectable manufacturing footprint and vertically 3rd full needs of the vancomycin Supply integrated supply chain, which includes leading cause of death in the United States injection market. The success R&D, APIs and FDFs, provide multiple after heart disease and cancer, killing more of our first four products supply options for medicines. than 270,000 people each year1. That’s one person every two minutes. already this year has resulted in over 1,200 US institutions using VANCO READY™ and 42% is an important validation of Our unique company structure, which is autonomous and nimble with best- 2 of Americans have not heard of sepsis . our US strategy. Our focus X-Factor in-class people and culture, is wholly remains to provide life-saving owned by Novo Holdings A/S, a strong supporter of research in life sciences. medicine in novel and ready
1 Rhee, C. et al. Incidence and trends of sepsis in US forms to improve patient hospitals using clinical vs claims data, 2009-2014. safety and a reliable supply. JAMA 318, 1241–1249 (2017). 2 https://www.sepsis.org/sepsis-alliance-news/ Carl-Åke Carlsson sepsis-word-know-meaning-learn/ Chief Executive Officer
Xelia Corporate Report 2019 14 Highlights Business Corporate Corporate Overview Responsibility Governance Innovation
Building a pipeline of Our core pipeline of novel anti-infective treatments reflects the culture of innovation value-added anti-infectives and scientific expertise that we have embedded throughout our company. The investments we have made in our R&D At Xellia, our global R&D growth strategy is rooted in strategy and team of experts have enabled a culture of innovation with a deep understanding of the development of differentiated and the ever-changing regulatory and business environment. transformative anti-infective productsfor
We have invested significantly in R&D over the treatment of serious and often life- the past five years to create a platform to threatening diseases. enable the development of a pipeline of more innovative value-added anti-infective Dr Aleksandar Danilovski products that is focused on improving Chief Scientific Officer, Xellia already established drug products from our core portfolio. Developing a pipeline of value-added anti-infectives Xellia’s innovative pipeline of value-added anti-infective therapies Improved formulations Our initial focus has been online extensions based Formulation on improved formulations, compared to standard Program Indication Discovery development Pre-clinical Clinical Submission Approval forms, of existing injectable anti-infectives that XEL 1005 New formulaion of Gram-positive antibiotic offer healthcare professionals and patients enhanced convenience and safety. XEL 1000 Inhaled antibiotic for lung infection
Clinically differentiated products XEL 1004 Inhaled antibiotic for lung infection Longer term, it is also our ambition to provide clinically differentiated products, and we are XEL 1015 New formulaion of Gram-positive antibiotic investigating optimizations of existing molecules XEL 1007 New formulaion of Gram-negative antibiotic from our portfolio to increase efficacy and reduce harmful side effects, such as those XEL 1012 New formulation of anti-fungal caused by toxicity. XEL 1011 New formulaion of Gram-positive antibiotic R&D teams XEL 1013 New formulaion of Gram-positive antibiotic Our experienced teams operate from Xellia’s state-of-the-art R&D Centers of Excellence XEL 1018 New formulaion of Gram-negative antibiotic in Zagreb and Oslo and are supported by our Scientific Advisory Board. XEL 1022 New formulaion of Gram-positive antibiotic
15 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Antimicrobial resistance (AMR) and antibiotic stewardship Addressing the AMR global challenge
Addressing the AMR global challenge through responsible Xellia’s membership of the AMR manufacturing, continuity of anti-infective supply and innovation. Industry Alliance The AMR Industry Alliance ensures that signatories from biotech, diagnostics, generics Antibiotics play a vital role in modern medicine, Signing the Davos Declaration and research-based pharmaceutical companies saving millions of lives worldwide. However, some In 2017, Xellia united with over 100 other collectively deliver on the specific commitments of these drugs are losing their effectiveness pharmaceutical, biotech and diagnostic made in the Davos Declaration and the United due to AMR, caused by a microbe’s natural ability companies and trade associations in working Nations Roadmap and will measure progress to evolve genetically and thereby counter the towards the single goal of beating AMR made in the fight against AMR. effects of these drugs. for the protection of patients worldwide, In 2019, Xellia participated in the biennial The rise of AMR is a global crisis and is now by signing “The Declaration by the AMR Industry Alliance progress survey. recognized as one of the major threats to global Pharmaceutical, Biotechnology and Diagnostics The survey led to the second AMR Industry health; it is an immense challenge to overcome. Industries on Combating Antimicrobial Alliance 2020 Progress Report, published This means there are fewer or sometimes no Resistance”, known as the ‘Davos Declaration’. in January 2020. This report showsthe effective treatments available for infections The Davos Declaration calls for collective action commitment of the life sciences caused by these multidrug-resistant microbes. and government support to tackle this crisis as industry to tackle the public health This is further compounded by the gap that we recognize that it is only by collaborating threat of AMR. remains between new effective antibiotics across countries and industries, and by taking reaching the market and existing antibiotics. action together, that we can start to make Since the loss of effective antibiotics will a positive difference. reduce our ability to fight infectious diseases and manage the complications of secondary infections common in vulnerable patients, such as immunosuppressed patients or ageing populations, it is becoming evenmore important to take control of existing antibiotics to help patients.
