Offering Circular 2008

OFFERING CIRCULAR (International Version)

LifeCycle Pharma A/S (a public company incorporated with limited liability under the laws of the Kingdom of Denmark, registered number 26527767)

Rights Issue of up to a maximum of 24,078,880 new Shares of nominal DKK 1 each at DKK 17 per Share with Preemptive Rights for Existing Shareholders at the ratio of 3:4

This Offering Circular has been prepared in connection with a capital increase comprising an offering (the “Offering”) of up to a maximum of 24,078,880 new shares (the “Offer Shares”) of nominal DKK 1 each of LifeCycle Pharma A/S (the “Company” or “LifeCycle Pharma”) with preemptive rights to subscribe for Offer Shares (“Preemptive Rights”) to the Existing Shareholders (as deﬁned below) at the ratio of 3:4.

As of the date of this Offering Circular (the “Offering Circular Date”), but prior to the Offering, the Company’s registered share capital is nominal DKK 32,105,174 and consists of 32,105,174 shares of nominal DKK 1 each, all of which are fully paid (the “Existing Shares”).

Pursuant to the authorization adopted as Article 9 of the Company’s Articles of Association, the board of directors (the “Board of Directors”) passed a resolution on 17 March 2008 to increase the Company’s share capital by up to nominal DKK 24,078,880 (corresponding to 24,078,880 Offer Shares of nominal DKK 1 each). The capital increase will be carried out with Preemptive Rights for Existing Shareholders.

On 1 April 2008 at 12:30 p.m. CET (the “Allocation Time”) any person registered with VP Securities Services (Værdipapircentralen A/S) as a shareholder of the Company (“Existing Shareholders”) will be allocated three (3) Preemptive Rights for each Existing Share held. For every four (4) Preemptive Rights, the holder will be entitled to subscribe for one (1) Offer Share at a price of DKK 17 per Offer Share (the “Offer Price”), which is below the ofﬁcially quoted price of the Existing Shares on 14 March 2008 of DKK 29.20 per Share. Due to the subscription ratio of 3:4 and the number of Existing Shares in the Company prior to the Offering (32,105,174 Shares), there will be an excess of two (2) Preemptive Rights even if all Offer Shares are subscribed.

The trading period for the Preemptive Rights will commence on 28 March 2008 at 9:00 a.m. CET and close on 10 April 2008 at 5.00 p.m. CET. The subscription period for the Offer Shares (the “Subscription Period”) commences on 2 April 2008 at 9.00 a.m. CET and closes on 15 April 2008 at 5.00 p.m. CET. Preemptive Rights that are not exercised during the Subscription Period will lapse with no value, and the holder of such Preemptive Rights will not be entitled to compensation. Once a holder of Preemptive Rights has exercised such rights and subscribed for Offer Shares, such subscription cannot be revoked or modiﬁed by the holder. The Preemptive Rights have been approved for trading and ofﬁcial listing on the OMX Nordic Exchange Copenhagen A/S (“OMX Nordic Exchange Copenhagen”).

Investors should be aware that an investment in the Preemptive Rights and the Offer Shares involves a high degree of risk. See “Risk Factors” beginning on page 12 to read about factors that should be considered before investing in the Preemptive Rights and the Offer Shares.

The Offering is not underwritten, but H. Lundbeck A/S and Novo A/S have each made a binding undertaking to exercise its Preemptive Rights to subscribe for, in aggregate, 9,635,376 Offer Shares corresponding to total gross proceeds of approximately DKK 163.8 million (approximately € 21.97 million).

The Offering comprises a public offering in Denmark and a private placement in certain other jurisdictions.

The Offering is subject to Danish law. This Offering Circular has been prepared in order to comply with the standards and conditions applicable under Danish law.

Joint Global Coordinators and Lead Managers

The date of this Offering Circular is 18 March 2008 This Offering Circular may not be distributed or otherwise made available, the Offer Shares may not be directly or indirectly offered, sold or subscribed, and the Preemptive Rights may not be directly or indirectly offered, sold, acquired or exercised in the United States, Canada, Australia or Japan, unless such distribution, offering, sale, acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction, and the Company and the Joint Global Coordinators and Lead Managers receive satisfactory documentation to that effect. This Offering Circular may not be distributed or otherwise made available, the Offer Shares may not be directly or indirectly offered, sold or subscribed and the Preemptive Rights may not be directly or indirectly offered, sold, acquired or exercised in any other jurisdiction, unless such distribution, offering, sale, acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction. The Company and the Joint Global Coordinators and Lead Managers may require receipt of satisfactory documentation to that effect. Due to such restrictions under applicable legislation and regulations, the Company expects that certain investors residing in the United States, Canada, Australia, Japan and other jurisdictions may not be able to receive this Offering Circular and may not be able to exercise their Preemptive Rights or subscribe for the Offer Shares. No offering and no solicitation to any person is being made by the Company in any circumstances that would be unlawful.

The Preemptive Rights and the Offer Shares have not been approved by the U.S. Securities and Exchange Commission, any state securities commission in the U.S. or any other U.S. regulatory authority, nor have any of such regulatory authorities passed upon or endorsed the merits of the Offering or the accuracy or adequacy of this Offering Circular. Any representation to the contrary is a criminal offence in the U.S.

The Preemptive Rights and the Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws in the U.S., and Preemptive Rights may not be offered, sold, acquired or exercised in the U.S. and Offer Shares may not be subscribed, offered or sold in the U.S. unless they are registered under the Securities Act or an exemption from such registration requirements is available. Any person in the U.S. wishing to exercise Preemptive Rights and subscribe for Offer Shares must execute and deliver an investor letter satisfactory to the Company and the Joint Global Coordinators and Lead Managers to the effect that such exercise of Preemptive Rights and subscription of Offer Shares would be in compliance with U.S. law, see Part III, Section 5.13 “Jurisdictions in which the Offering will be made and restrictions applicable to the Offering”.

The Company’s Existing Shares are listed on the OMX Nordic Exchange Copenhagen under the symbol “LCP” and the securities code DK0060048148.

The Offer Shares will not be issued or admitted to trading and ofﬁcial listing on the OMX Nordic Exchange Copenhagen until after registration of the capital increase relating to the Offering with the Danish Commerce and Companies Agency. Issuance and admission to trading and ofﬁcial listing of the Offer Shares is expected to take place on 21 April 2008 in the securities code of the Existing Shares (DK0060048148).

The Preemptive Rights and the Offer Shares will be available for delivery by allocation to accounts through the book-entry facilities of VP Securities Services. The Offer Shares have been accepted for clearance through Euroclear Bank S.A./N.V. as operator of the Euroclear System (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”).

In connection with the Offering, the Joint Global Coordinators and Lead Managers may, from commencement of the trading period for Preemptive Rights, until 30 days after the ﬁrst day of trading and ofﬁcial listing of the Offer Shares, effect transactions which stabilize or maintain the market prices of the Preemptive Rights (stabilizing actions regarding the Preemptive Rights will only take place during the trading period for Preemptive Rights), the Offer Shares and the Existing Shares at levels above those which might otherwise prevail in the open market. The Joint Global Coordinators and Lead Managers are, however, not obliged to effect any such transactions. Such transactions, if commenced, may be discontinued at any time. Introduction

In connection with the Offering in Denmark, an offering cir- tered trademark and Fenoglide™ is a trademark owned by cular has been prepared in Danish (the “Danish Offering Sciele Pharma, Inc. (“Sciele Pharma”), Lipitor® is a regis- Circular”). The Danish Offering Circular has been prepared tered trademark owned by Pfizer, Inc. (“Pfizer”). Rapa- in compliance with Danish legislation and regulations, mune® is a registered trademark owned by Wyeth. including Consolidated Act no. 1077 of 4 September 2007 on Securities Trading, as amended, the rules of the OMX No person is authorized to give any information or to make Nordic Exchange Copenhagen and Executive Order No. any representation not contained in this Offering Circular in 1232 of 22 October 2007 issued by the Danish Financial connection with the Offering and any information or repre- Supervisory Authority on prospectuses (the “Prospectus sentation not so contained must not be relied upon as Order”). This Offering Circular is an English translation of having been authorized by us or on our behalf or by or on the Danish Offering Circular. A separate offering circular has behalf of the Joint Global Coordinators and Lead Managers. been prepared in relation to the offering to persons located in the U.S. (the “U.S. Offering Circular”). The Dan- This Offering Circular is not intended to provide the basis ish Offering Circular, this Offering Circular and the U.S. of any credit or any other evaluation and should not be Offering Circular are the same, except that the Danish considered as a recommendation by us or the Joint Global Offering Circular contains statements which are required Coordinators and Lead Managers that any recipient of this under E.U. Commission Regulation No. 809/2004 and/or by Offering Circular should acquire or exercise Preemptive the OMX Nordic Exchange Copenhagen, including responsi- Rights or subscribe for any Offer Shares. Each prospective bility statements made by our Board of Directors, our Reg- investor should determine for itself the relevance of the istered Management, our independent auditors and the information contained in this Offering Circular and its sub- Joint Global Coordinators and Lead Managers. Also, the scription of Offer Shares or its acquisition or exercise of U.S. Offering Circular does not include information con- Preemptive Rights should be based upon such investigation tained in the section herein entitled Part I, Section 9 “Profit as it deems necessary. Forecast or Estimates” and an incorporation by reference of certain information contained in the published annual reports of the Company for 2005, 2006 and 2007. The U.S. General Information and Special Notices Offering Ciruclar does include a form of investor letter to be executed by any person in the U.S. wishing to exercise The distribution of this Offering Circular and the Preemptive Rights to subscribe for Offer Shares. In the Offering is, in certain jurisdictions, restricted by law, event of any discrepancy between the Danish Offering Cir- and this Offering Circular may not be used for the cular and the U.S. Offering Circular or this Offering Circular, purpose of, or in connection with, any offer or solici- the Danish Offering Circular shall prevail. tation to anyone in any jurisdiction in which such offer or solicitation is not authorized or to any per- References in this Offering Circular to “the Company”, son to whom it is unlawful to make such offer or “LCP”, “LifeCycle”, “LifeCycle Pharma”, “we”, “us” and “our” solicitation. This Offering Circular does not consti- are to LifeCycle Pharma A/S. A glossary of scientific and tute an offer of or an invitation to acquire any Pre- medical terms used in this Offering Circular is set forth on emptive Rights or to subscribe for Offer Shares in page III-29. A list of definitions of frequently used and any jurisdiction in which such offer or invitation important terms is included on page III-27. References to would be unlawful. Persons into whose possession persons comprise references both to individuals and to this Offering Circular comes shall inform themselves legal entities. We own the MeltDose® and LifeCycle of and observe all such restrictions. Neither the Pharma® trademarks. This Offering Circular also includes Company nor the Joint Global Coordinators and Lead references to trademarks owned by other companies. Tri- Managers accept any legal responsibility for any vio- Cor® is a registered trademark owned by Abbott Laborato- lation by any person, whether or not a prospective ries Corporation (“Abbott”), Antara® is a registered trade- purchaser of Preemptive Rights or Offer Shares, of mark owned by Oscient Pharmaceuticals Corporation any such restrictions. For a more detailed description (“Oscient”), Lipanthyl® is a registered trademark owned by of certain restrictions in connection with the Offer- Solvay S.A. (“Solvay”), Zanidip® and Lercadip® are regis- ing, see Part III, Section 5.13 “Jurisdictions in which tered trademarks owned by Recordati S.p.A. (“Recordati”), the Offering will be made and restrictions applicable Prograf® and Advagraf® are registered trademarks owned to the Offering”. by Astellas Pharma Inc. (“Astellas”), Triglide® is a regis-

iii This Offering Circular may not be distributed or oth- In addition to their own examination of the Company and erwise made available, the Offer Shares may not be the terms of the Offering, including the merits and risks directly or indirectly offered, sold or subscribed, and involved, investors should rely only on the information the Preemptive Rights may not be directly or indi- contained in this Offering Circular, including the risk fac- rectly offered, sold, acquired or exercised in the U.S., tors described herein, and any notices required under Canada, Australia or Japan unless such distribution, Executive Order no. 1172 of 9 October 2007 issued by offering, sale, acquisition, exercise or subscription is the Danish Financial Supervisory Authority on issuers’ permitted under applicable laws of the relevant juris- duties to disclose information, and the rules of the OMX diction, and the Company and the Joint Global Coor- Nordic Exchange Copenhagen that are published by the dinators and Lead Managers receive satisfactory doc- Company and expressly amend this Offering Circular. umentation to that effect. The Offering Circular may not be distributed or otherwise made available, the In connection with the Offering, the Joint Global Coordina- Offer Shares may not be directly or indirectly tors and Lead Managers or their respective affiliates act- offered, sold or subscribed and the Preemptive ing as investors for their own account, may sell, acquire Rights may not be directly or indirectly offered, sold, or exercise Preemptive Rights and offer, sell and subscribe acquired or exercised in any other jurisdiction, unless for Offer Shares in the Offering. They may in this capacity such distribution, offering, sale, acquisition, exercise for their own account hold, buy or sell such securities and or subscription is permitted under applicable laws of any other of the Company’s securities and any invest- the relevant jurisdiction. The Company and the Joint ments related thereto, and they may offer or sell such Global Coordinators and Lead Managers may require securities or other investments in contexts other than in receipt of satisfactory documentation to that effect. connection with the Offering. References in this Offering Circular to the Preemptive Rights being allocated, acquired Due to such restrictions under applicable legislation or sold and the Offer Shares being subscribed, offered, and regulations, the Company expects that certain sold or acquired should therefore be considered to com- investors residing in the U.S., Canada, Australia, prise such offers or placements of securities to the Joint Japan and other jurisdictions may not be able to Global Coordinators and Lead Managers or their respec- receive this Offering Circular or the U.S. Offering Cir- tive affiliates. The Joint Global Coordinators and Lead cular and may not be able to exercise their Preemp- Managers do not intend to disclose the extent of any tive Rights and subscribe for Offer Shares. such investments or transactions other than in compliance with legal or regulatory requirements to do so. Investors are authorized to use this Offering Circular solely for the purpose of considering the acquisition or exercise Danske Markets (a division of Danske Bank A/S) and UBS of the Preemptive Rights and subscription of the Offer Limited are Joint Global Coordinators and Lead Managers Shares described in this Offering Circular. The Company in connection with the Offering and will in that connec- and other sources identified herein have provided the tion receive fees from the Company. In connection with information contained in this Offering Circular. The Joint Danske Markets’ and UBS Limited’s usual business activi- Global Coordinators and Lead Managers make no war- ties, Danske Markets or UBS Limited and certain compa- ranty, express or implied, as to the accuracy or complete- nies affiliated therewith may have provided and may in ness of such information, and nothing contained in this future provide investment banking advice and carry on Offering Circular is, or shall be relied upon as, a promise normal banking business with the Company and its sub- or representation by the Joint Global Coordinators and sidiary. Lead Managers. Investors may not reproduce or distribute this Offering Circular, in whole or in part, and investors The Joint Global Coordinators and Lead Managers do not may not disclose any of the contents of this Offering Cir- make any direct or indirect representation and do not cular or use any information herein for any purpose other assume responsibility for the accuracy and completeness than considering the acquisition or exercise of Preemptive of the information contained in this Offering Circular. Rights and the subscription of Offer Shares. Investors agree to the foregoing by accepting delivery of this Offer- No person is authorized to give any information or to ing Circular. make any representation in connection with the Offering other than as contained in this Offering Circular and any Prospective holders of the Preemptive Rights and pro- amendments thereto, and if given or made, such informa- spective subscribers of the Offer Shares should make an tion or representation must not be relied upon as having independent assessment as to whether the information been made or authorized by the Company or the Joint in this Offering Circular is relevant, and any acquisition or Global Coordinators and Lead Managers. Neither the exercise of the Preemptive Rights and any subscription of delivery of this Offering Circular nor the acquisition or the Offer Shares should be based on the examinations exercise of Preemptive Rights or the subscription of the that the holder or subscriber in question may deem nec- Offer Shares shall create any implication that the informa- essary. tion contained in this Offering Circular is correct as at any

iv time subsequent to the Offering Circular Date or that subscribed, offered or sold in the U.S. unless they are there have been no changes in the affairs of the Com- registered under the Securities Act or an exemption from pany since the date hereof. Any material change as com- such registration requirements is available. Any person in pared with the contents of this Offering Circular will be the U.S. wishing to exercise Preemptive Rights to sub- published as a supplement pursuant to applicable laws, scribe for Offer Shares must execute and deliver an inves- rules and regulations. tor letter satisfactory to the Company and the Joint Global Coordinators and Lead Managers to the effect that such This Offering Circular may not be forwarded, reproduced person is a “Qualified Institutional Buyer” (“QIB”) within or in any other way redistributed by anyone but the Joint the meaning of Rule 144A under the Securities Act and Global Coordinators and Lead Managers and the Com- satisfies certain other requirements. pany. The Preemptive Rights and the Offer Shares may be subject to restrictions on transferability and resale under Any person who wishes to acquire or exercise Preemptive applicable securities legislation in certain jurisdictions and Rights and subscribe for Offer Shares will be deemed to may not be acquired, transferred, exercised or resold have declared, warranted and agreed, by accepting deliv- unless permitted under applicable securities legislation. ery of this Offering Circular and delivery of Preemptive Persons into whose possession this Offering Circular may Rights or Offer Shares, either that he is acquiring or exer- come undertake to inform themselves about and to cising the Preemptive Rights and subscribing for the Offer observe such restrictions. Neither the Company nor either Shares in an offshore transaction as defined by Regulation of the Joint Global Coordinators and Lead Managers S of the Securities Act, or that he is acquiring or exercis- assumes any legal responsibility for any violation of these ing the Preemptive Rights and subscribing for the Offer restrictions by any person, irrespective of whether such Shares in his capacity as a QIB and that he will not re-sell, person is a potential holder of the Preemptive Rights and pledge or otherwise transfer the Preemptive Rights or the a potential subscriber of the Offer Shares. Offer Shares except (i) in an offshore transaction meeting the requirements of Regulation S of the Securities Act, (ii) Prospective holders of the Preemptive Rights and pro- pursuant to an effective registration statement, or (iii) spective subscribers of the Offer Shares should make pursuant to an exemption from registration. their own individual assessment of the legal basis of and consequences of the Offering, including possible tax con- In addition, until the expiration of the 40-day period sequences and possible foreign exchange restrictions beginning on the Offering Circular Date, an offer to sell or which may apply before deciding whether to invest in the a sale of the Preemptive Rights or the Offer Shares within Preemptive Rights and the Offer Shares. the U.S. by a broker/dealer (whether or not it is participating in the Offering) may violate the registration Potential acquirers of Preemptive Rights and subscribers requirements of the Securities Act if such offer to sell or of Offer Shares shall comply with all applicable laws and sale is made otherwise than pursuant to the foregoing. provisions in countries or regions in which they acquire, subscribe, offer, sell or exercise the Preemptive Rights or the Offer Shares or possess or distribute this Offering Cir- Notice to New Hampshire Residents cular and shall obtain consent, approval or permission, as required, for the acquisition of the Preemptive Rights or NEITHER THE FACT THAT A REGISTRATION STATEMENT OR subscription for the Offer Shares. AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STAT- UTES (“RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR Notice to Investors in the U.S. THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE The Preemptive Rights and the Offer Shares have not CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF been approved by the U.S. Securities and Exchange NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA Commission, any state securities commission in the 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER U.S. or any other U.S. regulatory authority, nor have ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR any of such regulatory authorities passed upon or EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSAC- endorsed the merits of the Offering or the accuracy TION MEANS THAT THE SECRETARY OF STATE HAS PASSED or adequacy of this Offering Circular. Any representa- IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR tion to the contrary is a criminal offence in the U.S. RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR The Preemptive Rights and the Offer Shares have not CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, been and will not be registered under the Securities Act CUSTOMER OR CLIENT ANY REPRESENTATION INCONSIS- or any state securities laws in the U.S. Accordingly, the TENT WITH THE PROVISIONS OF THIS PARAGRAPH. Preemptive Rights may not be offered, sold, purchased or exercised in the U.S., and the Offered Shares may not be

v Notice to Investors in For the purposes of the above, the expression an “offer of the European Economic Area Preemptive Rights and Offer Shares to the public” in relation to Preemptive Rights and Offer Shares in any Relevant In relation to each Member State of the European Eco- Member State means the communication in any form and nomic Area which have implemented the EU Directive by any means of sufficient information on the terms of the 2003/71 (together with all current implementing mea- Offering, the Preemptive Rights and Offer Shares so as to sures in the individual Member States, the “Prospectus enable an investor to decide to exercise or acquire Pre- Directive”) (each a “Relevant Member State”), not includ- emptive Rights or subscribe for Offer Shares, as the same ing Denmark, no offering of Preemptive Rights and Offer may be varied in that Member State by any measure imple- Shares to the public will be made in any Relevant Member menting the Prospectus Directive in that Member State. State prior to the publication of a prospectus concerning the Preemptive Rights and the Offer Shares, which has been approved by the competent authority in such Rele- Notice to Investors in the United Kingdom vant Member State or, where relevant, approved in another Relevant Member State and notified to the com- This communication is only being distributed to, and is petent authority in such Relevant Member State, all pursu- only directed at, (i) persons who are outside the United ant to the Prospectus Directive, except that with effect Kingdom or (ii) investment professionals falling within from and including the date of implementation of the Pro- article 19(5) of the Financial Services and Markets Act spectus Directive in such Relevant Member State, an offer- 2000 (financial promotion) order 2005 (the “Order”) or ing of Preemptive Rights and Offer Shares may be made (iii) high net worth companies, and other persons to to the public at any time in such Relevant Member State: whom it may lawfully be communicated, falling within article 49(2)(a) to (d) of the Order (all such persons • to legal entities that are authorized or regulated to together being referred to as “Relevant Persons”). The operate in the financial markets or, if not so authorized Preemptive Rights and the Offer Shares are only available or regulated, whose corporate purpose is solely to to, and any invitation, offer or agreement to subscribe, invest in securities; purchase or otherwise acquire such Preemptive Rights or Offer Shares will be engaged in only with, Relevant Per- • to any legal entity fulfilling at least two of the follow- sons. Any person who is not a Relevant Person should not ing conditions (1) an average of at least 250 employ- act or rely on this document or any of its contents. ees during the last financial year; (2) a total balance sheet of more than €43 million; and (3) an annual net revenue of more than €50 million, as shown in its last Notice Concerning Canada, Australia and Japan annual or consolidated accounts; This Offering Circular may not be distributed or otherwise • to fewer than 100 natural or legal persons (other than made available, the Offer Shares may not be directly or qualified investors as defined in the Prospectus Direc- indirectly offered, sold or subscribed, and the Preemptive tive) subject to obtaining the prior consent of the Joint Rights may not be directly or indirectly offered, sold, Global Coordinators and Lead Managers, for any such acquired or exercised in Canada, Australia or Japan, unless offer; or such distribution, offering, sale, acquisition, exercise or subscription is permitted under applicable laws of the rel- • in any other circumstances falling within Article 3(2) of evant jurisdiction, and the Company and the Joint Global the Prospectus Directive, Coordinators and Lead Managers receive satisfactory documentation to that effect. provided that no such offer of Offer Shares shall result in a requirement for the publication by the Company or any Due to such restrictions under applicable legislation and Joint Global Coordinator and Lead Manager of a prospec- regulations, the Company expects that certain investors tus pursuant to Article 3 of the Prospectus Directive. residing in Canada, Australia, Japan and other jurisdictions may not be able to receive this Offering Circular and may not be able to exercise their Preemptive Rights or subscribe for the Offer Shares. No offering and no solicitation to any person is being made by the Company in any circumstances that would be unlawful.

vi Stabilization Enforceability of Judgments

IN CONNECTION WITH THE OFFERING, THE JOINT The Company is organized under the laws of Denmark, GLOBAL COORDINATORS AND LEAD MANAGERS MAY with our domicile in the municipality of Rudersdal, Den- FROM COMMENCEMENT OF THE TRADING PERIOD FOR mark. PREEMPTIVE RIGHTS UNTIL 30 DAYS AFTER THE FIRST DAY OF TRADING AND OFFICIAL LISTING OF THE Most of the members of our Board of Directors and Exec- OFFER SHARES EFFECT TRANSACTIONS WHICH STABI- utive Management and a number of the experts named LIZE OR MAINTAIN THE MARKET PRICES OF THE PRE- herein are residents of Denmark or other jurisdictions EMPTIVE RIGHTS (STABILIZING ACTIONS REGARDING outside the U.S. All or a substantial portion of our assets THE PREEMPTIVE RIGHTS WILL ONLY TAKE PLACE DUR- as well as the assets of such non-resident persons are ING THE TRADING PERIOD FOR PREEMPTIVE RIGHTS), located in Denmark or other jurisdictions outside the U.S. THE OFFER SHARES AND THE EXISTING SHARES AT As a result, it may not be possible for investors to effect LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PRE- service of process upon such persons or us with respect VAIL IN THE OPEN MARKET. THE JOINT GLOBAL COOR- to litigation that may arise under U.S. federal securities DINATORS AND LEAD MANAGERS ARE, HOWEVER, NOT law or to enforce against them or us judgments obtained OBLIGED TO EFFECT ANY SUCH TRANSACTIONS. SUCH in U.S. courts, whether or not such judgments were made TRANSACTIONS, IF COMMENCED, MAY BE DISCON- pursuant to civil liability provisions of the federal or state TINUED AT ANY TIME. securities laws of the U.S. or any other laws of the U.S.

We have been advised by our Danish legal advisers, Presentation of Financial Mazanti-Andersen, Korsø Jensen & Partnere, that there is and Certain Other Information not currently a treaty between the U.S. and Denmark providing for reciprocal recognition and enforceability of Our audited financial statements as at and for the years judgments rendered in connection with civil and commer- ended 31 December 2005, 2006 and 2007 included in cial disputes and accordingly that a final judgment ren- this Offering Circular have been prepared in accordance dered by a U.S. court based on civil liability would not be with the International Financial Reporting Standards enforceable in Denmark. Considerable uncertainty exists (“IFRS”) as adopted by the EU and the additional Danish whether Danish courts would allow actions to be predi- disclosure requirements for financial statements of listed cated on the securities laws of the U.S. or other jurisdic- companies. tions outside Denmark. Awards of punitive damages in actions brought in the U.S. or elsewhere may be unen- Financial information set forth in a number of tables in forceable in Denmark. this Offering Circular has been rounded. Accordingly, in certain instances, the sum of the numbers in a column or row may not conform exactly to the total figure given for Foreign Currency Presentation that column or row. In addition, certain percentages presented in the tables in this Offering Circular reflect calcu- We publish our financial statements in Danish Kroner. Cer- lations based upon the underlying information prior to tain financial information included in this Offering Circular rounding and, accordingly, may not conform exactly to the contains conversions of certain Danish Kroner amounts percentages that would be derived if the relevant calcula- into Euros at specified rates. These conversions should tions were based upon the rounded numbers. not be construed as representations that the Danish Kro- ner amounts actually represent such Euro amounts or In this Offering Circular all references to “Danish Kroner”, could be converted into Euros at the rates indicated or at “kroner”, or “DKK” are to the currency of the Kingdom of any other rate. In addition, certain additional information Denmark, all references to “U.S. dollars”, “U.S. Dollars”, herein has been presented in U.S. dollars. See Part III, “US$”, “USD”, or “$” are to the currency of the U.S., and Section 4.4 “Currency” for certain historical information all references to “Euro”, “euro” and “€” are to the cur- regarding rates of exchange between Danish Kroner, U.S. rency introduced from the start of the third stage of the dollars and Euros. The conversions in our financial state- European Economic and Monetary Union pursuant to the ments of financial information into Euros have been made Treaty establishing the European Community, as using the rates disclosed therein. Unless otherwise indi- amended. cated, conversions of financial information from Danish

vii Kroner into Euros have been made using the Danish Cen- Independent Auditors tral Bank’s foreign exchange reference rate on 28 Decem- ber 2007, effective on 31 December 2007, of €1.00 = Our audited consolidated ﬁnancial statements as at and DKK 7.4566. Conversions of ﬁnancial information from for the years ended 31 December 2005, 2006 and 2007 U.S. Dollars into Euros have been made using the Danish included herein have been audited by PricewaterhouseC- Central Bank’s foreign exchange reference rate on oopers Statsautoriseret Revisionsaktieselskab (“PwC”), 28 December 2007, effective on 31 December 2007, of Strandvejen 44, DK-2900 Hellerup, Denmark. €1.00 = $1.4692.

Financial Calendar Market and Industry Information

This Offering Circular contains historical market data and Our Annual General Meeting is planned for 24 April 2008 industry forecasts, including information related to the Interim Financial Statements as at and for the sizes of the markets in which we participate or parts three-month period ended 31 March 2008 14 May 2008 thereof, diseases targeted by our product candidates and the number of people affected by such diseases. This Interim Financial Statements as at and for the information has been obtained from a variety of sources, six-month period ended 30 June 2008 27 August 2008 including professional data suppliers, such as IMS Health Inc. (“IMS”; a company listed on the New York Stock Interim Financial Statements as at and Exchange providing business intelligence products and for the nine-month period ended services to the pharmaceutical industry) and Datamonitor 30 September 2008 26 November 2008 Inc, (”Datamonitor”), pharmaceutical specialist literature and articles, company websites and other publicly available information as well as our knowledge of the markets. The publications of professional data suppliers state that Available Information the historical information they provide has been obtained from sources, and through methods, believed to be reli- The following documents (which include those documents able, but that they do not guarantee the accuracy and referred to in Section 29(2) of the Danish Public Compa- completeness of this information. Similarly, industry fore- nies Act) are available for inspection during usual busi- casts and market research, while believed to be reliable, ness hours on any day (Saturdays, Sundays and public have not been independently verified by us. Neither we holidays excepted) at our registered office, Kogle Allé 4, nor any of the Joint Global Coordinators and Lead Manag- DK-2970 Hørsholm, Denmark: (i) our Memorandum of ers represent that this historical information is accurate. Association and our Articles of Association; (ii) our annual Industry forecasts are, by their nature, subject to signifi- reports as at and for the financial years ended 31 Decem- cant uncertainty. There can be no assurance that any of ber 2006 and 2007 prepared in accordance with IFRS as the forecasts will materialize. adopted by the EU and the additional Danish disclosure requirements for annual reports of listed companies; (iii) If information has been obtained from third parties, we our annual report as at and for the financial year ended confirm that such information has been accurately repro- 31 December 2005 prepared in accordance with IFRS and duced and that to the best of our knowledge and belief, the additional Danish disclosure requirement for annual and so far as can be ascertained from the information reports of unlisted companies; (iv) a statement from the published by such third party, no facts have been omitted Board of Directors dated 17 March 2008, which, to the which would render the information provided inaccurate extent this is not to our detriment due to special circum- or misleading. stances, discloses events of material importance which have occurred after the approval of the annual report for Market statistics are inherently subject to uncertainty and the year ended 31 December 2006; (v) a statement from are not necessarily reflective of actual market conditions. PwC regarding the Board of Directors’ statement; (vi) this Such statistics are based on market research which itself Offering Circular; and (vii) the Danish Offering Circular. is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market/market segment definitions.

viii Copies of the Danish Offering Circular and this Offering Circular, with certain exceptions, including prohibition on access by persons located in the U.S., can be downloaded from our website, www.lifecyclepharma.com.

The documents referred to in Section 29(2) of the Danish Public Companies Act include (i) a copy of the latest annual report, (ii) a statement from the Board of Directors disclosing, to the extent that this would not be detrimen- tal to us due to special circumstances, events of material importance which have occurred after the annual report for 2006 was approved and which affect the Company and (iii) a statement by the auditor on the report of the Board of Directors.

We have agreed that, for so long as any Preemptive Rights or Offer Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, we will, during any period in which we are neither subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, upon the request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the Securities Act.

We are not currently subject to the periodic reporting and other information requirements of the Exchange Act.

x i Table of contents

Introduction iii Table of contents x Tables and ﬁgures xi Special Notice Regarding Forward-looking Statements xii Summary 1 Summary of the Offering 6 Summary Financial Data 10 Risk Factors 12

I. Description of the Company

1. Persons Responsible I-1 2. Statutory auditors I-2 3. Selected Financial Information I-3 4. Risk Factors I-5 5. Information about the Company I-6 6. Business Overview I-10 7. Organizational structure I-37 8. Property, Plant, Equipment, etc. I-39 9 Profit Forecast or Estimates I-40 10. Review of Operations and Financial Statements I-43 11. Capital Resources I-48 12. Research and Development, Patents and Licenses I-49 13. Trend Information I-54 14. Board of Directors, Executive Management I-55 15. Remuneration and Benefits I-59 16. Practices of the Board Of Directors and Executive Management I-60 17. Staff I-65 18. Major Shareholders I-67 19. Related Party Transactions I-68 20. Financial Information Concerning the Company’s Assets and Liabilities, Financial Position and Profits and Losses I-70 21. Additional Information I-71 22. Agreements I-80 23. Third-Party Information and Statements by Experts and Declarations of any Interest I-85 24. Documentation material I-86 25. Information on Capital Holdings I-87

II. Financial information

1. Index to Historical Financial Statements II-1 2. Preface to the Financial Statements II-2 3. Inclusion of material by reference II-4 4. Audited Financial Statements for 2005, 2006 and 2007 II-5

x III. The Offering

1. Responsibility Statements III-1 2. Risk factors related to the Offering III-2 3. Key Information III-3 4. Information Concerning the Securities to Be Offered III-6 5. Terms and Conditions of the Offering III-16 6. Admission to Trading and Ofﬁcial Listing III-22 7. Selling Security Holders and Lock-Up Agreements III-23 8. Net Proceeds and Aggregate Costs III-24 9. Dilution III-25 10. Additional information III-26 11. Deﬁnitions III-27 12. Glossary III-29

IV. Appendices 1. Articles of Association of LifeCycle Pharma A/S IV-1 2. Appendix 1 to the Articles of Association of LifeCycle Pharma A/S IV-8 3. Appendix 2 to the Articles of Association of LifeCycle Pharma A/S IV-15

Tables and ﬁgures

Summary Table 1. Product and Product Candidate Portfolio 1

I. Description of the Company Table 2. Product and Product Candidate Portfolio I-10 Table 3. Conditions Leading to End-Stage Organ Failure I-19 Table 4. Overview of Major Immunosuppressants I-20 Table 5. Total Operating Costs I-49 Table 6. Warrants Currently in Issue I-66 Table 7. Major Shareholders in the Company I-67 Table 8. Issued and Outstanding Warrants I-72 Table 9. Changes in Share Capital I-75

Figure 1. Mean Dose Uncorrected Whole Blood Concentrations of Tacrolimus in Patients on Days 7, 14 and 21 (n=47, topline results) I-21 Figure 2. Linear Time Concentration Plot, Dose-Uncorrected, From Preliminary Analysis of Study 1017 (LCP-Tacco vs. Advagraf) I-22 Figure 3. Solubility and Permeability Considerations for Oral Absorption of Drugs I-28 Figure 4. Comparison of Drug Particle Size I-29 Figure 5. Functional Structure of the Company I-37 Figure 6. LifeCycle Pharma Patent Applications I-51 Figure 7. Board of Directors I-55 Figure 8. Executive Management I-57 Figure 9. Executive Management I-60

III. The Offering Table 10. Costs of the Offering III-24

i x Special Notice Regarding Forward-looking Statements

Certain statements in this Offering Circular are based on • our ability to manage growth, including in the develop- the beliefs of our Board and Registered Management, as ment of sales and marketing operations; well as assumptions made by and information currently available to our Board and Registered Management, and • our ability to attract and retain suitably qualified per- such statements may constitute forward-looking state- sonnel; ments. These forward-looking statements (other than statements of historical fact) regarding our future results • our ability to enforce and protect our patents and of operations, financial condition, cash flows, business other proprietary rights; strategy, plans and objectives of our Board and Registered Management for future operations can generally be iden- • potential intellectual property litigation over Fenoglide tified by terminology such as “targets”, “believes”, and our product candidates; “expects”, “aims”, “intends”, “plans”, “seeks”, “will”, “may”, “anticipates”, “would”, “could”, “continues” or sim- • our ability to obtain additional patents to our proprie- ilar expressions or the negatives thereof. tary technology, including our MeltDose technology;

Such forward-looking statements involve known and • impact of new or amended patent regulations and leg- unknown risks, uncertainties and other important factors islation; that could cause our actual results, performance or achievements, or industry results, to differ materially from • difﬁculties relating to enforcement of our patent rights, any future results, performance or achievements including, but not limited to, our MeltDose technology expressed or implied by such forward-looking statements. platform; Such risks, uncertainties and other important factors include, among others: • our relationships with afﬁliated entities;

• our ability to successfully develop and commercialize • our dependence on our partners such as Sciele pharmaceutical products; Pharma, Sandoz Inc. (“Sandoz”), Mylan Inc. (“Mylan”) and Recordati and our ability to enter into additional • the outcome of our ongoing and future clinical studies; collaborations;

• the rate of patient recruitment to our clinical studies; • changes and developments in technology which may render our products obsolete; • competition from local and international pharmaceutical companies and from companies in the pharmaceu- • the impact of pharmaceutical industry regulation and tical and biopharmaceutical industries; any future legislation that could affect the pharmaceutical industry; • potential, unforeseen safety issues resulting from the administration of our products in patients; • the difﬁculty of predicting U.S. Food and Drug Adminis- tration (“FDA”), European Medicines Agency (“EMEA”) • our ability to secure product manufacturing; and other regulatory authority approvals;

• the level of market acceptance of Fenoglide™, the • the regulatory environment and changes in the health FDA-approved brand name in the U.S. for our product policies and structures of various countries; LCP-FenoChol, which is marketed by our partner Sciele Pharma, and any of our potential future products;

xii or other factors referenced in this Offering Circular. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, our actual ﬁnancial condition or results of operations could differ materially from that described herein as anticipated, believed, estimated or expected. We urge investors to read the section of this Offering Circular entitled “Risk Factors”, beginning on page 12, for a more complete discussion of the factors that could affect our future performance and the industry in which we operate.

We do not intend, and do not assume, any obligation to update any forward-looking statements contained herein, except as may be required by law. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualiﬁed in their entirety by the cautionary statements referred to above and contained elsewhere in this Offering Circular.

xiii Summary

This Summary must be read as an introduction to this Overview Offering Circular. Any decision to invest in any Offer Shares and the Preemptive Rights should be based on a We are an emerging specialty pharmaceutical company consideration of this Offering Circular as a whole, includ- focused on certain cardiovascular indications and the ing the documents incorporated by reference and the immunosuppression market. We currently have one prod- risks of investing in the Offer Shares and the Preemptive uct on the market, seven clinical development programs Rights set out in the section entitled ‘‘Risk Factors”, covering five product candidates and three product candi- beginning on page 12. This Summary is not complete and dates in preclinical development. does not contain all the information that you should consider in connection with any decision relating to the Offer Our first commercialized product, LCP-FenoChol, has Shares and the Preemptive Rights. received FDA approval for sale in the U.S., under the brand name Fenoglide for the treatment of dyslipidemia No civil liability will attach to us in respect of this Sum- (which includes hypertriglyceridemia, mixed dyslipidemia mary, including the Summary of the Offering and the and hypercholesterolemia) as an adjunct to diet in adult Summary Financial Data included herein, or any transla- patients. Launched in February 2008, Fenoglide is mar- tion thereof, unless it is misleading, inaccurate or incon- keted in the U.S. by our partner Sciele Pharma. In addi- sistent when read together with the other parts of this tion, we have three clinical programs for product candi- Offering Circular. Where a claim relating to information dates in the cardiovascular area: LCP-AtorFen, a contained in this Offering Circular is brought before a fixed-dose combination therapy in Phase II studies for court in a state within the European Economic Area, the dyslipidemia; LCP-Lerc, a reformulation of lercanidipine, a plaintiff may, under the national legislation of the state calcium channel blocker, which has completed Phase I where the claim is brought, be required to bear the costs studies for hypertension; and LCP-Feno, a generic fenofi- of translating this Offering Circular before the legal pro- brate formulation which has completed Phase I studies for ceedings are initiated. dyslipidemia.

Table 1. Product and Product Candidate Portfolio

Product Indication Pre-Clinical Phase I Phase II Phase III Marketed Partner

Cardiovascular Fenoglide Dyslipidemia Sciele Pharma LCP-AtorFen Dyslipidemia LCP-Lerc Hypertension Recordati LCP-Feno Dyslipidemia Sandoz/Mylan Immunosuppression LCP-Tacro Kidney Transplant LCP-Tacro Liver Transplant LCP-Tacro Autoimmune Hepatitis LCP-Siro Organ Transplant/Autoimmune LCP-3301 Organ Transplant/Autoimmune Other Programs LCP-Sciele Undisclosed Sciele Pharma Undisclosed Top 10 LCP-4401 Undisclosed Pharmaceutical Company 1

1) Based on gross revenues for 2006

1 For the immunosuppression market, we have four clinical an offer price of DKK 44 per Share, generating approxi- programs and one preclinical program currently underway mately DKK 500 million (€67 million) in net proceeds. Our relating to three product candidates. Our most advanced Existing Shares are listed on the OMX Nordic Exchange product candidate is LCP-Tacro, which has completed Copenhagen under the symbol “LCP” and the securities Phase II studies with positive data in kidney transplant code DK0060048148. recipients and achieved positive interim data in Phase II studies in liver transplant recipients. We expect to commence Phase III studies for LCP-Tacro in the second half Business Strategy of 2008 with kidney and liver transplant recipients. In addition, LCP-Tacro is in ongoing Phase II studies for auto- Our primary goal is to build a fully integrated specialty immune hepatitis. We also have LCP-Siro, which is in pharmaceutical business around our key cardiovascular Phase I studies for organ transplantation and autoimmune and immunosuppression product candidates and the diseases, and LCP-3301, which is in preclinical studies for broader application of our proprietary MeltDose technol- organ transplantation. In addition, we have two other ogy platform for other major therapeutic areas with product candidates in preclinical development for undis- established commercial potential. The ﬁve key elements closed indications. of our business strategy are as follows:

Our proprietary MeltDose technology platform is designed • Advance LCP-Tacro, LCP-Siro and our other immu- to enhance the release and absorption of drugs in the nosuppression product candidates through clinical body by incorporating the drug in a solubilized form in a studies within the organ transplantation area. tablet matrix, for example as a solid solution. By applying LCP-Tacro (once-daily dosage) has recently received our MeltDose technology to create new versions of exist- positive and statistically significant Phase II clinical data ing drugs, we believe we are able to develop products in kidney transplant recipients demonstrating a poten- with differentiated characteristics significantly faster and tial best-in-class profile when compared head-to-head cheaper and with a higher success rate as compared with with Prograf (twice-daily dosage), the only tacrolimus traditional drug development. product currently available on the U.S. market. In addition, we have received positive interim Phase II data for In order to commercialize Fenoglide and to develop and LCP-Tacro in liver transplant recipients indicating a commercialize our product candidates for the cardiovas- potential best-in-class profile when compared head-to- cular market, we have entered into partnerships with head with Prograf (twice-daily dosage). pharmaceutical companies such as Sciele Pharma, Recor- dati, Sandoz and Mylan. We intend to continue this part- We expect to initiate Phase III clinical studies for LCP- nering strategy for our product candidates in major thera- Tacro in the second half of 2008 in both kidney and peutic markets with large physician and patient liver transplant recipients. populations where we believe the expanded marketing capabilities of these companies may significantly increase We plan to advance our earlier stage immunosuppres- the market penetration of our products. For product can- sion product candidates, such as LCP-Siro, through didates we are developing for immunosuppression and late-stage clinical development. We currently own may develop for other specialist indications, we intend to worldwide commercialization rights to our entire immu- establish our own hospital-based sales force and market- nosuppression portfolio, and, although we intend to ing capabilities where we believe, through such a strat- develop and commercialize these product candidates egy, we can maximize their commercial potential. ourselves for the U.S. market in order to maximize their commercial potential, we may outlicense development or commercialization of a product candidate where we Corporate Information deem it appropriate.

We commenced operations in June 2002 as a spin-off • Develop LCP-Tacro, LCP-Siro and our other immuno- from H. Lundbeck A/S. We are based north of Copenha- suppression product candidates for indications gen, Denmark, and currently employ 95 permanent staff within the autoimmune disease area. There is scien- in Denmark and the United States. Our registered office is tific and clinical data that suggest that tacrolimus and located at Kogle Allé 4, DK-2970, Hørsholm, Denmark, sirolimus may have efficacy in the treatment of various and we are domiciled in the municipality of Rudersdal. autoimmune diseases, including autoimmune hepatitis. Our telephone number is +45 70 33 33 00. For the year We intend to develop further our product candidates, ended 31 December 2007 we had revenues of DKK LCP-Tacro and LCP-Siro, for the treatment of auto- 64,705 thousand (€8,678 thousand). In 2006, we com- immune hepatitis and other indications in the auto- pleted an initial public offering of 12.65 million Shares at immune area that have commercial and clinical significance.