Xelia Corporate Report 2019 16 Highlights Business Corporate Corporate Overview Responsibility Governance
Xellia’s role in fighting AMR As a leading global producer of established or Responsible use of colistin (available in two “old” anti-infectives that still provide a meaningful treatment for serious infections, we forms; colistimethate sodium and colistin sulfate) take our role in preventing AMR as well as In 2015, scientists from Britain and China Similar measures were undertaken in the antibiotic stewardship very seriously by identified a gene called mcr-1 that allows European Union (EU) in April 2016 when The supporting the following: bacteria to develop resistance and therefore Committee for Medicinal Products for 1 Manufacturing responsibly to survive the “last-resort” antibiotic colistin . Veterinary Use (CVMP) – the European All our APIs and FDFs are contained This major discovery indicated Medicines Agency’s (EMA) committee during production and distribution and a that some bacterial infections would be responsible for veterinary medicines – range of techniques are employed to impossible to treat with current antibiotics, recommended the withdrawal of marketing ensure that discharge of waste is to a a scenario known as the “post-antibiotic authorisation for all veterinary medicinal pre-defined acceptable standard. These future”. Although first identified in China, products containing colistin in combination procedures are designed to reduce mcr-1 has now been shown to exist in over with other antimicrobial substance. If environmental impact and mitigate risk 30 countries, spanning four continents. As successfully applied at an EU level, these of AMR development. China is one of the world’s largest users of measures are estimated to result in an overall colistin in agriculture, where it serves as a reduction of approximately 65% of the current Supplying consistently growth promoter in animal feed, it is probable sales of colistin for veterinary use. This We enable stewardship of existing that colistin resistance evolved in this reduction should build on the decrease of 19% antibiotics through compliant situation. Since discovering mcr-1, the in colistin sales for veterinary use already seen manufacturing to provide a consistent scientists have worked closely with the between 2011 and 2013.2 supply of quality established anti- Chinese government to combat the spread of 1 https://www.mrc.ukri.org/news/browse/ infectives for responsible, human medical antibiotic resistance by initiating an amr-research-leads-to-china-banning-antibiotic- use only. In addition, our products are unprecedented policy change in 2016 that from-animal-feed/ affordable and responsibly priced as part banned the use of colistin in animal feed. 2 https://www.ema.europa.eu/en/documents/ of our commitment to a reliable supply. scientific-guideline/updated-advice-use-colistin- Investing in new innovative products-animals-within-european-union- treatments based on established development-resistance-possible_en.pdf antibiotics We invest significantly in R&D and are dedicated to preserving the safety and long-term effectiveness of existing anti-infectives by developing and commercialising safer, easier to use and more efficient new value-added products.
17 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Corporate responsibility
Overview of Xellia’s The sustainable production of anti-infectives for critical care forms the foundation of Xellia. We have built a strong and stable global business and corporate responsibility have remained dedicated to providing a consistent and reliable supply of high-quality products for the At Xellia we value integrity and openness, and are committed to healthcare industry. a high level of compliance in all aspects of our work. As a global business with international customers, it is vital that we have a uniform set of standards that can be applied to our business regardless of the country in which we operate.
Over the following pages we have provided We have established a Corporate Social an overview of our corporate responsibility Responsibility (CSR) steering group, headed activities and performance, focusing on by our CEO with the participation of senior economic, environmental and social areas. management representatives from functions including Operations, People & Organization, EHS We are actively working to expand our corporate (Environment, Health and Safety), Finance, responsibility policies across the entire Communications and Legal. The role of the group business and to update or introduce systems is to monitor and drive the progress of corporate and platforms that will progress our corporate responsibility initiatives across different areas responsibility practices further. We also continue of our business. to work on alignment of the content in this report with the relevant standards on sustainability reporting produced by the Global Reporting Initiative (GRI).
Xelia Corporate Report 2019 18 Highlights Business Corporate Corporate Overview Responsibility Governance Economic sustainability Xellia’s growth and development
Continuing sustainable growth and development, and the Financial stability We believe that a stable and sustainable We ensure consistent protection of our employees, is paramount to our future success. business benefits us all and we work hard Many internal and external stakeholders rely on us to maintain to ensure financial sustainability, enabling and continuous us to invest in future growth plans to create a consistent supply of high-quality products and to invest and long-term value. At the end of 2019, our manufacture and supply borrow wisely to create a strong and stable business. external bank debt including mortgages of the products that our amounted to 199.5 MUSD (175.3 MUSD in 2018). customers, healthcare Continuity of production Across 2019, we invested 25.6 MUSD in tangible professionals and their The sustainable production of anti-infectives for assets to maintain increasing and improving our critical care forms the foundation of Xellia. We production capacity (down from 32.6 MUSD in patients rely on. ensure consistent and continuous manufacture 2018). In addition, we invested significantly in the and supply of the products that our customers, additional manufacturing facilities in Cleveland, healthcare professionals and their patients rely Ohio, which we acquired in November 2015. We on from our global production sites through: will continue to invest considerably in these facilities as we are now ready to start commercial • Rigorous monitoring of quality and production following the January 2020 FDA manufacturing systems inspection. • Investment in new capacity and equipment In February 2019, we divested our Raleigh, North • Improvement of existing products and Carolina manufacturing plant to Sagent processes Pharmaceuticals. This strategic divestment allows us to focus investments on our two main sterile injectables facilities in Cleveland and Copenhagen and to strengthen and build new capabilities that are aligned with our innovative product portfolio.
19 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Health and safety Constantly striving to create a healthy and safe environment
High level of health protection and We are responsive in accident reporting and occupational safety in ensuring that we take action to prevent We recognize that the “whole” employee comes reoccurrence of any accidents. Our long-term Focus on safety At Xellia, we have over 1,700 employees. We to work and that human factors can affect 2020 target is to maintain the maximum In 2019, Xellia has focused internally to align constantly strive to create a healthy, safe and productivity, performance and overall health frequency of work-related accidents at on a global vision about health and safety and secure working environment across all of our and safety. We are taking action to promote an below 3.0 per 1,000,000 working hours in what that means for employees across our locations and are committed to maintaining high environment and resources for safety and addition to ensuring that we continue to different sites around the world. This has had standards of occupational health and safety. health, as well as knowledge around stress avoid all serious incidents. We use the OHSAS an impact on our safety culture. In large part, We have adopted an EHS policy that sets out recognition and management. standard to measure the frequency of the alignment has been accomplished by our key principles for EHS management and occupational accidents. We experienced a keeping health and safety at the forefront of detailed EHS standards that we apply across significant improvement and reduced our discussions, in both technical and our manufacturing sites. work-related accidents during 2019 relative conceptual topics. While the “safety minute” is As a pharmaceutical manufacturing company to 2018 at a rate of 0.9, and we are currently part of regular meetings, from the executive producing anti-infectives, our operations involve at a level that is below both the KPI for the year level down to the plant floor, bi-weekly news certain inherent risks. We promote a culture and our long-term target. Increased focus has articles and visual posters published by our where these risks are clearly recognized and been put on hazard reporting and our global EHS team and translated into local languages mitigated, and employees take personal safety culture. have also inspired daily awareness about responsibility for their safety. working safely. We apply the internationally recognized OHSAS “Report them all, big or small” is an example of a 18001 standard which provides an occupational safety slogan that we have used to increase our health and safety framework from which to Lost Time Injury Frequency Rate (LTIFR) communication and discussion about implement effective management and control Accident frequency rate per 1,000,000 working recognizing the hazards we may encounter in associated risks. In 2019, both of our production hours. our daily activities. sites in Europe remained certified under OHSAS Also contributing to our renewed global safety 18001 and our China site made the change to the 6 5.1 vision is the initiative for a more holistic view of new ISO 45001 standard. Our US facilities are not 4.3 employee health, considering stress factors OHSAS 18001 certified but are included under that could potentially influence overall our health and safety management and reporting 4 3.5 employee wellbeing, both on and off the job. systems. 3.0
1.8 2 1.7 0.9
0 2013 2014 2015 2016 2017 2018 2019
Xelia Corporate Report 2019 20 Highlights Business Corporate Corporate Overview Responsibility Governance Environmental responsibility
We understand the importance of preserving our environment Environmental impact and natural resources today and in the future. We accept that the responsibility lies with us to minimize the impact we have and management on the environment.
We comply with all relevant laws, regulations and Environmental compliance our own EHS policy and standards. In addition, we Environmental compliance is a central pillar are constantly looking for ways to improve our of our business and we strive for complete operations, products and services, as well as adherence to all environmental laws and using chemicals and natural resources regulations. Over the past three years, we have responsibly. With careful management, we can received a fine that related to an environmental grow our business and increase production non-compliance of an odor limit in Taizhou. We volumes but still reduce our environment impact. received a violation and fine at our Budapest We will be setting new long-term non-financial facility due to an increase in our wastewater and targets for 2025 to be implemented across all of we have begun construction of a new wastewater our sites in order to minimize our environmental treatment facility. In the past year, we have made impact with regards to carbon-, energy- and improvements to reduce our methanol emissions water-use efficiency. in Copenhagen to ensure strict compliance with our environmental permit. We take such Management systems non-compliance very seriously and have In addition to our overall EHS policy, implemented measures to ensure that we we have developed and applied detailed maintain a high compliance level. EHS standards and standard operating procedures to ensure the quality of the Stakeholders EHS management system across our production We know that the impact of our business and R&D facilities. Our three production sites in can stretch beyond the boundaries of our Europe and China are certified under the production and R&D sites around the world and internationally recognized ISO 14001 therefore encourage open, reliable environment management system. Our US communication on environmental matters with facilities are not ISO 14001 certified; however, all stakeholders both internally and externally. the sites are included under our environmental management and reporting systems.