2 • Advance LCP-AtorFen to late stage clinical studies. reduces development costs and time-to-market. In We intend to take LCP-AtorFen through Phase II clinical addition to our marketed product, Fenoglide, we cur- studies, and plan to prepare for Phase III clinical stud- rently have seven clinical development programs, includ- ies. We intend to seek a partner to fund any such ing three programs for LCP-Tacro, which has completed Phase III clinical studies and to leverage the larger sales Phase II studies for kidney transplants and is in ongoing force of such a partner at the time of the market Phase II studies for liver transplants and autoimmune launch of LCP-AtorFen. hepatitis, LCP-AtorFen, which is in ongoing Phase II studies for dyslipidemia, LCP-Lerc, which has completed • Leverage our clinical and regulatory expertise Phase I studies for hypertension, LCP-Siro, which is in within the cardiovascular and immunosuppression Phase I studies for organ transplantation, and LCP-Feno, areas. We have initially focused on the development which has completed Phase I studies for dyslipidemia. of product candidates for cardiovascular disease and immunosuppression, which are major therapeutic areas • Potential best-in-class product candidates with with established commercial potential. We intend to worldwide commercialization rights retained. We leverage our clinical and regulatory expertise by concurrently retain the worldwide commercialization rights tinuing to develop new MeltDose product candidates in to two of our late-stage product candidates- LCP-Tacro these two areas. In addition, we may in-license attrac- and LCP-AtorFen. LCP-Tacro is a once-daily dosage ver- tive product candidates to complement our existing in- sion of tacrolimus, a drug currently approved for immu- house portfolio, particularly within the immunosup- nosuppression with 2007 world wide sales of approxi- pression area, where we can obtain sales and market- mately $1.6 billion (source: IMS Health; all rights ing synergies with our existing in- house portfolio. reserved). In Phase II clinical studies in kidney transplant patients, LCP-Tacro demonstrated a clear once-a- • Continue to leverage our proprietary MeltDose day profile as well as improved bioavailability and technology platform across multiple therapeutic reduced variability as compared with Prograf, the only areas with established commercial potential. We version of tacrolimus currently marketed in the U.S. LCP- believe that our proprietary MeltDose technology plat- AtorFen is a proprietary once-daily fixed-dose combina- form has broad applicability across multiple existing tion of atorvastatin and a low dose fenofibrate for the drugs and disease areas. We intend to further maximize treatment of dyslipidemia. We intend to seek a partner the commercial value of our MeltDose technology by to fund Phase III clinical studies and to leverage the applying it across a broad range of therapeutic indica- larger sales force of such a partner at the time of the tions where we believe we can retain significant rights to market launch of LCP-AtorFen. In North America alone, our products and maximize their commercial potential. combined 2006 sales of atorvastatin and fenofibrate were approximately $10.8 billion (source: IMS Health; all rights reserved). In Phase I clinical studies, LCP-AtorFen Key Strengths demonstrated comparable bioavailability to Lipitor and Tricor, and a once-daily oral dosing profile without any • Marketed product generating revenues in 2008. significant food effect. LCP-AtorFen is currently being Our first commercialized product, Fenoglide, is a fenofi- compared to Lipitor and Tricor, the most widely pre- brate product that has received FDA approval for sale scribed statin and fenofibrate, respectively, currently on in the U.S. for the treatment of dyslipidemia as an the market, in a head-to-head Phase II clinical study. adjunct to diet in adult patients. Fenoglide is currently marketed in the U.S. by our partner, Sciele Pharma. • Proprietary MeltDose technology platform. We In February 2008, we began to generate recurring reve- believe that our proprietary MeltDose technology plat- nues from royalties on sales of Fenoglide. Fenofibrates form enables the creation of new, potentially best-in- had global sales of US$1.7 billion in 2006 (source: IMS class, versions of existing marketed drugs as it Health; all rights reserved). enhances the bioavailability of compounds with low water-solubility and enables a controlled or modified • Late stage and diverse product pipeline with a low release plasma profile. We believe that the technology risk profile. We have applied our proprietary MeltDose has broad application across a wide range of com- technology platform to create what we believe to be a pounds and therapeutic areas. diversified late stage and low risk product pipeline in the areas of cardiovascular disease and immunosup- ° Clinically and commercially validated. Our propri- pression. Our current product candidates are designed etary MeltDose technology platform has been vali- to be improved versions of existing marketed drugs for dated in a number of clinical studies and has which we believe the limitations of existing therapies received regulatory acceptance through the FDA create significant commercial opportunity and market approval of Fenoglide for sale in the U.S. In addition, potential for our product candidates. We believe this we believe the MeltDose technology has been com- minimizes our development risk and significantly mercially validated at the partner level through the

3 formation of several partnerships to utilize the tech- 2. LCP-AtorFen is our proprietary product candidate in nology with leading international pharmaceutical Phase II clinical studies for the treatment of dyslipidemia, companies. combining atorvastatin (the active ingredient of Lipitor, currently marketed by Pfizer and often referred to as the ° Permits a low-risk profile for our product candi- best selling drug in the world) and an undisclosed low dates. Compared with product candidates devel- dose of fenofibrate without food effect. In North America oped through the traditional pharmaceutical devel- alone, combined sales of atorvastatin and fenofibrate opment process, we believe that using known active were approximately US$10.8 billion in 2006 (source: IMS ingredients in combination with our proprietary Health; all rights reserved). MeltDose technology platform may reduce the risk of product development failure and may shorten 3. LCP-Lerc is designed to become a new, improved ler- development timelines and reduce overall develop- canidipine product for the treatment of hypertension. ment cost. For example, Fenoglide was developed LCP-Lerc is being developed as a follow-on product to from pre-clinical trials to FDA approval for sale in the Zanidip, the top selling product of our partner Recordati. U.S. within five years as compared with a traditional drug development time of 8 to 11 years (source: 4. LCP-Feno (containing 145 mg/48 mg active sub- Reuters Business Insight; Achieving Market Domi- stance) is our development stage fenofibrate product nance through Reformulation (2001)). We believe candidate for the treatment of dyslipidemia. LCP-Feno has that this enables us to advance our product candi- been designed to be marketed as an AB-rated (substitut- dates through late-stage clinical studies and/or reg- able) generic version of Tricor. ulatory approval at a faster rate whilst retaining substantial commercial rights. IMMUNOSUPPRESSION

• Strong commercial partnerships with leading phar- 1. and 2. LCP-Tacro (organ transplantation–kidney maceutical companies. We have formed partnerships and liver) is a once-daily dosage formulation of tacroli- with Sciele Pharma for the commercialization of Feno- mus that we are developing for immunosuppression treat- glide, and with Recordati, Sandoz and Mylan for the ment in kidney and liver transplant recipients. We have development of certain of our product candidates for recently positive and statistically significant Phase II clini- the treatment of cardiovascular diseases. cal data in kidney transplant recipients demonstrating a potential best-in-class profile when compared head-to- • Experienced management. We have internationally head with Prograf (twice-daily dosage), the only tacroli- experienced management consisting of biopharmaceu- mus product currently available on the U.S. market. In tical executives and recognized experts who offer addition, we have received positive interim Phase II data diverse backgrounds and complementary skill-sets in for LCP-Tacro in liver transplant recipients indicating a research, development, drug approval and finance. Our potential best-in-class profile when compared head-to- management draw from experience gained at leading head with Prograf (twice-daily dosage). Final data from pharmaceutical and biotech companies such as Novar- the Phase II studies are expected in the second quarter of tis, Novo Nordisk, SkyePharma and Bavarian Nordic 2008. In 2007, worldwide sales of Prograf were approxi- A/S. mately US$1.6 billion (source: IMS Health; all rights reserved).

Product Portfolio 3. LCP-Tacro (autoimmune hepatitis) is in Phase II clinical studies for the treatment of autoimmune hepatitis. CARDIOVASCULAR 4. LCP-Siro (organ transplantation/autoimmune dis- 1. Fenoglide (containing 120 mg/40 mg active sub- eases) is designed to provide increased bioavailability stance) is our FDA-approved fenoﬁbrate product for the and reduced dosing, as compared to the currently avail- treatment of dyslipidemia, which is currently marketed in able version of sirolimus. It is currently in ongoing Phase I the U.S. by our partner Sciele Pharma. In 2006, worldwide studies for organ transplantation and autoimmune dis- sales of all fenoﬁbrate drugs were approximately US$1.7 eases. billion (source: IMS Health; all rights reserved). 5. LCP-3301 (organ transplantation/autoimmune diseases) is developed to be a unique once-daily dosage form of another immunosuppression agent for the prevention of rejection after organ transplantation and for the treatment of patients with autoimmune diseases. Phase I studies for organ transplantation and autoimmune diseases are expected to start in the second half of 2008.

4 In addition, the net proceeds from the Offering will be Intellectual Property used for such general corporate purposes as staff costs within drug development and administration as well as to As of the Offering Circular Date, a total of four patents obtain and maintain patents and submit registration relating to our MeltDose technology have issued in the applications with the FDA and other regulatory authori- U.S., South Africa and Europe. We have filed four families ties. We may also use a portion of the proceeds to co- of patent applications concerning our MeltDose technol- fund joint development projects with partners. ogy. Also, we have filed three families of patent applications in the area of drug discovery technology. In addi- The amount as well as the timing of our actual expendi- tion, we have filed 16 product-specific families of patent tures cannot be predicted with certainty, and the specific applications which are currently being examined. use of the net proceeds of the Offering will depend upon numerous factors. As of the Offering Circular Date we have a total of 136 pending patent applications. We therefore wish to keep a high degree of freedom as regards the use of the net proceeds from the Offering, and the amounts and timing of the actual expenditures Reasons for the Offering and Use of Proceeds may depart from our estimates. Pending utilization of such net proceeds, we intend to invest such funds in cash The reasons for the Offering are to provide additional deposits, short-term, interest-bearing securities and funding for future clinical development of our product other similar low-risk investments in and outside Den- portfolio, for research and development activities and for mark. general corporate purposes.

H. Lundbeck A/S and Novo A/S have each made a binding Risk Factors undertaking to exercise its respective Preemptive Rights, and to subscribe for Offer Shares corresponding to total There are risks associated with an investment in the Offer gross proceeds of approximately DKK 163.8 million Shares and the Preemptive Rights, including risks associ- (approximately € 21.97 million). ated with the development of pharmaceutical products and the biopharmaceutical industry, with our business Assuming subscription of the maximum number of Offer and with the Offering, which investors should take into Shares (24,078,880 Offer Shares), we expect to receive account before the acquisition or exercise of the Preemp- net proceeds from the Offering of approximately DKK tive Rights and/or subscription of the Offer Shares. The 376.9 million (approximately € 50.5 million). information set forth below is only a summary of these risks. For a more complete analysis of each of the risks We intend to use the net proceeds from the Offering, described below, see the section entitled “Risk Factors” whether or not fully subscribed, together with any reve- beginning on page 12. Investors should carefully consider nues generated from the sale of our ﬁrst commercialized these risk factors together with all of the other informa- product, Fenoglide, future milestone payments and tion included in this Offering Circular before making a license fees, and existing cash balances in the further decision regarding the acquisition or exercise of Preemp- development of our product portfolio towards commer- tive Rights and/or subscription for the Offer Shares. These cialization, including the following direct clinical expenses: risks are divided into the following categories:

• to fund planned Phase III studies of LCP-Tacro for • Risks Related to Our Financial Results organ transplantation; • Risks Related to Our Business • to fund ongoing Phase II studies of LCP-Tacro for liver transplantation and autoimmune hepatitis; • Risks Related to Our Intellectual Property

• to fund ongoing Phase II clinical studies and prepara- • Risks Related to Government Regulatory and Legal tion of Phase III studies of LCP-AtorFen for dyslipid- Requirements emia; • Risks Related to Our Employees • to fund ongoing Phase I clinical studies of LCP-Siro for organ transplantation and autoimmune diseases; • Risks Related to Currency and Other Financial Risks

• to fund ongoing preclinical and planned Phase I studies • Risks Related to the Offering for LCP-3301 for organ transplantation and autoimmune diseases.

5 Summary of the Offering

See Part III “The Offering” for a detailed description of the Offering.

The Issuer LifeCycle Pharma A/S, a public company incorporated with limited liability under the laws of Denmark. Our registered identiﬁcation number is CVR no. 26527767.

The Offering The Offering comprises up to a maximum of 24,078,880 Offer Shares of nominal DKK 1 each, with Preemptive Rights to the Existing Shareholders at the ratio of 3:4.

Offer Price The Offer Shares are offered at DKK 17 per Offer Share of nominal DKK 1 each, free of brokerage fees.

Subscription Ratio and Any person who is registered with VP Securities Services as a shareholder of the Company on 1 Allocation of Preemptive Rights April 2008 at 12.30 p.m. CET will be entitled to and will be allocated three (3) Preemptive Rights for each Existing Share of nominal DKK 1 each. For every four (4) Preemptive Rights, the holder will be entitled to subscribe for one (1) Offer Share. No fractional Shares will be issued.

Shares traded after 27 March 2008 will be traded ex Preemptive Rights.

Offer Shares The Offer Shares, when issued by the Company, will belong to the same class as the Existing Shares. The Offer Shares will not be issued or admitted to trading and official listing on the OMX Nordic Exchange Copenhagen until registration of the capital increase has taken place with the Danish Commerce and Companies Agency. Accordingly, shareholders and investors should note that the Offer Shares will not be admitted to trading and official listing on the OMX Nordic Exchange Copenhagen under a temporary securities code. The Offer Shares will be issued and admitted to trading and official listing on the OMX Nordic Exchange Copenhagen directly under the securities code for the Existing Shares (DK0060048148) following registration of the capital increase with the Danish Commerce and Companies Agency, which is expected to take place on 17 April 2008.

The Preemptive Rights and the Offer Shares will be delivered by allocation to accounts through the book-entry facilities of VP Securities Services.

When the Offer Shares have been admitted to trading and ofﬁcial listing, the Offer Shares will be accepted for clearance through Euroclear and Clearstream.

Trading period for The Preemptive Rights are expected to be traded on the OMX Nordic Exchange Copenhagen Preemptive Rights during the period from 28 March 2008 at 9.00 a.m. CET to 10 April 2008 at 5.00 p.m. CET.

Subscription Period for The subscription period for the Offer Shares commences on 2 April 2008 at 9.00 a.m. CET and Offer Shares closes on 15 April 2008 at 5.00 p.m. CET.

Subscription Procedure A holder of Preemptive Rights wishing to exercise its Preemptive Rights to subscribe for Offer Shares must do so through its own custodian institution, in accordance with the rules of such institution. The time until which notification of subscription may be given will depend upon the holder’s agreement with, and the rules and procedures of, its custodian institution or other financial intermediary and may be earlier than the end of the Subscription Period. Once a holder has subscribed for Offer Shares, such subscription may not be revoked or modified by the holder.

6 Method of Payment Upon the exercise of the Preemptive Rights, the holder must pay DKK 17 per Offer Share for which he subscribes. Payment for the Offer Shares shall be made in Danish kroner at the time of subscription, however, not later than 15 April 2008 at 5.00 p.m. CET. Holders of Preemptive Rights are required to adhere to the account agreement with their Danish custodian institution or other ﬁnancial intermediaries through which they hold Shares. Financial intermediaries through whom a holder may hold Preemptive Rights may require payment by an earlier date.

Failure to Exercise Preemptive Rights that are not exercised during the Subscription Period will lapse with no value, Preemptive Rights and the holder of such Preemptive Rights will not be entitled to compensation. The Subscription Period will end on 15 April 2008 at 5.00 p.m. CET.

Withdrawal of the Offering The Offering may be withdrawn at any time prior to the registration of the capital increase relating to the Offer Shares with the Danish Commerce and Companies Agency. The Rights Issue Agreement dated 18 March, 2008 which we have entered into with the Joint Global Coordinators and Lead Managers (the “Rights Issue Agreement”) provides that the Joint Global Coordinators and Lead Managers may require us to withdraw the Offering at any time prior to the registration of the capital increase relating to the Offer Shares upon notiﬁcation of termination of the Rights Issue Agreement. The Joint Global Coordinators and Lead Managers are entitled to terminate this Agreement upon the occurrence of certain exceptional and unpredictable circumstances such as force majeure. The Rights Issue Agreement also contains closing conditions which we believe are customary for offerings such as the Offering and the closing of the Offering is dependent on compliance with all of the closing conditions set forth in the Rights Issue Agreement. If one or more closing conditions are not met, the Joint Global Coordinators and Lead Managers may, at their discretion, also terminate the Rights Issue Agreement and thereby require us to withdraw the Offering.

If the Offering is not completed, the exercise of Preemptive Rights that has already taken place will automatically be cancelled, the subscription price for Offer Shares will be refunded (less any brokerage fees) to the last registered owner of the Offer Shares at the time of withdrawl, all Preemptive Rights will be null and void, and no Offer Shares will be issued, potentially causing investors who may have acquired Preemptive Rights and/or rights to Offer Shares (in an off- market transaction) to incur a loss. However, trades of Preemptive Rights executed during the trading period for the Preemptive Rights will not be affected. As a result, investors who acquired Preemptive Rights will incur a loss corresponding to the purchase price of the Preemptive Rights and any brokerage fees. Any withdrawal will be notiﬁed immediately to the OMX Nordic Exchange Copenhagen and announced as soon as possible in the same Danish daily newspaper in which the Offering was announced.

Share Capital As of the Offering Circular Date, but prior to the Offering, the Company’s registered share capital is nominal DKK 32,105,174 and consists of 32,105,174 Shares of nominal DKK 1 each, all of which are fully paid.

Voting Rights Each Offer Share entitles the holder to one vote on all matters submitted to a vote of our shareholders. See Part III, Section 4.5 “Rights attached to the Preemptive Rights and the Offer Shares”.

Dividends The Offer Shares will be eligible for any dividend declared in respect of our ﬁnancial year ending 31 December 2007 and subsequent years. However, we have not paid any dividends since our inception and do not anticipate paying any dividends in the foreseeable future. See “Dividend Rights” under Part I, Section 21.5 “Description of the Company’s Shares”.

Warrants As of the Offering Circular Date, there are outstanding warrants entitling the holders to subscribe up to 3,926,673 Shares. See Part I, Section 21.2 “Warrant Programs” for a description of the Company’s warrant programs, including the adjustments that will be made to the subscription prices applicable to warrants and the number of warrants following completion of the Offering.

7 Lock-up The Company, its Board of Directors and the Executive Management have entered into lock-up agreements with the Joint Global Coordinators and Lead Managers. See Part III, Section 7.2 “Lock-up agreements in connection with the Offering”.

Applicable Law and Jurisdiction The Offering is subject to Danish law. Any dispute which may arise as a result of the Offering shall be brought before the Danish courts of law.

Underwriting The Offering is not underwritten.

Major Shareholders The following shareholders (“Major Shareholders”) have notiﬁed the Company that they hold more than 5% of the Company’s registered share capital: H. Lundbeck A/S, Novo A/S, and Alta Partners, which includes Alta BioPharma Partners III, L.P., Alta BioPharma Partners III, GmbH & Co. Beteiligungs KG, and Alta Embarcadero BioPharma Partners III, LLC.

Intentions of Major Shareholders, H. Lundbeck A/S and Novo A/S have each made a binding undertaking to exercise its Preemptive Executive Management or Rights to subscribe for, in aggregate, 9,635,376 Offer Shares corresponding to total gross Board of Directors to participate proceeds of approximately DKK 163.8 million (approximately € 21.97 milllion). in the Offering The Company has not received any indications from its Executive Management or the members of its Board of Directors as to whether they expect to participate in the Offering.

Selling and Transfer Restrictions The Preemptive Rights and the Offer Shares will be subject to certain selling and transfer restrictions. See Part III, Section 5.13 “Jurisdictions in which the Offering will be made and restrictions applicable to the Offering”.

ISIN/Securities ID Code Existing Shares DK0060048148

Offer Shares DK0060131126 (temporary securities code)

Preemptive Rights DK0060131043

Trading Symbol on the OMX “LCP” Nordic Exchange Copenhagen

8 Expected timetable of principal events

Last day of trading of Existing 27 March 2008 Shares cum Preemptive Rights

First day of trading of Existing 28 March 2008 Shares ex Preemptive Rights

Trading period for Preemptive 28 March 2008 Rights commences on the OMX Nordic Exchange Copenhagen

Allocation Time 1 April 2008 at 12.30 p.m. CET through the computer system of VP Securities Services

Subscription Period for 2 April 2008 (the day after the Allocation Time) Offer Shares begins

Trading period for 10 April 2008 at 5.00 p.m. CET Preemptive Rights ends

Subscription Period for 15 April 2008 at 5.00 p.m. CET Offer Shares ends

Publication of the results Not later than two Banking Days after the end the Subscription Period (expected to be on of the Offering 17 April 2008)

Completion of the Offering The Offering will only be completed if and when the Offer Shares subscribed are issued by the Company upon registration of the capital increase with the Danish Commerce and Companies Agency which is expected to take place on 17 April 2008.

Ofﬁcial listing of and trading 21 April 2008 in Offer Shares under existing securities code expected to commence

9 Summary Financial Data

The summary financial data in this section has been taken tion with (i) the section entitled “Capitalization and Debt” from our audited consolidated financial statements for the at Part III, Section 3.2, (ii) Part I, Section 10 “Review of years ended 31 December 2005, 2006 and 2007, as Operations and Financial Statements”, and (iii) our con- included in this Offering Circular. The audited consolidated solidated financial statements and related notes thereto financial statements for the years ended 31 December included elsewhere in Part II. Conversions in the following 2005, 2006 and 2007 have been prepared in accordance data should not be construed as representations that the with IFRS as adopted by the EU and additional Danish dis- Danish Kroner amounts actually represent such Euro closure requirements for financial statements of listed amounts at any specified rate. Euro amounts have not companies. The following data should be read in conjunc- been audited.

Statement of income Year ended 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

Revenue 2,754 9,740 64,705 369 1,306 8,678 Research and development costs (80,919) (129,403) (183,608) (10,852) (17,354) (24,624) Administrative expenses (16,170) (29,395) (54,033) (2,169) (3,942) (7,246)

Operating loss (94,335) (149,058) (172,936) (12,651) (19,990) (23,192) Financial income 945 2,993 18,553 127 401 2,488 Financial expenses (1,779) (1,648) (5,856) (239) (221) (786)

Net loss for the year (95,169) (147,713) (160,239) (12,763) (19,810) (21,490)

Balance sheet data As of 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

Assets Total non-current assets 28,245 29,891 28,786 3,788 4,009 3,861 Cash and cash equivalents 87,224 464,658 331,740 11,698 62,315 44,489 Total current assets 108,112 477,166 353,126 14,499 63,992 47,356 Total assets 136,357 507,057 381,912 18,287 68,001 51,217

Equity and liabilities Equity 92,430 458,083 325,689 12,396 61,433 43,678 Total current liabilities 18,647 24,309 35,807 2,501 3,260 4,801 Total liabilities 43,927 48,974 56,223 5,891 6,568 7,539 Total equity and liabilities 136,357 507,057 381,912 18,287 68,001 51,217

0 1 Cash ﬂow statement data Year ended 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

Cash flow from operating activities (86,771) (125,813) (130,727) (11,637) (16,873) (17,533) Cash flow from investing activities (13,572) (7,222) (7,298) (1,820) (969) (978) Cash flow from financing activities 187,558 510,469 3,769 25,153 68,459 506 Cash and cash equivalents at 31 December 87,224 464,658 331,740 11,698 62,315 44,489

Other ﬁnancial data(1) Year ended 31 December 2005 2006 2007 2005 2006 2007

Number of fully paid Shares in issue as at 31 December(2) 4,428,569 30,369,816 31,770,705 - - - Weighted average number of Shares for the year(3) 13,965,252 19,313,737 30,875,434 - - - Asset/Equity at year end 1.48 1.11 1.17 - - - Average number of employees for the year (full-time equivalents) 35 44 64 - - - Basic earnings per share in DKK/EUR (6.82) (7.65) (5.19) (0.91) (1.03) (0.70) Diluted earnings per share in DKK/EUR (6.82) (7.65) (5.19) (0.91) (1.03) (0.70) Price/book value - 3.71 3.48 - - - EBITDA in DKK/EUR (in thousands) (90,264) (143,482) (165,872) (12,105) (19,242) (22,245) EBITDA-margin (32.78) (14.73) (2.56) - - - Net Interrest bearing debt in DKK/EUR (in thousands) (56,900) (433,912) (306,232) (7,631) (58,191) (41,068)

(1) Such ﬁnancial data is stated in accordance with the recommendations of the Association of Danish Financial Analysts. (2) At the board meeting held on 5 December 2005 the share capital was increased by 509,551 D-shares. 67,824 D-shares were paid in after 31 December 2005. (3) The weighted average number of Shares has been adjusted according to the issue of bonus shares in the ratio of 1:3 as resolved by the general meeting of 27 July 2006.

11 Risk Factors

Before investing in the Preemptive Rights and the Offer nificant or large enough to achieve profitability. Even if we Shares, investors should consider carefully the following do achieve profitability, we may not be able to sustain or risks and uncertainties in addition to the other informa- increase profitability on a quarterly or annual basis. Our tion presented in this Offering Circular. If any of the fol- failure to become and remain profitable would cause the lowing risks actually occurs, our business, results of oper- market price of our Shares to decrease and could impair ations or financial condition could be materially adversely our ability to raise capital, expand our business, diversify affected. In that event, the value of the Offer Shares and our product offerings or continue our operations. the Preemptive Rights could decline, and you might lose part or all of your investment. Although we believe that If our operating losses are greater than anticipated, the risks and uncertainties described below are our most we may require substantial additional funds to exe- material risks and uncertainties, they are not the only cute our business plan and, if additional capital is ones we face. Additional risks and uncertainties not pres- not available, we may need to limit, scale back or ently known to us or that we currently deem immaterial cease our operations. may also have a material adverse effect on our business, results of operations or financial condition and could neg- As of 31 December 2007, we had cash and cash equiva- atively affect the price of the Preemptive Rights and the lents totaling DKK 331,740 thousand (€44,489 thou- Offer Shares. The risk factors discussed below are not sand). During the year ended 31 December 2007, we had listed in any order or priority. a net loss of DKK 160,239 thousand (€21,490 thousand) and used cash in operating activities of DKK 130,727 thousand (€17,533 thousand). We will continue to Risks Related to Our Financial Results require substantial funds to conduct research and development, preclinical testing and clinical studies of our We have a limited operating history and have product candidates, as well as funds necessary to manu- incurred a cumulative loss since inception. If we do facture and market any other products that are approved not generate significant revenues, we will not be for commercial sale. Because successful development of profitable. our product candidates is uncertain, we are unable to estimate the actual cash we will require to complete We have incurred significant losses since our inception research and development and commercialize our prod- in June 2002. At 31 December 2007, our accumulated ucts under development. deficit was approximately DKK 465.9 million (approximately €62.5 million). We have only one product, Feno- Our future capital requirements may vary depending on glide, that has been approved by the FDA for commercial the following: sale in the U.S. We have not generated significant revenues to date from the sale of Fenoglide or any of our • the progress of the commercialization of Fenoglide and product candidates. Despite the launch of Fenoglide, we our and our partners’ efforts and successes in develop- expect that our annual operating losses will increase over ing and commercializing our product candidates; the next several years as we expand our product commercialization, development and discovery efforts. To become • the time and costs involved in obtaining regulatory profitable, we must successfully develop and obtain regu- approvals; latory approval for our existing product candidates. Accordingly, we may never generate significant revenues • the costs of manufacturing, marketing and sales activi- and, even if we do, we may never achieve profitability. ties, if any, and in developing such capabilities, if any;

To become and remain proﬁtable, we must succeed in • the continued progress in our research and develop- developing and commercializing products with signiﬁcant ment programs, including completion of our preclinical market potential. This will require us to be successful in a studies and clinical studies and the size and complexity range of activities for which we are only in the preliminary thereof; and stages, including developing product candidates, obtaining regulatory approval for them, and manufacturing, mar- • the potential acquisition and in-licensing of other tech- keting and selling them. We may never succeed in these nologies, products or assets. activities and may never generate revenues that are sig-

2 1 If our operating losses are greater than anticipated, we It is likely that in some future periods our results of oper- may seek additional funding in the future and may do so ations may be below the expectations of public market through collaborative arrangements and public or private analysts and investors. If this occurs, the price of our equity and debt financings. Our failure to do so may Shares may decline. adversely affect our business, results of operations and prospects and the value of our Shares. Risks Related to Our Business Conversely, if we raise additional funds by issuing equity securities, our shareholders may experience dilution. Any The commercialization of Fenoglide is, in large part, debt financing or additional equity that we raise may con- dependent on the actions of our partner, Sciele tain terms that are not favorable to our shareholders or Pharma, which are largely outside of our control. us. If we raise additional funds through collaboration and licensing arrangements with third parties and through We have granted a license to Sciele Pharma to commer- divestments, we may be required to relinquish some cialize Fenoglide in the U.S., Canada and Mexico. Sales of rights to our technologies or our product candidates or Fenoglide have only recently begun in the U.S. and the grant licenses on terms that are not favorable to us. successful commercialization of Fenoglide is dependent, in large part, on the actions of our partner, Sciele Pharma, Our operating results may vary significantly from which are largely outside of our control. The failure of Sci- period to period and these variations may be difficult ele Pharma to act in accordance with its obligations under to predict. the license agreement or to prioritize or devote sufficient resources to the commercialization of Fenoglide, or a Our future revenues and operating results are expected to change of control of Sciele Pharma, may cause us to incur vary significantly from period to period due to a number substantial additional costs in order to commercialize of factors. Many of these factors are outside of our con- Fenoglide, which could materially harm our business. trol. These factors include: We are, and expect to continue to be, substantially • the timing of future regulatory approvals, if any, for our dependent on collaboration agreements with third product candidates in clinical development; parties in the development and commercialization of certain of our product candidates. • the amount and timing of operating costs and capital expenditures relating to the expansion of our business According to our business model, we have in the past, operations and facilities; and will continue to seek to enter into collaboration agreements with pharmaceutical companies to address • the timing of the commencement, completion or termi- market opportunities that require large sales and market- nation of collaboration agreements; ing resources, large development investments and/or special expertise as well as to share the financial risks • the introduction of new products and services by us, involved in drug development and commercialization of our partners or our competitors; certain of our product candidates. In accordance with this strategy, we have entered into a number of collaboration • delays in preclinical testing and clinical studies; agreements to promote the further development and commercialization of certain of our product candidates. • changes in regulatory requirements for clinical studies; See Part I, Section 22 “Agreements”. The successful commercialization of certain of our product candidates may • costs and expenses associated with preclinical testing be dependent, in large part, on the actions of our part- and clinical studies, the size and complexity of which ners, which are largely outside of our control. The failure may increase in late-stage clinical studies; and of our partners to act in accordance with their obligations under their respective collaborative agreements or to pri- • payment of license fees and/or royalties for the right oritize or devote sufficient resources to the commercial- to use third-party proprietary rights. ization of our product candidates, or a change in control of our partners may cause us to incur substantial addi- Our revenues in any particular period may be lower than tional costs in order to commercialize our products, which we anticipate and, if we are unable to reduce spending in could materially harm our business. that period, our operating results and the value of our Shares will be adversely affected. You should not rely on period-to-period comparisons of our results of operations as an indication of future performance.

13 While our strategy includes plans to enter into future col- collaborations and any future collaboration agreements laboration agreements, we may fail to do so, and the will depend on the efforts and activities of our partners, terms of those collaboration agreements we do enter into who will have significant discretion in determining may not be favorable to us. If we are not successful in our whether to pursue planned activities and the quality and efforts to enter into a collaboration arrangement with nature of the efforts and resources that they will apply to respect to any particular product candidate, we may not the collaboration agreements, and who may otherwise be have sufficient funds to develop the product candidate unable to complete the development and commercializa- internally. If we do not have sufficient funds to develop tion of our products. We cannot be certain that we will be our product candidates, we will not be able to bring these able to initiate and maintain these collaborations, that product candidates to market and generate revenues. Fur- any of these collaborations will be successful or that we ther, even if we are successful in entering into collabora- will receive revenues from any of these collaboration tion agreements, such agreements may not result in the agreements. Factors that may affect the success of our successful commercialization of our product candidates. collaborations include the following: For example, although we intend to advance LCP-AtorFen through Phase II clinical studies without a partner, we • our partners may be pursuing alternative technologies plan to prepare for Phase III clinical studies and intend to or developing alternative products, either on their own seek a partner to provide funding for any such Phase III or in collaboration with others, that may be competi- clinical studies by the end of 2008. However, the market tive with products on which they are collaborating with in which LCP-AtorFen would compete would include a us or which could affect our partners’ commitment to number of competing alternatives and, as a result, any the collaboration; inability to obtain a partner with the resources and resolve to compete effectively would adversely impact the • reductions in marketing or sales efforts or a discontinu- success of this product candidate’s commercialization. In ation of marketing or sales of our products by our addition, the inability to enter into collaboration agree- partners would reduce any royalties we could be enti- ments could delay or preclude the development, manufac- tled to receive, which are based on the sales of our ture and/or commercialization of a product candidate and products by our partner; could have a material adverse effect on our financial condition and results of operations as revenues from product • our partners may terminate their collaborations with candidate licensing arrangements could be delayed. If so, us, which could make it difficult for us to attract new we may elect not to commercialize the product candidate. partners or adversely affect our reputation in the business and financial communities; We rely to a certain extent on third parties to conduct clinical studies of our product candidates. If these third • our partners may pursue higher priority programs or parties do not carry out their contractual duties or obliga- change the focus of their development programs, tions or meet expected deadlines, if the third parties which could affect their commitment to us; need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to failure to • our partners may not develop product candidates gen- adhere to our clinical protocols or for other reasons, erated using our MeltDose technology platform as planned clinical studies may be extended, delayed or ter- expected; and minated. Any extension, delay or termination of such clinical studies would have a negative impact on our business • business combinations or significant changes in a part- and our ability to license or commercialize our product ner’s business strategy may adversely affect that part- candidates. ner’s willingness or ability to continue its obligations under its collaboration agreement with us. Our collaborating partners have significant discretion as to the quality, conduct and timing of the develop- If we do not realize the contemplated benefits from our ment and commercialization of certain of our product partners, our business, financial condition and results of candidates, and, as we do not control their efforts operations may be materially harmed. and activities, these collaborations may not be successful or otherwise progress as we would like. Clinical studies, which are lengthy, time consuming and expensive and have uncertain outcomes, need to Our existing and any future collaborations may not be sci- be conducted for our product candidates before entifically or commercially successful. Certain of our exist- commercialization. If we fail to obtain approval for ing collaboration agreements provide for milestone pay- commercialization of our product candidates, we may ments to us upon the achievement of specified clinical have to curtail our product development programs and regulatory milestones, and provide for royalty-based and our business would be materially harmed. payments to us if the product candidate is commercialized. The success of these collaborations, other existing

4 1 Our pharmaceutical development programs and the rejections may be encountered as a result of many other potential commercialization of our product candidates will factors, including changes in regulatory policy during the be expensive and require substantial resources. We have period of product development, or because our clinical invested a significant portion of our time and financial studies may not be statistically significant and sufficient resources in the development of our product candidates. to obtain the requisite regulatory approvals for product Our product candidates must demonstrate that they are candidates employing our technology. Our near-term abil- safe and effective for use in humans through preclinical ity to generate revenues and our future success depend testing and clinical studies in order to be approved for on clinical studies and regulatory approval leading to the commercial sale. Conducting clinical studies is a lengthy, commercialization of our product candidates. time-consuming and expensive process. The length of time may vary substantially according to the type, com- If we are unable to satisfactorily complete the necessary plexity and intended use of the product candidate, and testing and meet certain other requirements for approval can often be several years. As our product candidates to commercialize our product candidates, we may never progress into late-stage clinical studies, the size and com- realize revenue from such product candidates and we may plexity of such studies will increase. The commencement have to curtail our other product development programs. and rate of completion of clinical studies may be delayed As a result, our business, results of operations and pros- by many factors, including: pects, and the value of our Shares and the Preemptive Rights could be adversely affected. • slow rates of patient recruitment (particularly for product candidates relating to organ transplants); Competition in the biotechnology and pharmaceutical industries is intense, and, if we are unable to • inability to manufacture sufficient quantities of quali- compete effectively, our business, results of opera- fied cGMP materials for clinical studies; tions and prospects will suffer.

• inability to observe patients adequately after treat- The markets in which we intend to compete are undergo- ment; ing, and are expected to continue to undergo, rapid and significant technological changes. We expect competition • change in regulatory requirements for clinical studies; to intensify as technological advances are made or new drugs and biotechnology products are introduced. New • modifications to clinical trial protocols; developments by competitors may render our current or future product candidates and/or technologies non-com- • unforeseen safety issues; and petitive, obsolete or not economical. Our competitors’ products may be more efficacious or marketed and sold • government or regulatory delays, including delays more effectively than any of our products. resulting from efforts by competitors to influence the regulatory process by actions such as petitions to alter In particular, we are aware of several pharmaceutical and approval requirements for the types of products we are biopharmaceutical companies that have commenced clini- seeking to develop. cal studies of products or have successfully commercialized products addressing areas which are being targeted Even if we obtain positive results from preclinical or early by us, including Abbott, Solvay, Oscient, Sciele Pharma, clinical studies, we may not achieve success in future Pfizer, Astellas, Wyeth, Recordati, Novartis AG (“Novartis”), studies. Teva Pharmaceutical Industries Limited (“Teva”), Merck & Co., Inc. (“Merck”), Cipher Pharmaceuticals, Inc. (“Cipher”), The results of our early stage clinical studies are based on ProEthics Pharmaceuticals, Inc. (“ProEthics Pharmaceuti- a limited number of patients and may, upon further cals”), Cordis Corporation (“Cordis”), Galenica S.A. review, be revised, negated or rejected by regulatory (“Galenica”) and Johnson & Johnson. For a more detailed authorities or be negated by later stage clinical results. description of such product-based competition, see the Historically, industry results from preclinical testing and discussion of our product candidates in Part I, Section 6.2 early clinical studies have often not been predictive of “Market Overview and Product Portfolio–Competition”. In results obtained in later clinical studies. A number of new addition to product-based competition, our proprietary drug and biologics-candidates have shown promising MeltDose technology platform faces significant technol- results in earlier clinical studies, but subsequently failed ogy-based competition from several existing methods to establish sufficient safety and effectiveness data to enabling oral delivery of drugs with low water solubility. obtain necessary regulatory approvals. In addition, data obtained from preclinical and clinical activities are suscep- tible to varying interpretations and Good Clinical Practice (“GCP”) documentation requirements, which may delay, limit or prevent regulatory approval. Regulatory delays or

15 Furthermore, as we are developing proprietary equivalents • the availability and cost of manufacturing, marketing of already approved drugs, we face competition from the and sales capabilities; pharmaceutical companies which are currently marketing such approved products. These pharmaceutical companies • the effectiveness of our and our partners’ marketing can generally be expected to seek to delay the introduc- and sales capabilities; tion of competing products through a variety of means including: • the availability and amount of third-party reimbursement for our products; and • filing new formulation and use patent applications on drugs whose original patent protections are about to • the strength of our patent position. expire; Our competitors may develop or commercialize products • filing an increasing number of patent applications that with significant competition advantages in regard to any are more complex and costly to challenge; of these factors. Our competitors may therefore be more successful in commercializing their products than we are, • filing suits for alleged patent infringement that may which could adversely affect our business, results of oper- delay FDA approval; ations and prospects, and the value of our Shares and the Preemptive Rights. • developing patented controlled-release or other “next- generation” products, which often reduces demand for We have limited sales and marketing experience. If the generic version of the existing product for which we are unable to develop adequate sales and mar- we are seeking approval; or keting capabilities, we may be unable to directly commercialize our product candidates. • changing and expanding product claims and product labeling. We may choose to market certain of our product candidates, such as LCP-Tacro, in selected geographic areas Any one of these strategies may increase the costs and which are expected to have concentrated marketplaces risks associated with our efforts to introduce any of our directly through our own sales and marketing force. To do product candidates and may delay or altogether prevent this, we will have to develop a sales and marketing orga- such introduction. nization and establish distribution capability, which would be expensive and time-consuming and could delay prod- Many of our competitors have: uct launch. If we are unable to implement successfully a marketing and sales force, this could adversely affect our • significantly greater financial, technical and human business, results of operations and prospects, and the resources than we have at every stage of the discov- value of our Shares. ery, development, manufacturing and commercialization process; Market acceptance for our products is uncertain. If our products fail to gain acceptance, our business • more extensive experience in commercializing drugs, will suffer. preclinical testing, conducting clinical studies, obtaining regulatory approvals, challenging patents and in manu- The degree of market acceptance for Fenoglide or our facturing and marketing pharmaceutical products; product candidates (if and when they are commercialized) will depend on a number of factors, including: • products that have been approved or are in late stages of development; or • cost-effectiveness;

• collaborative arrangements in our target markets with • alternative treatment methods; leading companies and research institutions. • reimbursement policies of government and third-party If we successfully develop and obtain approval for our payers; and product candidates, we will face competition based on many different factors, including: • marketing and distribution support for our products.

• the safety, efficacy and price of our products; If our products do not achieve significant market acceptance, this could adversely affect our business, results of • the timing of and specific circumstances relating to operations and prospects, and the value of our Shares regulatory approvals for these products; and the Preemptive Rights.

6 1 In addition, the treatment focus in the markets for our We may encounter problems with the following: product candidates may change, in particular for immunosuppression and combination therapy use for treating • production yields; dyslipidemia. The results of recently published studies summarized in the New England Journal of Medicine sug- • quality control and assurance; gest that a bone marrow transplant in conjunction with an organ transplant could potentially reduce or even elim- • shortages of qualified personnel; inate the need for prolonged immunosuppression therapy in the future, and the recent ENHANCE study of Vytorin • compliance with the rules and regulations issued by showed no additional efficacy benefit of the combination FDA, EMEA and the rules and regulations of other of ezetimibe and statin in Vytorin as compared with authorities; statins alone in the treatment of dyslipidemia. • production costs; and As we continue to develop and commercialize our product candidates, we may have difficulties in man- • development of advanced manufacturing techniques aging our growth and expanding our operations suc- and process controls. cessfully. In addition, we and any third-party manufacturer will be As we advance our product candidates through the devel- required to register such manufacturing facilities with the opment and commercialization process, we will need to FDA (and have a U.S. agent for the facility), European and expand our development, regulatory, manufacturing, sales other regulatory authorities. and marketing capabilities or contract with other organizations to provide these capabilities for us. As our opera- We may not be able to maintain or renew our existing or tions expand, we expect that we will need to manage any other third-party manufacturing arrangements on additional relationships with various partners, suppliers, acceptable terms, if at all. If we are unable to establish distributors and other organizations. Our ability to man- relationships with third-party manufacturers for our prod- age our operations and growth requires us to continue to uct candidates at an acceptable cost level, or if any sup- improve our operational, financial and management con- plier fails to meet our requirements in relation to our trols, reporting systems and procedures. Such growth product candidates for any reason, we would be required could place a strain on our administrative and operational to obtain alternative suppliers. Any inability to obtain infrastructure. We may not be able to make improvements qualified alternative suppliers, including an inability to to our management information and control systems in obtain, or delay in obtaining, approval of an alternative an efficient or timely manner and may discover deficien- supplier by the FDA, would delay or prevent the clinical cies in existing systems and controls. Our inability to development and commercialization of our product candi- manage our growth could adversely affect our business, dates, and could impact our ability to meet our supply results of operations and prospects, and the value of our obligations to partners for the future marketing and sale Shares and the Preemptive Rights. of our product candidates.

If we fail to meet manufacturing requirements for We may not be successful in our efforts to identify our product candidates or if we are required to con- any additional product candidates that may be devel- tract with alternative third-party manufacturers, our oped based on our proprietary MeltDose technology development and commercialization efforts may be platform. materially harmed. An important element of our strategy is to develop We rely on third parties to manufacture our products and through the use of our proprietary MeltDose technology product candidates for the pivotal clinical studies and/or platform improved versions of currently marketed drugs. commercial manufacturing of our products and product Research programs to identify new product candidates candidates. To be successful, our products and product require substantial technical, ﬁnancial and human candidates must be manufactured in commercial quanti- resources. These research programs may initially show ties in compliance with regulatory requirements and at promise in identifying potential product candidates, yet acceptable costs, and we are aware of only a limited fail to yield product candidates for clinical development number of companies who operate manufacturing facili- for a number of reasons, including that: ties in compliance with such regulatory requirements. We cannot be certain that we will be able to contract with any of these companies on acceptable terms, if at all, all of which could adversely affect our business, results of operations and prospects, and the value of our Shares and the Preemptive Rights.

17 • the research methodology used may not be successful our partner, Sciele Pharma, claiming patent infringement in identifying potential product candidates; or in connection with Fenoglide. Litigation may involve significant expense and a court could issue an injunction pre- • potential product candidates may, on further study, venting Sciele Pharma or us from marketing Fenoglide in show inadequate efficacy, harmful side effects, undif- the U.S. for the remaining term of one or more U.S. pat- ferentiated features or other characteristics suggesting ents relating to a fenofibrate composition. In addition, that they are unlikely to be effective products. each of Abbott and Solvay has significantly greater resources than we or Sciele Pharma have. Intellectual If we are unable to develop suitable product candidates property litigation involves many risks and uncertainties, through internal research programs or otherwise, we will and there is no assurance that we or Sciele Pharma will not be able to increase our revenues in future periods, prevail in any lawsuit brought by Abbott, Solvay or any which could harm our business, results of operations and other third party. If Abbott, Solvay or any other third party prospects, and the value of our Shares and the Preemp- prevails against us or Sciele Pharma in any such lawsuit, tive Rights. our business, results of operations and prospects as well as the value of our Shares and the Preemptive Rights We may face product liability claims related to the could be adversely affected. use or misuse of products employing our technology which may cause our business to suffer. Companies that produce branded pharmaceutical products for which there are listed patents in the FDA’s Orange Our business exposes us to potential product liability risks Book routinely bring patent infringement litigation against which are inherent in research and development, preclini- applicants seeking FDA approval to manufacture and mar- cal and clinical studies, manufacturing, marketing, promo- ket branded and/or generic forms of their branded prod- tion, sale and use of our products. Product liability claims ucts. For example, in several cases Abbott has sought to may be expensive to defend and may result in judgments protect Tricor (with 160/200 mg active ingredient) from against us that are material. It is generally necessary for generic competition. Accordingly, we and our partner San- us to secure certain levels of insurance as a condition for doz may face costly and time consuming intellectual prop- the conduct of clinical studies. We believe that our product erty litigation with Abbott and/or Solvay, as a result of liability insurance for clinical studies as well as the sale of our submission to the FDA of an Abbreviated New Drug Fenoglide in the U.S. market is sufficient to cover claims. Application (“ANDA”) for LCP-Feno, our generic version of We currently maintain liability insurance with specified Tricor. Litigation often involves significant expense and coverage limits of US$5 million (DKK 25.4 million, €3.4 could delay or prevent the introduction of LCP-Feno or million) per occurrence and in the aggregate. Although we any generic product. Specifically, the patent holders/ believe these coverage limits are adequate, we cannot be licensees of any of the patents listed in the FDA’s Orange certain that the insurance policies will be sufficient to Book for Tricor may trigger a 30-month stay period in cover all claims that may be made against us. Product lia- respect of approval of such ANDA if the patent holder bility insurance is expensive, difficult to obtain and may and/or Abbott files a patent infringement suit against us not be available in the future on acceptable terms. Any or Sandoz within 45 days from their receipt of notice of claim against us, regardless of its merit, could adversely the ANDA’s patent certification. Depending upon a com- affect our business, results of operations and prospects, plex analysis of a variety of legal and commercial factors, and the value of our Shares and the Preemptive Rights. we and Sandoz may, in certain circumstances, including upon expiration of the 30-month automatic stay, elect to market LCP-Feno, after FDA approval, even though litiga- Risks Related to Our Intellectual Property tion may still be pending, for example, before any district court decision or while an appeal of a lower court deci- We may face intellectual property litigation with sion is pending. Should we and Sandoz elect to proceed Abbott, the NDA holder of Tricor, and/or Solvay, in this manner, we could face substantial patent liability which owns several patents listed in the FDA’s damages, including possible treble damages and liability Orange Book for Tricor. for attorneys fees, if a final court decision is adverse to us. Further, if we and Sandoz are unsuccessful in defend- Although we believe that our activities do not infringe ing any litigation, the court could issue an injunction pre- third-party intellectual property rights of which we are venting us from marketing LCP-Feno for the remaining aware, we cannot rule out that we may become involved term of the litigated patent(s), which will expire in 2011, in costly and time-consuming intellectual property litiga- 2018, 2020 and 2023, respectively. In addition, as noted tion with Abbott, the NDA holder of Tricor, and/or Solvay, above, each of Abbott and Solvay has significantly greater which owns several patents listed in the FDA’s Orange resources than we do, and litigation with either party Book for Tricor, or any other party claiming to have intel- could last a number of years, potentially delaying or pro- lectual property rights in connection with our Fenoglide hibiting the commercialization of LCP-Feno. Intellectual product. Legal proceedings may be initiated against us or property litigation involves many risks and uncertainties, and there is no assurance that we would prevail in any

8 1 lawsuit brought by Abbott, Solvay or any other third party. We may face intellectual property litigation with If we are not successful in commercializing LCP-Feno or Pfizer, the NDA holder of atorvastatin, one of the are significantly delayed in doing so, we may have to cur- components of LCP-AtorFen. tail our product development programs, and our business, results of operations and prospects as well as the value Although we believe that our activities related to LCP- of our Shares and the Preemptive Rights could be AtorFen do not infringe third-party intellectual property adversely affected. rights of which we are aware, we cannot rule out that we may become involved in costly and time consuming intel- Regulatory approval of pharmaceutical products in Europe lectual property litigation with Pfizer, the NDA holder of is not linked to patent rights and patent disputes as it is atorvastatin, one of the components of LCP-AtorFen, or in the U.S. However, patent litigation is costly in Europe any other party in connection with our LCP-AtorFen prod- due to the number of countries where relevant patents uct. Pfizer has composition-of-matter patents on certain may be in force. With respect to LCP-Feno in Europe, we atorvastatin salts and pediatric exclusivity associated filed an opposition in July 2006 at the European Patent therewith that will expire in or before June 2011. Any Office against European patent EP-B-1273294 held by party may at any time after submission of an NDA under Fournièr (now a subsidiary of Solvay) claiming an immedi- Section 505(b)(2) for LCP-AtorFen initiate legal proceed- ate release fenofibrate formulation on the grounds that all ings against us claiming patent infringement. Litigation of the granted claims are invalid. In addition to us, three often involves significant expense and the court could other companies, including our collaborator Mylan, have issue an injunction preventing us from marketing LCP- oppositions pending against Fournièr’s patent. No assur- AtorFen in the U.S. for the remaining term of one or more ance can be given that Fournièr’s claims will be rejected of the applicable U.S. patents relating to atorvastatin. In or properly restricted in scope as a result of our opposi- addition, Pfizer has significantly greater resources than tion or the oppositions made by third parties or subse- we have. Intellectual property litigation involves many quent appeal proceedings, if any, at the European Patent risks and uncertainties, and there is no assurance that we Office. If we and/or any third party are not successful in would prevail in any lawsuit brought by Pfizer or any other opposing this patent, we may be prevented from commer- third party. If we do not prevail in any such lawsuit, our cializing or marketing LCP-Feno in Europe for the life of business, results of operations and prospects as well as this patent. the value of our Shares could be adversely affected.