21 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
Most of our sites are located in urban areas and We are building a risk-aware culture amongst our Energy and water efficiency In 2019, the energy consumption at our we work to minimize any negative impact on the employees and encourage a sense of personal We understand the importance of managing the manufacturing sites increased by approximately people living in close proximity to us. We receive responsibility towards preventing incidents. All use of energy and water sustainably and take our 3% compared to 2018. Our long-term target is very few complaints regarding odor and noise sites incorporate emergency response and crisis responsibility to protect this precious resource to make a 20% improvement to our energy from our local community; in 2019, we received management programs into management plans. very seriously. We have established short- and efficiency by 2020, compared to the baseline only one complaint across all sites. We take These programs ensure that if incidents do occur, long-term targets for improving our efficiency that we established in 2014. complaints very seriously and have implemented they are effectively managed and that any impact with respect to energy and water consumption. Our sustainable water management process is measures to ensure that we remain good on the environment, the local community and our focused on both creating efficiencies in the use neighbours to the communities in which we are business is minimized. All our sites employ a specialist team focusing of water at our manufacturing sites and based. We constantly monitor noise levels from solely on energy use and how to improve energy improving our discharge treatment systems. machinery and take steps to limit noise and odor Carbon footprint and sustainability consumption efficiencies. Our energy By implementing systematic quality controls wherever possible. We take a collective approach to sustainability consumption strategy is defined in close and encourage our employees to take an active collaboration with each site’s EHS teams, for effluents, we are helping to preserve the Identifying environmental risks to interest in minimizing the impact of our operation purchasing departments and engineering availability of drinking water and preventing minimize incidents on the environment. We welcome input, feedback departments (energy management specialists). any risk of contamination. The manufacture, quality control and and suggestions from all staff as to how we can development of anti-infectives involve the use of further improve our commitment to the certain hazardous materials and processes from environment. We have set short- and long-term Development in environmental impact and revenue which there is an inherent risk to the targets for improving the carbon footprint of environment. By understanding and identifying both our API and FDF manufacturing sites over these risks, we have implemented standards and the coming years. In 2019, the carbon dioxide (CO ) emissions from our manufacturing sites policies to protect the environment by preventing 2 3 increased by approximately 2% compared to $363.8m 116Mw H 130m 101Mt CO2 incidents before they can take place. Revenue Energy consumption Water consumption Emission from production 2018. This was mainly due to increased We are committed to the identification and production volumes at several manufacturing 180 400 prevention of potential environmental accidents. sites. Our long-term target is to reduce our 170 It is our ambition to prevent any environmental carbon footprint by 20% by 2020 compared to 350 incidents, and when incidents do occur we the baseline that we established in 2014. 160 perform a thorough analysis of the causes to
150 (MUSD) Revenue ensure that we implement action plans to prevent 300 reoccurrence. As in previous years, in 2019 we 140 achieved our corporate KPI to avoid all major 130 250 environmental incidents across our global 120 production sites. We were also able to avoid any 200 minor environmental incidents. 110
Environmental impact index 100 150 90
80 100 2014 2015 2016 2017 2018 2019
Index energy consumption Index water consumption
Index CO2 emission from production Revenue
Xelia Corporate Report 2019 22 Highlights Business Corporate Corporate Overview Responsibility Governance Social responsibility
Business ethics and legal compliance Code of Conduct Anti-bribery program Supporting and The Xellia Code of Conduct contains our values Xellia’s anti-bribery program aims to reduce and standards for ethical business conduct and the risk of non-compliance. The program reflects our commitment to meeting the includes annual risk assessments, due diligence guiding our employees expectations of our stakeholders. The code sets procedures for agents and other certain out the principles that must be adhered to by all business partners and adoption of corporate employees within key areas that are essential to guidelines for gifts, hospitality and our business, including compliance and fair entertainment. We believe that a successful Our people make us what we are. We aim to attract the most dealings in relevant areas. A copy is presented to anti-bribery program is spearheaded by each employee when joining Xellia. In addition, all informed, aware employees and we ensure talented, productive employees in our industry and to earn their senior employees are required to certify annually that all relevant parts of the organization loyalty and commitment. We support and protect our employees that they have acted in compliance with the receive regular training in the program. In guidelines. Any alleged or suspected cases where 2019, we introduced a number of new policies through comprehensive human resource processes, ensuring the guidelines may have been violated are and procedures covering topics including: that every employee is treated fairly and has a voice that is investigated by selected members of our interactions with healthcare professionals; corporate functions. In 2019, Xellia introduced its use of consultants; support to external listened to and valued. online whistle-blower system, allowing both organizations; use of product samples; and employees and third parties to report concerns compliance with applicable laws governing from anywhere in the world. During 2019, there the marketing and sale of prescription drugs were three reported cases of alleged or and devices. suspected violations. General Data Protection Regulation Conflict of interest In 2019, Xellia continued the awareness of It is imperative to the maintenance of our good the new policies and procedures across its reputation that business decisions are made different functions that were implemented in independently from conflicts of interest and on 2018 to meet the new requirements in the EU an objective basis. These decisions must not be General Data Protection Regulation (GDPR). influenced by any personal interests that We ensure that our processes are secure with employees may have, wherever in the world they respect to the protection of personal data. GDPR work, and at whatever level of seniority they awareness material has been rolled out across operate. We have established procedures Xellia’s business in scope, including new training including the pre-approval of any ‘related party’ and e-learning on Xellia’s compliance with GDPR. transactions by the Board of Directors as well as an annual certification of compliance by all senior employees.
23 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
Change, diversity and employee turnover Managing change Employee surveys Diversity Gender diversity Our business exists in a highly competitive, We ask all employees to participate in surveys at As a truly international company, we benefit Xellia is committed to building a workforce dynamic environment. Our commitment to open regular intervals, usually on a bi-annual basis, the from a diverse, multicultural workforce. We throughout the entire organization that is communication and engagement remains strong next being in 2021. These surveys address a employ more than 37 nationalities over sites represented equally by both genders across all as we support employees through the internal number of areas such as motivation, satisfaction in 8 countries. Despite having locations around management levels and managerial positions. In and external changes that influence us. and communication. The data from the survey are the world, we have an integrated, open and 2018, we adopted a new Diversity Policy that followed up both at a senior management level transparent culture built on mutual respect, sets out the key principles for our commitment Employee relations and in each function and department. trust and accountability. We aim to recruit and focus in this area. In 2019, for all companies in We operate across diverse social backgrounds competent and motivated people who respect the Group, there was an average of 57% male and The employee survey from 2017 showed an and locations where continued and constructive our values, and we in turn provide equal 43% female employees (versus 58% male and overall index of 73% employees responding dialogue with our employees opportunities for their development and protect 42% female in 2018). At manager level, there was positively about their experience at Xellia. The is important. Without this interchange, labour their privacy. We do not tolerate any form of a male average of 67% and female average of 2019 survey showed a substantial improvement disputes can occur that are disruptive to our harassment or discrimination for any reason and 33% (versus 68% male and 32% female in 2018). with 78% positive responses. That is significantly business and affect a wide range of strive to maintain a culture that provides equal above the long-term target of 75% in 2020, which stakeholders beyond the working site. We aim to opportunities for all. foster a culture based on openness and was established in 2015. In 2014, the result was a transparency, being at our best, accountability 67%positive response. and zest. Our employee relations strategy One area that we are particularly focused on is encourages open dialogue with employees and the “engagement” category, which improved from external stakeholders. We support collective 82% of employees responding favourably in dialogue and negotiations with unions and other 2017, to 85% in 2019. representative associations within the local As a truly international company, we benefit from legal framework. We have maintained good a diverse, multicultural workforce. We employ more relationships with the unions. In 2019, one minor industrial action resulting in lost working time than 37 nationalities in our sites, located in 8 countries. was reported.
Xelia Corporate Report 2019 24 Highlights Business Corporate Corporate Overview Responsibility Governance
Total no. of employees
2000 1784 1642 1524 1500 1352 1176 1067 1000
500
0 2014 2015 2016 2017 2018 2019
The voluntary employee turnover in 2019 was 8.6%, up from 7.7% in 2018 and above the target for 2019. The employee turnover rates vary between countries. We continue to analyze In accordance with the diversity policy, qualified Employee turnover and evaluate the appropriate target for turnover women are encouraged to apply and pursue In 2019, the number of full-time employees in in view of Xellia’s business transformation, as well leadership and managerial positions in Xellia and Xellia increased by 142 to 1,784. The increase as developments in local labour markets. The gender diversity is an area of increased focus in was primarily at our sites in Copenhagen, figures outlined in the graphs shown cover the our development and succession planning Budapest and Cleveland, Ohio. The main reasons voluntary turnover rates only. initiatives. Our staff policies and People and for the increase were new hires to support the Organization processes are directed at retaining continued expansion of the production facility in qualified female employees by addressing the Cleveland, as well as primarily capabilities in work/life balance to create a desirable working quality and laboratory services in Budapest. The Employee turnover rate environment, as well as supporting personal expansion in employees in Copenhagen was (voluntary resignations) development through continuous learning mainly due to new activities in both API- and conversations, feedback and leadership training. FDF-like vancomycin liquid and B2i activities. 10 For example, unconscious bias training delivered 8.6% to the organization will help overcome 8.2% 8 7.8% stereotypes and outdated beliefs, giving women 7.7% 6.8% 6.4% more opportunities to grow and advance at Xellia. Xellia will actively embark on key strategic 6 initiatives to improve the gender diversity ratios that currently exist throughout our organization. 4
2
0
2014 2015 2016 2017 2018 2019
25 Xelia Corporate Report 2019 CORPORATE RESPONSIBILITY
Highlights Business Corporate Corporate Social Responsibility Overview Responsibility Governance
Development and training Development and training To remain competitive, we need to ensure that our employees have the opportunity to To remain competitive, we need to ensure in acontinually leadership advance role. and extend We put their thisskills andPromise 1. 1. 2. 2. Leading Leading Leading Leading that our employees have the opportunity to intoknowledge. action We during achieve the this by year providing across all our I build I build I am I am others others leaders leaders employees with the possibility to grow in their bridges bridges courageouscourageous continually advance and extend their skills sitescurrent by positionsrunning or discoverworkshops,1:1 new working areas,sessions, and knowledge. We achieve this by providing peer-coachingfunctions or locations. and This mentoring. initiative is facilitated This effort employees with the possibility to grow in willwithin also our be newly continued implemented throughout internal mobility 2019. framework. During regular performance their current positions or discover new feedback meetings with employees, we draw up a working areas, functions or locations. Onboardingplan for the next process steps in their development and set performance milestones, as well as personal Our Our My My To andsupport professional the goals. high We volume actively promote of new the LeadershipLeadership LeadershipLeadership 3. 3. principle of lifelong learning, which also means Leading theLeading the This initiative is facilitated within our newly employees joining Xellia we have focusedI make peopleI make people function function that we provide the opportunity for professional shine shine PromisePromise JourneyJourney implemented internal mobility framework. on andimproving behavioral training,our onboarding linked to the agreed process in 2018 During regular performance feedback to individualensure plan.a smooth integration into the meetings with employees we draw up a plan company. Based on both internal and external for the next steps in their development and best practices we implemented a globally set performance milestones, as well as aligned process with supportive Leadership 4. 4. personal and professional goals. We actively Tools, across our sites. Our onboarding process Leading theLeading the I am presentI amand present and organizationorganization promote the principle of lifelong learning, and Leadership Tools support the authentic authentic which also means that we provide the professional and personal integration into Being Being our best our best opportunity for professional and behavioral ourOur working values environment by providing pre- Our GoalOur Goal training, linked to the agreed individual plan. boardingXellia continually information, welcoming events, To provide anti-infectiveTo provide anti-infective strives to be an solutions againstsolutions multi-drug against multi-drug dedicatedappealing, stimulating managerial attention and buddy resistant micro-organismsresistant micro-organisms Our values support.and high-performing The individual onboarding plan and workplace with a culture XelliaXellia Xellia continually strives to be an appealing, follow-upbased on Xellia’smeetings goal, accelerate the systematic AccountabilityAccountability stimulating and high-performing workplace inductionpurpose and into values. the new tasks and ValuesValues with a culture based on Xellia’s goal, purpose responsibilities. In order to engage our new Our PurposeOur Purpose and values. employees for our company culture we To save and Toenhance save and lives enhance by lives by implemented the so-called DNA Day, as well as leading the fightleading against the fight against infections infections Openness andOpenness and Our leadership promise we seek for feedback by our new hire survey Zest Zest TransparencyTransparency The substantial transformation of Xellia’s for further development in our onboarding business means that effective leadership practice. We will continue to sharpen our is more important than ever. As a result onboarding practice in 2019, for example Xelia Corporate Report 2019 26 during 2018 we instigated our Leadership by implementing possible integrated IT Promise which builds on our values and solutions or e-learning opportunities. lays out the attributes and behaviors Xellia 2018 that Xellia expects from all individuals 20 Highlights Business Corporate Corporate Overview Responsibility Governance