We may face intellectual property litigation with We depend on our own proprietary rights and on in- Astellas, the NDA holder of Prograf. licensed patents and other proprietary rights. If we or our licensors cannot adequately protect our own Although we believe that our activities related to LCP- proprietary rights or our in-licensed patents and Tacro do not infringe third-party intellectual property other proprietary rights, our business will suffer. rights of which we are aware, we cannot rule out that we may become involved in costly and time consuming intel- Our success depends in part on our ability to: lectual property litigation with Astellas, the NDA holder of Prograf, or any other party in connection with our LCP- • protect trade secrets; Tacro product. Astellas has composition-of-matter patents on tacrolimus which expire in April 2008 in the U.S. and • apply for, obtain, maintain and enforce patents and in June 2009 in Europe. Furthermore, Astellas has patent trademarks; protection on certain sustained-release formulations of tacrolimus until 2019. Any party may at any time after • operate without infringing upon the proprietary rights submission of an NDA under Section 505(b)(2) for LCP- of others; and Tacro initiate legal proceedings against us claiming patent infringement. Litigation often involves significant expense • have our licensors enforce their patent rights against and the court could issue an injunction preventing us from third-party infringers. marketing LCP-Tacro in the U.S. for the remaining term of one or more of the applicable U.S. patents relating to We will be able to protect our proprietary rights from tacrolimus. In addition, Astellas has significantly greater unauthorized use by third parties only to the extent that resources than we have. Intellectual property litigation such proprietary rights are covered by valid and enforce- involves many risks and uncertainties, and there is no able patents or are effectively maintained as trade secrets. assurance that we would prevail in any lawsuit brought by We protect our proprietary position by filing and prosecut- Astellas or any other third party. If we do not prevail in ing international, U.S., European and other national and any such lawsuit, our business, results of operations and regional patent applications related to our proprietary prospects as well as the value of our Shares could be technology, inventions and improvements that are impor- adversely affected. tant to the development of our business. We are also dependent on our licensors to enforce their patent rights.

19 We have filed four distinct families of patent applications able terms, if at all. These adverse results, if they occur, relating to our MeltDose technology and three families of could adversely affect our business, results of operations patent applications in the area of drug delivery technol- and prospects, and the value of our Shares and the Pre- ogy. In addition, we are actively prosecuting 16 product- emptive Rights. specific patent families. We have a total of 136 pending national and international patent applications. To date If the validity of our own or our in-licensed proprie- four national patents relating to our MeltDose technology tary rights is challenged, our business may suffer. have issued, including two U.S. patents and one European patent. No patents relating solely to our product candi- The biotechnology and pharmaceutical industries have dates have issued. been characterized by extensive litigation regarding patents and other intellectual property rights. The defense In addition to patents, we rely on trade secrets and pro- and prosecution of contractual or intellectual property prietary know-how. We seek protection, in part, through lawsuits, U.S. Patent and Trademark Office interference confidentiality and proprietary information clauses in proceedings, European Patent Office oppositions and agreements with our partners, employees, consultants, related legal and administrative proceedings in the U.S., outside scientific partners and sponsored researchers and Europe and internationally, involve complex legal and fac- other advisors. These clauses may not effectively prevent tual questions. As a result, such proceedings may be disclosure of confidential and proprietary information and costly and time-consuming to pursue and their outcome may not provide an adequate remedy in the event of is uncertain. Litigation may be necessary to: unauthorized use or disclosure of confidential and proprietary information. Furthermore, if our trade secrets other- • protect and enforce our in-licensed patents and any of wise become known to, or are independently developed our patents and future patents; by, our competitors, we may not be able to successfully assert any trade secret rights against such parties. Costly • enforce or clarify the terms of the licenses we have and time-consuming litigation may be necessary to deter- been granted or may be granted in the future; mine the scope of and enforce our proprietary rights, and the failure to obtain or maintain trade secret protection • protect and enforce trade secrets, know-how and other could adversely affect our competitive business position. proprietary rights that we own or in-license; or Additionally, U.S. patent law has undergone and continues to undergo significant shifts which have led to uncertainty • determine the enforceability, scope and validity of the in the U.S. patent process and which could make obtain- proprietary rights of third parties and defend against ing, maintaining and enforcing patents in the U.S. more alleged patent infringement. difficult. If we fail to obtain and maintain patent and trade secret protection of our products or product candi- If we become involved in any litigation, interference or dates, we could lose our competitive advantage, and the other administrative proceedings, we may incur substan- increased competition we may face could adversely affect tial expense and the efforts of our technical and manage- our business. ment personnel may be diverted. An adverse determina- tion may subject us to significant liabilities or require us We also use various trademarks, primarily our corporate to seek licenses. Such licenses may not be available from name, LifeCycle Pharma, and the trade name MeltDose. third parties on commercially reasonable terms, if at all. We have obtained Danish, European and U.S. trademark Therefore, we and our partners may be restricted or pre- protection for these trademarks. We may not be able to vented from manufacturing and selling products employ- obtain trademark protection in other territories that we ing our technology. This could have a material adverse consider of significant importance to us. Furthermore, our effect on our business, results of operations and pros- trademarks could be challenged by others. pects, and the value of our Shares and the Preemptive Rights. Our commercial success depends significantly on our ability to operate without infringing the patents and other If we are unable to obtain licenses that we believe proprietary rights of third parties. Practice of our own and are necessary to conduct our business on commer- our in-licensed technologies may infringe the patents or cially reasonable terms our business will suffer. violate other proprietary rights of third parties. In the event of any infringement or violation, we may need to We seek to obtain licenses to granted and potential pat- obtain licenses from such third parties and we and our ent rights when, in our judgment, such licenses are nec- partners may be prevented from pursuing product devel- essary to conduct our business. If any license is required, opment or commercialization and/or may be required to there can be no assurance that we will be able to obtain pay damages. There can be no assurance that any any such license on commercially favorable terms, if at all, licenses required under such patents or proprietary rights and if these licenses are not obtained, we might be pre- would be made available to us on commercially reason- vented from using certain of our technologies. Our failure

0 2 to obtain a license to any technology that we may require Our current plans for submitting NDAs for our product may have a material adverse effect on our business, candidates other than LCP-Feno and LCP-Lerc (being financial condition and results of operations. We cannot developed for markets other than the U.S.) entail efforts assure you that our products and/or actions in developing to minimize data required in order to obtain marketing or selling our products will not infringe such third-party approval for our product candidates and therefore poten- patents. Moreover, our owned or licensed proprietary tially expedite the development and review period for rights may not prevent others from developing competi- these applications. Except for Fenoglide and LCP-Tacro, tive products using our technology or other technologies. we have neither discussed nor reached agreement with Similarly, others may obtain patents that could limit our the FDA as to the nature or extent of any studies we may ability and the ability of our licensees to use, import, be required to conduct in order to achieve approval for manufacture, market or sell products or impair our com- any of our other product candidates. The timeline for petitive position and the competitive position of our submission and review of our NDAs is based on our plan licensees. This could have a material adverse effect on our to submit those NDAs under Section 505(b)(2) of the U.S. business, results of operations and prospects, and the Federal Food, Drug, and Cosmetic Act, wherein we will value of our Shares and the Preemptive Rights. rely in part on data in the public domain or prior FDA conclusions of safety or effectiveness concerning a drug. Other than for Fenoglide, we have not yet filed an NDA Risks Related to Government Regulatory and under Section 505(b)(2) for any of our product candi- Legal Requirements dates. Depending on the data that may be required by the FDA for approval, some of the data may be related to We may never obtain the regulatory approvals we products already approved by the FDA. If the data relied need to market our product candidates. upon is related to products already approved by the FDA and covered by third-party patents listed in the Orange To date, we and our partners have only received regula- Book for that product we would be required to certify that tory approval from the FDA for the commercial sale of we do not infringe the listed patents or that such patents Fenoglide in the U.S. We have not yet received any regula- are invalid or unenforceable. As a result of the certifica- tory approvals required for the commercial sale of Feno- tion, the third-party would have 45 days from notification glide in any other jurisdiction or regulatory approval for of our certification to initiate a legal action against us, the commercial sale of any of our product candidates in resulting for example in alleged patent infringement litiga- the U.S., Europe or in any other jurisdiction. Accordingly, tion. In the event that such action is brought in response we have yet to submit an NDA to the FDA for our product to such certification, the approval of our NDA could be candidates other than Fenoglide, or an MAA to the EMEA, subject to a stay of up to 30 months or longer while we national regulatory agencies in Europe or to any interna- litigate. Approval of our product candidates under Section tional regulatory authorities for any of our product candi- 505(b)(2) may therefore be delayed until patent exclusiv- dates. We have only limited experience in filing and pursu- ity expires or until we prevail in the patent litigation. ing applications necessary to obtain regulatory approval Alternatively, we may elect to generate sufficient addi- or licensure, and we cannot ensure that any of our prod- tional clinical and other data so that we can file for uct candidates will be approved or licensed for marketing. approval under Section 505(b)(1) and avoid a stay of the The process of applying for regulatory approval is expen- approval of our product candidates. Even if no exclusivity sive, often takes many years and can vary substantially periods apply to our applications under Section based upon the type, complexity and novelty of the prod- 505(b)(2), the FDA has broad discretion to require us to uct candidates involved. If any or all of our product candi- generate additional data on the safety and efficacy of our dates are not approved, this could have a material product candidates to supplement third-party data on adverse effect on our business, results of operations and which we may be permitted to rely. In either event, we prospects, and the value of our Shares and the Preemp- could be required, before obtaining marketing approval for tive Rights. any of our product candidates, to conduct substantial new research and development activities beyond those in If we are unable to file for approval under Section which we currently plan to engage in order to obtain 505(b)(2) of the U.S. Federal Food, Drug, and Cos- approval of our product candidates. Such additional new metic Act for our product candidates other than LCP- research and development activities would be costly and Feno and LCP-Lerc or if we are required to generate time consuming. additional data related to safety and efficacy, in order to obtain approval under Section 505(b)(2) for any of our product candidates, we may be unable to meet our anticipated development and commercialization timelines.

21 Safety issues with the originator drugs or other com- approval. At the time of such application, the clinical and ponents of our product candidates, or with approved regulatory environment may have changed signiﬁcantly as products of third parties that are similar to our prod- a result of new scientiﬁc discoveries, competitor product uct candidates, could give rise to delays in the regu- evaluations, changes in medical health care policies, new latory approval process. technical standards and other factors beyond our control.

Our product development portfolio consists of new propri- Regulators can refuse marketing approval, or can require etary formulations of already approved and marketed us or our partners to repeat previous clinical studies or drugs. Discovery of previously unknown problems with conduct further clinical studies. A pre-approval inspection any of these approved products may result in restrictions of manufacturing facilities by regulatory authorities may on its permissible uses, including withdrawal of the prod- need to be completed before marketing approval can be uct from the market. obtained, and such facilities will be subject to periodic inspections that could prevent or delay marketing Additionally, problems with approved products marketed approval, or require the expenditure of financial or other by third parties that utilize the same therapeutic target as resources to address. If we or our partners do not suc- the originator drug could adversely affect the develop- ceed in obtaining regulatory approval, or succeed only ment of our product candidates. For example, the product after delays, this could have a material effect on our abil- withdrawals of Vioxx by Merck and Bextra from Pfizer in ity to generate revenues. Delays in obtaining regulatory 2005 due to safety issues has caused other drugs that approvals may: have the same therapeutic target, such as Celebrex from Pfizer, to receive additional scrutiny from regulatory • adversely affect the successful commercialization of authorities. any product that we or our partners develop;

Any failure or delay in commencing or completing clinical • impose costly procedures on us or our partners; trials or obtaining regulatory approvals for our product candidates would delay commercialization of the product • diminish any competitive advantages in the market candidates and severely harm our business and financial place that we or our partners may attain; and condition. • adversely affect our receipt of revenues or royalties. We are subject to extensive and costly government regulation. If we fail to obtain or maintain govern- Material changes to an approved product, such as manu- mental approvals, we will not be able to commercial- facturing changes or additional labeling claims, require ize Fenoglide and our product candidates and our further FDA and European regulatory agency review and business will suffer. approval before marketing. Once obtained, any approvals may be withdrawn or revoked because of unforeseen Pharmaceutical products, including product candidates safety, effectiveness or potency concerns or failure to employing our technology, are subject to extensive and comply with governmental regulations. Further, if we, our rigorous government regulation. The FDA, the EMEA and partners or our contract manufacturers fail to comply with other international regulatory agencies regulate the devel- applicable FDA, European regulatory agency and other opment, testing, manufacture, safety, efficacy, record- regulatory requirements at any stage during the regulatory keeping, labeling, storage, approval, advertising, promo- process, the FDA, European regulatory agencies and other tion, sale and distribution of pharmaceutical products. If regulatory agencies may impose sanctions, including: products employing our technology are marketed in countries outside of Europe and the U.S., they will also be • delays; subject to extensive regulation by other governments. The regulatory review and approval or licensing process, • warning letters; including preclinical testing and clinical studies of each product candidate, is lengthy, expensive and uncertain. • fines; Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting • importation restrictions; information to the FDA and European regulatory agencies for each indication to establish the candidate’s safety and • product recalls or seizures; efficacy. The approval process takes many years, requires substantial resources, involves post-marketing surveil- • injunctions; lance, and may involve ongoing post-marketing studies. While clinical studies are designed with scientific advice • refusal of the FDA and/or European or other regulatory from regulatory authorities, such plans must often be put agency to review pending market approval applications in place years in advance of application for marketing or supplements to approval applications;

2 2 • total or partial suspension of production; apply. All of these activities are also potentially subject to federal and state consumer protection, anti kick-back and • suspension or debarment from selling FDA-regulated unfair competition laws. products to the U.S. government for periods of time that vary depending on the cause of such suspension Within the European Union once a Marketing Authoriza- or debarment; tion is obtained, numerous post-approval requirements also apply. The requirements are regulated by both EU • civil penalties; regulations (such as reporting of adverse events etc.) as well as national applicable regulations (related to e.g. • withdrawal or revocation of previously approved mar- prices and promotional material). keting applications or licenses; and The regulatory requirements relating to the manufactur- • criminal prosecutions. ing, testing, marketing and sale of pharmaceutical products are subject to periodic change. This may impact our Fenoglide is, and, assuming approval, our product ability and the ability of our partners to conduct clinical candidates will be, subject to extensive post- studies in the European Union. Changes in the regulations approval regulation. governing us could increase costs and adversely affect our business. The governmental regulation of the development of products such as our first commercialized product, Fenoglide, Furthermore, companies developing pharmaceutical prod- and our product candidates extends beyond clinical stud- ucts are facing increased demands to publish clinical trial ies to approval required for their sale and monitoring of results. Any such publication by us may, in addition to the such products after sale. This regulation, approval and additional cost of the publication, lead to investors misin- monitoring is the responsibility of numerous authorities in terpreting the published data due to its technical nature, Denmark, the U.S., the European Union and other jurisdic- which, in turn, may adversely affect our business, results tions. Following any regulatory approval of a product can- of operations and prospects and the value of our Shares didate, we, our partners and the manufacturers of our and the Preemptive Rights. products will be subject to continuing regulatory obligations, including safety reporting requirements, regulatory Our ability to generate revenue from any products oversight of product promotion and marketing, and good that we may develop will depend on reimbursement manufacturing practices. These regulations cover all and drug pricing policies and regulations. aspects of manufacturing, testing, quality control and record keeping of our products. If we or our partners or Many patients may be unable to pay for any product that manufacturers fail to comply with applicable regulatory we may develop. In the U.S., many patients will rely on requirements, we may be subject to fines, suspension or Medicare/Medicaid, private health insurers and other withdrawal of regulatory approvals, product recalls, sei- third-party payors to pay for their medical needs. Our zure of products, operating restrictions and criminal pros- ability to achieve acceptable levels of reimbursement for ecution. drug treatments by governmental authorities, private health insurers and other organizations will have an effect In the U.S., advertising and promotional materials must on our ability to successfully commercialize, and attract comply with FDA rules in addition to other potentially additional partners to invest in the development of, our applicable federal and state laws. In particular, the promo- product candidates. We cannot be sure that reimburse- tional claims that we would be permitted to make for our ment in the U.S., Europe or elsewhere will be available for products would be limited to those supported by the any product that we may develop, and any reimbursement approved product labeling. The distribution of product that may become available may be decreased or elimi- samples to physicians must comply with the requirements nated in the future. of the Prescription Drug Marketing Act. Manufacturing facilities remain subject to FDA inspection and must con- In the U.S. where Fenoglide is currently marketed and the tinue to adhere to FDA’s current good manufacturing other principal markets in which we may in the future sell practice requirements. Application holders must obtain our products, there is continued economic, regulatory and FDA approval for product and manufacturing changes, political pressure to limit the cost of pharmaceutical prod- depending on the nature of the change. Sales, marketing, ucts. Third-party payors increasingly are challenging prices and scientific/educational grant programs must comply charged for pharmaceutical products and services, and with U.S. federal and state fraud and abuse laws. Pricing many third-party payors may refuse to provide reimburse- and rebate programs must comply with Medicaid rebate ment or raise co-payments for particular drugs when an requirements. If products are made available to autho- equivalent generic drug is available. Although we believe rized users of the Federal Supply Schedule of the General any product that we may develop will represent an Services Administration, additional laws and requirements improvement over the originator drugs upon which they

23 are based and be considered unique, it is possible that a pre-approval and ongoing periodic inspection by the FDA, third-party payor may consider our product candidate and European regulatory agencies and other corresponding the generic originator drug as equivalents and only offer governmental agencies, including unannounced inspec- to reimburse patients for the generic drug. Even if we tions, and must be licensed before they can be used in show improved efficacy or improved convenience of commercial manufacturing of products employing our administration with our product candidates, pricing of the technology. After regulatory approvals or licensure are existing originator drug may limit the amount we will be obtained, the subsequent discovery of previously able to charge for our products. If reimbursement is not unknown manufacturing, quality control or regulatory available or is available only at limited levels, we may not documentation problems or failure to maintain compli- be able to successfully commercialize our product candi- ance with the regulatory requirements may result in dates, and may not be able to obtain a satisfactory finan- restrictions on the marketing of a product, revocation of cial return on products that we may develop. the license, withdrawal of the product from the market, product seizures, injunctions, or criminal sanctions. We The trend toward managed healthcare in the U.S. and the cannot assure you that such third parties will be able to changes in health insurance programs, as well as legisla- comply adequately with the applicable regulations and tive proposals to reform healthcare or reduce government any failure by them to do so may adversely affect our insurance programs, may result in lower prices for phar- business, results of operations and prospects and the maceutical products, including any product that may be value of our Shares and the Preemptive Rights. offered by us. In Europe, the pricing environment is affected by the nature of the European Union. Efforts by We may be subject to generic competition sooner the European Commission to harmonize the disparate than expected if third parties are able to develop national regulatory systems have met with little immedi- bioequivalent products of the originator drugs or ate success. The industry is, therefore, exposed to ad hoc other components of our product candidates. national cost-containment measures on prices and the consequent cross-border movement of products from Our product candidates consist of new proprietary formu- markets with prices depressed by governments into those lations of already approved and marketed originator where higher prices prevail. In addition, any future regula- drugs. If third parties are able to develop products that tory change regarding the healthcare industry or third- are the bioequivalent to the originator drug, then such party coverage and reimbursement may affect demand for originator drug could become subject to competition from any products that we may develop and could harm our generic products sooner than anticipated. Any erosion of sales and profitability. the market for the originator drug from such generic competition could adversely affect the market for our product The importation of pharmaceutical products from coun- candidates and thus adversely affect our business, results tries where prices are low due to government price con- of operations and prospects and the value of our Shares trols or other market dynamics, to countries where prices and the Preemptive Rights. for those products are higher may increase. The accession of additional countries from Central and Eastern Europe to Our operations involve hazardous materials and are the European Union could result in significant increases in subject to environmental controls and regulations. the parallel trading of pharmaceutical products. Move- ments of pharmaceutical products into the U.S., in partic- As a pharmaceutical company, we are subject to environ- ular from Canada, may increase despite the need to meet mental and safety laws and regulations, including those current or future safety requirements imposed by regula- governing the use of hazardous materials. The cost of tory authorities. The effects of any increase in the volume compliance with health and safety regulations is substan- of this cross-border movement of products could result in tial. Our business activities involve the controlled use of a materially adverse effect on our financial condition and hazardous materials. We cannot eliminate the risk of acci- results of operations. dental contamination or injury from these materials. In the event of an accident or environmental discharge, we If our manufacturing partners do not obtain or main- may be held liable for any consequential damage and any tain cGMP, we may not be able to commercialize our resulting claims for damages, which may exceed our product candidates. financial resources and may materially adversely affect our business, results of operations and prospects, and the We depend on third parties to manufacture products value of our Shares and the Preemptive Rights. employing our technology. Manufacturers must comply with the applicable FDA, European, or other regulatory agency current good manufacturing practices (“cGMP”) which include quality control and quality assurance requirements as well as the maintenance of records and documentation. Manufacturing facilities are subject to

4 2 Risks Related to Our Employees enter into foreign exchange contracts to cover our exposure to exchange rate fluctuations. If we fail to manage We may have difficulties in attracting and retaining foreign exchange risk adequately our business, results of key personnel, and if we fail to do so our business operations and prospects, and the value of our Shares may suffer. Our current Senior Vice President and and the Preemptive Rights may be adversely affected. Chief Financial Officer was appointed recently and has only had limited time prior to this Offering to Shareholders outside Denmark are subject to integrate into the Company. exchange rate risk.

We are highly dependent on the principal members of our The Offer Shares and the Preemptive Rights are priced in management and scientific staff, the loss of whose ser- Danish Kroner. Accordingly, the value of the Offer Shares vices could adversely affect the achievement of planned and the Preemptive Rights will likely fluctuate as the development objectives. In particular, we are dependent exchange rate between the local currency of the country on the services of Dr. Flemming Ørnskov, President and in which an investor outside Denmark is based and the Chief Executive Officer, Dr. Michael Beckert, Executive Vice Danish Kroner fluctuates. If the value of the Danish Kro- President and Chief Medical Officer, Peter G. Nielsen, ner decreases against the local currency of the country in Executive Vice President of Pharmaceutical Development. which an investor outside Denmark is based, the value of For us to further expand our product development, mar- such investor’s Offer Shares and the Preemptive Rights keting and commercialization plans, we will need to hire will decrease. additional qualified scientific personnel to perform research and development. We will also need to hire per- We may be a passive foreign investment company for sonnel with expertise in clinical testing, government regu- U.S. tax purposes. lation, manufacturing, marketing and finance. We may not be able to attract and retain personnel on acceptable We may be a passive foreign investment company (a terms, given the competition for such personnel among “PFIC”), for U.S. federal income tax purposes, for the cur- biotechnology, pharmaceutical and healthcare companies, rent tax year and the foreseeable future. Our status as a universities and non-profit research institutions. Although PFIC must be determined annually, and, therefore, may be we may be successful in attracting and retaining suitably subject to change. If we are a PFIC in any year during qualified scientific personnel, there can be no assurance which a U.S. Holder owns our Shares or the Preemptive that we will be able to attract and retain such personnel Rights, the U.S. Holder generally will be subject to adverse on acceptable terms given the competition for experi- U.S. federal income tax consequences. Certain U.S. Hold- enced scientists from numerous pharmaceutical and ers may be avoid these adverse tax consequences by chemical companies, specialized biotechnology firms, uni- making a mark to market election or by electing to treat versities and other research institutions. Our failure to do us as a “qualified electing fund”. See Part III, Section 4.11 so could adversely affect our business, results of opera- “Taxation – U.S.: Passive Foreign Investment Company tions and prospects, and the value of our Shares and the Considerations”. U.S. Investors are strongly urged to con- Preemptive Rights. sult their own tax adviser as to the potential application of the PFIC rules. On 1 March 2008, Hans Christian Teisen was appointed Senior Vice President and Chief Financial Officer of the The prospective financial information included in this Company. While Mr. Teisen has significant CFO experience Offering Circular may differ materially from our in the biotech/pharmaceutical industry, he has only had actual results. limited time prior to this Offering to integrate into the Company. The prospective financial information included in Part I, Section 9.1 “Prospects for 2008” and elsewhere in this Offering Circular are our projections of the results of Risks Related to Currency and operations for fiscal year 2008. Other Financial Risks The projections and plans are based on upon a number of We have revenue and expenses in foreign currencies assumptions (including the success of our business strat- and are therefore subject to foreign exchange risk. egies), some of which may not materialize, or may change. In addition, unanticipated events may adversely Our expenses and investments are primarily in Danish affect the actual results that we achieve in future periods Kroner. However, our revenues and a portion of our whether or not our assumptions relating to future periods expenses are in currencies other than Danish Kroner, pri- otherwise prove to be correct. Consequently, our results marily U.S. dollars and Euros. Therefore, our expenses and may vary materially from these projections and plans. See any future investment or other income may be vulnerable “Special Notice Regarding Forward Looking Statements” to fluctuations in exchange rates. We currently do not beginning on page xii.

25 Risks Related to the Offering The market price of our Shares and Preemptive Rights may be highly volatile. Our Major Shareholders control a significant portion of our Shares and their interest may conflict with the The market price of the Shares as well as of the Preemp- interests of our other shareholders. tive Rights may be highly volatile, subject to significant fluctuations in response to various factors, some or many Our Major Shareholders control a significant portion of of which may be beyond our control and which may be our Shares and their interest may conflict with the inter- unrelated to our business, operations or prospects. Mat- ests of our other shareholders. Upon completion of the ters which could affect the price of the Shares as well as Offering (and assuming that the Offering will be fully sub- of the Preemptive Rights include actual or anticipated scribed), our Major Shareholders, our Board of Directors variations in operating results, announcements relating to and our Executive Management will own approximately the results of clinical studies, announcements of techno- 43.08%, 0.24% and 3.76% of our Shares, respectively, on logical innovations by us or our competitors, new prod- a fully diluted basis, assuming the exercise of all of our ucts or services introduced by us or announced by us or issued warrants and such shareholders exercise their full our competitors, conditions, or trends or changes in the allocation of Preemptive Rights. As a result, these per- biotechnology and pharmaceutical industries, changes in sons may have the ability either alone or voting together the market valuations of other similar companies, addi- as a group to determine and/or significantly influence the tions or departures of key employees and further sales of outcome of matters submitted to our shareholders for Shares by us. approval, including the election and removal of directors, payment of dividends, amendments to our Articles of In addition, the equity market in general, and the market Association, including changes to our share capital or any for technology companies in particular, has experienced merger or acquisition. In addition, this group of share- significant price and volume fluctuations that may be holders may have the ability to control our management unrelated or disproportionate to the operating perfor- and affairs. Such control and concentration of ownership mance of those companies. There has been particular vol- may affect the market price of the Shares and may dis- atility in the market prices of securities of pharmaceutical courage certain types of transactions, including those and life sciences companies. These general market and involving actual or potential change of control of us industry factors may adversely affect the market price of (whether through merger, consolidation, take-over or our Shares as well as of the Preemptive Rights, regardless other business combination), which might otherwise have of our operating performance. a positive effect on the market price of our Shares. The trading price of our Shares as well as of the Preemp- There has been and may continue to be limited tive Rights may be subject to wide fluctuations in liquidity in our Shares. response to these factors, including the sale or attempted sale of a large number of our Shares or Preemptive Rights Following the Offering (and assuming that the Offering into the market. will be fully subscribed), 53.25% of our Shares will be held by persons other than the Major Shareholders as at Subscribers of the Offer Shares will suffer immediate the Offering Circular Date (assuming that our Major and substantial dilution of their investment. Shareholders exercise their full allocation of Preemptive Rights but do not acquire any additional Shares in the The price you will pay for the Offer Shares will be signifi- Offering and that no warrantholder exercises warrants). cantly greater than the book value per Share of our regis- We have agreed not to issue any further Shares for a tered Share capital after the Offering. Accordingly, you will period from the date hereof to 180 days following the suffer immediate and substantial dilution of your invest- Closing Date, and our Board of Directors and Executive ment. In addition, there are 3,926,673 outstanding war- Management have agreed not to dispose of their share- rants, each conferring to a right to subscribe one Share at holdings, subject to certain exceptions, from the date a weighted average exercise price of approximately DKK hereof until 180 days following the Closing Date, without 36.63. If any of such warrants are exercised, subscribers the consent of the Joint Global Coordinators and Lead of the Offer Shares will suffer further dilution. See Part I, Managers. The limited public market for our Shares may Section 21.2 “Warrant Programs” for a description of the impair the ability of investors to sell their Shares at the Company’s warrant programs, including the adjustments time or times they wish to do so or at an acceptable that will be made to the subscription prices applicable to price, and may increase the volatility of the price of our warrants and the number of warrants following comple- Shares. tion of the Offering.

6 2 Our Board of Directors has been authorized to issue tioned above or our Major Shareholders of Shares, Pre- 83,119 warrants to our Board members, members of emptive Rights or other securities, or a public perception Executive Management, employees and our consultants that an offering or sale may occur, could have an adverse and advisors. Each warrant will, upon issuance, confer the effect on the market price of the Shares and the Preemp- right to subscribe one Share at no less than the market tive Rights. value of our Shares on the date of issuance of the warrants. This price may be lower than the Offer Price We have never paid dividends and do not intend to depending on the market price of our Shares on the date pay dividends in the foreseeable future. such warrants are granted. See Part I, Section 21.2 “War- rant Programs”. The issuance and exercise of such war- We have never paid dividends or distributions, and we do rants may cause investors in the Offer Shares to suffer not at the present time contemplate the payment of divi- further dilution. dends or distributions for the foreseeable future. We are a public limited liability company organized under the Our Board and Executive Management have broad laws of Denmark. The rights of holders of Shares are discretion in the use of the net proceeds from this accordingly governed by Danish law and by our Articles of Offering and may not use them effectively. Association. Such rights may be substantially different to typical rights of shareholders in other jurisdictions. While our Board and Executive Management currently intend to use the proceeds of the Offering as described The Company is a public limited liability company under Part III, Section 3.4 “Reasons for the Offering and organized under the laws of Denmark, which may Use of Proceeds”, our Board and Executive Management make it difficult for Shareholders residing outside will have broad discretion in the application of the net Denmark to exercise or enforce certain rights. proceeds. Pending any such use, our Board and Executive Management intend to invest the net proceeds from the The rights of holders of Shares and the Preemptive Rights Offering in cash deposits and capital preserving, short- are governed by Danish law and by the Company’s Articles term, investment grade, interest-bearing securities. Such of Association. These rights may differ from the typical investments may not yield a favorable return to our share- rights of shareholders in the U.S. and other jurisdictions. holders. The failure by our Board or Executive Manage- See Part III, Section 5 “Terms and Conditions of the Offer- ment to apply these funds effectively could have a mate- ing”. It may not be possible for investors to effect service rial adverse effect on our business, results of operations of process outside Denmark upon the Company, or to and prospects, and the value of our Shares. enforce judgments against the Company obtained from non-Danish courts based upon applicable law in jurisdic- The Company may issue additional Shares or other tions outside Denmark. In addition, shareholders outside securities in the future which could have an adverse Denmark may face difficulties exercising their rights to impact on the Share price. The Company’s Major vote. Shareholders, Board of Directors and Executive Man- agement could decide to sell Shares (including Offer Possible inability to acquire and/or exercise Preemp- Shares) or Preemptive Rights, which could have a tive Rights for shareholders in jurisdictions outside material adverse impact on the market price of the Denmark. Shares (including Offer Shares) and the Preemptive Rights. Holders of Shares in jurisdictions outside Denmark, such as the U.S., may be unable to acquire and/or exercise any The Company and the members of its Board of Directors Preemptive Rights unless the Preemptive Rights and/or and Executive Management are restricted by lock-up the Offer Shares or any rights or other securities being agreements for a limited period of time after the Offering offered have been registered with the relevant authorities is completed. See Part III, Section 7.2 “Lock-up agree- in such jurisdictions or such acquisition or exercise is ments in connection with the Offering” for a more done pursuant to an exemption from such registration. detailed description of the agreements, including excep- We are under no obligation and do not intend to file a tions hereof. Following the end of the lock-up periods, registration statement in other jurisdictions outside Den- the members of the Company’s Board of Directors and mark in respect of the Preemptive Rights or the Offer Executive Management will be free to sell, and the Com- Shares, and make no representation as to the availability pany will be free to issue, Shares or other securities, of any exemption from the registration requirement under which could cause the market price of its Shares to the laws of any other jurisdictions outside Denmark in decline. The Company has no current plans for a subse- respect of any such rights in the future. quent public offering of its Shares. However, it is likely that the Company may decide to offer additional Shares or other securities in the future. An additional offering or sale by the Company or a sale by the individuals men-

27 There is a risk that the Offering is not completed, Nonetheless, depending upon the level of subscription and it may be withdrawn in certain exceptional and and other considerations, we may decide to proceed with unpredictable circumstances. the Offering. As the exercising of Preemptive Rights and subscription for Offer Shares is irrevocable and cannot be In the period until registration of the capital increase with withdrawn, you may be investing in a company that the Danish Commerce and Companies Agency, the Offer- requires substantial additional financing to pursue the ing may be withdrawn. In connection with the Offering planned activities as indicated in this Offering Circular. If the Company and the Joint Global Coordinators and Lead we are unable to obtain this additional financing on Managers have entered into the Rights Issue Agreement. attractive terms or at all, this could materially adversely See Part III, Section 5.21 “Placing and Underwriting”. Pur- affect our business, results of operations or financial con- suant to this agreement, the Joint Global Coordinators dition. and Lead Managers may require us to withdraw the Offer- ing at any time prior to the registration of the capital If the Offering is not completed investors who pur- increase relating to the Offer Shares upon notification of chase Preemptive Rights may incur a total loss on termination of the Rights Issue Agreement. The Joint the purchase price of the Preemptive Rights. Global Coordinators and Lead Managers are entitled to terminate this Agreement upon the occurrence of certain If the Offering is not completed, the exercise of the Pre- exceptional and unpredictable circumstances such as force emptive Rights that has already taken place will automati- majeure. The Rights Issue Agreement also contains clos- cally be cancelled, the subscription price for Offer Shares ing conditions which we believe are customary for offer- will be refunded (less any brokerage fees), all Preemptive ings such as the Offering and the closing of the Offering Rights will be null and void, and no Offer Shares will be is dependent on compliance with all of the closing condi- issued. However, trades of Preemptive Rights executed tions set forth in the Rights Issue Agreement. If one or during the trading period for Preemptive Rights will not be more closing conditions are not met, the Joint Global affected. As a result, investors who purchase Preemptive Coordinators and Lead Managers may, at their discretion, Rights will incur a loss corresponding to the purchase also terminate the Rights Issue Agreement and thereby price of the Preemptive Rights and any brokerage fees. require us to withdraw the Offering. In the event that such circumstances occur before registration of the capi- Purchasers of rights to Offer Shares prior to the tal increase with the Danish Commerce and Companies completion of the Offering may lose their invest- Agency, and the Joint Global Coordinators and Lead Man- ment if the Offering is not completed. agers decide to terminate the Rights Issue Agreement, the Preemptive Rights will become null and void and no If the Offering is not completed, the Offer Shares will not Offer Shares will be issued, causing investors who may be issued and investors who have acquired rights to Offer have acquired Preemptive Rights and/or Offer Shares (in Shares (when issued) in an off-market transaction risk an off-market transaction, see below) to incur a loss. Any losing their investment if they are not successful in withdrawal will be notified immediately to the OMX Nordic reclaiming the purchase price (and any brokerage fees) Exchange Copenhagen and announced as soon as possi- from the seller of such rights to Offer Shares. ble in the same Danish daily newspaper in which the Offering was announced. If there is a substantial decline in the market price of the Shares, the Preemptive Rights may lose their The Offering may proceed without full subscription value. of the Offer Shares, and, if this occurs, we may require substantial additional financing to pursue our The market price of the Preemptive Rights depends on planned activities; the subscription is nonetheless the price of the Shares. A drop in the price of the Shares irrevocable and cannot be withdrawn by the holder. could have an adverse impact on the value and market price of the Preemptive Rights. We intend to use the net proceeds from the Offering together with any revenue generated from the sale of our Failure to exercise Preemptive Rights by the end of first commercialized product, Fenoglide, future milestone the Subscription Period (15 April 2008 at 5:00 p.m. payments and license fees and existing cash balances in CET) will result in the lapse of the holder’s Preemp- the further development of our product candidates tive Rights. towards commercialization. However, the amount of proceeds we will receive in the Offering is uncertain, in par- If Preemptive Rights are not exercised by the end of the ticular as the Offering is not underwritten. To the extent Subscription Period (15 April 2008 at 5:00 p.m. CET), such that the Offering is not fully subscribed, our ability to holders’ Preemptive Rights to subscribe for Offer Shares fund our planned activities will be impacted and, depend- will lapse with no value, and the holder will not be enti- ing on the level of subscription, may be significantly tled to compensation. Accordingly, Existing Shareholders impacted. and other holders of Preemptive Rights must ensure that

8 2 all required exercise instructions are actually received by such Existing Shareholder’s or other holder’s bank before the deadline. If an Existing Shareholder or other holder fails to provide all required exercise instructions or otherwise fails to follow the procedure applicable to exercising the Preemptive Rights prior to 15 April 2008 at 5:00 p.m. CET, the Preemptive Rights will lapse and will no longer exist.

If any Existing Shareholder does not exercise any or all of its Preemptive Rights, its ownership interest will be diluted and such dilution may be substantial.

Upon the issue of the Offer Shares, any Existing Share- holder who did not exercise its Preemptive Rights will experience dilution of its ownership interest and voting power and such dilution may be substantial. Even if such Existing Shareholder decides instead to sell its Preemptive Rights, the compensation it receives may not be sufﬁcient to offset this dilution.

The market for the Preemptive Rights might only offer limited liquidity and, if a market does develop, the price of the Preemptive Rights may be subject to greater volatility than the price of the Existing Shares.

The trading period during which Preemptive Rights may be traded on the OMX Nordic Exchange Copenhagen will commence on 28 March 2008 at 9.00 a.m. CET and close on 10 April 2008 at 5:00 p.m. CET. No guarantee can be given as to whether a market will develop for the Preemp- tive Rights when they will be trading for the ﬁrst time on the OMX Nordic Exchange Copenhagen, and if such a market does develop, the Preemptive Rights may be subject to greater volatility than the Existing Shares.

I. Description of the Company 1. Persons Responsible

Intentionally Omitted

I – 1 2. Statutory auditors

Our independent auditors are:

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab Strandvejen 44 DK-2900 Hellerup, Copenhagen Denmark

Our audited ﬁnancial statements as at and for the years ended 31 December 2005, 2006 and 2007 included herein have been audited by PwC, represented by State Authorized Public Accountant Lars Holtug and State Authorized Public Accountant Claus Køhler Carlsson, who acted as independent auditors and are members of the Institute of State Authorized Public Accountants in Den- mark (Foreningen af Statsautoriserede Revisorer (“FSR”)).

Our audited published annual reports as at and for the years ended 31 December 2005, 2006 and 2007 have been audited by PwC, in 2005 represented by State Authorized Public Accountant Lars Holtug and State Authorized Public Accountant Lars Nielsen, in 2006 represented by State Authorized Public Accountant Lars Holtug and in 2007 represented by State Authorized Public Accountant Lars Holtug and State Authorized Public Accountant Claus Køhler Carlsson, respectively, who acted as independent auditors and are members of the FSR.

I – 2 3. Selected Financial Information

The selected financial information in this section has been conjunction with (i) the section entitled “Capitalization taken from our audited consolidated financial statements and Debt” at Part III, Section 3.2, (ii) Part I, Section 10 for the years ended 31 December 2005, 2006 and 2007, “Review of Operations and Financial Statements”, and (iii) as included in this Offering Circular. The audited consoli- our consolidated financial statements and related notes dated financial statements for the years ended 31 Decem- thereto included elsewhere in Part II. Conversions in the ber 2005, 2006 and 2007 have been prepared in accor- following data should not be construed as representa- dance with IFRS as adopted by the EU and additional tions that the Danish Kroner amounts actually represent Danish disclosure requirements for financial statements of such Euro amounts at any specified rate. Euro amounts listed companies. The following data should be read in have not been audited.

Statement of income Year ended 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

Operating loss (94,335) (149,058) (172,936) (12,651) (19,990) (23,192) Financial income 945 2,993 18,553 127 401 2,488 Financial expenses (1,779) (1,648) (5,856) (239) (221) (786)

Net loss for the year (95,169) (147,713) (160,239) (12,763) (19,810) (21,490)

Balance sheet data As of 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

I – 3 Cash ﬂow statement data Year ended 31 December 2005 2006 2007 2005 2006 2007 DKK DKK DKK € € € (In thousands)

Other ﬁnancial data1) Year ended 31 December 2005 2006 2007 2005 2006 2007

Number of fully paid Shares in issue as at 31 December2) 4,428,569 30,369,816 31,770,705 - - - Weighted average number of Shares for the year3) 13,965,252 19,313,737 30,875,434 - - - Asset/Equity at year end 1.48 1.11 1.17 - - - Average number of employees for the year (full-time equivalents) 35 44 64 - - - Basic earnings per share in DKK/EUR (6.82) (7.65) (5.19) (0.91) (1.03) (0.70) Diluted earnings per share in DKK/EUR (6.82) (7.65) (5.19) (0.91) (1.03) (0.70) Price/book value - 3.71 3.48 - - - EBITDA in DKK/EUR (in thousands) (90,264) (143,482) (165,872) (12,105) (19,242) (22,245) EBITDA-margin (32.78) (14.73) (2.56) - - - Net Interrest bearing debt in DKK/EUR (in thousands) (56,900) (433,912) (306,232) (7,631) (58,191) (41,068)

1) Such ﬁnancial data is stated in accordance with the recommendations of the Association of Danish Financial Analysts. 2) At the board meeting held on 5 December 2005 the share capital was increased by 509,551 D-shares. 67,824 D-shares were paid in after 31 December 2005. 3) The weighted average number of Shares has been adjusted according to the issue of bonus shares in the ratio of 1:3 as resolved by the general meeting on 27 July 2006.

I – 4 4. Risk Factors

Reference is made to the section entitled “Risk Factors” beginning on page 12.

I – 5 5. Information about the Company

5.1 Name, Registered Ofﬁce, etc. 5.5 Financial Year and Financial Reporting

The Company’s name is LifeCycle Pharma A/S. The Company’s financial year runs from 1 January to 31 December. The Company publishes interim reports for The Company’s registered office is the first, second and third quarters of the financial year Kogle Allé 4 and a full-year report. The Company publishes its annual DK-2970 Hørsholm reports and interim reports in both Danish and English. Denmark.

The Company’s telephone number is +45 70 33 33 00. 5.6 Objects and Purposes

The Company’s registration number (“CVR”) is 26527767. The Company’s object, as set out in Article 3 of the Arti- cles of Association, is to engage in medical research, pro- The Company is domiciled in the municipality of Rudersdal. duction and sale of such products and related business.

The Company’s wholly owned subsidiary, LifeCycle Pharma, Inc. has its principal address at 100 Park Avenue, 5.7 Principal Bank 13th Floor, New York, New York 10017, U.S. The Company’s principal bank is Danske Bank A/S.

5.2 Securities Identiﬁcation Code 5.8 Issuing Agent The Company’s Existing Shares are listed on the OMX Nordic Exchange Copenhagen under the securities identi- The Company’s issuing agent is: ﬁcation code DK0060048148. Danske Bank A/S Holmens Kanal 2-12 DK-1092 Copenhagen K 5.3 Date of Incorporation and Governing Law Denmark

The Company was incorporated with limited liability under the laws of Denmark on 21 March 2002. 5.9 Share Registrar

The Company’s share registrar is VP Securities Services. 5.4 Financial Calendar

5.10 Transactions with Financial Advisers Interim Financial Statements for the three-month period ended 31 March 2008 14 May 2008 The Joint Global Coordinators and Lead Managers may in Interim Financial Statements for the the past have and may in the future, at any time, perform six-month period ended 30 June 2008 27 August 2008 investment banking services for the Company, for which Interim Financial Statements for the nine- they have in the past received, or may in the future month period ended 30 September 2008 26 November 2008 receive, fees and commissions.

The Company has entered into a market maker agreement The Company’s next Annual General Meeting is expected with Danske Bank according to which Danske Bank will act to be held on 24 April 2008. as market maker for the Company’s Shares.

The Company’s most recent Annual General Meeting was held on 24 April 2007. The Company’s most recent extraordinary meeting was held on 14 March 2008.

I – 6 5.11 The Company’s History and Development EVENTS IN 2005

EVENTS IN THE PERIOD 2002-2004 In early 2005, the Company announced positive results of clinical studies of LCP-Feno. In May 2005, the Com- The Company’s proprietary MeltDose technology platform pany successfully completed its second round of financ- was originally developed at H. Lundbeck A/S to address a ing and raised approximately DKK 113 million (€15.2 mil- critical roadblock experienced by pharmaceutical compa- lion) in proceeds through the issuance of 1,274,471 C nies related to poor oral absorption (bioavailability) of shares to select investors. Jean Deleage (of participating otherwise high-potential drugs. Faced with the problems venture fund, Alta Partners) joined the Company’s Board of new drug substances with low water-solubility, H. Lun- of Directors. dbeck A/S decided to put forth a focused effort into the development and implementation of dissolution- and In October 2005, the Company’s current President and absorption-enhancing methods. This work resulted in the Chief Executive Officer, Dr. Flemming Ørnskov (see “Events development of what is now the Company’s proprietary in 2006” below) joined the Company’s Board of Directors MeltDose technology platform – a technology designed as chairman of the Board of Directors. In November 2005, to improve the bioavailability of low water-soluble or Dr. Gérard Soula joined the Company’s Board of Directors. insoluble drug substances so that these drugs can be In December 2005, the Company completed its third taken orally. round of financing and raised approximately DKK 74 million (€9.9 million) in proceeds through the issuance of In order to capitalize on the potential of the MeltDose 509,551 D shares. technology platform, H. Lundbeck A/S decided to spin out the MeltDose technology platform into the Company, During 2005, the Company initiated clinical studies of which commenced operations on 13 June 2002 under LCP-Feno and Fenoglide and successfully conducted clini- the name PharoTech A/S. In connection with the com- cal studies with three other product candidates, LCP- mencement of operations, H. Lundbeck A/S made an ini- Tacro, LCP-AtorFen and LCP-Lerc (the latter in collabora- tial contribution in kind of the intellectual property rights tion with Recordati). In the course of 2005, the Company to the MeltDose technology platform (value DKK 1 mil- identified a number of new potential product candidates lion) (€0.1 million) alongside an initial cash contribution in order to strengthen the Company’s portfolio of product of DKK 8.5 million (€1.1 million). On 28 April 2003 the candidates. Also, the Company strengthened its organiza- Company’s name was changed to it current name tion with special emphasis on improving its preclinical and LifeCycle Pharma A/S. clinical development skills. At the end of 2005, the Com- pany employed a total of 40 employees. In August 2003, the Company raised approximately DKK 22 million (€3 million) in gross proceeds through the issu- EVENTS IN 2006 ance of 746,370 B shares to select investors. In January 2004, the Company moved its operations to its current In January 2006, the Company announced positive pilot facilities with combined laboratories, an area compliant Phase I data for LCP-Tacro. Further, the Company with cGMP and office space located in Hørsholm, north of announced positive pivotal data for Fenoglide demon- Copenhagen. In January 2004, the Company formed its strating that Fenoglide had an improved absorption com- initial scientific advisory board to provide advice and pared with Antara as well as no significant food effect. counsel with respect to the Company’s development programs. In March 2004, the Company raised approximately The Company’s current chairman of the Board of Direc- DKK 28 million (€3.8 million) in proceeds through the tors, Dr. Claus Braestrup, joined the Company’s Board of issuance of 379,474 B shares and 508,425 A shares. Directors in March 2006. In April 2006, the Company In July 2004, the Company entered into its first strategic entered into an agreement with H. Lundbeck A/S concern- collaboration (with Recordati) to jointly develop and coming the Company’s use of certain of H. Lundbeck A/S‘s mercialize a new tablet formulation of Lercanidipine HCI manufacturing facilities and support areas for the manu- marketed by Recordati as Zanidip using the MeltDose facture of the Company’s product candidate for clinical technology platform. The collaboration is ongoing (the studies conducted in Europe. collaborative agreement was amended in May 2006) and aims at developing a new formulation of lercanidipine HCI In the course of 2006, the Company entered into three (LCP-Lerc). In 2004, the Company completed clinical stud- strategic collaborations: (i) an exclusive development and ies on an improved tablet formulation of fenofibrate (LCP- commercialization agreement regarding LCP-Feno with Feno) and clinical studies on an improved tablet formula- Sandoz concerning the U.S. market, (ii) an exclusive devel- tion of tacrolimus (LCP-Tacro). At the end of 2004 the opment and commercialization agreement regarding LCP- Company employed a total of 24 employees. Feno with Mylan for the European markets and (iii) a service agreement with H. Lundbeck A/S whereby H. Lundbeck A/S was granted the right to use the MeltDose

I – 7 technology platform for two of H. Lundbeck A/S’s internal In May 2007, the Company signed an exclusive license preclinical CNS-related projects. Also, the Company agreement with Sciele Pharma to market Fenoglide in the expanded its collaboration with Recordati for LCP-Lerc. U.S., Canada, and Mexico, in 120 mg and 40 mg Further, the Company initiated Phase I clinical studies for strengths. The Company also entered into a technology LCP-AtorFen and received its first EU patent for the Melt- collaboration with Sciele Pharma utilizing the MeltDose Dose technology platform. In August 2006, Dr. Flemming technology platform for the lifecycle management of one Ørnskov was employed as the Company’s President and of Sciele Pharma’s products. The Company also Chief Executive Officer (at the same time resigning from announced the issuance of a U.S. patent for its MeltDose his position as member of and chairman of the Board of technology. Directors), and in September 2006, Kurt Anker Nielsen joined the Company’s Board of Directors. In June 2007, the Company announced the initiation of a Phase II clinical trial of LCP-Tacro for the prevention of In October 2006, the Company submitted a New Drug organ rejection in kidney transplant patients and Application (NDA) to the FDA under Section 505(b)(2) to announced that it had reached a protocol agreement produce and market Fenoglide for dyslipidemia in the U.S. with the FDA for this Phase II trial and a subsequent Phase II trial in liver transplant recipients. In July 2007, The Shares of the Company were admitted to trading and the Company announced the initiation of a Phase II clini- official listing on the OMX Nordic Exchange Copenhagen cal trial program for LCP-AtorFen for the treatment of on 13 November 2006 through the initial public offering dyslipidemia. of 11 million new Shares at an offer price of DKK 44 per Share. The underwriters’ over-allotment option was sub- On 10 August 2007, the FDA approved Fenoglide under sequently exercised in full, leading to the issue of an the FDA’s 505(b)(2) regulatory procedure. additional 1.65 million Shares. Through the offering, the Company raised approximately DKK 500 million (€67.1 In September 2007, the Company announced the initia- million) in net proceeds. The initial public offering resulted tion of a head-to-head clinical study of LCP-Tacro versus in more than 4,200 new shareholders in the Company Advagraf. and approximately 50% of the initial public offering was subscribed to outside Denmark. In October 2007, the Company announced positive interim results from its Phase II clinical trial for LCP-Tacro In December 2006, the FDA accepted the Company’s NDA for the treatment of kidney transplant patients announc- for Fenoglide for review. ing that LCP-Tacro demonstrated a superior profile when compared with Prograf. In November 2007, the Company At the end of 2006, the Company employed a total of 44 announced positive results from its Phase I head-to-head employees, with 80% working within research and devel- clinical trial comparing LCP-Tacro to Advagraf. opment. In November 2007, the Company initiated a Phase I clini- EVENTS IN 2007 cal study in healthy volunteers for LCP-Siro, an immunosuppression drug for the prevention of organ rejection In January 2007, the Company established LifeCycle after transplantation and for the treatment of certain Pharma, Inc., its wholly-owned subsidiary located in New autoimmune diseases. York, U.S. In February 2007, the Company announced positive results from the Company’s Phase I clinical pro- In December 2007, the Company initiated a Phase II clini- gram with LCP-AtorFen. In March 2007, the Company cal study for LCP-Tacro in liver transplant recipients. Fur- announced that it had not, within the 45-day period ther, in December 2007 the Company entered into a fea- under the U.S. Hatch-Waxman Act, received notice of any sibility study agreement with an undisclosed Top 10 patent infringement lawsuits regarding the Company’s pharmaceutical company regarding the use of the Compa- Paragraph IV certification for Fenoglide and that the Com- ny’s proprietary MeltDose technology to conduct a pre- pany’s NDA for Fenoglide therefore would not be subject clinical feasibility study in order to investigate a new for- to a 30-month stay under the Hatch-Waxman Act. mulation of one of the pharmaceutical company’s product candidates. On 24 April 2007, the Company held its first annual general meeting as a listed company.

I – 8 At the end of 2007, the Company had 84 permanent 5.12 Investments staff. 74 of these employees were employed in Hørsholm, Denmark and 10 were employed in New York. In total 68 2005 2006 2007 employees worked within research, preclinical and clinical DKK DKK DKK development, and 16 were general and administrative (In thousands) staff. Investments in property, EVENTS IN 2008 plant and equipment 13,572 7,222 5,900

In January 2008, the Company announced positive interim results from Phase II clinical studies of LCP-Tacro in liver The investments in 2005 and 2006 primarily relate to pro- transplant recipients and initiated Phase II clinical studies cess plant and machinery for use in the Company’s labo- of LCP-Tacro for the treatment of autoimmune hepatitis. ratories. In 2007, the majority of the investments related On 21 February 2008, Sciele Pharma launched Fenoglide to furniture and office equipment for use in the Compa- in the U.S. On 28 February 2008, the Company published ny’s premises. its preliminary annual report for 2007. On 1 March 2008, Hans Christian Teisen assumed the position of the Com- The financing of the investments in property, plant and pany’s Chief Financial Officer, replacing Michael Wolff Jen- equipment has primarily been through finance lease sen. On 3 March 2008, the Company announced positive agreements, and the remainder through the Company’s results from its Phase II clinical studies of LCP-Tacro in own financial resources. kidney transplant recipients. On 14 March 2008, the Com- pany held an extraordinary general meeting whereby the In June 2007, the Company entered into an additional Board of Directors was authorized to increase the Compa- lease of office space in Hørsholm, Denmark to meet the ny’s share capital by up to 25,000,000 Shares, and the requirements of the increasing number of employees. shareholders adopted general guidelines for incentive Further, the Company has established a subsidiary in the remuneration to members of the Board of Directors and U.S. and entered into a lease of office space in New York. Executive Management. On 17 March 2008, the Company published its annual report for 2007. Also, on 17 March The Company has no material current investments and 2008, the Board of Directors passed a resolution to has made no commitments to material future invest- increase the Company’s share capital by up to nominal ments. DKK 24,078,880 (corresponding to 24,078,880 Offer Shares of nominal DKK 1 each).

I – 9 6. Business Overview LifeCycle Pharma A/S

6.1 General Lerc, a reformulation of lercanidipine, a calcium channel blocker, which has completed Phase I studies for hyperten- OVERVIEW sion; and LCP-Feno, a generic fenofibrate formulation which has completed Phase I studies for dyslipidemia. We are an emerging specialty pharmaceutical company focused on certain cardiovascular indications and the For the immunosuppression market, we have four clinical immunosuppression market. We currently have one prod- programs and one preclinical program currently underway uct on the market, seven clinical development programs relating to three product candidates. Our most advanced covering five product candidates and three product candi- product candidate is LCP-Tacro, which has completed dates in preclinical development. Phase II studies with positive data in kidney transplant recipients and achieved positive interim data in Phase II Our first commercialized product, LCP-FenoChol, has studies in liver transplant recipients. We expect to com- received FDA approval for sale in the U.S., under the brand mence Phase III studies for LCP-Tacro in the second half name Fenoglide for the treatment of dyslipidemia (which of 2008 with kidney and liver transplant recipients. In includes hypertriglyceridemia, mixed dyslipidemia and addition, LCP-Tacro is in ongoing Phase II studies for auto- hypercholesterolemia) as an adjunct to diet in adult immune hepatitis. We also have LCP-Siro, which is in patients. Launched in February 2008, Fenoglide is mar- Phase I studies for organ transplantation and autoimmune keted in the U.S. by our partner Sciele Pharma. In addition, diseases, and LCP-3301, which is in preclinical studies for we have three clinical programs for product candidates in organ transplantation. In addition, we have two other the cardiovascular area: LCP-AtorFen, a fixed-dose combi- product candidates in preclinical development for undis- nation therapy in Phase II studies for dyslipidemia; LCP- closed indications.

Table 2. Product and Product Candidate Portfolio

Product Indication Pre-Clinical Phase I Phase II Phase III Marketed Partner

1) Based on gross revenues for 2006

I – 10 Our proprietary MeltDose technology platform is designed positive and statistically significant Phase II clinical data to enhance the release and absorption of drugs in the from kidney transplant recipients demonstrating a body by incorporating the drug in a solubilized form in a potential best-in-class profile when compared head-to- tablet matrix, for example as a solid solution. By applying head with Prograf (twice-daily dosage), the only tacro- our MeltDose technology to create new versions of exist- limus product currently available on the U.S. market. In ing drugs, we believe we are able to develop products addition, we have received positive interim Phase II with differentiated characteristics significantly faster and data for LCP-Tacro in liver transplant recipients indicat- cheaper and with a higher success rate as compared with ing a potential best-in-class profile when compared traditional drug development. head-to-head with Prograf (twice-daily dosage).

In order to commercialize Fenoglide and to develop and We expect to initiate Phase III clinical studies for LCP- commercialize our product candidates for the cardiovas- Tacro in the second half of 2008 in both kidney and cular market, we have entered into partnerships with liver transplant recipients. pharmaceutical companies such as Sciele Pharma, Recor- dati, Sandoz and Mylan. We intend to continue this part- We plan to advance our earlier stage immunosuppres- nering strategy for our product candidates in major thera- sion product candidates, such as LCP-Siro, through peutic markets with large physician and patient late-stage clinical development. We currently own populations where we believe the expanded marketing worldwide commercialization rights to our entire immu- capabilities of these companies may significantly increase nosuppression portfolio, and, although we intend to the market penetration of our products. For product can- develop and commercialize these product candidates didates we are developing for immunosuppression and ourselves for the U.S. market in order to maximize their may develop for other specialist indications, we intend to commercial potential, we may outlicense development establish our own sales and marketing capabilities where or commercialization of a product candidate where we we believe, through such a strategy, we can maximize deem it appropriate. their commercial potential. • Develop LCP-Tacro, LCP-Siro and our other immu- CORPORATE INFORMATION nosuppression product candidates for indications within the autoimmune disease area. There is scien- We commenced operations in June 2002 as a spin-off tific and clinical data that suggest that tacrolimus and from H. Lundbeck A/S. We are based north of Copenha- sirolimus may have efficacy in the treatment of various gen, Denmark, and currently employ 95 permanent staff autoimmune diseases, including autoimmune hepatitis. in Denmark and the United States. Our registered office is We intend to develop further our product candidates, located at Kogle Allé 4, DK-2970, Hørsholm, Denmark, LCP-Tacro and LCP-Siro, for the treatment of autoim- and we are domiciled in the municipality of Rudersdal. mune hepatitis and other indications in the autoimmune Our telephone number is +45 70 33 33 00. For the year area that have commercial and clinical significance. ended 31 December 2007 we had revenues of DKK 64,705 thousand (€8,678 thousand). In 2006, we com- • Advance LCP-AtorFen to late stage clinical studies. pleted an initial public offering of 12.65 million Shares at We intend to take LCP-AtorFen through Phase II clinical an offer price of DKK 44 per Share, generating approxi- studies, and plan to prepare for Phase III clinical stud- mately DKK 500 million (€67 million) in net proceeds. Our ies. We intend to seek a partner to fund any such Existing Shares are listed on the OMX Nordic Exchange Phase III clinical studies and to leverage the larger sales Copenhagen under the symbol “LCP” and the securities force of such a partner at the time of the market code DK0060048148. launch of LCP-AtorFen.

BUSINESS STRATEGY • Leverage our clinical and regulatory expertise within the cardiovascular and immunosuppression Our primary goal is to build a fully integrated specialty areas. We have initially focused on the development of pharmaceutical business around our key cardiovascular product candidates for cardiovascular disease and and immunosuppression product candidates and the immunosuppression, which are major therapeutic areas broader application of our proprietary MeltDose technol- with established commercial potential. We intend to ogy platform for other major therapeutic areas with leverage our clinical and regulatory expertise by con- established commercial potential. The ﬁve key elements tinuing to develop new MeltDose product candidates in of our business strategy are as follows: these two areas. In addition, we may in-license attractive product candidates to complement our existing in- • Advance LCP-Tacro, LCP-Siro and our other immu- house portfolio, particularly within the immunosup- nosuppression product candidates through clinical pression area, where we can obtain sales and market- studies within the organ transplantation area. ing synergies with our existing in-house portfolio. LCP-Tacro (once-daily dosage) has recently received

I – 11 • Continue to leverage our proprietary MeltDose reduced variability as compared with Prograf, the only technology platform across multiple therapeutic version of tacrolimus currently marketed in the U.S. areas with established commercial potential. We LCP-AtorFen is a proprietary once-daily fixed-dose com- believe that our proprietary MeltDose technology plat- bination of atorvastatin and a low dose fenofibrate for form has broad applicability across multiple existing the treatment of dyslipidemia. We intend to seek a drugs and disease areas. We intend to further maximize partner to fund Phase III clinical studies and to leverage the commercial value of our MeltDose technology by the larger sales force of such a partner at the time of applying it across a broad range of therapeutic indica- the market launch of LCP-AtorFen. In North America tions where we believe we can retain significant rights to alone, combined 2006 sales of atorvastatin and fenofi- our products and maximize their commercial potential. brate were approximately $10.8 billion (source: IMS Health; all rights reserved). In Phase I clinical studies, KEY STRENGTHS LCP-AtorFen demonstrated comparable bioavailability to Lipitor and Tricor, and a once-daily oral dosing profile • Marketed product generating revenues in 2008. without any significant food effect. LCP-AtorFen is cur- Our first commercialized product, Fenoglide, is a fenofi- rently being compared to Lipitor and Tricor, the most brate product that has received FDA approval for sale in widely prescribed statin and fenofibrate, respectively, the U.S. for the treatment of dyslipidemia as an adjunct currently on the market, in a head-to-head Phase II to diet in adult patients. Fenoglide is currently marketed clinical study. in the U.S. by our partner, Sciele Pharma. In February 2008, we began to generate recurring revenues from • Proprietary MeltDose technology platform. We royalties on sales of Fenoglide. Fenofibrates had global believe that our proprietary MeltDose technology plat- sales of US$1.7 billion in 2006 (source: IMS Health; all form enables the creation of new, potentially best-in- rights reserved). class, versions of existing marketed drugs as it enhances the bioavailability of compounds with low • Late stage and diverse product pipeline with a low water-solubility and enables a controlled or modified risk profile. We have applied our proprietary MeltDose release plasma profile. We believe that the technology technology platform to create what we believe to be a has broad application across a wide range of com- diversified late stage and low risk product pipeline in the pounds and therapeutic areas. areas of cardiovascular disease and immunosuppression. Our current product candidates are designed to be ° Clinically and commercially validated. Our propri- improved versions of existing marketed drugs for which etary MeltDose technology platform has been vali- we believe the limitations of existing therapies create dated in a number of clinical studies and has received significant commercial opportunity and market potential regulatory acceptance through the FDA approval of for our product candidates. We believe this minimizes Fenoglide for sale in the U.S. In addition, we believe our development risk and significantly reduces develop- the MeltDose technology has been commercially vali- ment costs and time-to-market. In addition to our mar- dated at the partner level through the formation of keted product, Fenoglide, we currently have seven clini- several partnerships to utilize the technology with cal development programs, including three programs for leading international pharmaceutical companies. LCP-Tacro, which has completed Phase II studies for kidney transplants and is in ongoing Phase II studies for ° Permits a low-risk profile for our product candi- liver transplants and autoimmune hepatitis, LCP-Ator- dates. Compared with product candidates devel- Fen, which is in ongoing Phase II studies for dyslipid- oped through the traditional pharmaceutical devel- emia, LCP-Lerc, which has completed Phase I studies for opment process, we believe that using known active hypertension, LCP-Siro, which is in Phase I studies for ingredients in combination with our proprietary organ transplantation, and LCP-Feno, which has com- MeltDose technology platform may reduce the risk pleted Phase I studies for dyslipidemia. of product development failure and may shorten development timelines and reduce overall develop- • Potential best-in-class product candidates with ment cost. For example, Fenoglide was developed worldwide commercialization rights retained. We from pre-clinical trials to FDA approval for sale in the currently retain the worldwide commercialization rights U.S. within five years as compared with a traditional to two of our late-stage clinical candidates, LCP-Tacro drug development time of 8 to 11 years (source: and LCP-AtorFen. LCP-Tacro is a once-daily dosage ver- Reuters Business Insight; Achieving Market Domi- sion of tacrolimus, a drug currently approved for immu- nance through Reformulation (2001)). We believe nosuppression with 2007 world wide sales of approxi- that this enables us to advance our product candi- mately $1.6 billion (source: IMS Health; all rights dates through late-stage clinical studies and/or reg- reserved). In Phase II clinical studies in kidney trans- ulatory approval at a faster rate whilst retaining sub- plant patients, LCP-Tacro demonstrated a clear once-a- stantial commercial rights. day profile as well as improved bioavailability and

I – 12 • Strong commercial partnerships with leading phar- MARKET OVERVIEW maceutical companies. We have formed partnerships with Sciele Pharma for the commercialization of Feno- Cardiovascular disease includes a variety of disorders, glide and with Recordati, Sandoz and Mylan for the such as dyslipidemia, hypertension, heart attack, atrial development of certain product candidates for the ﬁbrillation, congestive heart failure, angina and coronary treatment of cardiovascular diseases. artery disease and is the leading cause of death in the U.S., Japan, the United Kingdom, France, Germany, Italy • Experienced management. We have internationally and Spain. In 2006, the cardiovascular market in the U.S., experienced management and key employees consist- Japan, the United Kingdom, France, Germany, Italy and ing of biopharmaceutical executives and recognized Spain was estimated to have been approximately US$120 experts who offer diverse backgrounds and comple- billion (source: Datamonitor). In 2006, cardiovascular mentary skill-sets in research, development, drug sales in the U.S. alone were estimated to have been over approval and ﬁnance. Our management and key US$70 billion (source: Datamonitor). The American Heart employees draw from experience gained at leading Association estimates that cardiovascular disease will cost pharmaceutical and biotech companies such as Novar- US$448.5 billion in the U.S. in 2008, and, according to tis, H. Lundbeck A/S, Novo Nordisk A/S, SkyePharma the European Parliament, estimated costs associated with AG, Bavarian Nordic A/S (“Bavarian Nordic”) and Roche cardiovascular disease in 2007 were approximately €169 Laboratories, Inc. billion in the European Union. Most patients with cardiovascular disease have multiple lipid abnormalities, such as low levels of high-density lipoprotein (“HDL”, the “good” 6.2 Market Overview and Product Portfolio cholesterol), high levels of low density lipoprotein cholesterol (“LDL”, the “bad” cholesterol), and elevated levels of CARDIOVASCULAR triglycerides in the blood stream.

Within the cardiovascular area, we currently have one Our product and product candidates are for the treatment marketed product, Fenoglide (the U.S. brand name for of the following areas of the cardiovascular market: dys- LCP-FenoChol), which has been approved by the FDA for lipidemia (which includes hypercholesterolemia, hypertri- sale in the U.S. for the treatment of dyslipidemia (which glyceridemia and mixed dyslipidemia) and hypertension. includes hypertriglyceridemia, mixed dyslipidemia and hypercholesterolemia). We are also developing three product candidates (described in the table below) for the treatment of dyslipidemia or hypertension. We are currently focusing our efforts on developing LCP-AtorFen, and are seeking to commercialize LCP-Lerc and LCP-Feno through our existing partnerships. Our current portfolio in respect of the cardiovascular area is outlined in the chart below.

Product Disease Indications Status Marketing Rights

1. Fenoglide1) Dyslipidemia Marketed in the U.S. by our U.S., Canada and Mexico – (LCP-FenoChol) partner Sciele Pharma Sciele Pharma Rest of the world – LCP

2. LCP-AtorFen Dyslipidemia Phase II clinical studies ongoing Worldwide – LCP

3. LCP-Lerc Hypertension Phase I studies complete Worldwide – Recordati

4. LCP-Feno Dyslipidemia Phase I studies complete U.S. – Sandoz EU – Mylan Rest of the world – LCP

1) Fenoglide is the brand name for LCP-FenoChol in the U.S.

I – 13 DYSLIPIDEMIA Update). In the treatment of hypercholesterolemia, a key diagnostic factor is the proportion of LDL to HDL. The aim Dyslipidemia is a disorder that involves an imbalance in of the treatment is to reduce LDL and increase HDL in the the level of blood lipids. Dyslipidemia encompasses a blood, which cleanses the body of excessive fat by deliv- variety of conditions characterized by either excessively ering cholesterol to the liver, where it is broken down and high or low levels of certain lipids in the bloodstream. Lip- eliminated from the body. ids, or fatty molecules, include both cholesterol and triglycerides. Dyslipidemia has been shown to play an Studies indicate that, in addition to high levels of LDL in important role in the development of cardiovascular dis- the blood, elevated triglycerides along with low HDL have eases. The main types of dyslipidemia are: been linked to the risk of cardiovascular disease. In accordance with the ATP III Guidelines, optimal cholesterol • hypercholesterolemia; screening now includes a lipoprotein profile that measures triglycerides in addition to cholesterol levels. • hypertriglyceridemia; and Statins are typically recommended as first line therapy to • mixed dyslipidemia. reduce elevated LDL. There are many different statins, but the market leader is Pfizer’s atorvastatin drug, Lipitor. In Dyslipidemia was estimated to have affected approximately 2007, Pfizer reported Lipitor sales of $12.7 billion 309 million individuals in the U.S., Japan, the United King- (source: Pfizer, Inc. Press Release 23 January 2008). Lipi- dom, France, Germany, Italy and Spain in 2007 (source: tor remains the world’s top-selling pharmaceutical prod- Datamonitor). According to a 2005 report, an estimated uct (source: IMS Health; all rights reserved). Statins alone 78% of patients diagnosed with dyslipidemia are treated have limited impact on HDL and triglycerides, which are with pharmaceuticals (source: Datamonitor). In 2006, the increasingly a treatment focus, with numerous clinical anti-dyslipidemic market accounted for approximately studies having shown the added benefits of combinations US$21 billion in annual U.S. retail sales, which represented of fenofibrates and statins when compared with mono- a 21% annual growth over 2005. In 2007, it was esti- therapy, e.g., in patients with Type II diabetes and meta- mated that the anti-dyslipidemic market totaled approxi- bolic syndrome. In North America alone, sales of atorvas- mately US$23 billion in annual retail sales – a 10% tatin and fenofibrate were approximately $10.8 billion in increase over the prior year (source: Datamonitor). 2006 (source: IMS Health; all rights reserved).

Statins, a class of lipid-lowering drugs that reduce serum Hypertriglyceridemia. Hypertriglyceridemia (“HTG”) is cholesterol levels by inhibiting a key enzyme involved in defined as high levels of triglycerides. Triglycerides impact cholesterol biosynthesis, account for a majority of the a broad range of major disease areas, including cardiovas- anti-dyslipidemic market and were estimated to have cular disease and diabetes. HTG has long been associated sales in the U.S. of approximately US$19 billion in 2007 with an increased risk of cardiovascular disease, indepen- (source: Datamonitor). To a lesser extent, fibrates, ezeti- dent of levels of LDL, and can be broken down into three mibe, bile acid sequestrants and niacin are also treat- sub-categories for which the ATP III Guidelines recom- ments for dyslipidemia. Although statins are currently the mend treatment: “very high” triglyceride levels of ≥ 500 preferred treatment choice, the use of combination ther- mg/dL; “high” triglyceride levels of 200-499 mg/dL; or apy is becoming increasingly common as a result of treat- “borderline-high” triglyceride levels of 150-199 mg/dL. ment guidelines such as the Adult Treatment Panel III The HTG market comprises approximately 22% of the total guidelines (“ATP III Guidelines”) (developed by the U.S. dyslipidemia population (source: Datamonitor). National Cholesterol Education Program), which were designed to provide guidance on appropriate methods, In 2005, there were estimated to be over 22 million including the role played by drugs, for the treatment of patients diagnosed with HTG in the U.S., Japan, the cardiovascular disease. The ATP III Guidelines recom- United Kingdom, France, Germany, Italy and Spain (source: mended more aggressive therapy, such as treatment with Datamonitor). According to an IMS report, in 2005 50% of two or three lipid-lowering drugs, including those specifi- HTG patients suffered from “very high” triglyceride levels, cally targeting high levels of triglycerides. approximately 30% suffered from “high” triglyceride levels, and the remainder suffered from “borderline-high” Hypercholesterolemia. Historically, dyslipidemia treatment triglyceride levels. The ATP III Guidelines recommend has focused on hypercholesterolemia (patients with ele- greater emphasis on elevated triglycerides as a marker for vated cholesterol), targeting LDL levels in the blood. In increased risk of coronary heart disease. If widely fol- the U.S. in 2004, approximately 80.4 million people age lowed, this would significantly increase the potential 20 and older had LDL levels of 130 mg/dL and above patient population requiring treatment. (source: AHA Heart Disease and Stroke Statistics, 2008

I – 14 Fibrates and niacin, either in monotherapy or in concomi- Mixed dyslipidemia is primarily treated with statins, and to tant treatment with statins, are currently the most fre- a lesser extent in combination with other lipid-lowering quently used triglyceride-lowering drugs and together pharmaceuticals, such as fibrates or niacin (source: Data- account for a majority of the treatment market for HTG monitor). Combination therapy with statins plus fibrates (source: Datamonitor). Fibrates are used to lower triglyc- or niacin improves lipid parameters; however, such ther- erides and increase the content of HDL in the blood and apy has been shown to increase the risk for adverse are also associated with a moderate decrease in LDL. In effects. 2006 the fibrate segment of the anti-dyslipidemic market accounted for over US$1.3 billion dollars in U.S. sales HYPERTENSION (source: Datamonitor). Hypertension (high blood pressure) is a major risk factor Several different types of fibrates exist. Fenofibrate domi- for cardiovascular disease and the main risk factor for nates the market and commands significantly higher sales stroke and heart attack. Hypertension can also lead to than the second most common fibrate category (bezafi- heart and kidney failure and other so-called end-organ brate). In the U.S. fenofibrate is actively marketed at a damage. Hypertension will affect an estimated 198 million substantially higher price than in Europe because people in 2008 in the U.S., Japan, the United Kingdom, improved patented products have been launched continu- France, Germany, Italy and Spain (source: Datamonitor). ously. In Europe fenofibrate had been marketed for many Hypertension is the leading sales generator in the cardio- more years before the new versions were launched, and vascular market, accounting for 33% of pharmaceutical therefore generics command a significant share of the sales, with the anti-hypertensives market recording sales market. of approximately US$37.1 billion in 2006 (source: Data- monitor). In addition, fenofibrate is more difficult to formulate into a tablet, and therefore it remains predominantly a Hypertension is often referred to as the “silent killer”, as branded market, whereas bezafibrate is genericized. many people affected by the disease are unaware of their condition. The most recently available American Heart Tricor is the most widely prescribed fenofibrate product. Association data indicates that in 2004 only approximately The drug was originally developed and launched under 60% of people in the U.S. with high blood pressure were the brand name Lipanthyl by Fournièr in France in 1975, receiving treatment, and even among those patients who and it is now marketed in more than 80 countries. Abbott were being treated, fewer than 36% were believed to in-licensed the marketing rights to Tricor in the U.S. in have reached and maintained adequate blood pressure 1998 and has established and expanded the market ever control. The most influential guidelines for the manage- since, while avoiding generic competition through contin- ment of hypertension are those set by the Joint National uous product upgrades, primarily through lower dosages. Committee (“JNC”) in the U.S. The most recent JNC guide- Abbott’s leading position in the fenofibrate market has lines (published in 2003) recommend the use of anti- been maintained to this date, even though two new hypertensives to lower blood pressure to less than 140/90 products – Antara from Oscient and Triglide from Sciele mm Hg for most persons with hypertension and to less Pharma – entered the U.S. market in 2005. than 130/80 mm Hg for those with diabetes or chronic kidney disease, who are at higher risk of heart attacks Sales of fenofibrate products, and in particular Tricor, have and of stroke. The JNC guidelines acknowledge that most increased significantly in the last few years, with 2006 patients will require two, and at times three or more, worldwide sales exceeding US$1.7 billion (source: IMS medications to lower blood pressure to the desired level. Health; all rights reserved). In the U.S., Abbott reported sales of Tricor of $1,048 million in 2006 (source: Abbott Continued growth of this already large market is expected Press Release dated 24 January 2007). to be driven by an increasingly elderly population in all key markets, combined with increases in the rates of dia- Mixed Dyslipidemia. Mixed dyslipidemia is characterized betes and obesity globally. Furthermore, higher treatment by elevated LDL, decreased HDL and elevated levels of tri- rates due to increased diagnosis rates and higher aware- glycerides. Due to the mixed nature of this condition, ness, as well as more aggressive treatment, including the combination therapies are often considered the most administration of more than one drug to reach and main- beneficial treatment. Mixed dyslipidemia comprised tain defined blood pressure targets in line with accepted approximately 29% of the total dyslipidemia market in guidelines, are expected to add to this market growth. 2005 (source: Datamonitor).

I – 15 Current drug treatments for hypertension include calcium Status channel blockers (CCBs), Angiotensin receptor blockers (ARBs), Angiotensin-Converting enzyme (ACE) inhibitors, On 10 August 2007, the FDA approved Fenoglide for the diuretics, beta-blockers and alpha-blockers. Worldwide treatment of dyslipidemia in the U.S. We outlicensed the sales of hypertension products were over $37 billion in marketing of Fenoglide for the U.S., Canada and Mexico 2006, of which CCBs represented approximately $9 billion to Sciele Pharma, which launched the product in the U.S. (Source: Datamonitor). In 2006, worldwide sales of ler- in February 2008. We are reviewing opportunities for canidipine, a CCB, were approximately US$381 million LCP-FenoChol outside the territories licensed to Sciele (source: IMS Health; all rights reserved). Pharma (U.S., Canada and Mexico) on a market-by-market basis. The commercial potential in these markets depends on pricing, competition and other relevant mar- Cardiovascular Product Portfolio ket issues.

1. FENOGLIDE 2. LCP-ATORFEN

General General

Our first commercialized product, Fenoglide (the U.S. LCP-AtorFen, which is in Phase II clinical studies for the brand name for LCP-FenoChol), is a fenofibrate product treatment of dyslipidemia, is a combination therapy based approved by the FDA for sale in the U.S. for the treatment on a fixed-dose combination of atorvastatin (the active of dyslipidemia as an adjunct to diet in adult patients. ingredient in Lipitor) and an undisclosed low dose of Fenoglide has been developed to become a leading feno- fenofibrate without food effect. Thus, it is designed to fibrate product with the lowest marketed dose without combine in a small tablet a proven statin and a fenofibrate any significant food effect. The market has been consis- in a treatment for all three components of cholesterol tently moving towards lower doses, and we believe that a (LDL, HDL and triglycerides). fenofibrate product without any significant food effect will allow patients to take their medication at their conve- In addition to increased convenience, we believe that LCP- nience and provide for additional marketing advantages. AtorFen will meet physicians’ needs for additional safety In particular, we believe this will allow Fenoglide to be data, as we believe extensive but uncontrolled co-pre- used in combination and concurrently with statins. scriptions of statins and fibrates (fibric acid derivatives) are a cause of some concern. The Lipitor label in the U.S. In the U.S., fenofibrate was originally launched as a 200 states that “physicians considering combined therapy mg dose capsule formulation, but Abbott has continu- with atorvastatin and fibric acid derivatives should care- ously upgraded its best-selling fenofibrate product, Tricor, fully weigh the potential benefits and risks and should by lowering the effective dose, first to 160 mg and most carefully monitor patients”. We believe that: recently to 145 mg. In addition to lowering the dose, Abbott also removed any significant food effect from Tri- • a regulatory approval of LCP-AtorFen and the poten- cor, enabling patients to take Tricor at their convenience. tially extensive data which would be available at the time of the launch of LCP-AtorFen, combined with The standard dose of Fenoglide is 120 mg, which is significantly lower than Abbott’s current 145 mg version of • the potential for the prescription of low, yet effective Tricor. Therefore, we believe Fenoglide, the lowest effec- doses of LCP-AtorFen tive marketed dose available without any significant food effect, will be a natural choice for physicians. Fenoglide is will eliminate many of the safety concerns associated also available in a 40 mg dose, which is lower than with “uncontrolled” co-prescriptions of statins and Abbott’s current 48 mg version of Tricor, which is used fibrates. primarily for patients with mild to moderately impaired renal function. Furthermore, we expect to achieve results that demonstrate to physicians with safety concerns over the use of high doses of Lipitor that they would be able to achieve the same LDL-lowering effect in patients with a lower dose of LCP-AtorFen as compared with Lipitor.

I – 16 Development strategy and status 3. LCP-LERC

We have developed LCP-AtorFen to be a proprietary once- General daily dosage formulation of a standard dose of atorvastatin and an undisclosed low dose of fenofibrate without We are working with Recordati to develop LCP-Lerc, an food effect. Having completed Phase I studies in early improved version of Recordati’s current version of lercani- 2007, we initiated the Phase II program in July 2007. We dipine (Zanidip®), for the treatment of hypertension. The designed the Phase II program to be double-blind, ran- primary goal of the development is to apply our MeltDose domized and active controlled studies, through which we technology to lercanidipine and thereby develop an are seeking to compare LCP-AtorFen with separate doses improved, proprietary product for the European market. of Lipitor and Tricor in 220 patients with mixed dyslipid- The main research goals are to increase oral bioavailability emia over 12 weeks, followed by an open-label extension in order to reduce the required dose and to reduce the study for one year, which was initiated in the fourth quar- food effect so that patients can take the product at their ter of 2007 with an expected enrollment of a total of 150 convenience. – 180 patients. Development strategy and status Through the Phase II studies we are seeking to demonstrate the superiority of our LCP-AtorFen combination We have developed LCP-Lerc as a once-daily dosage with therapy versus the respective monotherapies (Tricor, Lipi- improved bioavailability as compared to Zanidip, which is tor) for non-HDL (versus both Tricor and Lipitor), HDL owned by our partner Recordati. Having completed Phase (versus Lipitor), LDL (versus Tricor) and triglycerides (ver- I studies in 2007, the product is now ready for pivotal sus Lipitor). Results of the initial Phase II double-blinded, studies. Because lercanidipine, the active substance in randomized and active controlled studies are currently LCP-Lerc, is already approved in Europe, we believe that a expected in the first half of 2008 and results of the open- smaller, combined Phase II/III study will be sufficient for label extension study are expected in the first quarter of European marketing approval. Assuming progress as cur- 2009. rently expected, an MAA is expected to be submitted to the EMEA by Recordati in 2008. We have delivered the Assuming positive results in the initial Phase II double- drug formulation to our partner Recordati and are now blinded, randomized and actively controlled studies, we awaiting instruction on how to proceed. plan to prepare for Phase III clinical studies and intend to seek a partner to provide funding for any such Phase III To date, we have successfully achieved the following clini- clinical studies by the end of 2008. These Phase III stud- cal results: ies will consist of studies in patients with dyslipidemia. The Phase II and Phase III studies are expected to have a • Increased bioavailability. In a Phase I study, we have total of approximately 1,200 patients. demonstrated a significant increase of the bioavailability for a MeltDose-based formulation of lercanidipine To date, we have successfully achieved the following clini- compared with Zanidip. cal results for LCP-AtorFen: • Reduced food-effect. In a second Phase I study with • Comparable bioavailability. In the Phase I study, we the same formulation, we have demonstrated a signifi- showed that LCP-AtorFen was safe and well-tolerated cant reduction of the food effect on lercanidipine’s and that the product had a similar rate and extent of absorption. absorption compared with Lipitor and Tricor. 4. LCP-FENO • Once-daily dosing and without significant food effect. In the Phase I study we demonstrated that LCP-AtorFen General has a convenient single-tablet, once-daily dosing regime. Previous results from our studies of Fenoglide LCP-Feno is designed to be an AB-rated, substitutable demonstrated that our fenofibrate formulation has no version of Tricor 145 mg currently marketed in the U.S. by significant food effect. Abbott and in Europe by Solvay under the name Lipanthyl. LCP-Feno is being developed for the treatment of dyslipidemia.

I – 17 Development strategy and status development of effective immunosuppression drugs, cou- pled with advances in immunology, surgical techniques, We have formed collaborations with Sandoz for the U.S. donor selection and postoperative care have all contrib- and with Mylan for Europe to jointly develop, manufacture uted to improved outcomes for solid organ transplants, and commercialize LCP-Feno. which is now an established treatment for organ failure of the kidney, pancreas, liver, heart or lung. The ﬁrst major The aim for development of LCP-Feno is to demonstrate advance in graft survival followed the discovery of the bioequivalence with Tricor in both fed and fasted states. anti-proliferative agent azathioprine which, in combina- We have demonstrated bioequivalence between LCP-Feno tion with corticosteroids, became the dominant regimen and Tricor in a fed state. However, the study failed to in the 1960s and 1970s. However, it was only after the reach one endpoint in regard to demonstrating bioequiva- launch of Novartis’s CNI cyclosporine (Sandimmun) in lence in the fasted state. We and Sandoz are currently 1983 that graft survival rates improved sufﬁciently to conducting pilot studies to demonstrate bioequivalence enable a widespread clinical application of transplanta- between LCP-Feno and Tricor in the fasted state. tion. The combination of cyclosporine with corticosteroids and azathioprine was found to be the most effective approach to immunosuppression for organ transplantation Immunosuppression patients during the 1980s and early 1990s.

In the area of immunosuppression, we have elected to Organ transplant is generally considered for all patients focus on organ transplantation and autoimmune disor- with end-stage organ failure. Such a condition typically ders, in particular autoimmune hepatitis. Our current follows severe disease progressions like those indicated in portfolio in respect of the immunosuppresion area is Table 3 below. outlined in the chart below. In 2005, over 50,000 organ transplants were conducted MARKET OVERVIEW in the U.S., Japan, the United Kingdom, France, Germany, Italy and Spain. Transplantation In 2005, the transplantation immunosuppression market Transplantation in humans has a relatively short history, in the U.S., Japan, the United Kingdom, France, Germany, spanning just over 50 years. The ﬁrst successful human Italy and Spain was valued at US$3.3 billion (source: Dat- kidney transplant was performed in 1954. Since then, the amonitor, IMS Health; all rights reserved), and by 2015, it

Product Disease Indications Status Marketing Rights

1. LCP-Tacro Organ transplant–Kidney Phase II clinical studies complete Worldwide – LCP

2. LCP-Tacro Organ transplant–Liver Phase II clinical studies ongoing Worldwide – LCP

3. LCP-Tacro Autoimmune hepatitis Phase II clinical studies ongoing Worldwide – LCP

4. LCP-Siro Organ transplant and Phase I clinical studies ongoing Worldwide – LCP autoimmune diseases

5. LCP-3301 Organ transplant Preclinical Worldwide – LCP

I – 18 is estimated this market will be US$4.3 billion (3% CAGR a noticeable evolution in therapeutic protocols. While CNIs 2006-2015) (source: Datamonitor). CNIs, the leading continue to be used for maintenance immunosuppression class, had a 54% share of global sales at US$1.8 billion, in most patients, there has been a change in the prefer- followed by anti-metabolites (US$1.1 billion, 34% market ence of CNI used, from cyclosporine to Astellas’ tacroli- share) and mTOR inhibitors (US$218 million, 7% market mus (Prograf). share) (source: Datamonitor). The top-selling product was Astellas’ Prograf (tacrolimus), which sold just over US$1 Immunosuppression can be achieved with many different billion, which represented approximately one-third (1/3) drugs, including steroids, targeted antibodies and CNIs of the total U.S. sales of Immunosuppression’ drugs for like tacrolimus. Of these immunosuppressants, tacrolimus transplantation closely followed by Roche’s CellCept is one of the most potent in terms of suppression of the (mycophenolate mofetil, US$945 million) and Novartis’s immune system. Tacrolimus for systemic use is currently Neoral (cyclosporine, US$653 million). These three prod- available worldwide as a twice-daily dosage formulation, ucts, which represent the cornerstones of modern immu- Prograf (Astellas), and in Europe, since June 2007, has nosuppressant regimens, accounted for 80% of sales in also been available as a once-daily dosage formulation, the transplantation market in 2005 and underline the cur- Advagraf (Astellas). rent dominance of the transplantation market by three multinational drug companies – Astellas, Novartis and Another transition is seen in the choice of anti-metabo- Roche. In 2007, world wide sales of Prograf were approxi- lite, from azathioprine to Roche’s mycophenolate mofetil mately $1.6 billion (source: IMS Health; all rights reserved). (MMF, brand name CellCept), which is currently the most The efﬁcacy of tacrolimus has been shown in many of the commonly administered adjunctive maintenance immuno- above-listed indications, but we believe its usage has been suppressive agent in solid organ transplantation (source: hampered by the inconvenience, variability and unwanted Datamonitor). The launches of Wyeth’s Rapamune (siroli- side effects associated with the current formulations. We mus/rapamycin) and Novartis’s Certican (everolimus), believe the use of LCP-Tacro may alleviate many of these which inhibit growth factor signal transduction by blocking issues. the serine-threonine kinase mammalian TOR (mTOR), have enabled the development of regimens designed to Over the past 10 years, a variety of new immunosuppres- limit or eliminate CNIs in order to enhance long-term graft sion medications have been approved, substantially survival without compromising immunologic protection. increasing the number of options available and facilitating

Table 3. Conditions Leading to End-Stage Organ Failure

Kidney Liver Heart

Diabetic nephropathy Chronic viral hepatitis Ischemic cardiomyopathy Hypertensive nephroangiosclerosis Biliary cirrhosis Congestive heart failure Glomerulonephritis Biliary atresia Polycystic kidney disease (PKD) Autoimmune hepatitis

I – 19 The most prescribed immunosuppressants are currently adherent patients (Source: Vlaminck H, et al. Am J Trans- Prograf, CellCept, Rapamune, Neoral, azathioprine and plant 2004; 4(9):1509-13). Thus, there is an established Myfortic. Table 4 summarizes the pharmacological charac- correlation between non-adherence and morbidity. teristics of each of these drugs. Autoimmune diseases The current product of choice appears to be Prograf, but since single-agent use of immunosuppressants is gener- Approximately 50,000 people (mainly women) in the U.S. ally unable to prevent rejection without unacceptable tox- suffer from autoimmune hepatitis, an unresolving inﬂam- icities, immunosuppressants are usually used in combina- mation of the liver which may lead to end-stage liver dis- tion. For instance, CNIs like Prograf are usually used in ease and organ failure. We believe there is an unmet combination with azathioprine, CellCept or corticosteroids, medical need because, while many patients use steroids with Prograf in combination with CellCept and/or cortico- and azathioprine in the medium-term, many patients with steroids being the most commonly prescribed combina- autoimmune hepatitis will ultimately need a liver trans- tion regimen. In addition, induction therapy with a mono- plant to survive. These treatments have side effects, and clonal antibody like basiliximab is used (source: treatments fail in approximately 10% of autoimmune hep- Datamonitor). atitis patients in the U.S., with another 10-15% more autoimmune hepatitis patients in the U.S. necessitating Although there appears to be a widespread satisfaction discontinuation of the treatment or dose reduction due to among practitioners with currently approved drugs, we intolerance or toxicity of the products currently used. believe there is still room for improvement with regard to short- and long-term graft and patient survival, and also In addition to autoimmune hepatitis, there are a number in terms of resistance and compliance, although the two of other autoimmune disorders with signiﬁcant patient are actually interlinked. populations, including systemic lupus erythematosus, myasthenia gravis, ulcerative colitis, Crohn’s disease, mul- We believe that, despite being among the most frequently tiple sclerosis and scleroderma. prescribed immunosuppressants, both Prograf and cyclosporine show a higher inter- and intra-individual variabil- 1. AND 2. LCP-TACRO ity, and both drugs have a narrow therapeutic index. – KIDNEY AND LIVER TRANSPLANTATION These factors require monitoring to optimize treatment. Furthermore, we believe that the twice-daily dosing General together with the need to take the drug on an empty stomach is often a compliance nuisance for patients. LCP-Tacro is being developed as a once-daily dosage version of tacrolimus, with potentially improved bioavailabil- The issue of non-compliance has been investigated in a ity, lower effective dosage and reduced variability com- wide range of studies, and the frequency of medication pared with Astellas’ Prograf, a twice-daily dosage version non-adherence after organ transplantation has been esti- of tacrolimus, and Advagraf, a once-daily dosage version mated to range from 5% to 43% (source: Vasquez EM, et of tacrolimus for organ transplants which was approved al. Am J Health-Syst Pharmacy 2003; 60(3):266-9. Green- by the EMEA in mid-2007. Advagraf received an approv- stein S, et al. Transplant Proc 1999; 68:5155). A recent able letter from the FDA in January 2007 for the preven- large prospective study documented a 3.2-fold increase in tion of organ rejection in kidney and liver transplants, but late acute rejection, that was associated with reduced the product was not approved by the FDA for the preven- kidney allograft function, in patients who were non- tion of organ rejection in heart transplants. adherent to immunosuppressive regimens as compared to

Table 4. Overview of Major Immunosuppressants

Brand Name Prograf CellCept Rapamune Neoral Myfortic N/A

Generic name tacrolimus mycophenolate sirolimus cyclosporine mycophenolic azathioprine mofetil acid Market share(1) 31% 29% 7% 23% 1% 4% Maker Astellas Roche Wyeth Novartis / Generic Novartis various / generic Mechanism calcineurin anti-proliferative mTOR inhibitor calcineurin anti-proliferative anti-proliferative inhibitor inhibitor Approved kidney, liver, kidney, liver, kidney kidney, liver, kidney kidney Indications heart heart heart

(1) For 2005 (source: Datamonitor)

I – 20 Transplant patients need to maintain a minimum level of • Out of the 47 patients that completed the studies, 46 tacrolimus in the blood in order to prevent organ rejec- patients were successfully switched from Prograf tion. On the other hand, if too much tacrolimus is (twice-daily dosage) to LCP-Tacro (once-daily dosage) administered there is an increased risk of serious side for the full period; effects such as kidney damage. Tacrolimus levels therefore need to be carefully managed and transplant • The rate of conversion between Prograf (twice-daily patients typically are obliged to visit the hospital for dosage) to LCP-Tacro (once-daily dosage) was 0.66 – monitoring and dose adjustments for several months 0.80 (mg. LCP-Tacro/mg. Prograf); after receiving a new organ. The ability to manage the tacrolimus levels is complicated by the relatively low and • Approximately 40% higher bioavailability compared to unpredictable bioavailability of Prograf (approximately Prograf; and 20%). This low bioavailability has not been improved upon by the Advagraf once-daily dosage formulation of • Lower Cmax (at peak) and a reduced peak-to-trough the drug, which has 25-30% lower bioavailability than ratio. Prograf. There were no serious adverse effects related to LCP- Development strategy and status Tacro reported in the studies.