Our Leadership Promise The Leadership Promise consists of the Winner of the Business Culture Award Since Xellia has transformed its business from a leadership behaviors we believe will foster for International Initiative pure B2B play to now include a B2i offering, empowerment and collaboration to achieve Xellia Pharmaceuticals was named the winner of effective leadership is even more important than our targets, hence leading to business success. this year’s Business Culture Awards in the ever. As a result, during 2019, we instigated our The promise sharpens the expectations to category for International Initiatives. The award Leadership Promise; this builds on our values and leaders at Xellia and is a commitment to how we recognizes organizations with considerable lays out the attributes and behaviors that Xellia wish to be perceived with regards to inspiring international reach and outstanding multinational expects from all individuals in a leadership role. and transforming our people and organization. Business Culture initiatives across geographical We put the Leadership Promise into action during It builds on Xellia’s values and highlights what boundaries. The award was won in competition the year across all our sites by running good leadership is, distilled into four critical with Fortune 500 companies and others from workshops,1:1 sessions, peer-coaching and leadership areas that are vital to inspire people across the globe, including Europe and the mentoring. This effort will be continued and promote positive transformation, while still US, and a variety of industries, including throughout 2020. retaining “ONE Xellia”: pharmaceuticals. Transformers The “Transformers” community was initiated in December 2017 with the purpose of creating and implementing our Leadership Promise. The Leadership Promise is an incremental part of our People Strategy, and a pivotal factor as we implement our business objectives. The Transformers is a group of leaders from all levels, and representing all Xellia sites. The implementation of the Leadership Promise is an ongoing activity, with particular emphasis on the “leader teach leader” concept. I am present and authentic I make people shine I build bridges I am courageous
27 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
SOS Children’s Villages
The primary beneficiaries of the new Furthermore, our sites in Chicago, Illinois, USA; biochemistry machine are patients from Zagreb, Croatia; Taizhou, China; Bangalore, India; It’s in our DNA to vulnerable families in and around Eldoret that are and Budapest, Hungary, have also supported enrolled in the Family Strengthening Program and their local SOS Children’s Villages through either suffer from chronic conditions such as monetary donations or volunteer time. hypertension, diabetes and rheumatic heart help people in need diseases, and SOS children who are on long-term Xellia’s visit to the SOS Children’s medication and need to undergo organ function Village in Eldoret tests periodically. In connection with the annual In connection with the Annual Fundraising Event SOS Children’s Villages has been Xellia’s nominated charity fundraising event, three Xellia employees were hosted each year, the team of Xellia employees chosen in a lucky draw to make a trip to Eldoret in chosen during the lucky draw 2018 made the trip since 2005, becoming a long-term partner to the organization. the spring of 2020, to visit the SOS Children’s to Eldoret to visit the SOS Children’s Village in the Village and see the work we are contributing Spring of 2019. towards. SOS Children’s Villages is an independent social The Program provides access to essential The five Xellia employees coming from the development organization that promotes the healthcare and education; however, as many of Employee-driven initiatives various sites visited the community programs rights of children in over 130 countries and the families are living in hardship, they are also In addition to Xellia’s corporate funding and the and some of the families. In addition to the SOS territories around the world, providing over 2 assisted with vital “everyday needs.” This can annual fundraising event, colleagues from various Medical Center and SOS Children’s Village, the million children and their families with a safe include materials for their shelter, daily living, Xellia sites were actively fundraising during 2019 team also visited two families with children that place to live, learn and grow up. healthcare support and schooling, while the for three additional important causes to further have received vocational support funded through most vulnerable families receive supplementary support SOS Children’s Villages in Eldoret. These the Xellia Annual Fundraising Event 2018, a Xellia’s corporate partnership with SOS rations of the necessary food types. Through initiatives helped to provide sanitary towels, school that has been supported through Xellia’s Children’s Villages funding, the partnership has enabled Xellia to facilitated the renovation of a local pre-school employee donations, and participated in a jiggers Xellia has joined forces with SOS Children’s help improve the lives of over 70 vulnerable and enabled the treatment of more than 200 outreach campaign. Villages Denmark in a three-year partnership families in the local Eldoret community. children with jiggers (Tunga penetrans) and running from 2018 to 2020, and has pledged to provision of a new pair of shoes. fund activities and outreach campaigns Xellia’s Annual Fundraising Event 2019 coordinated by the SOS Family Strengthening Xellia held its fifth annual fundraising event for Program in Eldoret, Kenya. Organized by the SOS its employees to raise money for a new Children’s Villages Social Center in Eldoret, this biochemistry machine for the SOS Medical Program is intended to support families Center in Eldoret. The SOS Medical Center was experiencing crisis or extreme hardships that the focus of the three-year partnership between may have difficulty in caring for their children. Xellia and SOS Children’s Villages Denmark, By building capabilities and resources for families during which the clinic’s operations were fully and their communities, the Program allows funded by Xellia over the period children to be well cared for and to stay with t of 2015–2017. heir families.
Xelia Corporate Report 2019 28 Highlights Business Corporate Corporate Overview Responsibility Governance
I am deeply grateful for the long-term engagement and continuous support from Xellia Pharmaceuticals and the Xellia employees. With your determined backing of SOS Children’s Villages in Eldoret, Kenya, Xellia improves the lives of children in dire need of a helping hand by ensuring a loving home for them – with care and respect, healthcare and education. With your support, these children now have the opportunity to shape and dream about their own future. Caring changes everything. Thank you. Mads Klæstrup Kristensen Managing Director, SOS Children’s Villages Denmark
29 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Corporate Governance
New Xellia Group A/S has adopted a governance and management In 2019, management and other employees The B-Shares are owned by members of received, in addition to basic salary, variable management and other senior employees of structure that allows the Group to manage its business compensation dependent on the achievement of the Group as well as certain members of the successfully and mitigate risk on an ongoing basis. operational and strategic targets, as well as Board of Directors. In connection with the financial targets. acquisition of Xellia in July 2013, a Management Investment Program was established. At the end Our Long-Term Incentive Program (LTIP) In accordance with Danish company law, Xellia Board meetings, one end-of-year meeting to of 2019, a total of 1,057,051 B -shares were qualifies management and senior employees has a two-tier management system comprising review the annual operating plan and budget for owned by 38 managers and senior employees. at director level and above to receive annual the Board of Directors and a Managing Director the following year and one meeting focused on In addition to the B-shares, managers and senior grants of restricted share awards (RSAs) as part (CEO). As outlined in the Group’s Articles of the long-term strategy of the Group. In 2019, a employees have subscribed warrants in Xellia of their variable compensation package. In 2019, Association, the Board of Directors should total of six meetings were held. with a right to subscribe by up to 5,621,402 Xellia granted a total of 552,745 RSAs under consist of between three and seven additional B-Shares. In 2017, a Board Investment The Board has established a Finance and Audit the enhanced LTIP that was established in 2017. independent directors. Currently, the Board Program was established under which certain Committee, consisting of members of the Board These RSAs entitle the recipient to receive has seven members; a Chairman and six members of the Board of Directors have of Directors and management, which assists the B-Shares in 2021 subject to certain vesting independent directors. Directors are appointed subscribed for a total of 123,076 B-shares, Board in areas relating to accounting, audit, conditions and adjustment mechanisms linked for one year at a time, and can be re-elected at as well as warrants with a right to subscribe internal control and financial reporting. Chaired to Xellia’s financial performance in the period the annual shareholders meeting. The CEO is for up to 323,596 additional B-shares. by Benny Loft, a member of the Board, the from 2017through 2020. not a member of the Board of Directors. Finance and Audit Committee held five meetings We have also adopted an Executive Management The Board of Directors has adopted the Rules during 2019. The Board also has established Share Program under which RSAs may be granted of Procedure for the Board of Directors, which sub-committees within the areas of operations, to the CEO. In 2019, Xellia granted 8,351 RSAs sets out the responsibilities of the Board of commercial and new product development. under this program each giving the right to Directors in a number of areas. These include receive one B-sharein January 2021. determining Xellia’s overall strategy and Compensation actively contributing to developing the Group Compensation for the Chairman of the Board Share capital as a focused, sustainable, global speciality of Directors, other members of the Board Share capital of New Xellia Group A/S is divided pharmaceutical company and supervising and the CEO is based on market terms and into A and B shares. These two share classes have Executive Management in its decisions and conditions. identical rights, with the exception that the operations. Members of the Board of Directors receive A-Shares hold 10 votes per share and the The Board of Directors has also adopted an annual compensation, which is not dependent B-Shares hold 1 vote per share. annual meeting framework consisting of six on Xellia’s performance or results. Some The A-Shares, which total 100,500,000, are held meetings annually comprising of four regular members of the Board have also invested by Xellia Holdco A/S, which is owned by Novo in Xellia under the Board Investment Program. Holdings A/S.
Xelia Corporate Report 2019 30 Highlights Business Corporate Corporate Overview Responsibility Governance Board of Directors
Steen Riisgaard Andreas Rummelt Benny D. Loft Per Valstorp Chairman of the Board Board Member Board Member Board Member Born: 1951 Born: 1956 Born: 1965 Born: 1949
Steen is the former President and CEO of Denmark Andreas is a Partner and CEO of InterPharmaLink Benny was EVP and CFO at Novozymes A/S until Per Valstorp has a long track record attained from based biotech company Novozymes A/S. He has AG, Basel, Switzerland. His international career 2017, he has also worked on acquisitions and senior executive positions held at Novo Nordisk also held senior level positions at Novo Nordisk A/S spans over twenty years in executive management negotiations and played an active role in steering A/S within Pharma Operation Management, and Novo Industri A/S. positions at Novartis. groups for numerous corporate functions including Quality, Regulatory Affairs and Medical Devices. ethics, sustainability and business development. Other Board positions Other Board positions Other Board positions Chairman of the Boards of COWI Holding A/S Partner and CEO of InterPharmaLink AG. Member Other Board positions Chairman of the Board of Directors of Orana A/S and, up until March 2020, ALKAbelló A/S. Vice of the Boards of Alexion Pharmaceuticals, Inc., European Freeze Dry ApS (and up until March 2019, and Roto Health ApS, and member of the Board Chairman of the Boards of the Novo Holdings A/S Alvogen, Leukocare AG and, Cypralis Ltd. member of the Board of Directors of Orsted A/S, of Directors of DBI Plastics A/S, European Freeze and the Villum Foundation. Member of the Boards Chairman of the Audit and Risk Committee, Dry ApS and Scanbur A/S. of Novo Nordisk Foundation, Corbion, the Education Orsted A/S). University of Aarhus, Denmark and the Bird MSc and Ph.D. in Pharmaceutical Sciences, Education Protection Fund, Denmark. University of Erlangen–Nuremberg, Germany. Education MSc in Operational Research & Planning, Technical MSc in Accounting, Tax and Auditing, Copenhagen University of Denmark. Education Business School, Denmark and State Authorized MSc in Microbiology, University of Copenhagen, Public Accountant Denmark.