LCP-Tacro has completed Phase II clinical studies for Based on the above results, and as shown in Figure 1 patients who have undergone a kidney transplant and is below, we believe that LCP-Tacro may be used in kidney in ongoing Phase II clinical studies for patients who have transplant recipients as a once daily treatment with a undergone a liver transplant. lower effective dosage as compared with Prograf.

Kidney and liver – Planned Phase III clinical studies Figure 1. Mean Dose Uncorrected Whole Blood Concentrations of Tacrolimus in Patients on We expect to initiate a Phase III program in kidney trans- Days 7, 14 and 21 (n=47, topline results) plant recipients in the second half of 2008. Assuming successful completion of the Phase II clinical studies in 18 Whole blood concentration (ng/mL) liver transplant recipients, we intend to include liver trans- 16 plant recipients in this program. The combined program is 14 expected to consist of conversion (switch) studies with 12

Prograf as comparator, as well as de novo kidney and de 10 novo liver transplant studies versus Prograf. Ultimately, 8 this combined Phase III program is expected to have a 6 total of approximately 1,000 patients. A Phase III program 4 for kidney transplant recipients alone would instead have Time (hours) 2 a total of approximately 750 patients. 0 0 4 8 12 16 20 24 Kidney – Phase II clinical studies Prograf capsules Day 14 LCP-Tacro tablets Day 21 LCP-Tacro tablets The Phase II clinical studies were designed as conversion studies in stable kidney transplant recipients, with patients being switched to LCP-Tacro (once-daily dosage) from Prograf (twice-daily dosage), at least six months after transplantation.

The Phase II clinical studies in kidney transplant recipients were performed in 13 clinical centers in the U.S. The end- points of the studies were successful switching, conversion rates, bioavailability and pharmacokinetic parameters. In the studies patients were treated with Prograf (twice-daily dosage) for seven days after which the patients were treated with LCP-Tacro (once-daily dosage) for 14 days. The Phase II clinical studies showed that the following end-points were successfully met:

I – 21 Liver – Phase II clinical studies 3. LCP-TACRO – AUTOIMMUNE HEPATITIS

The Phase II clinical studies for liver transplant is designed General. as conversion studies in liver transplant recipients, with patients being switched to LCP-Tacro (once-daily dosage) Given its immunosuppression characteristics, we believe from Prograf (twice-daily dosage), at least six months that tacrolimus may be efficacious, not only in preventing after transplantation. The interim data from the Phase II organ rejection, but also in a number of autoimmune dis- studies in liver transplant recipients confirmed a once- eases such as autoimmune hepatitis, lupus nephritis, daily dosage treatment profile and demonstrated myasthenia gravis, ulcerative colitis, Crohn’s disease, mul- improved pharmacokinetics (PK) and higher bioavailability tiple sclerosis and scleroderma. Currently, patients with when compared with Prograf. The Phase II clinical studies such diseases have limited treatment options. As a last of LCP-Tacro in liver transplant recipients is expected to resort, doctors may offer expensive, injectable antibody be completed in the second quarter 2008. therapy or long-term, high-dose steroid therapy, which have severe side effects. The efficacy of tacrolimus has Organ transplantation – Phase I head-to-head been shown in several such indications, including rheuma- clinical studies toid arthritis and inflammatory bowel disease, but we believe its usage has been hampered by the inconve- In Phase I head-to-head clinical studies in healthy volun- nience, variability and unwanted side effects associated teers conducted by us, clinical data confirmed that LCP- with the current formulation. We believe that LCP-Tacro Tacro, when compared with Advagraf, demonstrated: could potentially eliminate these problems and offer a safe and effective alternative to patients with autoim- • Approximately 50% higher bioavailability; mune disorders. LCP-Tacro is currently in a Phase II study for the treatment of autoimmune hepatitis. • Flatter pharmacokinetic profile/decreased variability (i.e., a lower Cmax/Cmin, or peak-to-trough, ratio). In Development strategy and status. other words, the difference in blood concentration when measured at the highest and the lowest points is A Phase II study of LCP-Tacro in patients with autoimmune less when compared with Advagraf; and hepatitis was launched in December 2007. This is an open-label, prospective randomized study of up to 60 • Potential for administration at lower daily doses. adults with autoimmune hepatitis recruited at approximately 12 centers in the U.S. and Canada. Patients will be Figure 2 below presents Phase I results of LCP-Tacro com- randomized to LCP-Tacro and prednisone (once-daily dos- pared with Advagraf, which indicate that LCP-Tacro could age of LCP-Tacro adjusted to achieve and maintain target be developed as a once-daily dosage product with a con- whole blood trough tacrolimus levels of 3–6 ng/mL) or to sistent profile over 24 hours. the standard-of-care regimen of azathioprine and prednisone. Patients will be evaluated after six months on treatment and top-line results are expected early in 2009. Figure 2. Linear Time Concentration Plot, Dose- Uncorrected, From Preliminary Analysis of Study We are currently evaluating development and registration 1017 (LCP-Tacro vs. Advagraf) strategies for a number of the potential additional autoimmune indications for tacrolimus. The Phase I program 8 Mean Plasma Concentration (ng/mL) will be the same as the previous Phase I studies for organ 7 transplantation and autoimmune hepatitis, and we cur- 6 rently expect to initiate Phase II studies in one or more 5 other autoimmune therapy areas in the second quarter of

4 2008. We may seek orphan drug status for a number of these areas, which may secure market exclusivity for the 3 indications, if approved, for seven years in the U.S. and 2 Time (hours) ten years in Europe. 1

0 0 20 40 60 80 100 120

1 x 2 mg LCP-Tacro tablet 2 x 1 mg Advagraf capsule

I – 22 4. LCP-SIRO – ORGAN TRANSPLANTATION/ 5. LCP-3301 – ORGAN TRANSPLANTATION/ AUTOIMMUNE DISEASES AUTOIMMUNE DISEASES

General. During the second half of 2007, the Company began early formulation development of a unique once-daily dosage The active ingredient in LCP-Siro is sirolimus, an immuno- form of another immunosuppressive agent for the preven- suppression drug for the prevention of organ rejection tion of rejection after organ transplantation and for the after transplantation and for the treatment of certain treatment of patients with autoimmune diseases. Phase I autoimmune diseases. A once-daily dosage formulation of studies are expected to start in second half of 2008. sirolimus is currently marketed as Rapamune by Wyeth for kidney transplant rejection. We are developing LCP-Siro as OTHER PROGRAMS an additional immunosuppression product for the treatment of certain types of organ transplants and autoim- In addition to our other product candidates, we and our mune diseases with the expectation that LCP-Siro will partners also have two product candidates in preclinical demonstrate superior bioavailability compared to Rapa- development, LCP-Sciele and LCP-4401, for certain undis- mune. closed indications.

Development strategy and status.

We have initiated a Phase I clinical study for LCP-Siro in healthy volunteers, from which data are expected in late 2008. We believe that by applying the same reformulation methodology as for LCP-Tacro, we can achieve in LCP-Siro increased bioavailability and reduced dosing as compared to the currently available version of sirolimus (Rapamune).

Product Disease Indications Status Marketing Rights

1. LCP-Sciele Undisclosed Preclinical Worldwide – Sciele Pharma

2. LCP-4401 Undisclosed Preclinical Undisclosed Top 10 Pharmaceutical Company

I – 23 COMMERCIALIZATION for new prescriptions of branded fenofibrate products increased to 5.2%, up from 4.2% in 2006 (source: Oscient For products that serve very large markets or those that Press Release dated 31 October 2007). may be widely distributed geographically, such as our cardiovascular product candidates, we plan to enter into Triglide, a 160 mg fenofibrate tablet, was launched by Sci- commercialization and marketing licenses with major phar- ele Pharma in July 2005. The Triglide label does not indi- maceutical companies. As part of this commercialization cate Triglide has food effect, but we believe that due to strategy, we have established a partnership with Sciele the market demands for lower doses and the introduction Pharma, which is currently marketing Fenoglide in the U.S. of a 145 mg Tricor dose six months prior to the introduc- in 120 mg and 40 mg strengths. We have also established tion of Triglide, Triglide had only obtained approximately partnerships with Sandoz and Mylan for the commercial- 2% of new prescriptions by August 2007. Triglide is only ization of LCP-Feno and with Recordati for the commer- available in the U.S. cialization of LCP-Lerc. We currently retain full control over the development and commercialization of LCP-AtorFen. Cipher obtained final FDA approval to market Lipofen However, as studies continue to progress, we intend to in October 2007. ProEthic Pharmaceuticals has recently partner LCP-AtorFen with a strong market participant in launched Cipher’s Lipofen, a 150 mg fenofibrate capsule the cardiovascular segment in order to maximize the value that is equivalent to the higher Tricor 160 mg strength of this combination product candidate. We intend to con- tablet. tinue this partnering strategy for such product candidates in major therapeutic markets in which the expanded mar- Generic fenofibrates, while marketed by a number of com- keting capabilities of these companies may significantly panies in the U.S., have not been able to gain significant increase the market penetration of our products. market share, which we believe is the result of the consistent upgrade of branded products to lower dosages. For products that we are developing for specialist indica- Outside the U.S., companies marketing generics or tions, such as immunosuppression, we intend to establish branded generics have been more successful, but Solvay our own sales and marketing capabilities in select markets still holds a dominant share of the market with various where we believe, through such a strategy, we can maxi- dosage strengths of its branded fenofibrate, Lipanthyl. mize their commercial potential. We may also outlicense our product candidates where we deem such outlicensing Altogether, we believe that the market is ready for a to be appropriate. lower dose of fenofibrate, in particular if such a product does not have other shortcomings (e.g., food effect) COMPETITION compared with Tricor and is promoted consistently. An illustration of this is Antara which, despite initially having Fenoglide food effect, captured 4.9% of new prescriptions after only seven months on the market and continues to hold a Tricor, a 145 mg or 48 mg fenofibrate tablet without any 4.5% market share (source: IMS Health; all rights reserved significant food effect, was launched in the U.S. in No- and Oscient Press Release dated 31 October 2007). vember 2004 and quickly replaced an older 160 mg version which was subsequently withdrawn from the market LCP-Lerc in anticipation of generic competition. As of December 2007, Tricor captured over 87% of new fenofibrate pre- We believe that the biggest challenges will come from scriptions in the U.S. with its 145 mg and 48 mg fenofi- possible generic competition and from competing product brate tablets (source: IMS Health; all rights reserved). Out- life cycle management initiatives undertaken by Recordati, side the U.S., Solvay is in the process of launching the 145 such as Carmen ACE®, a fixed combination with EnalApril. mg fenofibrate tablet under the brand name Lipanthyl. In the U.S., Abbott has developed a new fenofibrate chemical LCP-AtorFen entity, ABT-335, for which it filed an NDA with the FDA in the fourth quarter of 2007 (source: Datamonitor). In addition to LCP-AtorFen, a number of statin/fibrate combination products are in development for the treat- Antara, a 130 mg or 43 mg fenofibrate capsule, was intro- ment of similar indications. For example, Abbott is devel- duced in the U.S. in February 2005 by Reliant Pharmaceu- oping a fixed dose statin/fibrate combination using its ticals, Inc. (which was subsequently acquired by Oscient), new version of a fenofibrate, ABT-335, with rosuvastatin and is now sold without any significant food effect. (Crestor) to treat dyslipidemia. Given the pivotal position According to Oscient, at the end of the third quarter of of fenofibrate in combination therapy and the current 2007, Antara had an approximate 4.5% market share of market share of atorvastatin, we believe that our total prescriptions among branded fenofibrate products, improved formulation will form a benchmark in the devel- up from 3.6% at the end of the third quarter of 2006. opment of fixed dose fibrate/statin combinations within During the same time period, the market share of Antara dyslipidemia. Sciele Pharma is also developing PravaFen, a

I – 24 combination of pravastatin and fenofibrate, for which Sci- LCP-Siro ele Pharma has completed enrolment in pivotal Phase III studies. Sirolimus is currently marketed by Wyeth under the brand name Rapamune. Rapamune is sold as an oral solution LCP-Feno and tablet and coats the CYPHER® coronary stent marketed by Cordis Corporation, a Johnson & Johnson com- By converting almost all patients from the 160 mg tablets pany. Through the third quarter of 2007, Rapamune had to the 145 mg tablets in a short timeframe, Abbott has sales of approximately US $290 million (source: IMS almost entirely eliminated the immediate threat of generic Health; all rights reserved). competition to Tricor. Today, in the U.S., the market share of all generic capsules and tablets is less than 5%, and PIPELINE COMPETITION more than three years after the launch of Tricor 145 mg only one generic application for a 145 mg product has Organ Transplantation been filed with the FDA (by Teva, probably at the end of 2007). In Europe, a 160 mg tablet version of fenofibrate Several novel agents intended for chronic administration is now available as a generic alternative and several oth- for the prevention of rejection are currently in develop- ers are likely to follow. ment. These include:

LCP-Tacro • Belatacept (LEA29Y, BMS), a selective costimulation blocker that binds surface costimulatory ligands (CD80 Although Astellas’ Prograf (twice daily) is the only version and CD86) on antigen-presenting cells. A Phase II study of tacrolimus currently marketed globally, Astellas’ Adva- of belatacept combined with CellCept and prednisone graf (once daily), which is currently marketed only in the showed comparable rejection prophylaxis and better United Kingdom and Germany, would likely be a key com- renal allograft function compared to a standard regimen petitive product to LCP-Tacro. Advagraf received an of cyclosporine, CellCept and prednisone in adult kidney approvable letter from the FDA in January 2007, but has de novo transplant patients (source: Vincenti F, et al. N yet to obtain U.S. marketing approval. Consequently, our Engl J Med 2005; 353:770-81). Phase III trials are clinical development plan for LCP-Tacro is designed to ongoing and the drug could come to market in 2010. detail all the benefits we believe our product candidate may offer over Advagraf. Astellas may aim to replace the • ISA247 (Isotechnika) is a calcineurin inhibitor created currently marketed version of Prograf before expiry of the by molecular modification of cyclosporine. Preliminary existing tacrolimus patents, at least in Europe. This will results from Phase II studies show comparable efficacy severely limit the generic competition, and in any case and safety with tacrolimus when combined with Cell- generic competition has historically had limited success Cept and corticosteroids (source: Busque S, et al. with cyclosporine, a drug of the same class as tacrolimus American Transplant Congress 2007 (abstract)). Phase (CNIs), presumably because physicians are reluctant to III trials are planned; market launch is not expected incur any kind of risk without substantial data on the spe- before 2010. cific formulation. • AEB071 (Novartis) is a small-molecule inhibitor of pro- Novartis, Abbott and various generic manufacturers are tein kinase C. This agent is currently in Phase II trials in marketing cyclosporine, an older CNI, and Isotechnika Inc. kidney transplantation. Market launch is not expected is conducting Phase II studies for a new CNI, ISA247, all of before 2011. which will be potential competitors to LCP-Tacro, as will anti-proliferative agents and Wyeth’s Rapamune (launched • CP-690,550 (Pfizer) is a small-molecule inhibitor of in the U.S. in 1999). Janus-3 kinase. Preliminary results from Phase II studies show comparable efficacy and safety with tacrolimus Astellas is developing its currently-marketed version of when combined with CellCept and corticosteroids tacrolimus for new indications in Japan, including autoim- (source: Busque S, et al. American Transplant Congress mune diseases such as Myasthenia Gravis and Ulcerative 2007 (abstract)). Market launch is not expected before Colitis, and tacrolimus has recently been approved for use 2013. in rheumatoid arthritis and Lupus Nephritis in Japan. It will therefore be important to ensure that our data remains proprietary, for example, through orphan drug designa- tions and/or further documentation of the significant product differences.

Galenica is pursuing similar indication expansion worldwide with the anti-proliferative agent myecophenolate.

I – 25 Autoimmune Hepatitis tatin salts on or before 28 June 2011. Further, Pﬁzer has the rights to a number of formulation patents and pat- We are not aware of other agents that are currently in ents on speciﬁc atorvastatin crystalline forms. Three of clinical development for the treatment of patients with these patents have been listed for Lipitor in the Orange autoimmune hepatitis. There are currently no drugs that Book with expiry dates (including expiration of pediatric are FDA- or EMEA-approved for the treatment of autoim- exclusivity associated therewith) on or before 8 January mune hepatitis. 2017.

LEGAL/IP MATTERS We believe we possess freedom to operate for our tablet formulation of fenofibrate and atorvastatin. We have Fenoglide obtained a positive freedom-to-operate opinion from an external European patent attorney. The composition-of-matter patents on the chemical compound fenofibrate expired in 2002. However, other com- Even though we believe that we have freedom-to-operate panies, including Abbott and Solvay, have been granted a for our LCP-AtorFen product candidate, companies that number of formulation patents and filed several patent market branded pharmaceutical products routinely bring applications that cover various fenofibrate formulations. litigation against applicants seeking FDA approval to man- Oscient has one formulation patent listed in the Orange ufacture and market alternate forms of their branded Book for Antara. products prior to the expiry of patents listed in the Orange Book. These companies typically allege patent We believe that we have freedom to operate for our tab- infringement as the basis for filing a lawsuit against an let formulation of fenofibrate. We have obtained positive applicant. Pfizer may initiate legal proceedings against us freedom-to-operate opinions in respect of Fenoglide from in accordance with the Hatch-Waxman Act following our an external European patent attorney and from a U.S. law regulatory filing. After market launch of the product, there firm. We have also obtained positive freedom-to-operate is also the risk that other third-party patent infringement opinions, prepared by a U.S. law firm, relating to the U.S. claims will be brought against us. patents for which we have filed Paragraph IV certifications with the FDA. In connection with our LCP-AtorFen product candidate, four distinct patent families have been filed presently In connection with our Fenoglide product, two PCT appli- encompassing eight PCT applications with the following cations were filed, the first on 1 October 2004 and the publication/application numbers and publication dates second on 13 April 2005, with the following respective and titles: WO2005/034920 A1, filed on 1 October 2004, publication/application numbers and publication dates published on 21 April 2005; A Solid Dosage Form Com- and titles: WO2005/034920 A1 published on 21 April prising a Fibrate; WO2005/034908 A1, filed on 1 October 2005; A Solid Dosage Form Comprising a Fibrate, and PCT/ 2004, published on 21 April 2005; A Solid Dosage Form DK2006/050014, published on 17 August 2006; A Tablet Comprising a Fibrate and a Statin; WO2006/037344 A1, Comprising a Fibrate. National/regional phase applications filed on 3 October 2005, published on 13 April 2006; for the first PCT application have been filed in the U.S., Pharmaceutical Compositions Comprising Fenofibrate and Canada, Europe, China, South Korea and Japan. For the Atorvastatin; WO2006/037345 A1, filed on 3 October second PCT application, a continuation-in-part application 2005, published on 13 April 2006; Pharmaceutical Com- has been filed in the U.S. and national/regional phase positions Comprising Fenofibrate and Simvastatin; applications have been filed in Canada, Europe and South WO2006/037346 A1, filed on 3 October 2005, published Korea. No patents have yet issued. Most patent applica- on 13 April 2006; Pharmaceutical Compositions Compris- tions are still awaiting examination by the respective pating Fenofibrate and Simvastatin; WO2006/037347 A1, ent authorities except for a U.S. application, a Chinese filed on 3 October 2005, published on 13 April 2006; application and a South Korean application, which are Pharmaceutical Compositions Comprising Fenofibrate and presently being examined. Atorvastatin; WO2006/037348 A1, filed on 3 October 2005, published on 13 April 2006; Pharmaceutical Com- Abbott, Solvay and/or Oscient and/or other parties may at positions Comprising Fenofibrate and a Statin; any time initiate legal proceedings against Sciele Pharma WO2006/084474, filed on 10 February 2006, published or us claiming patent infringement by Fenoglide. See the on 17 August 2006; A Stable Pharmaceutical Composition section entitled ‘‘Risk Factors”, beginning on page 12 for Comprising a Fixed Dose Combination of Fenofibrate and more information. an HMG-CoA Reductase Inhibitor. In addition, a fifth distinct patent family comprises the identical national appli- LCP-AtorFen cations in the U.S. and Europe published as US2007- 0190138 and EP1818049A, respectively, relating to a Composition-of-matter patent rights and pediatric exclu- formulation of atorvastatin. The U.S. application is pres- sivity associated therewith will expire for certain atorvas- ently being examined.

I – 26 National/regional phase applications for WO2005/034920 In connection with our LCP-Feno product candidate, two A1 have been filed in the U.S., Canada, Europe, China, PCT applications were filed, the first on 1 October 2004 South Korea and Japan. National/regional phase applica- and the second on 13 April 2005, with the following tions for WO2005/034908 A1 have been filed for the U.S., respective publication/application numbers and publica- Canada, Mexico, Brazil, Europe, Russia, India, China, South tion dates and titles: WO2005/034920 A1 published on Korea, Japan and Australia; and several continuation-in- 21 April 2005; A Solid Dosage Form Comprising a Fibrate, part applications have been filed for in the U.S. National/ and PCT/DK2006/050014, published on 17 August 2006; regional phase applications for WO2006/084474 have A Tablet Comprising a Fibrate. National/regional phase been filed for the U.S., Canada, Mexico, Brazil, Europe, applications for the first PCT application have been filed in Russia, India, China, South Korea and Australia. the U.S., Canada, Europe, China, South Korea and Japan. For the second PCT application, a continuation-in-part No patents have yet issued. Most of the patent applica- application has been filed in the U.S. and national/ tions are still awaiting examination by the respective pat- regional phase applications have been filed in Canada, ent authorities. The applications derived from Europe and South Korea. No patents have yet issued. WO2005/034908 which are pending in Australia, South Most patent applications are still awaiting examination by Korea and Russia are presently being examined. Also, the the respective patent authorities except for a U.S. applica- European application derived from WO2006/084474 is tion, a Chinese application and a South Korean applica- presently being examined. tion, which are presently being examined.

LCP-Lerc Even though we believe that we have freedom to operate for our LCP-Feno product candidate, companies marketing A PCT application was filed on 1 December 2004 and was branded pharmaceutical products routinely bring litigation published on 16 June 2005 with the publication number against generic applicants which seek FDA approval to WO 2005/053689 A1 and the title Pharmaceutical Com- manufacture and market generic forms of their branded positions Comprising Lercanidipine. National/regional products prior to the expiry of patents listed in the Orange phase applications based on this PCT application have Book. These companies typically allege patent infringe- been filed for the U.S., Canada, Europe, Japan and 16 ment as the basis for filing lawsuits against a generic other countries/regions. A patent has issued in South applicant. Abbott has routinely brought litigation against Africa. No other patents have yet issued. Most of the pat- generic companies seeking FDA approval for fenofibrate ent applications are still awaiting examination by the formulations, including litigation against Novopharm, Teva, respective patent authorities; the applications pending in Impax and Cipher. Australia, Singapore, India and the Euro-Asian region (covering up to 9 countries in a single examination proce- Abbott and/or Solvay may initiate legal proceedings dure) are presently being examined. against us following our potential regulatory filing. There is also a possibility that other third party patent infringement LCP-Feno claims will be brought against us. For instance, two Orange Book-listed patents (U.S. Patent Nos. 6,375,986 and As noted above, the composition-of-matter patent on 5,145,684) for Tricor are owned by Elan, and two patents fenofibrate expired in 2002. However, Abbott has been (U.S. Patent Nos. 7,276,249 and 7,320,802) are co-owned granted or has in-licensed a number of formulation pat- by Fournièr and Elan. Accordingly, Elan may also initiate ents and filed several patent applications in order to seek legal proceedings against us. With certain exceptions, San- protection of the Tricor formulations. Currently, Abbott doz and Mylan will indemnify us for any losses we incur or has listed eight patents for Tricor in the Orange Book. must pay to a third party as a result of patent infringe- These formulation patents will expire on or before 21 Feb- ment litigation brought against us by Abbott and/or Solvay. ruary 2023. Sandoz may offset certain of these costs against the royalty payments they may be required to make to us. We believe we have freedom to operate for our tablet formulation of fenofibrate. We have obtained a positive free- In July 2006 we filed an opposition against European pat- dom-to-operate opinion for our fenofibrate formulation ent EP-B-1273294 belonging to Fournièr concerning an from an external European patent attorney. We have also immediate release fenofibrate formulation, on the grounds obtained positive freedom-to-operate opinions, prepared that all of the granted claims are not valid. Three other by a U.S. law firm, relating to all U.S. patents listed in the parties have also pending oppositions to this patent. All Orange Book for Tricor. parties have filed written observations. Oral proceedings at the Opposition Division of the European Patent Office are scheduled for October 2008. The decision of the Opposi- tion Division can be appealed by any party. See Part I, Sec- tion 12.2 “Patents and other intellectual property rights”.

I – 27 LCP-Tacro We believe we will have freedom to operate for our tablet formulation of tacrolimus. We have obtained a positive Astellas has composition-of-matter patents on tacrolimus freedom-to-operate opinion from an external European until April 2008 in the U.S., and until June 2009 in Europe. patent attorney. We have also obtained a positive free- Furthermore, Astellas has patent protection on certain dom-to-operate opinion prepared by a U.S. law fi rm. sustained-release formulations of tacrolimus until 2019. By switching patients to the new sustained-release for- LCP-Siro mulation Astellas may be able to limit generic competition until 2019. We have identifi ed alternative methods for A PCT application relating to LCP-Siro was fi led on 8 March producing sustained-release formulations and have fi led a 2006 and published on 14 September 2006 with the fol- patent application for these methods covering the optimal lowing publication number and title: WO2006/094507 A1; combination of improved bioavailability and controlled Pharmaceutical Compositions Comprising Sirolimus and/or release of tacrolimus. An Analogue Thereof. National/regional phase applications for this PCT application have been fi led in the U.S., Two PCT applications for LCP-Tacro were fi led on Canada, Mexico, Brazil, Europe (covering up to 30 coun- 30 August 2004 and published on 10 March 2005 with tries), Norway, Australia, India, China and Japan. At pres- the following publication numbers and titles: ent no patents have issued. All patent applications are WO2005/020993 A1; Modifi ed Release Compositions awaiting examination by the respective patent authorities. Comprising Tacrolimus and WO2005/020994 A1; Solid Dispersions Comprising Tacrolimus. A new priority-establishing patent application for LCP-Tacro was fi led on 6.3 Our MeltDose Technology 30 May 2007 in Denmark (application number PA 2007 00783; unpublished; updated on 7 November 2007 as PA OVERVIEW 2007 01573, unpublished. A further priority-establishing patent application for a use of LCP-Tacro was fi led on MeltDose, our proprietary technology platform for 21 December 2007 in Denmark (App. No. PA 2007 01885; enhancing the bioavailability of compounds with low unpublished). National/regional phase applications for water solubility, allows us to create improved versions of each of these two PCT applications have been fi led in the marketed drugs, and has been validated in clinical studies U.S., Canada, Mexico, Brazil, Europe (covering up to 37 and through acceptance of our fi rst commercialized car- countries), Norway, Australia, India, China and Japan. At diovascular product, Fenoglide. In addition, we believe the present, these applications are awaiting examination by MeltDose technology has been commercially validated the respective patent authorities, except for one Austra- through the formation of several partnerships with lead- lian application, which is presently being examined. ing international pharmaceutical companies.

Figure 3. Solubility and Permeability Considerations for Oral Absorption of Drugs

Gl barrier cells Drug in systemic circulation

Liver metabolism

Permeability

Dissolution of drug substance

Dosage form

Drug molecules

Passage through the GI tract

I – 28 Independent studies have shown that approximately 30% We believe that our proprietary MeltDose technology plat- of existing drugs have suboptimal uptake and absorption form provides a novel drug formulation technology as we due to low water solubility (source: Technology Catalysts are capable of obtaining improved bioavailability of com- International; Delivery of Poorly Soluble or Poorly Perme- pounds with low water-solubility by solubilizing them and able Drugs, 4 ed.). We believe that a large number of incorporating the drug substance into a melted vehicle these drugs may be suitable candidates for our proprie- which is then sprayed onto a carrier. The result of this pro- tary MeltDose technology platform. MeltDose may also be cess is a granulate in which the drug substance is found in of value for NCEs for which low absorption of a particular solid solution. Compared with technologies relying on drug presents a significant barrier to its final formulation, decreasing particle size, we expect to show a significant and ultimately its development as an actual drug. advantage using our MeltDose technology when developing a formulation based on a solid solution method. The fundamental limiting factor for oral absorption of drugs with low water solubility is the transfer of drug The drug substances are solubilized in low-melting vehi- substance particles to dissolved molecules that can pene- cles such as PEG, poloxamers or lipids; all of which are trate the epithelium of the gastrointestinal tract and enter so-called GRAS (generally recognized as safe). This pro- into the bloodstream. cess can be conducted under controlled atmosphere (nitrogen) in order to avoid degradation processes such Figure 3 on the previous page illustrates the solubility and as oxidation. The solubilized drug in this melted vehicle is permeability considerations for oral absorption of drugs. transformed into solid particles by being sprayed under controlled conditions onto an inert carrier in a fluid bed. The majority of conventional drug delivery technologies From the resulting granulate–known as a solid solution or aimed at increasing bioavailability of compounds with low solid dispersion–tablets can be manufactured by way of water-solubility rely on reduction of the particle size of direct compression. the drug substance – thereby increasing the surface area available for the dissolution process. Figure 4 below shows a comparison of different formulation technologies in terms of particle size.

Figure 4. Comparison of Drug Particle Size

Typical drug Micron Nano MeltDose® particle size technology technology Technology

>10µm 1-10µm 0.5-1µm Solid particles particles particles Solution

Improved bioavailability

I – 29 Potential Clinical Beneﬁts of our Proprietary Through the development of LCP-Tacro, our proprietary MeltDose technology Platform MeltDose technology platform has shown the ability to create a product candidate with a once-daily administra- We believe that application of our proprietary MeltDose tion schedule compared with the twice-daily administra- technology platform to low water-soluble drugs may offer tion schedule of the currently marketed drug, Prograf. several meaningful clinical beneﬁts, including but not limited to: Manufacturing Process and Equipment

• Decreased inter- and intra-individual variability: Our proprietary MeltDose technology platform is based on We believe that by enhancing bioavailability, variability a fluid-bed technology which we believe allows it to be can be reduced leading to improved efficacy/side-effect easily scaled up to manufacturing scale. The drug sub- profiles of compounds with a narrow therapeutic win- stance is dissolved in an appropriate meltable water-mis- dow. In some cases, the therapeutic window is very cible vehicle or a combination of vehicles, and sprayed narrow and minimal variability is mandatory. We believe onto a suitable solid inert carrier (e.g. lactose particles). that reduction in the intra-subject variability will We believe that our proprietary MeltDose technology plat- improve the efficacy and reduce the number of adverse form has the advantage of well-controlled fast-spray of events. Furthermore, a decrease in the inter-subject the dissolved drug, which reduces crystal formation of the variability may improve the dosing schedule and reduce drug substance during solidification. The MeltDose pro- the need for individual titration and/or for control visits cess allows for a tight control of the size of the agglom- by the patient to the physician. erated particles in the form of granulates, which subsequently allows the granulate to be manufactured into • Reduction of food effect: The efficacy of many ther- tablets by direct compression. The process is based on apeutic products is decreased by food interaction. By conventional equipment and consequently does not reducing the fed/fasted effect, patient convenience is require significant additional investment. The manufactur- likely to improve, as patients will no longer have to ing cost of our formulated product is close to the typical take their drug together with meals. manufacturing cost of plain tablets.

Through the development of Fenoglide and our product We believe that our proprietary MeltDose technology plat- candidates, our proprietary MeltDose technology platform has the following main process advantages: form has shown the ability to create new product candidates without any significant food effect. • Gentle process: low heat, no use of water or organic solvents, controlled atmosphere, etc.; • Reduction in peak-to-trough ratio: Drugs often exhibit high peak (Cmax) and low trough (Cmin) plasma • Flexibility in choice of excipients and processing; levels that may severely affect the clinical profile of the drug. This is particularly problematic since severe side • Flexibility in choice of matrix substance; effects may be induced at peak levels, and lack of clinical effect may occur at low trough levels. A solution to • Direct tablet compression; this pharmacokinetic profile problem may be the development of a controlled-release formulation such as our • High drug load; MeltDose technology allowing a beneficial combination of an increase in bioavailability and a controlled or • Easy scalability; and modified release plasma profile. • Conventional equipment and low production costs. Through LCP-Tacro, our proprietary MeltDose technology platform has shown the ability to create a product At our own facility in Hørsholm, Denmark, we are able to candidate with reduction of Cmax and increased bio- perform development work in a scale up one-kilogram availability. batch size under non-cGMP conditions.

• Reduction of administration frequency: In order to Manufacturing Capacity for Clinical Studies improve compliance, it may be beneficial to reduce daily dosing frequency, for example, from three times a day Through our agreements with CMOs and through our to once daily. This may be achieved by a controlled- partnership with H. Lundbeck A/S, we have capabilities release formulation, and as described above, we believe for producing Phase I, Phase II and Phase III clinical stud- that our proprietary MeltDose technology platform may ies supplies in compliance with current Good Manufactur- solve this problem as it combines an increase in bio- ing Practices. At our facility in Hørsholm we are capable of availability with a controlled- or modified-release profile. producing pharmaceutical Phase I to Phase II clinical study supplies intended for use for clinical studies in Europe, in

I – 30 compliance with current Good Manufacturing Practices. lower development risks compared with traditional drug Currently, at these facilities we have the capacity to pro- discovery and development. In particular, pharmaceutical duce tablets in a scale up to 30-kilogram batch size. companies utilizing reformulation technologies will seek to improve the therapeutic potential of products and the Commercial Scale Manufacture formulation of the active compound to improve its therapeutic characteristics. It is not necessary to perform costly We will undertake commercial scale manufacturing in research of the compounds used to discover targets and close collaboration with a CMO. develop new active compounds, as they are already known. Once new formulations have been designed and Other Drug Delivery Technologies optimized in relation to desired characteristics, the product candidate is validated and documented in the clinical In addition to our MeltDose technology, we have, through phase. In addition, a company developing an improved a cross-license agreement regarding “porous tablet tech- pharmaceutical formulation has access to all public regu- nology” entered into with H. Lundbeck A/S in June 2005 latory documentation for the active compound in addition obtained a perpetual, worldwide, royalty-free license to to the proprietary information generated in connection develop and commercialize drug products using H. Lund- with the development of the new formulation. beck A/S’s patented “porous tablet technology”. In the same connection, H. Lundbeck A/S granted us an exclu- The Company’s Product Development Strategy sive, perpetual, worldwide, royalty-free license to the patented “porous tablet technology” to develop and com- The Company’s strategy is to capitalize on available public mercialize therapeutic or prophylactic drug products. The domain data on approved reference drugs to design and cross-license agreement is governed by Danish law. perform a focused clinical development program with the aim of demonstrating clinical benefits of the new formulation compared with the reference drug. Each of the Com- 6.4 The Company’s Drug Development Process pany’s clinical development programs will be designed to demonstrate differentiation of our new product compared DEVELOPMENT AND REGULATORY ENVIRONMENT with the marketed product in terms of clinical performance in order to secure rapid registration, optimal pric- We believe that the development process based on our ing, and patent protection. MeltDose technology has several advantages over the traditional pharmaceutical development process. In general, As a first step–and to avoid extensive preclinical testing pharmaceuticals developed through our drug development and conducting long-term safety and efficacy studies– process as compared with pharmaceuticals that are devel- careful evaluation of existing technical, preclinical, and oped through the traditional development process have a clinical data of the proposed drug is required. Where shorter time to market, lower development costs and appropriate, an animal model will be used to evaluate the lower development risks. The differences between the pharmacokinetic properties of our formulation compared two development processes are summarized and further with the approved drug. explained below. However, in contrast to the NCE development process, the PRODUCT DEVELOPMENT THROUGH REFORMULATION safety of the drug is already known from the literature, OF TRADITIONAL DRUGS thus allowing us to go directly into human Phase I pharmacokinetic testing without conducting preclinical toxicol- Overview ogy and mode of action studies with an uncertain outcome. Normally, such a Phase I pharmacokinetic study, Because traditional drug discovery and development is a which is conducted in 16-24 healthy volunteers, takes lengthy, expensive and risky process, on average taking three to four months. approximately 8-11 years and costing approximately US$600-800 million (source: Reuters Business Insight; After having obtained pharmacokinetic data and a clear Achieving Market Dominance through Reformulation understanding of the potential of the improved formula- (2001)), pharmaceutical companies often seek to improve tion/product, the next step is to proceed directly to piv- the sub-optimal therapeutic characteristics of well-docu- otal studies for regulatory submission. These studies mented active compounds that have already received reg- could be either bioequivalence or food-effect studies in ulatory approval. In doing so, these companies are able to healthy volunteers for approved drugs within the current utilize the significant existing knowledge about the safety label and dosing regimen. Alternatively, if the drug is and efficacy of the active compound as a basis for the intended for a new indication, a Phase III pivotal clinical documentation for the new formulation. This enables program in patients will be started. The entire bioequiva- these companies to develop new, proprietary pharmaceu- lence/food effect study program can be conducted in less ticals more quickly, at substantially lower costs and with than six months. Pivotal Phase III studies for new indica-

I – 31 tions are dependent on the expected label and can last ther study the safety in an expanded patient population from 18 months to three years. at multiple clinical study sites. Phase III studies may require several hundreds or thousands of patients and In compliance with the FDA and European guidelines, we are therefore the most expensive and time-consuming to will conduct our pivotal clinical studies in most of the conduct. Once these studies have been concluded, the cases in a “confirmatory study design”. This means that developer submits all the preclinical and clinical study the data from the European arm of development (“EU documentation to the regulator to seek approval to mar- trial”) will be supportive for the U.S. submission and vice ket the reformulation as a pharmaceutical. Having versa, leading to a robust database for approval. This pro- received the dossier of information from the developer, cedure affords the potential to save significant time and the regulator reviews all the information related to the costs for the entire product development. Compared with safety of the active compound and, based on the docu- the average of 8-11 years for the development of NCEs, mentation obtained for the new formulation, whether we believe that it is possible to shorten the entire drug the pharmacological effect claimed by the developer on development process to 3-5 years. Since the drugs are the proposed label can be substantiated by the results of well known by the regulatory agencies, the review and the clinical studies. The regulator has the option to the approval process will be shorter than for the assess- decide to approve the application as requested, ask for ment of an NCE. changes to the claims made by the developer, ask for more information or clinical studies, or refuse to approve the reformulation for sale. 6.5 Regulatory Matters Our regulatory strategy integrates internationally recog- OVERVIEW nized requirements for quality, safety and efficacy, the technical criteria developed under the International Con- We are developing global regulatory strategies for all of ference on Harmonization (ICH), in order to support suc- our product candidates entering actual development pro- cessful and fast approvals of new therapeutic products grams, focusing on regulatory standards defined by gov- and their placing on the market worldwide. ernment regulations of the territories where we intend to market our products. The goal of our strategy is to enable us to file registration applications in our key market regions within a short time Drug development is a highly structured process divided frame, particularly in the U.S., the European Union and into three phases which are designed to prove the safety Canada and other countries on a selective basis. These of any new pharmaceutical, determine dosage require- strategies also include pre-approval and post-licensing ments and, predominantly in the later phases, prove its activities relating to registration and compliance auditing efficacy. This process requires increasingly large, complex, as well as safety and pharmacovigilance. expensive and time-consuming clinical studies. However, in contrast to the NCE development process, with the Changes in the regulatory environment and practices reformulation of traditional drugs, the safety of the drug strongly influence the way in which pharmaceutical and is already known from the literature, thus allowing the biopharmaceutical companies are communicating inter- Company to go directly into human Phase I pharmacoki- nally and externally. In this respect, we are developing netic testing without conducting preclinical toxicology regulatory information and documentation management and mode of action studies with an uncertain outcome. systems that will support electronic archiving of essential During Phase I clinical studies, the product candidate is documents and data, as well as electronic submission of initially given to a small number of healthy human sub- registration files and safety reports. In addition, because jects or patients and tested for safety, tolerance, absorp- the regulatory environment is constantly evolving, we tion, metabolism, distribution and excretion. During actively monitor the regulatory requirements of the terri- Phase II clinical studies, additional studies are conducted tories where we intend to market our products. in a larger, but still relatively limited, patient population to verify that the product candidate has the desired Our regulatory strategy is designed to obtain market effect and identify optimal dosage levels. Furthermore, authorization of the product as quickly as possible. possible adverse effects and safety risks are identified. The efficacy of the product candidate for specific tar- Since we are dealing with known and approved sub- geted diseases is also studied in more depth and dosage stances, there are different options depending on the tolerance and optimal dosage are determined. During substance, indication and proposed label. Phase III clinical studies, after Phase II evaluations demonstrate that the product candidate has the desired effect and has an acceptable safety profile, trials are undertaken to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to fur-

I – 32 U.S. REGULATORY STRATEGY facture, safety, efficacy, labeling, distribution, storage, record keeping, approval, advertising and promotion of For the U.S., a 505(b)(2) NDA submission will be our pre- our products. Product development and approval within ferred regulatory submission strategy. A 505(b)(2) NDA is this regulatory scheme, if successful, will take a number intended to encourage innovation in drug development of years and involve the expenditure of substantial without requiring duplicate studies to demonstrate what resources. is already known about the substance, while still protecting the patent and exclusivity rights for the original prod- U.S. REGULATION uct. We believe this will eliminate unnecessary testing of drugs in animals and patients, resulting in shorter time- Products employing our technology in the U.S. are regu- lines and lower costs for development, and will be ethical lated by the FDA in accordance with the FDCA and other and environmentally friendly. Compared with a full NDA, laws. Marketing approval of a new therapeutic product by we believe this strategy will save us significant time and the FDA may follow one of the three routes: costs. • First, and most formidable, is the submission of a tra- The 505(b)(2) NDA submission strategy in the U.S. will ditional or full NDA under Section 505(b)(1) of the not only give us the opportunity to move directly from FDCA; first pharmacokinetic studies to pivotal Phase III studies, but it will also open the opportunity to proceed with • Second, where an applicant chooses to rely in part on pharmacodynamic and food effect studies directly to reg- data generated or approvals obtained previously by ulatory submission. other parties, it can submit a more limited NDA described in Section 505(b)(2) of the FDCA; and EUROPEAN REGULATORY STRATEGY • Third, an ANDA is permitted under Section 505(j) of Due to the structure of the European Union and the the FDCA for products which are shown to be pharma- EMEA, its pharmaceutical regulatory agency, the situation ceutically and therapeutically equivalent to previously in Europe is more complex, as there is no given clear dif- approved products. ferentiation between improved formulations of existing products and NCEs. Our normal procedure will be to seek We anticipate that most of our product candidates will be approval by Mutual Recognition Procedure (“MRP”). Start- subject to Section 505(b)(2) of the FDCA, and some ing with a “national” approval in a country where the drug selected product candidates will be subject to Section is already approved and the likelihood for acceptance of 505(j) of the FDCA. We do not expect any of our existing their assessment by other countries is high (decentralized product candidates to be submitted under Section procedure), the MRP will be spread to all relevant coun- 505(b)(1), but we may choose to follow this approval tries for this product. route for our product candidates in the future.

A clear timetable for approval exists for the MRP, resulting in a maximum assessment time for the chosen agency of Section 505(b)(1) New Drug Application between 90 and 180 days after submission of a complete dossier. We believe that MRP provides us with the oppor- The FDA must approve a new drug application, or NDA, tunity to market the product already approved in the ﬁrst before a new drug that is not equivalent to a previously countries while still seeking approvals in others. approved drug may be marketed in the U.S. NDAs require full report of investigations adequate to establish the safety and effectiveness of the drug. The process of Regulatory Affairs obtaining approval of an NDA principally involves the following main steps: The research, development, testing, manufacture, distribution and marketing of products employing our technol- • Completion of preclinical investigations. Preclinical ogy are subject to regulation for safety, efﬁcacy and qual- studies generally include laboratory evaluation of prod- ity by numerous governmental authorities in the U.S., uct chemistry and formulation, as well as toxicological Europe and other countries. In the U.S., therapeutic drug and pharmacological animal studies, to assess the products are subject to extensive rigorous federal regula- quality and safety of the new product. These studies tion including the requirement of approval by the FDA provide the basis for the design of the human clinical before marketing may begin and, to a lesser extent, state studies. regulation. The U.S. Federal Food, Drug, and Cosmetic Act (FDCA), as amended, and the regulations promulgated thereunder, and other federal and state statutes and regulations govern, among other things, the testing, manu-

I – 33 • Submission of an IND. An IND is a submission to the 1. the required patent information has not been filed; FDA that includes the results of all preclinical investigations along with a proposal for the clinical study 2. the listed patent has expired; design. The FDA must review the IND prior to the commencement of human clinical studies. Unless the FDA 3. the listed patent has not expired, but will expire on a raises concerns (such as concerns that human research particular date and approval is sought after patent subjects will be exposed to unreasonable risk) the IND expiration; or will become effective 30 days following its receipt by the FDA. 4. the listed patent is invalid, unenforceable or will not be infringed by the new product. A certification that • Completion of human clinical studies. Human clini- the new product will not infringe the already approved cal studies generally consist of pharmacokinetic studies, product’s listed patents or that such patents are dose ranging studies and adequate and well-controlled invalid or unenforceable is known as a Paragraph IV studies designed to demonstrate the safety and effec- certification. tiveness of the drug. These studies are typically, but not necessarily, conducted in three phases. Phase I If the applicant does not challenge the listed patents, the studies test for safety, dosage tolerance, absorption, Section 505(b)(2) application will not be approved until all metabolism, distribution and excretion, usually in the listed patents claiming the referenced product have healthy human subjects. Phase II studies evaluate effec- expired. The Section 505(b)(2) application also will not be tiveness and safety in patients who have the medical approved until any pertinent non-patent exclusivity, such condition that the drug is intended to treat. Phase III as exclusivity for obtaining approval of a new chemical studies include trials that are designed to accumulate entity, listed in the Orange Book for the referenced prod- the pivotal safety and efficacy data that are necessary uct, has expired. to satisfy the requirements for NDA approval. If the applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Para- Section 505(b)(2) New Drug Application graph IV certification to the NDA and patent holders once the NDA has been accepted for filing by the FDA. The NDA Another, less-burdensome, form of an NDA is the so- and patent holders may then initiate a legal challenge to called “505(b)(2) NDA”, which applicants submit pursuant the Paragraph IV certification. Under the FDCA, the filing to Section 505(b)(2) of the Federal Food, Drug, and Cos- of a patent infringement lawsuit by the patent holders metic Act. A Section 505(b)(2) NDA presents an alternate within 45 days of their receipt of a Paragraph IV certifica- path for FDA approval of modifications to formulations of tion automatically prevents the FDA from approving the products previously approved by the FDA. Section Section 505(b)(2) NDA until the earlier of 30 months, 505(b)(2) was enacted as part of the so-called “Hatch- expiration of the patent, settlement of the lawsuit, or a Waxman Amendments” and permits the submission of an decision in the infringement case that is favorable to the NDA where at least some of the information required for Section 505(b)(2) applicant. Thus, the Section 505(b)(2) approval comes from studies not conducted by or for the applicant may invest a significant amount of time and applicant and for which the applicant has not obtained a expense in the development of its products only to be right of reference. The 505(b)(2) NDA is similar to a full subject to significant delay and patent litigation before its NDA, except that under conditions prescribed by the FDA, products may be commercialized. Alternatively, if the it may be supported in whole or in part by one or more listed patent holder does not file a patent infringement animal or human study investigations published in scien- lawsuit within the required 45-day period, the applicant’s tific literature or the FDA’s own conclusions of safety or NDA will not be subject to the 30-month stay. effectiveness for a previously approved drug product.

To the extent that a Section 505(b)(2) NDA relies on Section 505(j) - Abbreviated New Drug Application studies conducted for a previously approved drug product, (“ANDA”) the applicant is required to certify to the FDA concerning any patents listed for the approved drug in the Orange The Hatch-Waxman Amendments established abbreviated Book. Specially, the applicant must certify that: FDA approval procedures for drugs that are no longer protected by patents and which are shown to be equivalent to drugs previously approved by the FDA through its NDA process. Approval to market and distribute these drugs is obtained by submitting an abbreviated new drug application, or ANDA, with the FDA. An ANDA is a comprehensive

I – 34 submission that contains, among other things, data and Under the Hatch-Waxman Amendments, any developer of information pertaining to the active pharmaceutical ingre- a generic drug that is considered first to have its ANDA dient, drug product formulation, specifications and stabil- accepted for the review by the FDA, and whose filing ity of the generic drug, as well as analytical methods, includes a Paragraph IV certification, may be eligible to manufacturing process validation data, and quality control receive a 180-day period of generic market exclusivity. procedures. Pre-market applications for generic drugs are This period of market exclusivity may provide the patent termed abbreviated because they generally do not include challenger with the opportunity to earn a return on the preclinical and clinical data to demonstrate safety and risks taken and its legal and development costs and to effectiveness. Instead, in order to gain approval from the build its market share before other generic competitors FDA for an ANDA, an applicant must establish that its can enter the market. If the ANDA of the first applicant product is bioequivalent to an existing approved drug and accepted for filing is withdrawn, the 180-day exclusivity that it is identical to the approved drug with respect to period is forfeited and unavailable to any other applicant. the active ingredient(s), route of administration, dosage form, strength, and conditions of use recommended on EUROPEAN UNION REGULATION the product’s labeling. A product is considered bioequivalent to an existing approved drug if testing demonstrates The European drug registration system is based on coop- that the rate and extent of absorption of the proposed eration between the EMEA, established in London, and generic drug is not significantly different from the rate competent national authorities in the European Union. and extent of absorption of the existing approved drug when administered under similar experimental conditions. Since 1995, the following two new registration procedures have been available throughout the European The Hatch-Waxman Amendments provide incentives for Union: generic pharmaceutical manufacturers to challenge patents on branded pharmaceutical products and / or their • Centralized registration procedure; or methods of use, as well as to develop products compris- • De-centralized registration procedure ing non-infringing forms of the patented drugs. The (“Mutual Recognition”). Hatch-Waxman legislation places significant burdens on the ANDA filer to ensure that such challenges are not friv- The centralized procedure is compulsory for medicinal olous, but also offers the opportunity for significant finan- products derived from biotechnology and available at the cial reward if the challenge is successful. request of companies for other innovative new products. Applications are submitted directly to the EMEA in London. If there is a patent listed for the branded drug in the At the conclusion of the EMEA’s internal scientific evalua- Orange Book at the time of submission of the ANDA or at tion, the opinion of the Committee of Proprietary Medici- any time before the ANDA is approved and the generic nal Products (“CPMP”); encompassing two members from company intends to market the generic equivalent prior to each national authority within the EU, is transmitted to the expiration of that patent, the generic company the European Commission, the approval of which will form includes a Paragraph IV certification asserting that the pat- the basis of one single market authorization applying to ent is invalid, unenforceable and/or not infringed. If the the whole European Union. applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph The de-centralized procedure is a mutual recognition pro- IV certification to the NDA and patent holders once the cedure which is mandatory for non-NCEs and to some ANDA has been accepted for filing by the FDA. The NDA degree optional for NCEs. It is based upon the principle of and patent holders may then initiate a legal challenge to mutual recognition of national authorizations and it pro- the Paragraph IV certification. Under the FDCA, the filing of vides for the extension of a marketing authorization a patent infringement lawsuit within 45 days of their granted by one member state of the European Union to receipt of a Paragraph IV certification automatically pre- one or more other member states identified by the appli- vents the FDA from approving the Section 505(j) ANDA cant. Should the original national authorization not be until the earlier of 30 months, expiration of the patent, recognized in another member state, the points in dis- settlement of the lawsuit, or a decision in the infringe- pute are submitted to EMEA’s scientific committee for ment case that is favorable to the Section 505(j) applicant. arbitration.

Currently, no products employing our technology have been approved for sale by the EMEA.

I – 35 POST-APPROVAL REQUIREMENTS In many foreign markets, including the countries in the European Union and Canada, pricing of pharmaceutical Even after initial health authority approval has been products, in particular reimbursed products, is subject to obtained, further studies, including Phase IV post-market- governmental control. In the European Union, a product ing studies, may be required to provide additional data on must receive specific country pricing approval in order to safety and will be required to gain approval for the use of be reimbursed in that country. The pricing approval in the a product as a treatment for clinical indications other Member States of the European Union can take many than those for which the product was initially tested. months, and sometimes years, to obtain. In Canada, pric- Also, the regulatory authorities require post-marketing ing must be approved by the Patented Medicine Prices reporting to monitor the adverse effects of the product. Review Board, the government and third-party payors. In Results of post-marketing programs may limit or expand addition, the provincial governments have the authority the further marketing of the products. Further, if there to assess the reimbursement status, if any, and the pric- are any modifications to the product, including changes in ing of newly approved drugs, pharmaceutical products indication, manufacturing process or labeling or a change and pharmaceutical product indications. Obtaining price in manufacturing facility, an application seeking approval approval from the Patented Medicine Prices Review Board of such changes must be submitted to the relevant regu- and provincial governments can take six to twelve months latory authority, before the modified product can be com- or longer after the receipt of the notice of compliance. mercialized. In the U.S., there have been, and we expect that there MANUFACTURING REQUIREMENTS will continue to be, a number of federal and state proposals to implement similar governmental pricing control. The We and our third-party manufacturers must comply with adoption of such proposals could harm our business and applicable FDA and EMEA regulations relating to cGMP. financial condition. The cGMP regulation include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and drug product containers 6.6 Our Competition and closures, production and process controls, packaging and labeling control, holding and distribution, laboratory For discussion on Competition, see Part I, Section 6.2 controls, records and reports, and returned or salvaged “Market Overview and Product Portfolio”. products. A failure to comply with these regulations could result in sanctions being imposed on the manufacturer, including fines, injunctions, civil penalties, suspension or 6.7 The Market withdrawal of FDA and/or EMEA approvals, seizures or recalls of products, operating restrictions, and criminal For a description of the Market, please see Part I, Section prosecutions. While we periodically monitor the FDA and/ 6.2 “Market Overview and Product Portfolio”. or EMEA regulation compliance of our third-party manufacturers, we cannot be certain that our present or future third-party manufacturers will be able to comply with the cGMP regulations and other ongoing FDA and/or EMEA regulatory requirements.

THIRD-PARTY REIMBURSEMENT AND PRICING CONTROLS

In the U.S. and elsewhere, sales of pharmaceutical products depend in significant part on the availability of reimbursement to the consumer from third-party payors, such as government and private insurance plans. Third-party payors are increasingly challenging the prices charged for medical products and services. It will be time consuming and expensive for us to go through the process of seeking reimbursement from Medicare and private payors. LCP- Feno or other products from which we may receive revenue in the future may not be considered cost-effective, and reimbursement may not be available or sufficient to allow these products to be sold on a competitive and profitable basis.

I – 36 7. Organizational structure

7.1 Group Structure FINANCE AND ADMINISTRATION

LifeCycle Pharma A/S is the parent company of LifeCycle The Finance and Administration function, is comprised of Pharma, Inc., of which it owns 100% of the share capital. Finance, Legal Affairs and Operations, Intellectual Prop- LifeCycle Pharma, Inc. was established in January 2007. erty, Investor Relations/Public Relations, Human Resources and Information Technology. LifeCycle Pharma A/S has its principal address and registered office at Kogle Allé 4, DK-2970 Hørsholm, Denmark. PHARMACEUTICAL DEVELOPMENT AND CLINICAL AND MANUFACTURING CONTRACTOR (CMC) LifeCycle Pharma, Inc., has its principal address and registered office at 100 Park Avenue, 13th Floor, New York, • Pharmaceutical Development. The Pharmaceutical New York 10017, U.S. Development group consist of Preformulation and Ana- lytical Development and Formulation Development. This The Company operates from sites in Hørsholm (just north includes an analytical group of chemists and techni- of Copenhagen, Denmark) and in New York, New York, cians and a formulation group of scientists and techni- U.S. The Company’s Hørsholm operations serve as Com- cians. Both groups support product development from pany headquarters and focus on coordination and execu- early-stage development to final regulatory submission tion of the drug development process and on the conduct of the dossiers. of preclinical and clinical trials and administration. The U.S. site is focused on the conduct of clinical trials in the Preformulation and Analytical Development. This U.S. and Canada as well as business development. department is actively involved in pre-formulation and early phase development studies including com- 7.2 Functional Structure patibility, solubility and miscibility screening and forced degradation studies. The group is responsible As of the Offering Circular Date, LifeCycle Pharma for the control strategy for active pharmaceutical employed 95 employees. ingredients, formulated products and raw materials and the elucidation of degradation pathways. The group partners with qualified third party organizations in this field of investigation.

Figure 5. Functional Structure of the Company

Pharmaceutical Finance and Administration Commercial Operations Medical Operations Development

Pharmaceutical Finance Business Development Regulatory Affairs Development

Legal and Operations Manufacturing Medical Affairs

Research and Clinical Intellectual Property Drug Delivery Research Development Investor Relations/ Alliance and Quality Assurance Public Relations Project Manegement

Human Resources

Information Technology

I – 37 Formulation Development. This group works on the COMMERCIAL OPERATIONS formulation and process development for converting active pharmaceutical ingredients into solid oral dos- The Commercial Operations function is responsible for age forms. This includes the application of both our business development and market intelligence. proprietary MeltDose technology platform and more conventional technologies. The formulation depart- MEDICAL OPERATIONS ment also interacts closely with the Drug Delivery Research group with respect to technology develop- • Regulatory affairs. The Regulatory Affairs function is ment and the evaluation of new product ideas. responsible for global oversight, strategy and implementation of all regulatory country interactions from • Manufacturing. The manufacturing organization development to commercialization. The function han- ensures internal and external manufacture of clinical dles registration activities and post-approval commer- trial material for all clinical development phases. We cial compliance. have our own facility for manufacture of clinical trial material for the early development stages. For the late • Medical affairs. The Medical Affairs function is stage development and commercialization the manu- responsible for global oversight and strategy for the facture is done externally at contract manufacturing medical aspects of the brands; facilitate and foster sci- organizations (“CMO”). The manufacturing group han- entiﬁc exchange and development within the interna- dles every aspect of manufacturing from sourcing of tional community in consideration of all ongoing and raw materials to technology transfer for commercial planned registration activities. scale manufacture. • Research and Clinical Development. The Research • Drug Delivery Research. The department is responsi- and Clinical Development function is responsible for ble for identifying new viable drug delivery projects planning, conducting and reporting of clinical studies, within our strategy and scope. The department is also from Phase I (pharmacokinetics) to Phase IV (post responsible for maintaining and development of our approval). The Research and Clinical Development func- proprietary MeltDose technology platform and for tion operates both in Denmark and the U.S. to cover exploring and development of new drug delivery tech- individual and regional clinical product development nologies and concepts to be used for our future proj- needs. ects. • Alliance and Project Management. The Alliance and • Quality Assurance. The department is responsible for Project Management function is responsible for overall overseeing our quality assurance operations. The project management of our products, bringing together department is responsible for approving the manufac- the different functions of pharmaceutical development, turing and controls for clinical supplies used in relation clinical development, medical affairs, regulatory affairs to the clinical trials sponsored by us. Also the depart- and commercial affairs. While Project Management is ment is responsible for the document system and an internal function, Alliance Management can be con- structure. sidered an extension of Project Management dealing with external partners on joint projects and service pro- vider agreements for other companies.

I – 38 8. Property, Plant, Equipment, etc.

8.1 Facilities 8.2 Insurance

The Company’s main operations are located in the DTU- The Company maintains all insurance coverage required Science Park in Hørsholm, Denmark, situated just north of under the laws of Denmark and the U.S. Its comprehen- Copenhagen. The Company’s U.S. operations are located sive insurance includes coverage in respect of personal in New York, New York, U.S. injury, chattel damage, business interruption, as well as for pollution up to certain levels. The Company also main- In Denmark, the Company leases approximately 2,460 tains directors’ and officers’ liability insurance coverage square meters of combined office and laboratory space. for members of the Board of Directors and Executive The lease can be terminated by the Company and by les- Management. In addition, the Company has taken out sor with a notice of 12 months to the end of a month; specific product liability insurances for the product candi- provided, however, that the lease is non-terminable by dates currently in clinical studies as well as for the Com- both the Company and the lessor until October 2013, at pany’s commercialized product Fenoglide with specified which time it can be terminated with effect as of October coverage limits of US$5 million (DKK 25.4 million, EUR 3.4 2014. In Denmark, the Company also leases approxi- million) per occurrence and in the aggregate. The Com- mately 1,294 square meters of office space. This lease pany intends to seek additional appropriate product liabil- can be terminated by the Company and by lessor with a ity insurance coverage in all future clinical studies that it notice of 6 months to the end of a month; provided, performs and for which the Company is liable. The Com- however, that the lease is non-terminable by the Com- pany may, subject to detailed assessment of the potential pany until 1 January 2010, at which time it can be termi- risks, take out additional suitable product liability cover- nated with effect as of July 2010. The lease is non-termi- age for the Company’s future products upon their com- nable by the lessor until 1 June 2012 at which time it can mercialization. The Company believes that it maintains be terminated with effect as of 1 January 2013. The the insurance coverage appropriate for its business and aggregate minimum lease commitments over the remain- stage of development. der of the lease terms are approximately DKK 40 million (approximately €5.3 million). The lessor under both leases in Denmark is Scion-DTU A/S. In addition to the leases, 8.3 Environmental issues the lessor provides the Company with certain maintenance services. LifeCycle Pharma is an emerging specialty pharmaceuticals company without significant production facilities, and In the U.S., the Company’s U.S. subsidiary, LifeCycle hence the Company’s consumption of energy and other Pharma, Inc., subleases approximately 11,000 square feet natural resources and its discharges of substances into of office space located at 100 Park Avenue, 13th Floor, the air and water are relatively limited. LifeCycle Pharma New York, New York, 10017, U.S. LifeCycle Pharma, Inc. is routinely works with chemical substances which place focused on the conduct of the Company’s clinical pro- stringent demands for comprehensive environmental and grams in the U.S. and Canada and general business devel- safety efforts to minimize adverse effects on the environ- opment. The sublease expires on 30 November 2010, ment and human health. The Company complies with unless sooner terminated as a result of breach. The mini- applicable legal requirements, directives, and international mum sublease commitments over the remainder of the agreements. There are no pending environment-related lease term are approximately DKK 9 million (€1.3 million). issues of significance to the Company’s operations. The lessor under the sublease in the U.S. is Network Appliance, Inc. The lessor does not provide the Company with any services other than those required pursuant to 8.4 Litigation the sublease. For the past 12 months, the Company has not been a party to any governmental, legal or arbitration proceedings that have had a significant effect on the financial position or results of operations of the Company or its subsidiary, nor is the Company aware of any such threatened proceedings that might have such an effect.

I – 39 9. Proﬁt Forecast or Estimates

9.1 Prospects for 2008

STATEMENT BY REGISTERED MANAGEMENT AND BOARD OF DIRECTORS

We have presented our forecast for 2008 in the subheading “Prospective financial information for 2008” below. The information was prepared applying the accounting policies as described in Part II, pages II-13 to II-19. The prospective financial information was prepared for use herein. Registered Management and the Board of Directors believe that the material assumptions on which the prospective financial information is based are described herein, and that the assumptions have been consistently applied in the preparation of the information.

The prospective financial information is based on a number of assumptions, some of which are within our control, whilst others are beyond our control. The methods used in the preparation of the prospective financial information and the underlying assumptions on which the information is based are stated in “Prospective financial information for 2008”, below.

This prospective financial information represents Registered Management’s and the Board of Directors’ best estimate of our revenue, research and development costs, administrative expenses and results of operations for the 2008 financial year. The prospective financial information contains forward-looking statements with respect to our financial position which involve significant uncertainties. Our actual results may differ materially from those represented in these statements. In addition to those discussed in “Prospective financial information for 2008” and “Special Notice Regarding For- ward-looking Statements”, potential risks and uncertainties include, without limitation, those set forth under the section entitled ‘‘Risk Factors”, beginning on page 12.

Registered Management

Flemming Ørnskov, Hans Christian Teisen, President and Chief Executive Ofﬁcer Senior Vice President and Chief Financial Ofﬁcer

Board of Directors

Claus Braestrup Thomas Dyrberg (Chairman)

Jean Deleage Gérard Soula

Kurt Anker Nielsen

I – 40 AUDITORS’ REPORT ON PROSPECTIVE FINANCIAL INFORMATION FOR 2008

As agreed upon, we have examined the prospective financial information for 2008 set out in the section “Prospective financial information for 2008” of the Offering Circular for LifeCycle Pharma A/S dated 18 March 2008. The prospective financial information is prepared on the basis of the material assumptions in the section “Methodology and Assump- tions” and the accounting policies described in Part II, pages II-13 to II-19. The accounting policies applied are in accordance with the recognition and measurement principles of IFRS.

Registered Management and the Board of Directors are responsible for the prospective ﬁnancial information including the assumptions on which it is based. Our responsibility is, based on our examination, to provide a conclusion on the prospective ﬁnancial information.

EXAMINATION PERFORMED

We conducted our examinations in accordance with the International Standard on Assurance Engagement (ISAE 3400) applicable to the examination of prospective ﬁnancial information. This standard requires that we plan and perform our examinations in order to obtain limited assurance that the applied assumptions are well founded and do not contain material misstatements and reasonable assurance that the prospective ﬁnancial statements have been prepared on the basis of the assumptions stated consistent with the Company’s accounting policies.

Our examinations comprise a review of the prospective financial information for 2008 with a view to assess whether the assumptions set forth by the Board of Directors and Registered Management are documented, well-founded and complete. In addition, we have tested whether the prospective financial information for 2008 has been prepared on the basis of Board of Directors and Registered Management’s assumptions and has been presented in accordance with Life- Cycle Pharma A/S’ accounting policies. Furthermore, we have tested the relationship in terms of figures in the prospective financial information.

We believe that our examination provides a reasonable basis for our conclusion.

CONCLUSION

Based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the prospective ﬁnancial information for 2008. Further, in our opinion the prospective ﬁnancial information for 2008 has been properly prepared on the basis of the assumptions, including those described under “Methodology and Assumptions” below, and presented in accordance with the accounting policies of LifeCycle Pharma A/S.

EMPHASIS OF MATTER

Actual results are likely to be different from the prospective ﬁnancial information since anticipated events frequently do not occur as expected and the variation may be material.

Copenhagen, 18 March 2008

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab

Lars Holtug Claus Køhler Carlsson State Authorized Public Accountant State Authorized Public Accountant

I – 41 INTRODUCTION • That the activities in connection with the ongoing Phase II clinical studies for LCP-Tacro and LCP-AtorFen We have prepared the prospective financial information as well as the Phase I clinical studies for LCP-Siro pro- for the 2008 financial year in accordance with Danish law. ceed in accordance with the Board’s and Registered The prospective financial information is inherently based Management’s expectations including that no change on a number of assumptions and estimates which while to the scope of the studies occurs, that the cost per presented with numerical specificity and considered rea- patient enrolled does not material change and that the sonable by us, are inherently subject to significant busi- expected timeline will be met; ness, operational and economical uncertainties, many of which are beyond our control and upon assumptions with • That the initiation of the Phase III clinical studies for respect to future business decisions that are subject to LCP-Tacro, the preparation of Phase III clinical studies change. The most important of these assumptions are for LCP-AtorFen and the initiation of the Phase I clinical described in “Methodology and Assumptions” below. The studies for LCP-3301 occur in the second half of 2008; prospective financial information has been prepared in accordance with our accounting policies, which are in • That our existing collaborations will continue and we accordance with the recognition and measurement regu- enter into additional collaboration(s) which generate lations of IFRS and consistent in all material respects with significant revenues in accordance with the Board’s and those set out in the financial statements for 2005, 2006 Registered Management’s expectations; and 2007 included elsewhere in this document, and in the estimates and assumptions described herein. • That the exchange rates (especially of DKK/Euro/USD) do not change materially as compared with the official METHODOLOGY AND ASSUMPTIONS exchange rate on 31 December 2007; and

Our prospective financial information for the 2008 finan- • The degree of market acceptance of our product Feno- cial year reflects the Board’s and Registered Manage- glide in accordance with the Board’s and Registered ment’s estimates and forecasts for 2008. These estimates Management’s expectations; for 2008 have been prepared in accordance with our normal budgeting procedures in which focus is on the income Furthermore, we have assumed the following factors: statement and our expected cash flow performance. • That the number of employees will increase to approxi- Our estimates of research and development costs are mately 110 during 2008 in connection with our ongo- based on the budgeted costs of further development of ing and planned clinical studies for LCP-Tacro, LCP- our product candidates. See Part III, Section 3.4 “Reasons AtorFen, LCP-Siro and LCP-3301; and for the Offering and Use of Proceeds”. • That we will continue to conduct clinical studies for all The forecasts are based on the assumption of a success- of our product candidates through CROs as well as ful implementation of our strategy as planned, see Part I, produce all of our product candidates through CMOs. Section 6 “Business Overview”. The success of this strategy is subject to uncertainties and contingencies which PROSPECTIVE FINANCIAL INFORMATION FOR 2008 are, at least in part, beyond our control and no assurance can be given that the strategy will be effective or that the We are projecting an operating loss of DKK 260 – 290 anticipated benefits from the strategy will be realized in million compared to the realized operating loss of DKK the periods for which forecasts have been prepared, or at 172.9 million in 2007. The net loss is expected to be in all. Accordingly, we cannot provide any assurance that the range of DKK 255 – 285 million compared to the net these results will be realized. The prospective financial loss of DKK 160.2 million in 2007. information may differ materially from our actual results. Prospective investors are cautioned not to place undue As of 31 December 2007, our cash position equaled DKK reliance on this information. 331.7 million and our 31 December 2008 cash position is expected to be in the range of DKK 70 - 110 million, In particular, we have assumed the following factors, excluding any proceeds from the Offering. which are, at least in part, beyond our control:

• As for LCP-Tacro, the Board and Registered Manage- ment expect to have incurred approximately 30% to 35% of the direct clinical study expenses for the Phase III clinical studies for kidney and liver transplant patients;

I – 42 10. Review of Operations and Financial Statements

The following discussion and analysis should be read in dose combination therapy in Phase II studies for dyslipid- conjunction with our consolidated financial statements emia; LCP-Lerc, a reformulation of lercanidipine, a calcium and related notes appearing elsewhere in this Offering channel blocker, which has completed Phase I studies for Circular. The audited financial statements have been pre- hypertension; and LCP-Feno, a generic fenofibrate in pared in accordance with IFRS as adopted by the EU and Phase I studies for dyslipidemia. For the immunosuppres- the additional Danish disclosure requirements for financial sion market, we have four clinical programs and one pre- statements of listed companies. See the audited consoli- clinical program currently underway: LCP-Tacro, which has dated financial statements for 2005, 2006 and 2007 in completed Phase II studies for kidney transplants and Part II. expects to commence Phase III studies in the second half of 2008. In addition, LCP-Tacro is in ongoing Phase II FACTORS AFFECTING THE COMPANY’S RESULTS OF studies for liver transplants as well as for autoimmune OPERATIONS hepatitis; LCP-Siro, in Phase I studies for organ transplantation and autoimmune diseases; and LCP-3301 in pre- The discussion in this Offering Circular contains forward- clinical studies for organ transplantation and autoimmune looking statements that involve risks and uncertainties, diseases. In addition, we have two other product candi- such as statements of our plans, objectives, expectations dates in preclinical development for undisclosed indica- and intentions. The cautionary statements made in this tions. Offering Circular should be read as applying to all related forward-looking statements wherever they appear in this For each of the periods discussed in this section, we did Offering Circular. Our actual results could differ materially not have any commercialized products that generated rev- from those discussed herein. Factors that could cause or enues. Since inception we have incurred significant losses contribute to these differences include those discussed in and, as of 31 December 2007, we had an accumulated “Risk Factors”, as well as those discussed elsewhere. You deficit of DKK 465.9 million (approximately € 62.5 mil- should read the section entitled “Risk Factors”, beginning lion). As we continue to develop our business, we will on page 12 and the section entitled “Special Notice incur additional losses. We also expect that the cash Regarding Forward-looking Statements”, beginning on required to support our operating activities will increase page xii. as we expand and advance our preclinical and clinical development programs and our related business activities. We have a limited operating history for you to use as a basis for evaluating our business. You must consider the Revenue. Revenue comprises milestone payments, royalty risks and difficulties frequently encountered by companies and other income from research and development and like ours in new and rapidly evolving markets. commercialization agreements.

Overview. We are a specialty pharmaceutical company Since our inception in 2002, we have generated DKK focused on certain cardiovascular indications and the 82,037 thousand (€ 11,001 thousand) of revenues, all of immunosuppression market in particular. We currently which were derived in the ordinary course of business, have one product on the market, seven clinical develop- primarily from milestone payments and reimbursements ment programs covering five product candidates and three for research and development expenses from our part- product candidates in preclinical development. Our inten- ners. From 2008, we anticipate that our revenues will be tion is to approach the transplantation market through derived principally from milestone payments and license our own hospital-based specialist sales force and to use fees we receive from our collaborations. In addition, we marketing and sales partners for the cardiovascular indi- expect to generate revenues from royalties on commercial cations. sales of Fenoglide in the U.S. by our partner Sciele Pharma. Longer-term, we expect the majority of our reve- Our first commercialized product, LCP-FenoChol, has nues to be derived from license fees, milestone payments, received FDA approval for sale in the U.S. under the brand royalties on sales of products by our partners and reve- name Fenoglide for the treatment of dyslipidemia as an nues generated from our own sales of products. adjunct to diet in adult patients. Launched in February 2008, Fenoglide is marketed in the U.S. by our partner Sciele Pharma. In addition, we have three clinical programs in the cardiovascular area: LCP-AtorFen, a fixed-

I – 43 Research and Development Costs. Research and develop- house. Finally, it must be documented with sufficient cer- ment costs comprise license costs, manufacturing costs, tainty that future revenue from the development project preclinical and clinical trial costs, salaries and other per- will exceed the costs of production and development and sonnel costs including pensions, and other costs including for the costs of sale and administration of the product. cost of facilities, depreciation and amortization related to research and development activities. Development costs relating to individual projects are recognized as assets only if there is sufficient certainty that General and Administrative Expenses. General and admin- future earnings from the individual projects will exceed istrative expenses comprise salaries and other personnel not only production, sales and administrative costs, but costs including pensions, office supplies, cost of facilities, also the actual development costs of the product. We and depreciation and amortization related to administra- believe that there is generally great risk involved in the tive activities. development of pharmaceutical products, and there is consequently not, at present, sufficient certainty of future CRITICAL ACCOUNTING POLICIES AND earnings. The future economic benefits related to product ACCOUNTING ESTIMATES development cannot be determined with sufficient certainty until the development activities have been com- A full description of our accounting policies is provided in pleted and the necessary approvals have been obtained. Part II, pages II-13 through II-19 of the audited consoli- As a result, we have decided to expense the development dated financial statements for 2005, 2006 and 2007. costs incurred during the period to which they relate. Development costs are recognized in the income state- Critical estimates, assumptions and judgments. Our most ment when incurred if the requirement for capitalization critical estimates, assumptions and judgments of our of the development costs is assessed not to have been accounting policies are our policies on revenue recogni- complied with. tion and on capitalization of development costs. Esti- mates, assumptions and judgments made in the applica- Joint Ventures/Collaboration Agreements. Collaboration tion of our accounting policies, including those described agreements within the Company’s industry are often below, may not be accurate and are subject to change. structured so that each party contributes its respective Such inaccuracies or changes may have a material effect skills in the various phases of a development project. No on our results of operations. joint control exists for such collaborations and the parties do not have any financial obligations on behalf of each Revenue recognition. Income is recognized over the other. Accordingly, the collaborations are not considered period of the agreements in accordance with the terms of to be joint ventures as defined in IAS 31, “Financial the agreements when it is considered realized or realiz- Reporting of Interests in Joint Ventures”. able and earned. This means that the general criteria for income recognition have to be met, all significant risks RECENT DEVELOPMENTS and rewards of ownership of the goods/services have been transferred to the buyer, the Company retains nei- In January 2008, the Company announced positive interim ther continuing managerial involvement to the degree results from Phase II clinical studies of LCP-Tacro in liver usually associated with ownership nor effective control transplant recipients and initiated Phase II clinical studies over the goods/services sold, the amount of revenue can of LCP-Tacro for the treatment of autoimmune hepatitis. be measured reliably, it is probable that the economic On 21 February 2008, Sciele Pharma launched Fenoglide benefits associated with the transaction will flow to the in the U.S. On 28 February 2008, the Company published Company, and the costs incurred or to be incurred in its preliminary annual report for 2007. On 1 March 2008, respect of the transaction can be measured reliably. Hans Christian Teisen assumed the position of the Com- pany’s Chief Financial Officer, replacing Michael Wolff Jen- Capitalization of development costs. As per IAS 38 “Intan- sen. On 3 March 2008, the Company announced positive gible assets”, intangible assets arising from development results from its Phase II clinical studies of LCP-Tacro in projects must be recognized in the balance sheet if the kidney transplant recipients. On 14 March 2008, the Com- criteria for capitalization are met. That means (1) that the pany held an extraordinary general meeting whereby the development project is clearly defined and identifiable, (2) Board of Directors was authorized to increase the Compa- that technical exploitation potential has been demon- ny’s share capital by up to 25,000,000 Shares. On 17 strated and that sufficient resources can be documented March 2008, the Company published its annual report for for completing the development work and marketing the 2007 final product or for use of the product in-house; and (3) that the company’s management has indicated its inten- We have incurred losses and decreased our cash position tion to produce and market the product or use it in- since 31 December 2007 in line with our expectations.

I – 44 RESULTS OF OPERATIONS reflecting interest earned on a higher average cash balance in the years ended 31 December 2006 and Years ended 31 December 2005, 2006 and 2007 31 December 2007 compared with the year ended 31 December 2005. Revenues were DKK 2,754 thousand (€369 thousand) in 2005, DKK 9,740 thousand (€1,306 thousand) in 2006, Financial expenses were DKK 1,779 thousand (€239 thou- and DKK 64,705thousand (€ 8,678 thousand) in 2007. sand) in 2005, DKK 1,648 thousand (€221 thousand) in The revenues in 2005 consisted of payments for research 2006 and DKK 5,856 thousand (€ 786 thousand) in 2007. and development work related to LCP-Lerc in connection The financial expenses in 2005 primarily reflect interest with our collaboration with Recordati. The revenues in expenses in connection with financial leases and a tempo- 2006 arose primarily from services provided by the Com- rary overdraft facility with Danske Bank. In 2006, the over- pany under the collaboration agreements with Sandoz, draft facility was paid back, thereby reducing the interest Mylan and Recordati related to LCP-Feno and LCP-Lerc, expenses; however, this reduction was partly offset by respectively. The revenues in 2007 consisted primarily of interest expenses arising from additional financial lease milestone payments received under our license agreement arrangements. In 2007, the financial expenses primarily with Sciele Pharma upon the approval by the FDA of comprised interest expenses in connection with finance Fenoglide, but also include payments for services provided leases, but also net exchange rate losses following the under our other collaboration agreements. significant fluctuations in foreign currencies over the year.

Research and development costs totaled DKK 80,919 LIQUIDITY AND CAPITAL RESOURCES thousand (€10,852 thousand) in 2005, DKK 129,403 thousand (€17,354 thousand) in 2006 and DKK 183,608 Since our inception, we have financed our operations pri- thousand (€ 24,624 thousand) in 2007. The increased marily through the sale of our securities in public and pri- rate of expenditures over the periods reflects the addi- vate placements, license fees and milestone payments. tional costs incurred in connection with the expansion of Since inception we have raised DKK 756,400 thousand our business activities, including the expansion and (€101,440 thousand), net, through the issuance of secu- advancement of our clinical studies and the hiring of rities to our shareholders and generated revenues of DKK employees in research and development (increasing from 82,037 thousand (€ 11,001 thousand). 21 at the beginning of 2005 to 68 permanent staff) at 31 December 2007). As of 31 December 2007, we had cash and cash equivalents of DKK 331,740 thousand (€ 44,489 thousand) as General and administrative expenses were DKK 16,170 compared with cash and cash equivalents of DKK 464,658 thousand (€2,169 thousand) in 2005, DKK 29,395 thou- thousand (€ 62,315 thousand) as of 31 December 2006. sand (€3,942 thousand) in 2006 and DKK 54,033 thou- This decrease reflects the expenditures associated with sand (€ 7,246 thousand) in 2007. The increased rate of our expanded business activities, including manufacturing expenditures in 2006 compared with 2005 was primarily costs related to the progression of our current and attributable to a significant increase in warrant compensa- planned clinical studies for our product candidates. For tion expenses in 2006. The increase in expenditures in additional information regarding our liquidity and capital 2007 compared with 2006 was primarily attributable to resources, see Part III, Section 3.1 “Working Capital”. the development of our administrative functions to reflect the expansion of our operations, including those relating CASH FLOWS to being a listed company following our IPO in November 2006. The increase in expenditures includes increased Cash flow from operating activities. Our cash outflow for personnel expenses including warrant compensation costs operating activities amounted to DKK 86,771 thousand and the establishment of our subsidiary in the U.S. (€11,637 thousand) in 2005, DKK 125,813 thousand (€16,873 thousand) in 2006 and DKK 130,727 thousand During 2007, the Company recognized a total of DKK (€ 17,532 thousand) in 2007. Cash flow used in operat- 18,017 thousand (€2,416 thousand) as share-based ing activities is attributable primarily to the initiation and compensation, compared to DKK 13,208 thousand completion of clinical development activities, as well as (€1,771 thousand) in 2006. The warrant compensation general and administrative expenses. The period-to- costs for 2007 were allocated to research and develop- period increase is primarily due to increasing research and ment costs at DKK 7,986 thousand (€1,071 thousand) development costs reflecting the increasing level of clini- and to general and administrative expenses at DKK cal activities arising from the advancement of our product 10,031 thousand (€1,345 thousand). pipeline. The cash flow from operating activities for 2007 was positively affected by the increasing revenues in Financial income was DKK 945 thousand (€127 thousand) 2007 compared with 2006. in 2005, DKK 2,993 thousand (€401 thousand) in 2006 and DKK 18,553 thousand (€ 2,488 thousand) in 2007,

I – 45 Cash flow from investing activities. Our cash flows used in We anticipate that the level of capital expenditure in the investing activities comprise our net addition of plant and future will be higher as we expand our clinical studies, equipment and, in 2007, also cash transferred to a research and development and other business activities, restricted security deposit. Our cash outflow for investing increase the number of employees and make additional activities amounted to DKK 13,572 thousand (€1,820 leasehold improvements in connection with the expansion thousand) in 2005, DKK 7,222 thousand (€969 thou- of our facilities. sand) in 2006 and DKK 7,298 thousand (€979 thousand) in 2007. Where considered efficient, we finance our capital expenditures through finance lease contracts, primarily with Cash flow from financing activities. Our cash inflow from respect to laboratory equipment, other operational assets financing activities is attributable primarily to net pro- and leasehold improvements. We have entered into such ceeds in connection with the issue of Shares and net lease agreements with three different lessors. The carry- financing of plant and equipment investments in connec- ing amount of plant and equipment and leasehold tion with finance leases. Our cash inflow from financing improvements under finance leases at the end of each activities amounted to DKK 187,558 thousand (€25,153 year amounts to DKK 21,837 thousand (€2,929 thou- thousand) in 2005, DKK 510,469 thousand (€68,459 sand) for 2005, DKK 26,768 thousand (€3,590 thousand) thousand) in 2006 and DKK 3,769 thousand (€505 thou- for 2006 and DKK 21,831 thousand (€2,927 thousand) sand) in 2007. The increase in 2006 reflects primarily the for 2007. cash inflow from the completion of the initial public offering in November 2006 resulting in net proceeds to the IMPACT OF INFLATION Company of approximately DKK 500,000 thousand (€67,055 thousand). Total expenses incurred in connec- The impact of inflation and changing prices on our operation with the initial public offering amounted to approxi- tions was not significant during the periods presented. mately DKK 56,500 thousand (€7,577 thousand). The cash flow from financing activities in 2007 comprised DKK QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 9,007 thousand (€1,208 thousand) in net proceeds from MARKET RISK the exercise of employee warrants. The primary objective of our investment activities is to CAPITAL EXPENDITURES preserve capital while at the same time maximizing the income we receive from our investments without signifi- Our capital expenditures totaled DKK 13,572 thousand cantly increasing risk. We currently maintain our portfolio (€1,820 thousand), DKK 7,222 thousand (€969 thousand) of cash and cash equivalents in interest-bearing bank and DKK 5,900 thousand (€791 thousand) for the years deposits. In the future, some of the securities in which ended 31 December 2005, 2006 and 2007, respectively. we invest may bear market risk. This means that a change In each period, the expenditures consisted primarily of the in prevailing interest rates may cause the fair value of the purchase of laboratory equipment and the establishment principal amount of our investment to fluctuate. For of office facilities, including leasehold improvements. example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest rate later rises, the fair value of the principal amount of our investment will probably decline.

I – 46 FOREIGN CURRENCY RATE FLUCTUATIONS OFF-BALANCE SHEET OBLIGATIONS

Our functional currency is Danish Kroner. Foreign currency Beyond the purchase obligations and operating lease obli- transactions are translated at the exchange rate prevailing gations described below, we do not have any material on the transaction date. Receivables, payables and other off-balance sheet obligations. monetary items denominated in foreign currencies that have not been settled at the balance sheet date are CONTRACTUAL OBLIGATIONS translated using the exchange rate prevailing on the balance sheet date. Exchange rate differences that arise Our contractual obligations relate primarily to finance between the rate at the transaction date and the rate at leases and operating leases. the settlement date are recognized in the financial statement as financial income or financial expenses. The following table summarizes our contractual obligations as of 31 December 2007 and the effect such obliga- Since most of our cash denominated in foreign currencies tions are to have on our liquidity and cash flows in future is a natural hedge for our transactions in foreign curren- periods. cies, we do not consider that there is a need to enter into specific contracts to reduce our exposure to changes in foreign currency exchange rates, such as by entering into options or futures contracts.

Payments Due by Period (1) (in thousands) Less than 1-5 More than 1 Year Years 5 Years Total DKK € DKK € DKK € DKK €

Finance lease obligations 5,092 683 18,357 2,462 2,058 276 25,507 3,421 Operating lease obligations 10,682 1,433 29,296 3,929 10,236 1,372 50,214 6,734

Total contractual obligations 15,774 2,116 47,653 6,391 12,294 1,648 75,721 10,155

1) We do not have any obligations for the payment of license fees, milestone payments or royalties related to our current product candidates.

I – 47 11. Capital Resources

LifeCycle Pharma’s capital resources currently consist of cash and cash equivalents. As of 31 December 2007, the Company’s capital resources totaled DKK 331,740 thousand (€44,489 thousand). For a description of the Com- pany’s cash ﬂows see Part I, Section 10 “Review of Oper- ations and Financial Statements–Cash Flows”. The Company is presently ﬁnanced through equity and does not have any material interest-bearing debt. The Compa- ny’s capital resources are not subject to any restrictions that materially affect or could materially affect its operations.

The Company aims to preserve capital while at the same time maximizing the income received from secure investments without signiﬁcantly increasing risk. The Company currently maintains its cash reserves by placing them in short term deposit accounts. Due to the short-term nature of these deposits, the Company believes it has no material exposure to interest rate risk arising from these investments.

In the future, the Company expects to continue to generate cash ﬂow from license fees and milestone payments, from existing as well as potentially new partners, future product sales, future royalty payments and other sources, if any, as well as capital resources accessed through equity or debt ﬁnancing, as required.

I – 48 12. Research and Development, Patents and Licenses

12.1 Research and development ent is granted. The outcome of the patent prosecution for biotechnology and pharmaceutical products is generally The Company is primarily a research and development highly uncertain and it involves complex legal and scien- company, and, therefore, substantially all its operating tific questions. The standards which patent offices in dif- costs are incurred to support research and development ferent countries use to grant patents, or to define the activities. subject matter or scope of allowable claims, are not always applied predictably or uniformly, and can change without prior notice. Except for some U.S. patent applica- Table 5. Total Operating Costs tions that remain confidential for the entire time prior to issuance as a patent, patent applications are typically (DKK million) 2005 2006 2007 published 18 months after the date of filing. Similarly, publications of discoveries in the scientific literature often Research and development costs 81 129 184 lag behind actual discoveries. Neither we nor our partners Administrative expenses 16 29 54 can be certain that we were the first to make the inven- Total operating costs 97 158 238 tions claimed in our pending patent applications, or that we were the first to file for protection of the inventions described in these patent applications. For additional information, see Part I, Section 10 “Review of Operations and Financial Statements”. The mere issuance of a patent does not guarantee that it is valid or enforceable. Even if issued, patents may be challenged, invalidated or circumvented, which may limit 12.2 Patents and other intellectual our ability and the ability of our partners to stop competi- property rights tors from marketing similar products, and may decrease the length of time of the patent protection afforded. In PATENT STRATEGY addition, our patents and those of our partners may not afford protection against competitors with similar technol- Our patent strategy is to secure intellectual property rights ogy. Accordingly, we cannot predict the degree of future that underpin our drug development programs and to protection for our current or future proprietary rights, or actively defend our technologies, inventions and improve- the breadth of claims allowed in any patent issued to us ments to inventions that are commercially important to or to our partners. the development of our business. We file patent applications initially in the U.S. or in Denmark with subsequent The most important form of patent protection for bio- international applications (referred to as a PCT application) pharmaceutical technologies is generally in the form of designating all PCT member states followed by national drug substance patents also referred to as compound or phase applications in relevant countries and jurisdictions. composition-of-matter patents, which prevent third par- Our European patent applications are filed with the Euro- ties from any use of the patented compound; as opposed pean Patent Office and subject to regulatory review under to formulation patents, which prevent third parties from the European Patent Convention, which presently provides using only particular formulations of a given compound, for protection in 37 European countries. and use patents (known as method-of-use patents in the U.S. and second medical use patents in Europe), which Our success will depend upon our ability, and upon the prevent third parties only from using a given formulation ability of our partners, to obtain protection for our inno- for a specific use, such as a new medical indication. In vative technologies incorporated into our products or addition, patents may be granted on processes for manu- product candidates in Europe, the U.S. and other coun- facturing drug substances and formulations. No assur- tries. The process of identifying and seeking patent pro- ance can be given that an application for formulation tection is expensive and time consuming, and we or our patent protection will not be narrowed to cover only par- partners may not be able to file and prosecute all neces- ticular uses. Where we or our partners have only sary or desirable patent applications at a reasonable cost method-of-use or process patent coverage for a product or in a timely manner. Our pending or future applications candidate, it may be more difficult to enforce such patent and those of our partners may not result in issued pat- protection. ents, or may need to be refined or narrowed before a pat-

I – 49 In addition to patents, we rely on trade secrets to protect Even though we and our partners believe that we have our business model and approach, especially where pat- freedom-to-operate for our LCP-Feno product candidate, ent protection is believed not to be appropriate or obtain- companies marketing branded pharmaceutical products able. We possess trade secrets and copyrights in the pro- routinely bring litigation against generic applicants which prietary process, including algorithms and user interfaces seek FDA approval to manufacture and market generic associated with the process, for evaluating clinical and forms of their branded products prior to the expiry of pat- scientific data and identifying drugs and drug candidates ents listed in the Orange Book. These companies typically of potential application to our business. We also possess allege patent infringement as the basis for filing law suits important trade secret information in the output of that against a generic applicant. Abbott has routinely brought proprietary process. However, trade secrets are difficult to litigation against generic companies seeking FDA approval protect. We attempt to protect our technology, in part, for fenofibrate formulations, including litigation against with confidentiality agreements with our employees, con- Novopharm, Teva, Impax and Cipher. sultants and partners. These confidentiality agreements may not provide meaningful protection and may be Abbott and/or Solvay may initiate legal proceedings breached. In addition, our trade secrets may become against us following our regulatory filing of LCP-Feno with known or independently developed by a third party, or the FDA, if any. There is also a possibility that other third misused by any collaborator to whom we disclose such party patent infringement claims will be brought against information. us. With certain exceptions, Sandoz and Mylan will indemnify us for any losses we incur or must pay to a third Our commercial success will depend in part on not infring- party as a result of patent infringement litigation brought ing upon the proprietary rights of third parties. We are against us by Abbott and/or Solvay. Sandoz may offset not aware of any valid third party patent rights that we certain of these costs against the royalty payments they believe would be infringed by our MeltDose process or by may be required to make to us. our planned product candidates. However, no assurance can be given that no third-party patents exist or might With respect to LCP-Feno in Europe, we filed an opposi- issue that would require us to alter our development or tion in July 2006 against European patent EP-B-1273294 commercial strategies or our products or processes, belonging to Fournièr and claiming an immediate release obtain licenses, or cease certain activities. Even if our of the fenofibrate formulation, on the grounds that all of MeltDose process is itself determined to be patentable, the granted claims are invalid. Along with us, three other that does not necessarily mean that such process does companies have pending oppositions against Fournièr’s not infringe any third party patents. Furthermore there patent. All parties have filed written observations. Oral can be no assurance that particular products made by proceedings at the Opposition Division of the European such process would not infringe the patent rights of oth- Patent Office are scheduled for October 2008. The deci- ers. Our breach of our license agreements or failure to sion of the Opposition Division can be appealed by any obtain a license to patents or technology that we may party. No assurance can be given that Fournièr’s patent require in order to develop or commercialize our future claims will be rejected or properly restricted as a result of products may have a material adverse impact on us. the opposition proceedings filed by us or others or the subsequent appeal proceedings, if any, at the European We believe we will have freedom to operate for our tablet Patent Office. If the oppositions filed by us and/or others formulation of tacrolimus. We have obtained a positive are unsuccessful in opposing this patent, we may be pre- freedom-to-operate opinion from an external European vented from commercializing or marketing LCP-Feno in patent attorney and a positive freedom-to-operate opin- Europe for the life of this patent. ion from a U.S. law firm. We believe we possess freedom to operate for our combi- We also believe that we have freedom to operate for our nation tablet formulation of fenofibrate and atorvastatin. tablet formulations of fenofibrate (Fenoglide and LCP- We have obtained a positive freedom-to-operate opinion Feno). We have obtained positive freedom-to-operate from an external European patent attorney. opinions in respect of our fenofibrate/Fenoglide formulation from an external European patent attorney and from a Even though we and our partners believe that we have U.S. law firm. We have also obtained positive non-infringe- freedom-to-operate for our LCP-AtorFen product candi- ment opinions, prepared by a U.S. law firm, relating to the date, companies that market branded pharmaceutical U.S. patents for which we have filed Paragraph IV certifica- products routinely bring litigation against applicants seek- tions with the FDA for Fenoglide. We have also obtained ing FDA approval to manufacture and market alternate positive non-infringement opinions, prepared by a U.S. law forms of their branded products prior to the expiry of pat- firm, relating to our fenofibrate formulation in relation to ents listed in the Orange Book. These companies typically U.S. patents listed in the Orange Book for Tricor. allege patent infringement as the basis for filing law suit

I – 50 against an applicant. Pfizer may initiate legal proceedings As of the Offering Circular Date, four patents related to against us in accordance with the Hatch-Waxman Act fol- our MeltDose technology platform have issued: U.S. Pat- lowing our regulatory filing. After market launch of the ent No. 7,217,431 and South Africa Patent No. product, there is also the risk that other third-party pat- 2004/0044 to the Controlled Agglomeration as well as ent infringement claims will be brought against us. U.S. Patent No. 7,252,247 and European Patent No. EP-B- 1497034 to a self-cleaning spray nozzle. A Russian patent Third-party patents or patent applications may conflict to the Controlled Agglomeration is under issuance (is with patent applications to which we have rights. Any accepted by the Russian Patent Office). The correspond- such conflict may substantially reduce the coverage of any ing patent applications in other countries and regions are rights that may issue from the patent applications to still pending. There can be no assurance that more pat- which we have rights. If third parties prepare and file patents covering our MeltDose technology platform will be ent applications in the U.S. that also claim the technology issued, or that the scope of any issued claims will not be to which we have rights, we may have to participate in substantially narrowed in the course of examination. interference proceedings in the U.S. Patent and Trademark Office to determine priority of invention. In addition, we have filed patent applications in the area of drug delivery technology: PATENT AND PATENT APPLICATION PORTFOLIO • Porous tablets as carriers for liquid formulations As of the Offering Circular Date we have a total of 136 (published as WO 2006/000229); pending patent applications covering • Disintegrating tablets (published as WO 2007/076874); • our technology platform including our MeltDose tech- and nology platform (34 pending patent applications) • Controlled convective zero order drug delivery device • our products (102 patent applications). Four patents (DK patent application nos. PA 2007 01330 and relating to our MeltDose technology platform have PA 2007 01331; unpublished). issued and one patent is under issuance PATENT AND PATENT APPLICATION PORTFOLIO ON PATENT AND PATENT APPLICATION PORTFOLIO PRODUCTS AND PRODUCT CANDIDATES ON TECHNOLOGY PLATFORM We regularly seek patent protection for new product We believe that we have established strong intellectual opportunities and for value-added improvements related property protection around our core technology through to pharmacokinetics; efficacy; safety and Adverse Drug claims addressing different angles of the technology plat- Reaction (ADR); treatment regimens; and novel indica- form: the process itself, choice of meltable carrier, con- tions and drug combinations. centration of carrier and choice of active compound and equipment. We are actively prosecuting 16 product-specific patent families, including 102 pending national/PCT patent appli- We have filed the following patent applications related to cations in the following product/therapeutic areas: the MeltDose technology platform:

• Controlled agglomeration (published as Figure 6. LifeCycle Pharma Patent Applications WO 03/004001); Number of Number of • A self-cleaning spray nozzle (published as Patent Pending Patent WO 2004/056487); Product/Therapeutic Area Families Applications

• Modiﬁed-release pharmaceutical composition based on Fenoﬁbrate 7 44 a controlled agglomeration technique (published as Tacrolimus 6 26 WO 2005/032525); and Lercanidipine 1 20 Immunosuppressants 1 10 • Use of a silica derivative as absorption material Other therapeutic areas 1 2 (published as WO 2004/073689).