31 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance
Julie McHugh Henrik Kjær Hansen Barbara Purcell Board Member Board Member Board Member Born: 1964 Born: 1976 Born: 1968
Julie McHugh has a track record that spans 27 Henrik joined Novo Holdings A/S in January 2017 Barbara is President of the Diversified Portfolio at years in the biopharmaceutical industry. Most and is now Senior Partner and Head of Principal multinational specialty pharmaceutical company recently, she was the COO at Endo Health Investments, News Investments and Projects, Bausch Health and is a member of its Executive Solutions, Inc., with responsibilities for both the where he leads on the investment process and Management team. She has spent the past 25 specialty and generic pharmaceuticals businesses. takes an active part in managing and developing years working in the pharmaceutical industry the growing portfolio of investments. Prior to this, mostly managing mature brands and generics. Other Board positions Henrik held a number of positions in the City of Most recently she was instrumental in building Chairman of the Board of Visitors for the Smeal London. Most recently he was a Senior Vice the generic division at Bausch Health as well as College of Business, Pennsylvania State University. President at Moelis & Co., focusing on healthcare revitalizing several mature brand assets there. Chairman of the Board of Directors of Ironwood buy and sell side M&A transactions. Previously Previously, Barbara was Executive Director Global Pharmaceuticals, Inc. and member of the Board of he was with Deutsche Bank and ABN AMRO. Directors of Aerie Pharmaceuticals,Inc., Lantheus Sales and Marketing for Bausch + Lomb’s generics Holding, Inc. and Trevena Pharmaceuticals, Inc. Other Board positions division, having also worked at Valeant, Novartis/ Member of the Board of Directors of Orexo AB Sandoz and Zydus. Education and WCG Clinical. Education BSc in Finance, Pennsylvania State University, USA and an MBA Administration in International Education MBA from Rutgers University and a BA from Management, St. Joseph’s University, USA. BSc. in Business Administration and an MSc. the University of Pittsburgh, and qualified in Applied Economic and Finance from the as a Certified Public Accountant (CPA). Copenhagen Business School, Denmark.
Xelia Corporate Report 2019 32 Highlights Business Corporate Corporate Overview Responsibility Governance Scientific Advisory Board
The Scientific Advisory Board, which was established in 2014, plays an important role in directing our R&D activities and focus on innovative anti-infectives.
The Board brings together leading international Professor Dr Tania Pressler Professor Matthew experts in infectious diseases, clinical George E Griffin Chief Attending Physician, Falagas microbiology, respiratory medicines Chairman of Rigshospitalet, Director, Department of Copenhagen, Denmark. and pharmaceutical research and development. the Scientific Internal Medicine and The Board’s insight and guidance combined with Infectious Diseases, Iaso Advisory Board Xellia’s specialist expertise are being harnessed General Hospital, Iaso Emeritus Professor of to overcome the challenges associated with Group, Athens, Greece. anti-infective discovery and development Infectious Disease and activities. Medicine at St George’s, University of London, UK.
Dr Andreas Rummelt Professor Keith S Kaye Professor Radan Member of Xellia Board Professor of Internal Spaventi of Directors and CEO and Medicine, Director of Founding Partner, Partner at InterPharmaLink Clinical Research, Division Triadelta Partners Ltd, AG, Basel, Switzerland. of Infectious Diseases, Zagreb, Croatia. University of Michigan Medical School, Ann Arbor, Michigan, US.
Professor Gerhard Professor Anne Winter O’Donnell Department of Pharmacy, Professor and Chief, Ludwig Maximilian Division of Pulmonary, University of Munich, Critical Care, and Sleep Munich, Germany. Medicine, Georgetown University Hospital, Washington DC, US.
Professor Christoph Professor Arjana Tang Tambić Andrašević The Sir William Dunn Head of the Department School of Pathology, of Clinical Microbiology University of Oxford, at the University Hospital Oxford, UK. for Infectious Diseases, Zagreb, Croatia.
33 Xelia Corporate Report 2019 Highlights Business Corporate Corporate Overview Responsibility Governance Executive Management Xellia’s leadership team
Carl-Åke Carlsson Daniel Schwartzlose Craig Boyd Chief Executive President, Xellia President, Xellia Officer and President International North America
Aleksandar Bjørn Thonvold Geelanie Briones Danilovski Corporate Vice Corporate Vice Chief Scientific President, People President, EHS Officer & Organization & Quality
Hera Bragadottir Kristin Lund Myrdahl Jamie Iudicia Vice President Corporate Senior Vice President, of R&D and Communications and Global Product Supply Strategic Projects Brand Management
Mikkel Lyager Olsen Matthew Anderson Corporate Chief Financial Development and Officer Chief Legal Officer
Xelia Corporate Report 2019 34 Contact us
Xellia Pharmaceuticals ApS Dalslandsgade 11 2300 Copenhagen S Denmark
Tel +45 32 64 55 00 Fax +45 32 64 55 01 Email [email protected] Web www.xellia.com