I – 51 FENOFIBRATE (INCLUDING COMBINATION PRODUCTS) National/regional phase applications for WO2005/034920 A1 have been continued in the U.S., Canada, Europe, Two PCT applications relating to fenofibrate formulations China, South Korea and Japan. National/regional phase were filed, the first on 1 October 2004 and the second on applications for WO2005/034908 A1 have been filed for 13 April 2005, with the following respective publication/ the U.S., Canada, Mexico, Brazil, Europe, Russia, India, application numbers and publication dates and titles: China, South Korea, Japan and Australia; and several con- WO2005/034920 A1 published on 21 April 2005; A Solid tinuation-in-part applications have been filed for in the Dosage Form Comprising a Fibrate, and PCT/ U.S. National/regional phase applications for DK2006/050014, published on 17 August 2006; A Tablet WO2006/084474 have been continued for the U.S., Can- Comprising a Fibrate. National/regional phase applications ada, Mexico, Brazil, Europe, Russia, India, China, South for the first PCT application have been filed in the U.S., Korea and Australia. Canada, Europe, China, South Korea and Japan. For the second PCT application, a continuation-in-part application No patents have yet issued. Most of the patent applica- has been filed in the U.S. and national/regional phase tions are awaiting examination by the respective patent applications have been filed in Canada, Europe and South authorities. The applications derived from Korea. No patents have yet issued. Most patent applica- WO2005/034908 which are pending in Australia, South tions are awaiting examination by the respective patent Korea and Russia are presently being examined. Also, the authorities except for a U.S. application, a Chinese appli- European application derived from WO2006/084474 is cation and a South Korean application, which are pres- presently being examined. ently being examined. LERCANIDIPINE In connection with our LCP-AtorFen product candidate, four distinct patent families have been filed presently A PCT application was filed on 1 December 2004 and was encompassing eight PCT applications with the following published on 16 June 2005 with the publication number publication/application numbers and publication dates WO 2005/053689 A1 and the title Pharmaceutical Com- and titles: WO2005/034920 A1, filed on 1 October 2004, positions Comprising Lercanidipine. National/regional published on 21 April 2005; A Solid Dosage Form Com- phase applications based on this PCT application have prising a Fibrate; WO2005/034908 A1, filed on 1 October been filed for the U.S., Canada, Europe, Japan and 16 2004, published on 21 April 2005; A Solid Dosage Form other countries/regions. A patent has been registered in Comprising a Fibrate and a Statin; WO2006/037344 A1, South Africa. No other patents have yet issued. Most of filed on 3 October 2005, published on 13 April 2006; the patent applications are still awaiting examination by Pharmaceutical Compositions Comprising Fenofibrate and the respective patent authorities; the applications pend- Atorvastatin; WO2006/037345 A1, filed on 3 October ing in Australia, Singapore, India and the Euro-Asian 2005, published on 13 April 2006; Pharmaceutical Com- region (covering up to 9 countries in a single examination positions Comprising Fenofibrate and Simvastatin; procedure) are presently being examined. WO2006/037346 A1, filed on 3 October 2005, published on 13 April 2006; Pharmaceutical Compositions Compris- TACROLIMUS ing Fenofibrate and Simvastatin; WO2006/037347 A1, filed on 3 October 2005, published on 13 April 2006; Two PCT applications relating to LCP-Tacro were filed on Pharmaceutical Compositions Comprising Fenofibrate and 30 August 2004 and published on 10 March 2005 with Atorvastatin; WO2006/037348 A1, filed on 3 October the following publication numbers and titles: 2005, published on 13 April 2006; Pharmaceutical Com- WO2005/020993 A1; Modified Release Compositions positions Comprising Fenofibrate and a Statin; Comprising Tacrolimus and WO2005/020994 A1; Solid WO2006/084474, filed on 10 February 2006, published Dispersions Comprising Tacrolimus. A priority-establishing on 17 August 2006; A Stable Pharmaceutical Composition patent application for LCP-Tacro was filed on 30 May 2007 Comprising a Fixed Dose Combination of Fenofibrate and in Denmark (application number PA 2007 00783; unpub- an HMG-CoA Reductase Inhibitor. A fifth patent family lished; updated on 7 November 2007 as PA 2007 01573, comprises the identical national applications in the U.S. unpublished). A further new priority-establishing patent and Europe published as US2007-0190138 and application was filed on 21 December 2007 in Denmark EP1818049A, respectively, relating to a formulation of (App. No. PA 2007 01885; unpublished). atorvastatin. The U.S. application is presently being examined.

I – 52 National/regional phase applications for each of these TRADEMARKS two PCT applications have been ﬁled in the U.S., Canada, Mexico, Brazil, Europe, Norway, Australia, India, China and We have obtained Danish, European and U.S. trademark Japan. At present no patents have issued. All patent appli- protection for “MeltDose” and our corporate name “Life- cations are still awaiting prosecution by the respective Cycle Pharma”, and Danish trademark protection for “Fen- patent authorities except for two Australian applications, lor”, “Fenlest”, “Coltriva” and the Company’s logo (corre- which are presently being examined. sponding European and U.S. trademark applications are pending). A Danish priority-establishing trademark appli- IMMUNOSUPPRESSANTS cation for “Fenoglide” is pending.

A PCT application relating to LCP-Siro was ﬁled on 8 March See the section entitled ‘‘Risk Factors”, beginning on page 2006 and published on 14 September 2006 with the fol- 12 for a discussion of certain issues in relation to patents, lowing publication number and title: WO2006/094507 A1; trademarks and related matters relevant to our business. Pharmaceutical Compositions Comprising Sirolimus and/or An Analogue Thereof.

National/regional phase applications for this PCT application have been ﬁled in the U.S., Canada, Mexico, Brazil, Europe (covering up to 30 countries), Norway, Australia, India, China and Japan. At present no patents have issued. All patent applications are still awaiting examination by the respective patent authorities.

I – 53 13. Trend Information

We are an emerging specialty pharmaceutical company focused on certain cardiovascular indications and the immunosuppression market. We do not have any in-house commercial-scale production facilities or operations and only recently launched a product on the market. Conse- quently, we are not directly affected by new trends within production.

There is a continuous focus on reducing the rate of increase in health care costs, which has resulted in price pressure in recent years within certain areas of the pharmaceutical market. We expect this trend to be unchanged in the years ahead. However, we believe that demo- graphic developments, increased treatment penetration, especially in newly industrialized countries, and better diagnostic tools will result in continuing high growth in global sales of therapeutic products.

I – 54 14. Board of Directors and Executive Management

14.1 Board of Directors of the Company as Executive Vice President, Research and Development. Dr. Braestrup holds a master’s degree in Chemical Engi- The Company’s Board of Directors currently consists of neering (1967) and is Master of Science in Biochemistry the ﬁve members listed in Figure 7 below, which sets (1971). He became Doctor of Medical Science in 1980 forth name, year of birth and position of the Board mem- and was Adjunct Professor in Neurobiology at the Univer- bers. The business address for the current members of sity of Copenhagen in 1988-1993. Dr. Braestrup is a the Board of Directors is LifeCycle Pharma A/S, Kogle Allé member of the board of directors of the Lundbeck Inter- 4, DK-2970 Hørsholm, Denmark. national Neuroscience Foundation, Chairman of the Board of Lundbeck Cognitive Therapeutics A/S, a registered DR. CLAUS BRAESTRUP – CHAIRMAN manager of Kastan ApS and a member of the board of directors of Profound Invest A/S. From July 2000 to Octo- Claus Braestrup, M.S., M.D., has been a Board member ber 2004, Dr. Braestrup was a member of the board of since March 2006 and Chairman of our Board of Directors directors of Arpida A/S. From November 2000 to March since September 2006. From 2003 and until 5 March 2004, Dr. Braestrup was a member of the board of direc- 2008, Dr. Braestrup was President and CEO of H. Lund- tors of Investeringsforeningen Gudme Raaschou. beck A/S. Dr. Braestrup was a research scientist at St. From June 2002 to June 2003 Dr. Braestrup was afﬁliated Hans Mental Hospital’s Department of Biochemistry/Neu- with Nordic Biotech K/S. From August 2002 to December rochemistry between 1971 and 1978, a research chemist 2003 Dr. Braestrup was chairman of the board of direc- and later a consultant at A/S Ferrosan’s Biochemical tors of Pharmexa A/S. From May 2001 to June 2006, Dr. Department 1978 to 1984, and a research associate at Braestrup was member of the board of directors of Sym- St. Hans Mental Hospital from 1980 to 1984. He was Vice bion Fonden. From June 2001 to May 2005 he was mem- President of Pharmaceutical Research, President of the ber of the board of directors of Hormos Medical Corp. CNS Division, and President of the Diabetes Care Division, Since 2004 Dr. Braestrup has been a member of the respectively, at Novo Nordisk A/S from 1984 to 1994. He board of the University of Copenhagen and since Septem- was Head of Preclinical Drug Research with Schering AG in ber 2006 member of the board of directors of Santaris Berlin from 1994 to 1998, before joining H. Lundbeck A/S Pharma A/S.

Figure 7. Board of Directors

Name Year of Birth Member Since Term Expires Position

Claus Braestrup 1945 2006 2008 Chairman of the Board of Directors (2) (4) Thomas Dyrberg 1954 2003 2008 Board member (1) (3) Jean Deleage 1940 2005 2008 Board member (1) (3) Gérard Soula 1945 2005 2008 Board member Kurt Anker Nielsen 1945 2006 2008 Board member (2)

1) Member of the Compensation Committee. 2) Member of the Audit Committee. 3) Has direct interests in/is employed with Major Shareholders. 4) Until 5 March 2008, Dr. Braestrup was President and CEO of one of our Major Shareholders, H. Lundbeck A/S

I – 55 DR. THOMAS DYRBERG – BOARD MEMBER in 1990 to 2005. Prior to founding Flamel Technologies, Dr. Soula served in various positions at Rhone Poulenc Thomas Dyrberg, M.D., D.M.Sc., has been a Board mem- Group (now known as Aventis) from 1973 to 1990. Dr. ber since September 2003. Dr. Dyrberg has served as a Soula received his M.B.A. from the Institut Partner at Novo Ventures, Novo A/S, a Danish firm that d’Administration d’Enterprises, Aix-Marseille and his Ph.D. provides capital for life science companies, since Decem- from the University of Marseille. ber 2000. Prior to joining Novo A/S, he served in various positions at Novo Nordisk A/S, a healthcare company spe- KURT ANKER NIELSEN – BOARD MEMBER cializing in the treatment of diabetes and before that in research positions at the Hagedorn Research Institute, Kurt Anker Nielsen, Msc, has been a Board member Gentofte, Denmark and the Scripps Research Institute, La since September 2006. Mr. Nielsen is a former CFO and Jolla, California. Dr. Dyrberg received both an M.D. and a deputy CEO of Novo Nordisk A/S (1989 to 2000) and co- D.M.Sc. degree from the University of Copenhagen. He CEO of Novo A/S (2000 to 2003). From November 1996 currently also serves on the board of directors of Sapphire to October 2003 Kurt Anker Nielsen was chairman of the Therapeutics, Inc., Lux Biosciences, Inc, and Ophthotech board of directors of Novo Ventures A/S. From December Corp. 1997 to December 2005 Kurt Anker Nielsen was a member of the board of directors of Coloplast A/S. From Sep- DR. JEAN DELEAGE – BOARD MEMBER tember 2000 to July 2003 Kurt Anker Nielsen was a member of the board of directors of Medicon Valley Capital Jean Deleage, M.S., Ph.D. has been a Board member Management ApS. From November 2000 to June 2003, he since June 2005. He is a founder and managing director was a member of the board of directors of Dako Denmark of Alta Partners, a venture capital firm founded in 1996 A/S. From April 2003 to February 2006 Kurt Anker Nielsen and investing in information technologies and life science was a member of the board of directors of TDC A/S. companies. In 1979, Dr. Deleage was a founder and a From October 2003 to May 2006 Kurt Anker Nielsen was a managing partner of Burr, Egan, Deleage & Co., a venture member of the board of directors of Novo A/S. From No- capital firm in San Francisco and Boston. In 1971, he vember 1996 to October 2003 Kurt Anker Nielsen was a became a member of Sofinnova’s initial team, a venture member of the board of directors of Novo Ventures 1 A/S. capital organization in Paris, and in 1976 formed From May 2005 to June 2007 Kurt Anker Nielsen was a Sofinnova, Inc. (the U.S. subsidiary of Sofinnova). He member of the board of directors of Harno Invest A/S. He received a Master’s Degree in Electrical Engineering from currently serves as chairman of the board of directors of Ecole Superieure d’Electricite in 1962 and a Ph.D. in Eco- Reliance A/S, vice chairman of the board of directors of nomics from the Sorbonne in 1964. In 1984, he was Novozymes A/S, board member of Novo Nordisk Founda- awarded the Ordre National du Merite, and in 1993, he tion, Novo Nordisk A/S, ZymoGenetics, Inc., StatoilHydro was awarded the Legion of Honor from the French gov- ASA and Vestas Wind Systems A/S. In the four last-men- ernment in recognition of his career accomplishments. Dr. tioned companies, Mr. Nielsen is also elected as Audit Deleage serves on the board of IDM Pharma, Inc., Kosan Committee chairman. Mr. Nielsen is also designated as Biosciences Incorporated, Rigel Pharmaceuticals, Inc., 7TM Audit Committee financial expert in Novo Nordisk A/S, A/S, Innate Pharma SA, Nereus Pharmaceuticals, Inc., StatoilHydro ASA and ZymoGenetics, Inc. He is also chair- PamGene B.V. (where he is Chairman), Plexxikon, Inc., Tor- man of the board of Collstrup’s Mindelegat. Mr. Nielsen is rey Pines Therapeutics, Inc. and U3 Pharma AG. From Au- a registered manager of KAN ApS. Mr. Nielsen received his gust 1996 to December 2005 Dr. Deleage was a director Master’s of Commerce and Business Administration from of Xcyte Therapies, Inc. From May 2000 to February 2006, the Copenhagen Business School in 1972. Dr. Deleage was a director in Xantos Biomedicine AG. From June 2001 to April 2006, he was a director of Gene- data AG and from May 1998 to April 2006, he was a 14.2 Executive Management director of AGY Therapeutics, Inc. From April 1999 through January 2007, he was a director of Intarcia Thera- Figure 8 below sets forth the name, year of birth and peutics, Inc. position of our executive management team (“Executive Management”). The business address for the current DR. GÉRARD SOULA – BOARD MEMBER members of Executive Management is LifeCycle Pharma A/S, Kogle Allé 4, DK-2970 Hørsholm, Denmark. Gérard Soula, Ph.D., M.B.A., has been a Board member since November 2005. Dr. Soula founded in December 2005, and is presently the President and CEO of, Proteins & Peptides Management. He was the President and Chief Executive Officer of Flamel Technologies from its inception

I – 56 Figure 8. Executive Management

Name Year of Birth Position

Flemming Ørnskov 1958 President and Chief Executive Officer Hans Christian Teisen 1965 Senior Vice President and Chief Financial Officer Michael Beckert 1963 Executive Vice President and Chief Medical Officer Peter G. Nielsen 1954 Executive Vice President of Pharmaceutical Development and CMC

Flemming Ørnskov and Hans Christian Teisen are regis- HANS CHRISTIAN TEISEN – SENIOR VICE PRESIDENT tered as our Chief Executive Officer and Chief Financial AND CHIEF FINANCIAL OFFICER Officer, respectively, with the Danish Commerce and Com- panies Agency and are referred to jointly in certain places Hans Christian Teisen has served as our Chief Financial in this Offering Circular as our “Registered Management”. Officer since March 2008. Previously he was Executive Vice President and Chief Financial Officer at Bavarian Nor- FLEMMING ØRNSKOV, M.D., M.B.A, M.P.H. dic A/S, where he was also responsible for commercial – PRESIDENT AND CHIEF EXECUTIVE OFFICER affairs. Prior to joining Bavarian Nordic A/S, Mr. Teisen was Vice President of Finance, IT, Procurement & Strategy at Dr. Flemming Ørnskov has served as our Chief Executive Rockwool International A/S in Denmark. Mr. Teisen has Officer since September 2006. From September 2005 worked for The Ministry of Foreign Affairs in Denmark, to September 2006 he was a director and chairman of our where he served as Head of Section, Foreign Policy Board of Directors. Previously, from October 2005 and Department; First Secretary of Embassy, Royal Danish until September 2006, Dr. Ørnskov was President and Embassy, London; and Head of Section - EU, Maastricht Chief Executive Officer of Ikaria, Inc., a Seattle-based, pri- Treaty, EMU and Economic Cooperation. Hans Christian vately held biotech company which was sold to a private Teisen has an MA in Political Science from the University equity company, and incorporated into a newly created of Copenhagen and an E*MBA from SIMI. critical care company, INO-Ikaria. Prior to this he was the President of the Ophthalmics Business Unit at Novartis Prior positions: from January 2003 until September 2005, and the Vice President, Head of the U.S. CV Therapeutic Franchise for Executive Vice President & CFO, Novartis from 2001 to 2002. Prior to his service at Novar- Bavarian Nordic A/S 2004 to 2008 tis, Dr. Ørnskov worked for Merck & Co., Inc. as Outcomes Vice President of Finance, IT, Procurement & Research Department Senior Manager and Associate Strategy at Rockwool International A/S 1999 to 2004 Director from 1994 to 1996, Senior Marketing Manager Project Manager at Rockwool International A/S 1997 to 1999 from 1996 to 1997, Marketing Director from 1997 to Diplomat with Ministry of Foreign Affairs 1990 to 1997 1998, Manager from 1998 to 2000, Senior Marketing Director from 2000 to 2001, and Urology Franchise Busi- ness Group Leader in 2001. Dr. Ørnskov received his M.D. MICHAEL BECKERT, M.D – EXECUTIVE VICE PRESIDENT degree from University of Copenhagen, his M.B.A. degree AND CHIEF MEDICAL OFFICER from INSEAD and his Master of Public Health degree from Harvard University. Dr. Ørnskov is executive director of Dr. Michael Beckert has served as our CMO since 2004. Flemmingo ApS and a chairman of the board of directors Previously, he was Medical Director at SkyePharma AG, of Santaris Pharma A/S and Astion Pharma A/S. Switzerland, responsible for preclinical development, clinical development and regulatory affairs. Dr. Michael Beck- Prior positions ert has a substantial background in Clinical Development, Regulatory Affairs and Pharmaceutical Development in a President and CEO Ikaria, Inc. 2005 to 2006 variety of different dosage forms and indications. For- President of the Ophthalmics Business Unit, merly a physician at the University Hospital Rudolf-Vir- Novartis 2003 to 2005 chow (Charité), Berlin, he joined Merck Sharp & Dohme Vice President, Head of the U.S. (Germany) as Research Manager Immunology & Anti- CV Therapeutic Franchise, Novartis 2001 to 2002 infective and was subsequently appointed as Senior Man-

I – 57 ager Clinical Development MSD Austria, responsible for 14.3 Statement on Past Records of the Board of Clinical Development, Regulatory Affairs and Medical Ser- Directors and Executive Management vices. He was also part of the MID Europe Region Coordi- nation Team and Merck & Co’s Medical Director’s Team. During the past five years, none of the members of our As Chief Medical Officer and a co-founder of Scil Biomedi- Board of Directors or our Executive Management has been cals, Dr. Beckert was responsible for clinical development, (i) convicted of fraudulent offences or (ii) an officer in any regulatory affairs, pharmacoeconomics and medical mar- company that has entered into bankruptcy, receivership or keting. As a member of the Senior Management, he was liquidation or (iii) subject to any official public incrimina- also taking over alliance managements tasks and a mem- tions and/or sanctions by statutory or regulatory authori- ber of the product development Steering Committee. ties (including designated professional bodies) or (iv) dis- qualified by a court from acting as a member of the Prior positions administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of Medical Director, SkyePharma AG, the affairs of any issuer. Muttenz, Switzerland 2003 to 2004 Chief Medical Officer, Scil Biomedicals GmbH, Munich, Germany 1999 to 2002 14.4 Statement of Kinship and Statement Senior Manager, Clinical Development, MSD, of Conflict of Interest Vienna, Austria 1996 to 1999 We are not aware of any family ties among the members of our Board of Directors or our Executive Management. PETER G. NIELSEN – EXECUTIVE VICE PRESIDENT OF The Company is not aware of any understanding among PHARMACEUTICAL DEVELOPMENT AND CMC Major Shareholders, customers, suppliers or others with respect to election of members of the Board of Directors Peter G. Nielsen has served as responsible for our CMC or appointment of Executive Management. area including drug delivery research, pharmaceutical development and manufacturing activities since early Other than as set forth immediately below, no actual or 2007. Previously he was Corporate Vice President at Novo potential conflict of interest exists between any duties of Nordisk A/S, latest being responsible for formulation the members of our Board of Directors or our Executive development and clinical supplies. Earlier in his career at Management towards us and these persons’ private inter- Novo Nordisk A/S he was Vice President responsible for ests and/or duties to other persons. other CMC Development activities including analytical and drug substance development within both biotechnology From 2003 until 5 March 2008, the Chairman of our products and NCEs. He has a very strong background and Board of Directors, Claus Braestrup was President and experience within research and development of new med- CEO of H. Lundbeck A/S, which is one of our Major Share- ical entities, and throughout his career he has brought holders. We have dealings with H. Lundbeck A/S, see Part several projects through the pipeline to late stage devel- I, Section 19 “Related Party Transactions” and Part I, Sec- opment and to regulatory approval. Peter G. Nielsen is tion 22 “Agreements”. We have entered into a consulting biochemist by training from the University of Copenhagen. agreement with a member of our Board of Directors, Mr. Gérard Soula. For more information on this arrangement, Prior positions see Part I, Section 19 “Related Party Transactions”.

Corporate Vice President, Formulation & See Part III, Section 7 “Selling Security Holders and Lock- Clinical Supplies, Novo Nordisk A/S, Denmark 2005 to 2007 up Agreements” for a description of lock-up agreements Vice President, CMC Development, concluded by the Company’s Board of Directors and Exec- Novo Nordisk A/S, Denmark 2002 to 2005 utive Management and the Joint Global Coordinators and Vice President, Pharmaceutical Development, Lead Managers in connection with the Offering. Novo Nordisk A/S, Denmark 1997 to 2002

From 2003 and until 29 February 2008, Mr. Michael Wolff Jensen served as the Company’s Executive Vice President and Chief Financial Ofﬁcer. Mr. Wolff Jensen will receive his regular monthly base salary until 31 May 2008.

I – 58 15. Remuneration and Beneﬁts

15.1 Remuneration of the Members of the The aggregate cash remuneration to the members of Board of Directors Executive Management (excluding the members of Regis- tered Management set forth above) totaled DKK 3,553 During 2007 the members of the Board of Directors thousand (€476 thousand) for 2007, including DKK 720 received an aggregate cash remuneration of DKK 213 thousand (€97 thousand) in bonus payments. During thousand (€29 thousand). 2007, the Company recognized share-based remuneration totaling DKK 1,698 thousand (€228 thousand) for war- During 2007 the Company recognized share-based remu- rants issued to members of Executive Management (other neration totaling DKK 574 thousand (€77 thousand) for than the members of Registered Management set forth warrants issued to members of the Board of Directors. above).

The Company has not granted any loans, issued any guar- The Company has not granted any loans, issued any guar- antees, or made any other commitments in respect of the antees or made any other commitments to or on behalf Board of Directors or any member thereof. No exceptional of any member of Registered Management or Executive agreements, including agreements regarding extra bonus Management. schemes, have been concluded between the Company and any member of the Board of Directors and no mem- Other than described in Part I, Section 16.3 “Information ber of the Board of Directors is entitled to any compensa- regarding contract terms for Executive Management”, no tion upon termination of his or her term. unusual or extraordinary agreements, including agreements regarding extra bonus schemes, have been con- There are no amounts set aside or accrued by the Com- cluded between the Company and the members of Regis- pany to provide pension, retirement or similar beneﬁts for tered Management or Executive Management. The members of the Board of Directors and the Company has members of Registered Management and Executive Man- no current obligations to do so. agement are not entitled to any extraordinary beneﬁts upon termination of employment.

15.2 Remuneration of Registered Management There are no amounts set aside or accrued by the Com- and Executive Management pany to provide pension, retirement or similar benefits for employees, including members of Registered Management The aggregate cash remuneration to the members of Reg- or Executive Management and the Company has no istered Management for 2007 (at the time consisting of unmet obligations to do so. our President and Chief Executive Officer Flemming Ørns- kov and our former Executive Vice President and Chief Financial Officer Michael Wolff Jensen) totaled DKK 7,331 15.3 Shares and Warrants held by the Board of thousand (€983 thousand) including DKK 2,482 thousand Directors and Executive Management (€333 thousand) in bonus payments. During 2007, the Company recognized share-based remuneration totaling See Part I, Section 17.2 “Shareholdings and Warrants for DKK 7,037 thousand (€944 thousand) for warrants Members of the Board of Directors and Executive Man- issued to members of Registered Management (at the agement” for information regarding holdings of shares time consisting of our President and Chief Executive Offi- and warrants for the individual members of the Board of cer Flemming Ørnskov and our former Executive Vice Pres- Directors and Executive Management. ident and Chief Financial officer Michael Wolff Jensen).

I – 59 16. Practices of the Board of Directors and Executive Management

16.1 Practices of the Board of Directors the Rules of Procedure, the Board of Directors is obligated to assess the auditor’s long form report prior to The Board of Directors (also sometimes referred to as the signing the same and to review the interim financial “Board”) is entrusted with the ultimate responsibility for statements and annual report. the Company and the supervision of Executive Manage- ment. Board duties include establishing policies for strat- Regular board meetings include an in-depth report from egy, accounting, organization and finance, and the Executive Management to the Board regarding the Com- appointment of executive officers. The Articles of Associa- pany’s operations status and progress. The Board has tion stipulate that the Board of Directors is elected by the issued management instructions which set forth general Company’s shareholders at the annual general meeting and principles to be followed by Executive Management con- members are elected for one-year terms. Members may cerning the Company’s day-to-day business. The manage- stand for re-election for successive terms. The Board of ment instructions are updated by the Board according to Directors shall consist of not less than three and no more the Company’s progress. than nine members elected by the Company’s shareholders at the general meeting. The Board of Directors has estab- The seniority, the date of expiration of the current term lished a compensation committee and an audit committee. of office and the positions for the members of the Board of Directors is set out in Figure 7 on page I-55. The Board of Directors convenes regularly and conducts its business according to its Rules of Procedure. The None of the members of the Board of Directors is entitled Rules of Procedure comply with the requirements of sec- to remuneration upon expiration of the term for which he tion 56(7) of the Danish Public Companies Act, which has been appointed. applies to listed companies. The Rules of Procedure set out, inter alia, guidelines for the division of responsibilities among the Board, Executive Management and com- 16.2 Practices of Executive Management mittees. The Board of Directors has prepared guidelines to ensure that Executive Management complies with Executive Management is responsible for the day-to-day instructions from the Board and for the establishment management of our business and shall in that capacity and maintenance of minute books, share registers and follow the directions and guidelines provided by the Board protocols. The Rules of Procedure specify the obligation of Directors. The day-to-day business does not include of the Board members to actively consider the Company’s transactions which are unusual or of great significance in organization and internal controls, as well as the obliga- consideration of the position of the Company. tion on the part of the Board to actively follow up on plans, budgets, cash flow position and other material Figure 9 below sets forth the seniority and position of issues concerning the Company’s business. According to each member of Executive Management.

Figure 9. Executive Management

Name Employed Since Position

Flemming Ørnskov 2006 President and Chief Executive Officer Hans Christian Teisen 2008 Senior Vice President and Chief Financial Officer Michael Beckert 2004 Executive Vice President and Chief Medical Office Peter G. Nielsen 2007 Executive Vice President of Pharmaceutical Development and CMC

The employment agreements for the above members of Executive Management do not have a ﬁxed term of expiry.

I – 60 16.3 Information regarding contract terms for MICHAEL BECKERT Executive Management We have entered into an employment agreement with Dr. DR. FLEMMING ØRNSKOV Michael Beckert to serve as our Executive Vice President and Chief Medical Officer. Dr. Beckert may terminate his We have entered into an employment agreement with Dr. employment on three months’ notice and is subject to a Flemming Ørnskov to serve as our President and Chief non-competition undertaking for a period of 12 months Executive Officer. Dr. Ørnskov may terminate his employ- following termination of his employment with us. The ment on three months’ notice and is subject to a non- non-competition undertaking does not apply if Dr. Beckert competition and non-solicitation undertaking for a period is dismissed without reasonable cause, or if he terminates of 12 months following termination of his employment his position on account of our breach of the employment with us. The non-competition undertaking does not apply relationship. We may terminate the employment relation- if Dr. Ørnskov is dismissed without reasonable cause, or if ship on six months’ notice. In the event that a majority of he terminates his position on account of our breach of our Shares (equivalent to more than 50% of the votes the employment relationship. We may terminate the attached to such Shares) are transferred, our termination employment relationship on 12 months’ notice. In the notice is prolonged to nine months. event that a majority of our Shares (equivalent to more than 50% of the votes attached to such Shares) are PETER G. NIELSEN transferred, we can subsequently only terminate the agreement with 24 months’ written notice. If a majority We have entered into an employment agreement with of our Shares are transferred within a period of six Peter G. Nielsen to serve as our Executive Vice President months after termination of the employment contract by of Pharmaceutical Development and CMC. Mr. Nielsen may us, the notice period due by us shall be extended by 12 terminate his employment on two months’ notice and is months, i.e., to a total of 24 months. subject to a non-competition undertaking for a period of 12 months following termination of his employment with HANS CHRISTIAN TEISEN us. The non-competition undertaking does not apply if Mr. Nielsen is dismissed without reasonable cause, or if We have entered into an employment agreement with he terminates his position on account of our breach of Hans Christian Teisen to serve as our Chief Financial Offi- the employment relationship. We may terminate the cer. Mr. Teisen may terminate his employment on two employment relationship on six months’ notice. months’ notice and is subject to a non-competition and non-solicitation undertaking for a period of 12 months Inventions made by the members of the Executive Man- following termination of his employment with us. The agement during their employment with the Company are non-competition undertaking does not apply if Mr. Teisen owned by the Company. We may, in accordance with man- is dismissed without reasonable cause, or if he terminates datory legislation, be obligated to pay a reasonable com- his position on account of our breach of the employment pensation for any invention unless the value of the inven- relationship. For a period of 12 months following termination does not exceed what the person in question could tion of his employment with the Company Mr. Teisen is reasonably be expected to achieve considering the terms also restricted from working in any business employing of employment. any person who was employed as a key employee of the Company for a period of six months preceding the day Apart from the above, none of the members of Executive notice of termination was given. However, Mr. Teisen is Management will receive remuneration upon termination not restricted from working together with former key of his employment, with the exception of payments made employees in a business which is not competing with the pursuant to mandatory legislation. Company. We may terminate the employment relationship on seven months’ notice. In the event that a majority of our Shares (equivalent to more than 50% of the votes 16.4 Committees, including Advisory Boards attached to such Shares) are transferred and Mr. Teisen’s employment is terminated within a period of 12 months AUDIT COMMITTEE thereafter, he will be entitled to a severance payment equivalent to five months’ base salary. The Audit Committee has been appointed by the Board of Directors and is expected to meet at least twice a year. The charter of the Audit Committee provides that the role of the Audit Committee is to assist the Board of Directors with respect to the Board of Directors’ responsibilities to ensure that satisfactory internal controls exist for the recording of financial transactions and the acquisition of assets. Also, the Audit Committee shall assist the Board

I – 61 of Directors in assuring the financial statements of the 16.5 Description of Management Reporting Company. The Audit Committee also reviews the Compa- Systems and Internal Control Systems ny’s accounting policies. The Audit Committee consists of Dr. Claus Braestrup and Kurt Anker Nielsen. As a listed company we are required to have established procedures, which provide a reasonable basis for manage- COMPENSATION COMMITTEE ment to make proper judgments as to our financial position and prospects. Management has established and The Compensation Committee is appointed by the Board relies on the following controls in managing and monitor- of Directors and is expected to meet at least twice a year. ing as well as reporting on our performance and financial The charter for the Compensation Committee provides position: that the role of the Compensation Committee is to assist the Board of Directors with respect to the Board of Direc- • Strategic planning and corporate objectives incorpo- tors’ responsibilities relating to compensation of the rated in a formal business plan; management and to oversee and advise the Board of Directors on the adoption of policies that govern the • Formalized annual budget and long-term forecasting Company’s compensation programs, including warrant and and projection procedures; benefit plans. It makes recommendations to the Board of Directors regarding specific remuneration packages for • Regular management reporting including: each of the members of management, including pension rights and any compensation payments. The Compensa- ° Financial performance and financial position; tion Committee consists of Dr. Thomas Dyrberg (Chair), and Dr. Jean Deleage. ° The comparison of budgeted, prior-year and actua- performance; SCIENTIFIC ADVISORY BOARDS ° The analysis of cash flow and finance structure; The Company has assembled one group of scientific advisors who are leaders in the fields related to the Compa- ° Project management and cost control, identification ny’s technology (the “Pharmaceutical Advisory Board”), of responsible project managers and regular project and one group of scientific advisors who are leaders in reporting and follow-up; the area of cardiovascular diseases (the “Cardiovascular Advisory Board”) (the Pharmaceutical Advisory Board and ° Summaries of project management key performance the Cardiovascular Advisory Board sometimes referred to indicators; collectively as the Company’s “Scientific Advisory Boards”). The Scientific Advisory Boards convene as ° Controls over purchasing and maintenance of required and consist of both regular members, as well as assets; ad hoc members. These advisors assist in formulating the Company’s research, development and commercialization ° The review of potential claims and litigation; strategy. ° Contract and collaboration agreement review and Regular members of the Pharmaceutical Advisory Board maintenance to ensure that all commitments and do not receive cash compensation for their services, but liabilities are recognized as well as all incomes to are reimbursed for their reasonable expenses of attending which we are entitled; meetings. Regular members of the Cardiovascular Advi- sory Board receive a nominal cash compensation and are • Detailed controls to ensure the completeness and reimbursed for their reasonable expenses of attending accuracy of our accounting records; meetings. Certain of the regular members of the Pharma- ceutical Advisory Board who frequently participate in • Detailed controls and procedures to ensure all report- meetings of the Pharmaceutical Advisory Board have been ing to the OMX Nordic Exchange Copenhagen is accu- granted warrants. rately and consistently presented in a timely manner in accordance with the rules; and

• Detailed controls and instructions to deal with the exercise of employee and other warrants and the maintenance of appropriate oversight over employee and board stock transactions.

We consider the above high-level and detailed controls ensure effective ﬁnancial reporting procedures.

I – 62 16.6 Corporate Governance Board of Directors in its decision making processes, and the Company believes that the committees will provide a In August 2005, the Copenhagen Stock Exchange’s Com- valuable support for the work of the entire Board of Direc- mittee on Corporate Governance published its proposal tors. Finally, the Company has established internal rules for “Revised Corporate Governance Recommendations governing the allocation of powers between the Board of 2005” (the “Recommendations”), and amended the Directors and Executive Management. Recommendations on 6 February 2008. However, the Company does not comply with all of the The Recommendations are generally considered to define Recommendations. Such non-compliance is set out below: what is currently good corporate governance in Denmark, and in October 2005, the Copenhagen Stock Exchange • The Board of Directors has not elected a co-chairman decided to implement the Recommendations into the dis- and has not established a program to evaluate on an closure requirements for listed companies. Hence, with annual basis the skills and professional qualifications respect to annual reports for financial years beginning on of each Board member. Likewise, no formal self- or after 1 January 2006, companies listed on the OMX appraisal program of the Board and its work has been Nordic Exchange Copenhagen must include in their annual established. The Company believes that currently there reports a statement on how they address the Recommen- is no need to formalize these matters given the relative dations in accordance with the “comply-or-explain” princi- size of the Board of Directors and the background of ple, which requires companies to either comply with the each Board member. Recommendations or state their reason for not doing so. The Company included such statement in its annual report • Some of the members of the Board of Directors hold for 2006 and will do so in its annual report 2007. directorships in excess of the number of directorships prescribed in the Recommendations. The Company The Company recognizes the value of an active and posi- regards the Recommendations’ limit for the number of tive approach to the issue of corporate governance, directorships as guidance only and wishes to leave the including those aspects of corporate governance that are matter to the professional judgment of each Board embodied in the Recommendations. The Company gener- member. ally agrees with the Recommendations, and complies with a substantial number thereof. • Four members of the Board of Directors have been granted warrants conferring a right to subscribe for The Company has established a duly qualified Board of Shares in the Company. The Company believes that the Directors in terms of professional background and experi- ability to offer warrants as well as other forms of ence within the Company’s business area. The composi- shares incentive compensation is necessary to attract tion of the Board of Directors secures a diversity of rele- key people from within the industry (whether as Board vant qualifications, nationalities, personalities and age in members, managers or employees). order for the Board to be able, also in the future, to perform its managerial and strategic duties given the Compa- • The Company reports remuneration for the Board of ny’s existing stage of development and direction going Directors and Executive Management on a group basis forward. See Part I, Section 14.1 “Board of the Directors rather than on an individual basis. The Company does of the Company” for a discussion of each member. In not believe that individual reporting is relevant for the addition, our Articles of Association stipulate that the appraisal of the Company and its performance. members of the Board of Directors are up for re-election each year at the annual general meeting. Also, Board • Due to the composition of the Board of Directors, members must retire from the Board of Directors at the none of the Company’s Board committees has three annual general meeting immediately following his or her members. However, the committees are not authorized 70th birthday. Additionally, the activities of the Board are to make independent decisions. governed by internal rules of procedure. The Company intends to continue to actively pursue a The Board of Directors has established a Compensation strategy of good corporate governance consistent with Committee whose sole purpose is to evaluate and make the main contents of the Recommendations. recommendations to the Board of Directors regarding the remuneration paid to the members of Executive Manage- ment and the Board of Directors. Also, the Board of Direc- tors has established an Audit Committee whose sole purpose is to review the Company’s financial controls and to work with the Company’s independent auditors in connection with their audit of the financial statements and make reports and recommendations to the Board of Directors on these matters. Both committees serve to assist the entire

I – 63 16.7 Guidelines for Incentive Remuneration The aggregated annual fees, the supplemental and additional annual fees, and warrants granted are disclosed in With effect from 1 July 2007, section 69 b of the Danish the Annual Report and subsequently approved at the Companies Act stipulates that the board of directors of a Annual General Meeting. listed company must lay down general guidelines for incentive remuneration to members of its board of direc- EXECUTIVE MANAGEMENT tors and executive management before any specific agreements to this effect can be made. These guidelines must The Compensation Committee performs an annual review be adopted at the first general meeting of the listed com- of the remuneration package paid to members of the pany following 1 July 2007. The Board of Directors has Executive Management. laid down such guidelines for incentive remuneration, which were approved at our Extraordinary General Meet- The remuneration paid to members of the Executive Man- ing held on 14 March 2008. Our Articles of Association agement consists of a fixed and a variable part. The fixed have been amended to the effect that Article 19 states pay consists of cash salary, pension contribution and that ”On the general meeting held 14 March 2008, the other benefits. Company adopted general guidelines for incentive remuneration to the members of the board of directors and As an element of the variable pay, members of the Execu- executive management”. Our guidelines for incentive tive Management may receive an annual bonus, subject to remuneration are also available at our website, achievement of certain benchmarks. The bonus propor- www.lifecyclepharma.com. tion varies among the members of the Executive Manage- ment, but is subject to a target on 45% of the fixed annual cash salary. The actual bonus paid to the members General guidelines for the Company’s Incentive of the Executive Management is disclosed in the Annual Remuneration to members of the Board of Report at an aggregated level. At the date of adoption of Directors and the Executive Management these guidelines, the bonus benchmarks comprise primarily of the progress in the Company’s development of its BOARD OF DIRECTORS product candidates, but they may be changed by the Board of Directors. Members of the Board of Directors receive a fixed annual fee. The Chairman of the Board of Directors and the Another element of the variable pay is made up of new Chairman of the Audit Committee receive a supplement to warrants and is intended to ensure that the Executive the fixed annual fee. Management’s incentive correlates with creation of shareholder value. The estimated aggregated present value of In addition to the fixed annual fee, the members of the new warrants granted in a given financial year to the Board of Directors are annually granted a fixed number of members of the Executive Management may be up to warrants. The estimated present value of warrants 100% of the aggregated fixed annual cash salary to the granted in a given financial year may be up to 100% of member of the Executive Management. The estimated the fixed annual fee to the individual member of the present value is calculated in accordance with the Interna- Board of Directors. The estimated present value is calcu- tional Financial Reporting Standards (IFRS). The grant of lated in accordance with the International Financial new warrants may or may not be subject to achievement Reporting Standards (IFRS). The general terms and condi- of defined benchmarks. The exercise price of the new tions applying to the grant, vesting, exercise, etc. of the warrants cannot be less than the market price of the warrants must be within the general terms and conditions Company’s stock at the date of grant. The new warrants applying if warrants are to be granted to members of the may have a maximum term of up to 7 years and the exer- Executive Management, cf. below, and which also apply to cise of the new warrants may be subject to a vesting other employees in the Company which has been granted period of up to 4 years. New warrants may be granted on warrants. such terms that the gain is taxed as share income while the costs of the grant are not tax deductible for the Com- Upon election, each member of the Board of Directors pany. The number of new warrants granted to each mem- may decide to exchange the annual fee for an additional ber of the Executive Management and their estimated number of warrants. Likewise, the fixed number of war- present value is disclosed in the Annual Report. rants may be exchanged for an additional annual fee.

I – 64 17. Staff

17.1 Overview of Employees Other than as set forth above, no members of the Board of Directors and no members of Executive Management As of 31 December 2007, the Company had 84 perma- hold Shares in the Company. nent staff, of which 74 were employed in Hørsholm, Den- mark and 10 were employed in New York, New York, U.S. The Board of Directors (with the exception of Kurt Anker In total, 68 employees worked within research, preclinical Nielsen), Executive Management and other employees, and clinical development, and 16 were general and advisors and consultants participate in the Company’s administrative staff. The number of our employees has warrant programs. Warrants issued to the respective per- increased from 35 as of 31 December 2005, to 44 as of sons as well as applicable exercise prices are set out in 31 December 2006, and to 84 as of 31 December 2007. Table 6 below. For further speciﬁc information in respect For more information on the number of employees of the to outstanding warrants, please see Exhibits 1 and 2 to Company as of the Offering Circular Date, see Part I, Sec- the Articles of Association. Following completion of the tion 7.2 “Functional Structure”. Offering, a recalculation of the number of warrants and the applicable exercise price will be carried out in order to The Company is not bound by any collective bargaining reﬂect the dilution as a result of the Offering being con- agreement. The Company has not been subjected to any ducted below the market price. See Part I, Section 21.2 strike or other industrial action by the employees and “Warrant Programs”. considers its relationship with the employees to be good.

17.2 Shareholdings and Warrants for Members of the Board of Directors and Executive Management

The members of the Board of Directors and Executive Management hold Shares in the Company as follows:

Thomas Dyrberg holds nominal DKK 8,800 Shares Michael Beckert holds nominal DKK 116,111 Shares (from exercise of warrants)

I – 65 Table 6. Warrants Currently in Issue

Number of Exercise Price Exercise Price Number of Warrants (DKK per (DKK per Share) Warrants (1) (adjusted) (2) Share) (1) (adjusted) (2) Date of Grant

Board of Directors Claus Braestrup 10,000 12,181 56.50 46.38 9 May 2007 Thomas Dyrberg 10,000 12,181 56.50 46.38 9 May 2007 Jean Deleage 17,500 21,317 56.50 46.38 9 May 2007 Gérard Soula 50,000 60,906 22.30 18.31 7 November 2005 17,500 21,317 56.50 46.38 9 May 2007 Gérard Soula in total 67,500 82,223 31.17 25.59 Kurt Anker Nielsen - - - - Board of Directors in total 105,000 127,902 - - -

Executive Management Flemming Ørnskov 100,000 121,812 22.30 18.31 17 October 2005 120,000 146,174 22.30 18.31 18 November 2005 1,120,757 1,365,213 44.00 36.12 7 September 2006 32,381 39,444 53.00 43.51 22 December 2006 Flemming Ørnskov in total 1,373,138 1,672,643 40.74 33.45 Hans Christian Teisen 80,000 97,449 33.00 27.09 28 February 2008 Michael Beckert 3,889 4,737 7.885 6.47 17 March 2005 184,000 224,134 36.3725 29.86 10 June 2006 Michael Beckert in total 187,889 228,871 35.78 29.37 - Peter G. Nielsen 75,000 91,359 55.00 45.15 5 March 2007 Executive Management in total 1,716,027 2,090,322 - - -

Current and former employees, April 2003 – Consultants and Advisors 2,105,646 2,564,924 2.50 - 56.50 2.05 - 46.38 28 February 2008 April 2003 – In total 3,926,673 4,783,148 2.50 - 56.50 2.05 - 46.38 28 February 2008

1) Before the Offering and without giving effect to the anti-dilution adjustment provisions of the warrant programs. See Part I, Section 21.2 “Warrant Programs” for further information. 2) Adjustment has been calculated on the basis of the closing price at 14 March 2008 of DKK 29.20� per Existing Share and on the assumption that the Offering will be fully subscribed. If the Offering is not fully subscribed, the Company will announce the actual dilution after the completion of the Offering.

I – 66 18. Major Shareholders

Immediately prior to the Offering Circular Date, the Com- For shareholdings of the Board of Directors and Executive pany had 3,022 registered shareholders, who held a total Management as of the Offering Circular Date, see Part I, of 26,930,509 Existing Shares. Since the Shares are Section 17.2 “Shareholdings and Warrants for Members of issued to the bearer, no complete record exists of the the Board of Directors and Executive Management”. holders. While the Company is authorized by the general meeting The shareholders listed in Table 7 below have notiﬁed the to buy treasury shares, it does not hold any Shares in Company that they hold at least 5% of the Company’s treasury as of the Offering Circular Date. Shares or voting rights.

H. Lundbeck A/S and Novo A/S have each made a binding undertaking to exercise its Preemptive Rights to subscribe for, in aggregate, 9,635,376 Offer Shares corresponding to total gross proceeds of approximately DKK 163.8 million (approximately € 21.97 million).

It is the duty of shareholders to give notice to the Com- pany of any changes in their shareholding or voting rights leading them to cross certain thresholds. See Part III, Sec- tion 4.9, “Danish regulations governing mandatory take- over bids, redemption of shares and disclosure requirements”. The Company will issue a company announcement in the event it receives such notice from a shareholder.

It is outside the authority of the Company to make any company announcement of major shareholdings unless prior notice from a shareholder has been received. Thus, changes may have occurred in the stated share capital or voting rights of Major Shareholders since the date indicated for the announcement (including as a result of increases in the Company’s share capital).

Table 7. Major Shareholders in the Company

Shareholder Shareholdings (%) Voting rights (%)1) Notiﬁcation date

H. Lundbeck A/S 27.26 27.26 15 November 2006 Ottiliavej 9, DK-2500 Valby, Denmark

Novo A/S 12.76 12.76 15 November 2006 Novo Ventures, Krogshøjvej 41, DK-2880 Bagsværd, Denmark

Alta Partners2) 6.73 6.73 15 November 2006 One Embarcadero Center, 37th Floor San Francisco, CA 94111, USA

1) Shareholders are entitled to one vote per Share. 2) Alta Partners includes Alta BioPharma Partners III L.P., Alta BioPharma III, GmbH & Co., Beteiligungs KG and Alta Embarcadero BioPharma III, LLC.

I – 67 19. Related Party Transactions

H. LUNDBECK A/S In October 2006, we entered into a research and development agreement with H. Lundbeck A/S whereby we In 2002, we entered into a transfer and license agree- agreed to perform research and development activities ment with H. Lundbeck A/S, one of our Major Sharehold- concerning the formulation of two of H. Lundbeck A/S’s ers, which gives H. Lundbeck A/S the right to purchase internal preclinical CNS-related projects being developed back patent rights granted by H. Lundbeck A/S in case of using our MeltDose technology. H. Lundbeck A/S will our insolvency or liquidation. The transfer and license reimburse us for time spent by our employees on these agreement is still in force and is further described under activities as well as external costs. We will receive mile- Part I Section 22 “Agreements”. stone payments related to results achieved in the future development of these projects. As H. Lundbeck A/S has In August 2003, we entered into a license agreement with been granted a royalty-free license to the MeltDose tech- H. Lundbeck A/S regarding H. Lundbeck A/S’s modiﬁed nology within the CNS area pursuant to the transfer and release/absorption material technology and our self- license agreement from June 2002 (further described in cleaning spray nozzle technology, see Part I, Section 22 Part I, Section 22 “Agreements”), H. Lundbeck A/S has the “Agreements”. right to use the research and development results without paying royalties on future possible revenues of these two During 2004, H. Lundbeck A/S entered into a repurchase CNS-related projects. In 2007, we performed research and guarantee of limited duration concerning a lease agree- development work for which we were reimbursed under ment entered into by us. The guarantee was terminated in this agreement totaling DKK 1,502 thousand (€201 thou- 2005. Also, in June 2004, we entered into an agreement sand). No fees were invoiced for 2006 under this agree- with H. Lundbeck A/S concerning our use of certain of H. ment. Lundbeck A/S’s manufacturing facilities for the manufacture of our product candidates for clinical studies. The During 2002, 2003, 2004 and 2005, we leased cars and term of the agreement was extended in 2005. received administrative assistance from H. Lundbeck A/S for an amount of DKK 167 thousand (€22 thousand). In June 2005, we entered into a patent license agreement DKK 750 thousand (€101 thousand), DKK 517 thousand with H. Lundbeck A/S regarding our and H. Lundbeck A/S‘s (€69 thousand) and DKK 338 thousand (€45 thousand) porous tablet technologies, see Part I, Section 22 “Agree- respectively. ments”. We also entered into an agreement with H. Lund- beck A/S concerning maintenance and service of our facil- The aggregate amount due by us to H. Lundbeck A/S ities and in 2005 received maintenance and service for an amounted to DKK 2,327 thousand (€312 thousand) as of amount of DKK 518 thousand (€69 thousand). 31 December 2002, DKK 195 thousand (€26 thousand) as of 31 December 2003, DKK 547 thousand (€73 thou- In April 2006, we entered into an agreement with H. Lun- sand) as of 31 December 2004, and DKK 46 thousand dbeck A/S concerning our use of certain of H. Lundbeck (€6 thousand) as of 31 December 2005. A/S’s manufacturing facilities and support areas for the manufacture of our product candidates for clinical studies As of 31 December 2006 and 31 December 2007, the conducted in Europe, see Part I, Section 22 “Agreements”. amount due by us to H. Lundbeck A/S amounted to DKK (This agreement replaced the agreement concerning use 166 thousand (€22 thousand) and DKK 0 (€0) respec- of manufacturing facilities entered into in 2004 and tively. amended in 2005). In addition, from 2003 until 5 March 2008, Claus In 2006 we received maintenance and service related to Braestrup, the Chairman of the Board of Directors of the the agreement with H. Lundbeck A/S concerning mainte- Company, was the President and CEO of H. Lundbeck A/S. nance and service of our facilities for an amount of DKK 555 thousand (€74 thousand). In 2007, we received maintenance and services for our facilities for an amount of DKK 794 thousand (€106 thousand).

I – 68 OTHER RELATED PARTIES: In 2007, we entered into a consulting agreement with Gérard Soula, who is a member of our Board of Directors, In May 2003, we entered into an agreement regarding the pursuant to which Mr. Soula provides consulting services purchase of rights related to our self-cleaning spray noz- and advice within the product formulation area and tech- zle technology for DKK 100 thousand (€13.4 thousand) nical assessment. During 2007, Mr. Soula received DKK and in connection with the purchase of these intellectual 214 thousand (€29 thousand) for such services, plus property rights we entered into a license agreement with reimbursement of his travel expenses. S.S.R. Stainless Steel A/S regarding the use of our self- cleaning spray nozzle technology outside the pharmaceu- Four members of our Board of Directors, Claus Braestrup, tical area. Since 2004, Michael Wolff Jensen, our former Gérard Soula, Jean Deleage and Thomas Dyrberg have Executive Vice President and Chief Financial Officer, has been granted warrants to subscribe Shares in the Com- been chairman of the board of directors of S.S.R. Stain- pany. See Part I, Section 17.2 “Shareholdings and War- less Steel A/S. During 2005 we paid a total of DKK 35 rants for Members of the Board of Directors and Executive thousand (€4.7 thousand), and in 2006 we paid a total Management”. of DKK 57 thousand (€8 thousand) to S.S.R. Stainless Steel A/S for purchases of manufacturing equipment. In For a description of the remuneration received by our 2007, we paid a total of DKK 371 thousand (€50 thou- Board of Directors and Executive Management, see Part I, sand) to S.S.R. Stainless Steel A/S for purchases of manu- Section 15 “Remuneration and Benefits”. For a description facturing equipment and related maintenance. of warrants issued to the Board of Directors and Executive Management, see Part I, Section 21.2 “Warrant Programs”. In 2005, we entered into an agreement with Pharmasteel A/S regarding purchase of manufacturing equipment for an amount of DKK 8,600 thousand (€1,153 thousand). Dr. Per Holm, our Chief Technology Officer, is member of the board of directors of Pharmasteel A/S and owns 33% of the shares in Pharmasteel A/S. During 2003, we paid a total of DKK 3,057 thousand (€410 thousand), during 2004 we paid a total of DKK 1,623 thousand (€218 thousand), during 2005 we paid a total of DKK 6,623 thousand (€888 thousand), during 2006 we paid a total of DKK 7,221 thousand (€969 thousand) and in 2007 we paid a total of DKK 123 thousand (€16 thousand) to Phar- masteel A/S for purchases of manufacturing equipment.

I – 69 20. Financial Information Concerning the Company’s Assets and Liabilities, Financial Position and Proﬁts and Losses

For ﬁnancial information concerning the Company reference is made to Part II.

I – 70 21. Additional Information

21.1 Share Capital Before and After the Offering capital at a price which does not correspond to market price. In the Offering, the price per Offer Share will be Prior to the Offering, the Company’s registered share capi- below market price of the Shares prior to the announce- tal is DKK 32,105,174 comprising 32,105,174 Shares. ment of the Offering. The number of outstanding war- Immediately after the Offering, the Company’s registered rants as well as the exercise price of these warrants will share capital will be DKK 56,184,054 comprised of thus be adjusted following the completion of the Offer- 56,184,054 Shares assuming subscription of the maxi- ing. The recalculation of the exercise price and the num- mum number of Offer Shares (24,078,880 Offer Shares). ber of warrants will be based on a comparison between As of the Offering Circular Date, the Company does not the Offer Price and the closing price listed on the OMX hold any shares in treasury. Nordic Exchange Copenhagen at 5:00 p.m CET on 14 March 2008 of DKK 29.20 per Existing Share. The recalculation will ensure that the value of the outstanding war- 21.2 Warrant Programs rants is not diluted as a result of the Offering being carried out below market value. Table 8 below, as well as the The Company has established warrant programs for mem- section headed “General Terms for the Company’s War- bers of the Board, Executive Management and other rant Programs” further below, shows the number of war- employees, consultants and advisors. rants and the exercise price of the Company’s warrant programs before and following adjustment as a result of According to the terms and conditions of the Company’s the Offering. The adjustments are based on the assump- warrant programs, certain customary adjustment clauses tion that the Offering will be fully subscribed. apply in the event of changes to the Company’s share

I – 71 Table 8. Issued and Outstanding Warrants

Percentage of Exercise outstanding Original Price in DKK Exercise Price Percentage Shares number of Number of Number of per Share per Share of total on a fully warrants warrants warrants of nominal of nominal number diluted basis issued outstanding outstanding DKK 1 DKK 1 of warrants following the Issue date (unadjusted) (unadjusted) (adjusted)1) (unadjusted) (adjusted)1) outstanding Offering 2)

4 April 2003 591,444 0 0 2.50 2.05 0 0%

29 August 2003 – 19 December 2003 431,352 107,864 131,391 7.3825 6.06 2.75% 0.22%

22 March 2004 – 20 June 2005 1,377,028 398,142 484,984 7.8850 6.47 10.14% 0.80%

20 June 2005 – 18 November 2005 482,000 404,279 492,459 22.30 18.31 10.30% 0.81%

12 December 2005 - 10 June 2006 1,096,000 884,750 1,077,729 36.3725 29.86 22.53% 1.77%

7 September 2006 1,120,757 1,120,757 1,365,213 44.00 36.12 28.54% 2.24%

1 December 2006 96,000 90,000 109,631 44.60 36.61 2.29% 0.18%

22 December 2006 32,381 32,381 39,444 53.00 43.51 0.82% 0.06%

5 March 2007 160,000 160,000 194,899 55.00 45.15 4.07% 0.32%

9 May 2007 248,000 248,000 302,093 56.50 46.38 6.32% 0.50%

21 August 2007 237,000 237,000 288,694 52.00 42.69 6.04% 0.47%

27 November 2007 58,500 58,500 71,260 41.50 34.07 1.49% 0.12%

28 February 2008 185,000 185,000 225,352 33.00 27.09 4.71% 0.37%

Total 6,115,462 3,926,673 4,783,148 36.63 30.07 100% 7.85%

1) The adjustment has been calculated on the basis of the closing price at 14 March 2008 of DKK �29.20 per Existing Share and on the assumption that the Offering will be fully subscribed. If the Offering is not fully subscribed, the Company will announce the actual dilution after the completion of the Offering. 2) Assuming the Offering will be fully subscribed.

I – 72 The weighted average subscription price per Share per VESTING PRINCIPLES FOR EXECUTIVE MANAGEMENT outstanding warrant is of approximately DKK 36.63 AND EMPLOYEES (adjusted: DKK 30.07). The outstanding number of warrants represents 12.23% of the Company’s registered Warrants granted prior to 1 July 2004 cease to vest upon share capital (calculated immediately prior to the Offer- termination of the employment relationship regardless of ing) and 7.85% of the Company’s registered share capital the reason for such termination. Warrants granted after on a fully diluted basis following the Offering, assuming 1 July 2004 cease to vest upon termination of the the Offering will be fully subscribed. employment relationship in the event that (i) a warrantholder resigns without this being due to the Company’s GENERAL TERMS FOR THE COMPANY’S breach of contract or (ii) if the Company terminates the WARRANT PROGRAMS employment relationship where the employee has given the Company good reason to do so. The warrantholder VESTING PRINCIPLES GENERALLY will be entitled to exercise vested warrants in the ﬁrst coming exercise period after termination. If the ﬁrst exer- All warrants have been issued by the general meeting or cise period after termination falls within three months of by the Board of Directors pursuant to valid authorizations the termination date, the warrantholder shall, additionally, in our Articles of Association and the terms and condi- be entitled to exercise in the following exercise period. In tions have in accordance with applicable legislation been all other instances than (i) and (ii) above, or in case of incorporated in the Articles of Association. The below the warrantholder’s death where all warrants lapse, war- merely contains a summary of the terms and conditions rants granted after 1 July 2004 continue to vest as had applicable and does not purport to be complete. the employee remained employed by the Company.

Warrants issued in 2003-2005 vest in general at rate of For warrants issued on 10 June 2006 to employees com- 1/36th per month from the date of issuance. prised by the Stock Option Act, such employee will be entitled to keep all warrants issued to him/her in the On 10 June 2006, we issued a total of 1,104,000 war- event of our termination of the employment relationship rants, of which 812,750 (adjusted: 990,025) warrants are unless the termination is caused by breach on the part of still outstanding. 240,750 (adjusted: 293,262) of these the employee. In case such employee resigns his/her warrants that are still outstanding vested from 1 January position due to his/her own termination, the employee 2006 with 1/48th per month. 572,000 (adjusted: may only exercise warrants issued in respect of which the 696,763) of these warrants that are still outstanding and exercise date has commenced before termination. were issued to employees who are comprised by the Dan- ish Act on use of purchase rights and subscription rights 184,000 (adjusted: 224,134) warrants issued on 10 June regarding shares etc. in employment (the “Stock Option 2006 to member of the Executive Management Michael Act”) were deemed vested in full upon grant. The war- Beckert may vest if we merge with another company or rants granted are subject to certain restrictions on exer- our share capital is part of a share swap, on conditions cise, all as more fully described below. whereby our then current shareholders do not control a majority of our Shares resulting from the merger or the On 7 September 2006, we issued to our Chief Executive share swap, or if more than 50% of our share capital is Ofﬁcer Dr. Flemming Ørnskov 1,120,757 warrants, of sold to a third party. Depending on the value ascribed to which all 1,120,757 (adjusted: 1,365,213) warrants are our Shares in such transaction, none, 75%, or all of these outstanding. These warrants all vest at a rate of 1/48th warrants vest, as further described in the warrant terms per month from commencement of Dr. Ørnskov’s employ- incorporated as Exhibit 2 to our Articles of Association. ment with the Company. On 22 December 2006, 32,381 (adjusted: 39,444) warrants were issued to Dr. Ørnskov, The terms concerning accelerated vesting in case of a all of which were fully vested upon issue. change of control described immediately above also apply to the 1,120,757 (adjusted: 1,365,213) warrants issued Warrants issued from 1 December 2006 through the to our Chief Executive Ofﬁcer Dr. Flemming Ørnskov on Offering Circular Date (with the exception of warrants 7 September 2006 provided, however, that Dr. Flemming issued to Dr. Ørnskov on 22 December 2006, see above) Ørnskov accepts certain changes to his working conditions all vest at a rate of 1/48th per month from the date of or does not terminate his employment relationship within issuance. 12 months after the change of control has occurred.

The warrants granted are subject to certain restrictions on Upon completion of the Company’s initial public offering exercise all as more fully described below. in November 2006, 1/10th of the 1,120,757 (adjusted: 1,365,213) warrants issued to Dr. Flemming Ørnskov on 7 September 2006 vested and the vesting period for the remaining unvested warrants was shortened by 4.8 months.

I – 73 VESTING PRINCIPLES FOR BOARD MEMBERS, CONSULTANTS For the purpose of implementing the capital increases AND ADVISORS necessary in connection with the exercise of warrants, our Board of Directors has been authorized to increase Exercise of warrants issued to Board members, consul- our share capital by one or more issues of Shares with a tants and advisors is conditional upon the warrantholder total nominal value corresponding to the number of war- being connected with us as a Board member, consultant rants issued upon cash payment of the exercise price or advisor, respectively, on the date of exercise. However, without any preemptive subscription rights to our existing if the warrantholder’s position has been terminated shareholders. without this being attributable to the warrantholder’s actions or omissions the warrantholder shall be entitled VALUE AND DILUTIVE EFFECT OF WARRANTS to exercise vested warrants in the predetermined exercise periods. The aggregate value of outstanding warrants has been calculated at DKK 37.5 million using the Black-Scholes EXERCISE PERIODS option pricing model on the assumption of (i) a share price corresponding to the closing price of the Company’s In the event of our liquidation, a merger, a demerger or a Shares on 14 March 2008 of DKK 29.20 per share, (ii) a sale or share exchange of more than 50% of our share volatility at 35% , (iii) no payment of dividends and (iv) a capital, the warrantholders may be granted an extraordi- risk-free interest rate at 3.915% annually. nary exercise period immediately prior to the transaction in which warrants may be exercised. To the extent that the existing warrants are exercised or any further warrants are issued and exercised, it will According to the current terms of the warrants and sub- result in dilution to the shareholders. ject to the above, vested warrants may be exercised in two three-week periods following publication of our pre- Our Board of Directors has been authorized to issue addi- liminary annual report and the interim financial report for tional warrants and to determine the terms and condi- the first six months of the relevant financial year, respec- tions thereof. See Part I, Section 21.4 “Summary of provi- tively. sions regarding the Board of Directors and Executive Management”. ADJUSTMENTS

Warrantholders are entitled to an adjustment of the number of warrants issued and/or the exercise price applicable in the event of certain changes to our share capital at a price other than the market price and in the event of payments of dividends in a given year in excess of 10% of our equity capital. Events giving rise to an adjustment include, inter alia, increases or decreases to the share capital at a price below respectively above market value, and issuance of bonus Shares.

I – 74 21.3 Historical Development of the Company’s Share Capital

Table 9 below sets forth the changes in the Company’s share capital since our incorporation, but before the Offering:

Table 9. Changes in Share Capital

Share Classes Share price Date Transaction Share Capital After Capital Increase in DKK1)

21 March 2002 Incorporation 500,000 (2) A-Shares 0.25 (1.00) 13 June 2002 Cash contribution and 1,000,000 (3) A-Shares 4.75 contribution in kind (19.00) 29 August 2003 Cash contribution 1,746,370 1,000,000 A-Shares 7.3825 746,370 B-Shares (29.53) 22 March 2004 Cash contribution 2,634,269 1,508,425 A-Shares 7.885 1,125,844 B-Shares (31.54) 11 May 2005 Cash contribution 3,908,740 1,508,425 A-Shares 22.30 1,125,844 B-Shares (89.20) 1,274,471 C-Shares 22 August 2005 Cash contribution 3,919,018 (4) 1,518,703 A-Shares 7.885 1,125,844 B-Shares (31.54) 1,274,471 C-Shares 5 December 2005 Cash contribution 4,428,569 1,518,703 A-Shares 36.3725 1,125,844 B-Shares (145.49) 1,274,471 C-Shares 509,551 D-Shares 23 January 2006 Cash contribution 4,429,954 (5) 1,520,088 A-Shares 7.885 1,125,844 B-Shares (31.54) 1,274,471 C-Shares 509,551 D-Shares 27 July 2006 Bonus share issue (at the ratio 17,719,816 6,080,352 A-Shares N/A of 1:3) 4,503,376 B-Shares 5,097,884 C-Shares 2,038,204 D-Shares 27 July 2006 Reclassiﬁcation of 17,719,816 (6) 17,719,816 Shares N/A share classes 13 November 2006 Cash contribution 28,719,816 (7) 28,719,816 Shares 44.00 23 November 2006 Cash contribution 30,369,816 (8) 30,369,816 Shares 44.00 12 March 2007 Cash contribution 30,514,048 (9) 30,514,048 Shares 3.788 (10) 10 September 2007 Cash contribution 31,770,705 (11) 31,770,705 Shares 6.778 (12) 14 March 2008 Cash contribution 32,105,174 (13) 32,105,174 Shares 6.76 (14)

1) Price per nominal DKK 1 Share as adjusted after the issue of bonus Shares on 27 July 2006. Numbers in brackets indicate the share price prior to the resolution to issue bonus Shares on 27 July 2006. 2) Original issue in March 2002 of 500,000 new Shares of nominal value DKK 1. 3) Issuance in June 2002 in connection with the contribution in kind by H. Lundbeck A/S of the intellectual property rights to the MeltDose technology platform (value DKK 1 million) and a cash subscription by H. Lundbeck A/S of DKK 8.5 million. 4) Issuance of 10,278 A-Shares in connection with the subscription through the exercise of employee warrants. 5) Issuance of 1,385 A-Shares in connection with subscription through the exercise of employee warrants. 6) Reclassification of share classes resolved by the general meeting in connection with the initial public offering. 7) Issuance of 11,000,000 Shares in connection with the initial public offering. 8) Issuance of 1,650,000 Shares in connection with exercise of over-allotment option in connection with initial public offering. 9) Issuance of 144,232 Shares in connection with the subscription through the exercise of employee warrants. 10) The share price indicated reflects the average subscription price per Share. 11) Issuance of 1,256,657 Shares in connection with the subscription through the exercise of employee warrants. 12) The share price indicated reflects the average subscription price per Share 13) Issuance of 334,469 Shares in connection with the subscription through the exercise of employee warrants. 14) The Share price indicated reflects the average subscription price per Share. I – 75 21.4 Description of the Company’s Articles take-over of existing businesses) or the conversion of of Association debt. The capital increase may be carried out with or without preemptive rights for existing shareholders at the Set forth below is a brief description of the Company and discretion of the Board of Directors. This authorization is certain provisions contained in the Articles of Association exercised in connection with the Offering. (see Appendix A) which will be in effect immediately prior to the issuance of the Offer Shares, as well as a brief At the Company’s Annual General Meeting planned to be description of certain provisions of the Danish Public held on 24 April 2008, the Board of Directors will propose Companies Act. Such summary does not purport to be that the Board of Directors be authorized to increase the complete and is qualified in its entirety by reference to Company’s share capital by up to 5,500,000 Shares by the Company’s Articles of Association and Danish laws. way of contributions in kind (including, e.g., take over of existing businesses), conversion of debt and/or cash capi- The Company is a limited liability company. The Company tal contributions with or without pre-emptive subscription was incorporated with limited liability pursuant to the rights for the Company’s shareholders at the discretion of Danish Companies Act on 21 March 2002 and is regis- the Board of Directors, for a period ending 23 April 2013. tered with the Danish Commerce and Companies Agency. The Board of Directors has additionally been authorized Below is set forth a number of material provisions of the to issue 83,119 warrants to the Board Members, Execu- Company’s Articles of Association. The description below tive Management, employees and consultants and advi- also contains the changes to the Articles of Association sors in the Company and the Company’s subsidiaries. as well as the authorization for the Board of Directors to Each warrant will confer the right to subscribe one Share arrange for the Company to acquire its own shares, which at a price corresponding at least to the share price at the will be proposed by the Board of Directors for shareholder date of issuance of the relevant warrants. The authoriza- approval at the Company’s Annual General Meeting to be tion to issue warrants is valid until 23 April 2012. The held on 24 April 2008. Board of Directors has also been authorized to increase the share capital to the extent that warrants are exer- OBJECT CLAUSE cised.

The Company’s object, as set out in Article 3 of the Arti- At the Company’s Annual General Meeting planned to be cles of Association, is to engage in medical research, pro- held on 24 April 2008, the Board of Directors will propose duction and sale of such products and related business. that the existing authorization for the Board of Directors to issue warrants shall be increased and extended so that SUMMARY OF PROVISIONS REGARDING THE BOARD OF the Board of Directors shall be authorized for a period DIRECTORS AND MANAGEMENT ending 23 April 2013 to issue a total of 3,885,381 warrants to members of the Board of Directors, Executive Pursuant to our Articles of Association, the part of our Management, employees and consultants and advisors in Board of Directors elected by the shareholders at the the Company and the Company’s subsidiaries and to general meeting shall be composed of not less than three increase the Company’s share capital to the extent that and no more than nine members. Board members are warrants are exercised. elected by the shareholders at the annual general meeting for a term of one year. Members of our Board of At the Company’s annual general meeting held on 24 April Directors may stand for re-election. Currently, the Board 2007, the Board of Directors was authorized to allow the of Directors consists of ﬁve members who are elected by Company to acquire up to 10% of the Company share the shareholders. Board Members must retire from the capital as treasury shares. The authorization is valid until Board of Directors at the annual general meeting follow- the next annual general meeting. As of the Offering Circu- ing their 70th birthday. lar Date, the Company has not used this authorization.

The Board of Directors shall employ an executive manage- At the Company’s Annual General Meeting planned to be ment consisting of one to ﬁve members to attend to the held on 24 April 2008, the Board of Directors will propose day-to-day management of the Company, and the Board that the Board of Directors shall be authorized until the of Directors shall determine the terms and conditions of Company’s annual general meeting to be held in 2009 to the employment. arrange for the Company to acquire its own shares up to a total nominal value of 10% of the Company’s nominal The Board of Directors has been authorized to increase share capital, provided that the purchase price of such our share capital by up to 25,000,000 Shares. The autho- shares may not differ by more than 10% from the price rization is valid until 1 July 2011. Capital increases pursu- quoted on OMX Nordic Exchange Copenhagen at the time ant to this authorization may be carried out through cash of the purchase. contributions, contributions in kind (including for example

I – 76 21.5 Description of the Company’s Shares meeting or by the Board of Directors pursuant to an authorization given by the shareholders. In connection VOTING RIGHTS with an increase of our share capital, the shareholders may, by resolution at a general meeting, approve devia- Each shareholder is entitled to one vote for each Share tions from the general Danish preemptive rights of the owned at the time of any general meeting. Compared shareholders. Under the Danish Public Companies Act, with Danish citizens, there are no limitations under our such resolution must be adopted by the afﬁrmative vote Articles of Association or under Danish law on the rights of shareholders holding at least a two-thirds majority of of foreigners or non-Danish citizens to hold or vote our the votes cast and the share capital represented at a gen- Shares. eral meeting.

DIVIDEND RIGHTS It should be noted that our Board of Directors may resolve to increase our share capital without preemptive subscrip- Pursuant to the Danish Public Companies Act, the share- tion rights for our shareholders pursuant to the authori- holders at the annual general meeting of a company zations set out in Part I, Section 21.4 “Description of the authorize the distribution of dividends on the basis of the Company’s Articles of Association”. approved accounts for the latest financial year. The annual general meeting cannot authorize the payment of divi- Considering that neither the Offering nor any future issu- dends exceeding the amount recommended by the Board ance of new Shares can be expected to be registered of Directors. The general meeting can authorize the Board under the U.S. Securities Act or with any authority out- of Directors to distribute interim dividends. Such authori- side Denmark, U.S. shareholders and shareholders in zation shall be incorporated in the articles of association. jurisdictions outside Denmark may be unable to exercise No such authorization has been incorporated in our Arti- their preemptive subscription rights. cles of Association. RIGHTS ON LIQUIDATION Our shareholders, including subscribers of Offer Shares, are eligible to receive any dividends for the year ending On liquidation or winding-up, shareholders will be entitled 31 December 2007 and any other dividends payable to participate, in proportion to their respective sharehold- thereafter. However, we have not to date declared or paid ings, in any surplus assets remaining after payment of our any dividends and we currently intend to retain all avail- creditors. able financial resources and any earnings generated by our operations for use in our business and we do not RIGHTS ATTACHING TO THE SHARES anticipate paying any dividends in the foreseeable future. The payment of any dividends in the future will depend All our Shares have equal rights and our Articles of Asso- on a number of factors, including our future earnings, ciation do not include provisions allowing for a conversion capital requirements, financial condition and future pros- of our Shares. pects, applicable restrictions on the payment of dividends under Danish law and other factors our Board of Directors REGISTRATION OF SHARES may consider relevant. All Shares are held in book-entry form and must be held The Company’s dividends, if declared, are paid in DKK to through a Danish bank or other institution authorized to the shareholders account set up through VP Securities be registered as the custodian of such Shares (a “custo- Services. There are no dividend restrictions or special pro- dian institution”) on accounts maintained in the computer cedures for non-resident holders of the Company’s system of VP Securities Services. The Shares are issued as Shares. Dividends which have not been claimed within non-certificated bearer shares but the name of the holder three years from the time they are payable are forfeited may be registered in our share register through the hold- and all such dividends will accrue to the Company. er’s custodian institution.

See Part III, Section 4.11 “Taxation” for a summary of cer- LIMITATIONS ON HOLDING OF SHARES tain tax consequences in respect of dividends or distributions to holders of Offer Shares. There are no limitations on the right to hold Shares under our Articles of Association or Danish law. PREEMPTIVE SUBSCRIPTION RIGHTS

Under Danish law, all shareholders have preemptive subscription rights in connection with capital increases effected as cash contributions. An increase in share capital can be resolved by the shareholders at a general

I – 77 21.6 Provisions in the Articles of Association or 21.8 General Meetings other rules, which may lead to a delay of a change of control of the Company The general meeting is the supreme authority in all matters, subject to the limitations provided by Danish law and The Articles of Association authorize the Board of Direc- our Articles of Association. The annual general meeting tors to increase the share capital of the Company without shall be held in the Greater Copenhagen area not later preemptive subscription rights for the existing sharehold- than the end of April in each year. ers (see “Summary of provisions regarding the Board of Directors and Management” in Part I, Section 21.4). At the annual general meeting, our audited annual report 1,304,757 warrants issued to members of our Executive is submitted for approval, together with the proposed Management, Dr. Flemming Ørnskov and Michael Beckert appropriations of profit/treatment of loss and the election during 2006 vest in certain events of a change of control of our Board of Directors and auditors. In addition, the of the Company. See “Vesting Principles for Executive Board of Directors submits a report on our activities dur- Management and Employees” In Part I, Section 21.2. ing the past year. Depending on the specific circumstances, the Board of Directors’ decision to issue Shares without preemptive General meetings are convened by the Board of Directors subscription rights and/or the change of control provi- with minimum eight days’ notice and a maximum of four sions applicable to these warrants may delay, defer or weeks’ notice by publication in a national Danish newspa- prevent a change of control of the Company. per and by announcement on the Danish Commerce and Companies Agency’s IT Information System. A convening Shareholders are not entitled to exercise voting rights for notice will also be forwarded to shareholders recorded in their Shares, unless they have requested the Company our share register, who have requested such notification. to issue an admission card to the relevant general meeting. Admission cards will only be issued to shareholders Shareholders are entitled to attend at general meetings, who are recorded in the Company’s share register or either in person or by proxy. Any shareholder is entitled against presentation of a deposit transcript from VP to submit proposals to be discussed at the general meet- Securities Services or the relevant bank. The transcript ings. However, proposals by the shareholders to be con- must not be dated more than eight days before the date sidered at the annual general meeting must be submitted of presentation. in writing to the Board of Directors not later than four weeks before the annual general meeting.

21.7 Disclosure Requirements Extraordinary general meetings must be held at the request of a general meeting, our Board of Directors, our Pursuant to section 29 of the Danish Securities Trading auditors or shareholders representing at least one-tenth Act, shareholders in a listed company are required to of the registered share capital. notify the listed company and the Danish FSA as soon as possible when the shareholder’s stake represents 5% or All resolutions made by the general meeting may be more of the voting rights in the company or the nominal adopted by a simple majority of the votes, subject only to value accounts for 5% or more of the share capital, and the mandatory provision of the Danish Public Companies when a change of a holding already notified entails that Act and the Articles of Association. Resolutions concern- the limits of 5, 10, 15, 20, 25, 50 or 90% and the limits ing all amendments to our Articles of Association must be of one-third and two-thirds of the share capital’s voting passed by two-thirds of the votes cast as well as two- rights or nominal value are reached or are no longer thirds of the share capital represented at the general reached. meeting. Certain resolutions which limit a shareholder’s ownership or voting rights are subject to approval by a The notification shall provide information about the full nine-tenth majority of the votes cast and the share capi- name, address or, in the case of undertakings, registered tal represented at the general meeting. Decisions to office, the number of shares and their nominal value and increase the obligations of the shareholders towards the share classes as well as information about the basis on Company require unanimity. which the calculation of the holdings has been made. Failure to comply with the notification requirements is punishable by a fine.

When the company has received a notiﬁcation, it must publish the content of such notiﬁcation as soon as possible.

I – 78 21.9 Reports to Shareholders

We publish an annual report that includes our annual financial statements, a copy of which will be sent in Dan- ish or English to all name registered shareholders upon request. We will also make available to holders of our Shares our annual report in respect of each financial year. Our annual report will include our audited annual financial statements prepared in accordance with IFRS as adopted by the EU, and the report of our auditors thereon. Addi- tionally, we will make available our quarterly reports in respect of each of the first three quarters of each financial year, which will include our unaudited financial information prepared in accordance with IAS 34. Such documents will also be available at the Company’s office and on the Company’s website.

I – 79 22. Agreements

MATERIAL AGREEMENTS breach of the representations, warranties, covenants or obligations pursuant to the agreement. Sciele Pharma will The following agreements represent all of the agreements also indemnify us for losses arising out of third party to which we are a party which are considered to be mate- claims resulting from the development or commercializa- rial to our business as of the Offering Circular Date. tion, including sale and use of LCP-FenoChol in the U.S., Canada, and Mexico by Sciele Pharma or its affiliates, sub- Sciele Pharma. License Agreement. In April 2007, we licensees or customers, including product liability claims, entered into a license agreement with Sciele Pharma to and losses resulting from the negotiation of and entry market LCP-FenoChol in the U.S., Canada, and Mexico. into the agreement. We will also indemnify Sciele Pharma Under this agreement, Sciele Pharma began marketing for losses arising out of third party claims resulting from LCP-FenoChol in the U.S. in February 2008 under the the development or commercialization, including the sale brand name Fenoglide. and use, of LCP-FenoChol in or outside the U.S., Canada, and Mexico by us or our affiliates, sublicensees or cus- Under the terms of the agreement we granted Sciele tomers (excluding Sciele Pharma) including product liabil- Pharma an exclusive royalty bearing license under our ity claims. intellectual property rights to develop and commercialize LCP-FenoChol in the U.S., Canada, and Mexico, for use in Either party may terminate the agreement by mutual the prevention, palliation or treatment of any condition, agreement or on the basis of material breaches by the indication or disease in humans. Sciele Pharma has other party or in certain events of bankruptcy or insol- agreed to use commercially reasonable efforts to commer- vency of the other party. Further, Sciele Pharma may ter- cialize LCP-FenoChol in the U.S., Canada, and Mexico. minate the agreement upon 180 days prior notice. Sciele Under the terms of the agreement we remained in control Pharma also has the right to partially terminate the of the regulatory approval process in the U.S. until FDA agreement for one or more specific countries other than approval. LCP-FenoChol was approved by the FDA in Au- the U.S. in which case the license in these countries will gust 2007 and we, therefore, (as agreed under the terms terminate. Otherwise, the agreement terminates on the of the agreement) assigned to Sciele Pharma all our rights expiration or termination of all royalty obligations in the in the regulatory dossier filed with the FDA. Sciele Pharma U.S., Canada and Mexico. is now solely responsible for all regulatory obligations and activities associated with LCP-FenoChol in the U.S., Can- The agreement is governed by the laws of the State of ada, and Mexico and has agreed to use commercially rea- New York, U.S. sonable efforts to obtain regulatory approval of LCP-Feno- Chol in Canada, and Mexico. We have no further H. Lundbeck A/S. MeltDose transfer and license agree- obligations to conduct or fund any further development ment. In June 2002, we entered into a transfer and or commercialization activities and Sciele Pharma is license agreement with H. Lundbeck A/S, pursuant to responsible for obtaining commercial supplies of LCP- which H. Lundbeck A/S irrevocably transferred to us full FenoChol. title to all of its patent and know-how rights to the Melt- Dose technology in consideration for our Shares and a Under the terms of the agreement, in April 2007 we non-exclusive, perpetual, worldwide, royalty-free license received an up-front payment of $5 million. In August from us back to H. Lundbeck A/S of rights to develop and 2007 we received a further $4 million milestone payment commercialize therapeutic or prophylactic MeltDose treat- upon FDA approval of LCP-FenoChol. We are entitled to ments of central or peripheral nervous system diseases. receive milestone payments of $8 million when certain H. Lundbeck A/S agreed to make certain milestone pay- sales targets are met and are entitled to single-digit to ments to us if certain regulatory milestones are achieved double-digit royalties on all or certain parts of net sales with respect to H. Lundbeck A/S products utilizing the of LCP-FenoChol. MeltDose technology. Under the agreement, we agreed to provide certain research and development services for H. We and Sciele Pharma have mutually indemnified each Lundbeck A/S, at its request, until 31 December 2005. other for losses arising out of third party claims resulting Under the terms of the agreement, H. Lundbeck A/S is from the indemnifying party’s negligent or willful miscon- entitled to purchase the transferred patents and know- duct in the exercise of their respective rights and obliga- how rights in the event that we enter into any kind of liq- tions under the terms of the agreement as well as from uidation, file for bankruptcy or any kind of protection

I – 80 under applicable bankruptcy laws, if we are declared Either party may terminate the agreement on the basis of bankrupt or insolvent or undergo comparable procedures. material breaches by the other party. Further, Sciele H. Lundbeck A/S‘s purchase price is agreed at DKK 2.5 Pharma may terminate the agreement for convenience, if million (€0.34 million, with an added annual interest of Sciele Pharma decides not to proceed with the develop- 15% from the date of the agreement and until exercise of ment of a product, in the event of our failure to meet the purchase option. The transfer and license agreement agreed upon deadlines, or if the development costs is governed by Danish law. exceed certain limits. Sciele Pharma may also terminate the agreement in certain events of our bankruptcy or S.S.R. Stainless Steel A/S (previously S.S. Rustfri A/S). insolvency and for non-delivery of the feasibility report In April 2003, we entered into a license agreement with provided for under the agreement. S.S.R. Stainless Steel A/S (“S.S.R. Stainless Steel”) pursuant to which we granted S.S.R. Stainless Steel a perpet- We and Sciele Pharma shall mutually indemnify each other ual, worldwide, royalty-free, exclusive license to manufac- for losses arising out of third party claims resulting from ture and sell non-pharmaceutical products using our the indemnifying party’s negligent act and breach of its self-cleaning spray nozzle technology. If we enter into an obligations under the terms of the agreement including arrangement with a third party to manufacture pharma- breach of the warranties given by the other party and, in ceutical products using the self-cleaning spray nozzle Sciele Pharma’s case, certain product liability claims. technology after rejecting a reasonable manufacturing offer from S.S.R. Stainless Steel, then we must pay S.S.R. The agreement is governed by the laws of the State of Stainless Steel 3% of the amount to be paid to the third- New York, U.S. party manufacturer. Recordati S.p.A. In July 2004, we entered into a collabo- OTHER AGREEMENTS ration agreement with Recordati to jointly develop and commercialize a new tablet formulation of Lercanidipine Sciele Pharma. Feasibility Study Agreement. In April HCI (“HCI”) marketed by Recordati as Zanidip using our 2007, we entered into a feasibility study agreement with MeltDose technology. The collaboration agreement, as Sciele Pharma, through its wholly owned subsidiary Sciele amended in May 2006, aims at developing a novel formu- Pharma Cayman, Ltd. Pursuant to the agreement, the par- lation of Zanidip. ties will perform life-cycle management of one of Sciele Pharma’s current products, using our proprietary MeltDose The collaboration is divided into several stages. In the first technology platform. We are responsible for the develop- stage, we will develop, scale-up and do cGMP manufactur- ment of the product up until (but not including) pharma- ing of two different formulations. In the second stage, codynamic studies. Sciele Pharma is solely responsible for Recordati will conduct bioavailability studies in humans to any further development (including filings with regulatory determine whether the tablet formulations meet the authorities) and the potential commercialization of any desired pharmacokinetic profile. Based on the results of resulting products. Sciele Pharma will pay us for develop- these studies, Recordati will have three opportunities: (i) ment work performed as well as reimburse us for our to enter into a commercial license with us upon terms and costs incurred. conditions to be agreed upon to commercialize the new formulation based on the MeltDose technology, (ii) agree We are entitled to ownership of discoveries and inven- upon a new development plan for further development tions arising from the development work relating to the work with us, or (iii) terminate the collaboration agree- active drug formulation and inclusive of the MeltDose ment. In case Recordati decides to continue the commer- technology platform but have granted Sciele Pharma an cialization, Recordati shall also conduct at least two piv- exclusive license to commercially exploit such discoveries otal bioavailability studies in humans, to demonstrate and inventions. Such license however does not extend to bioequivalence and a reduced food effect of the formula- permit any commercial sale of products (unless the agree- tion chosen. We will be responsible for manufacturing and ment is terminated by Sciele Pharma for certain specified supplying Recordati (at Recordati’s expense) with appro- reasons including material breach by us or failure to priate quantities of the formulation, manufactured deliver a final feasibility report). If Sciele Pharma decides according to cGMP for these studies. to continue the development of a product the parties shall negotiate a license and development agreement cov- Under the collaboration agreement, we will provide, and ering such product. The agreement contains the main Recordati will pay us for, development and manufacturing terms for such license and development agreement and work equivalent to a certain minimum amount of hours. we will be entitled to certain development milestones and The collaboration is governed by a joint steering commit- mid-single digit royalties on eventual sales of any result- tee, consisting of an equal number of our representatives ing product that is commercialized. and Recordati representatives. In the event of a disagreement, the position expressed by Recordati will prevail.

I – 81 The collaboration agreement provides that upon a deter- amount paid to us as reimbursement for work or external mination to proceed with commercialization of a Melt- costs. In the event that the LCP-Feno product that is com- Dose Lercanidipine product candidate, we will be entitled mercialized is based on reformulation of the current for- to certain fees and milestone payments upon achieving mulation of LCP-Feno, then our profit share and milestone certain regulatory milestones, as well as single-digit roy- entitlements will be reduced. Noteworthy is that our profit alty payments (on a percentage basis) upon sales of share cannot be reduced to less than a double-digit roy- Recordati’s MeltDose formulations of HCI. Each party alty (on a percentage basis). indemnifies the other for third-party claims arising out of the indemnifying party’s actions under the collaboration The collaboration is governed by a joint project team with agreement. equal representation of us and Sandoz. The joint project team shall review, update, and amend the development Both parties may terminate the collaboration for the activities for LCP-Feno, and monitor and coordinate the other party’s breach. In case Recordati does not wish to development and commercialization of LCP-Feno. The proceed with commercialization or if agreement on all joint project team will operate by consensus. However, if terms for such commercialization cannot be reached, the any disagreements regarding commercialization cannot be agreement may be terminated. resolved by the joint project team or the executive officers of both parties, then Sandoz’s executive officer shall have In July 2004, we entered into a separate license agree- the final decision making authority. Sandoz has sole ment with Recordati pursuant to which we granted to authority to make decisions with respect to any litigation Recordati a perpetual, worldwide, royalty-free license to claiming that the manufacture, use or sale of LCP-Feno our controlled release formulation of MeltDose Lercani- infringes any patents listed in the Orange Book for Tricor. dipine technology to manufacture and sell products based In addition, Sandoz has sole authority as to whether or on such technology. This license is exclusive while the not to launch LCP-Feno prior to receipt of final legal clear- Recordati collaboration and/or other commercial license ance from any infringement claims, as well as the price at agreements with Recordati are in effect. Each party has which it will sell LCP-Feno. agreed to indemnify the other for third-party claims arising out of the indemnifying party’s manufacture, use or Sandoz will indemnify us for any losses resulting from any sale of MeltDose Lercanidipine products. litigation by third parties including Abbott claiming that the manufacture, use or sale of LCP-Feno infringes any Both of our agreements with Recordati are governed by patents listed in the Orange Book for Tricor, any other liti- the laws of Switzerland. gation necessary in order to achieve regulatory approval and ability to commercialize LCP-Feno as well as any Sandoz Inc. In September 2006, we entered into a col- product liability claims with respect to LCP-Feno. We and laboration agreement with Sandoz to jointly develop, Sandoz will indemnify each other for losses resulting from manufacture and commercialize LCP-Feno as an AB-rated the indemnifying party’s misrepresentation or breach of generic version of Tricor for the U.S. market. its obligation under the agreement. To the extent that any losses result from a third party claim for which we are Under the terms of the agreement, we have granted San- obligated to indemnify Sandoz, Sandoz will have no obli- doz a license under our intellectual property rights to gation to indemnify us. develop and commercialize LCP-Feno (145 mg and 48 mg) in the U.S. and Sandoz has agreed to use commercially Either party may terminate the collaboration relationship reasonable efforts to file an ANDA for LCP-Feno and to for material breaches or certain events of bankruptcy or pursue FDA approval of the ANDA as well as to market insolvency of the other party. Sandoz may also terminate LCP-Feno in the U.S. Under the collaboration, we are the agreement if LCP-Feno or the market is deemed to responsible for conducting and funding substantially all of lack commercial viability, or if legal fees and other the costs of the ongoing development activities. Sandoz expenses for Orange Book litigation exceed certain has agreed to reimburse us for our employees’ actual thresholds or such litigation is not resolved by a specific hours spent on the ongoing study as well as our major date, if no ANDA is filed within a specific date or if we fail external costs such as costs of analytical work if the to meet certain other prearranged development mile- agreed end-points are achieved in the study. stones, or in other instances where certain costs exceed mutually agreed upon limits. If the agreement is termi- Sandoz will pay to us a double-digit royalty (on a percent- nated (except due to our breach), we will be granted a age basis) of Sandoz’s net profits earned from sales of license under certain intellectual property of Sandoz to LCP-Feno by Sandoz or its affiliates in the U.S. If certain develop and commercialize LCP-Feno in the U.S. If the regulatory and/or commercial milestones are achieved, agreement is terminated for any reason other than San- under certain circumstances, Sandoz will also make cer- doz’s breach, Sandoz’s failure to meet certain milestones, tain milestone payments to us. Sandoz is permitted to or Sandoz’s bankruptcy or insolvency, and we subse- offset certain costs in the milestones, including any quently commercialize LCP-Feno in the U.S., we shall pay

I – 82 to Sandoz certain royalties of our net sales until Sandoz In all cases where the agreement is terminated, the has recovered certain expenses and milestones paid to us license granted to Mylan will terminate. If the agreement unless at such time LCP-Feno had already been commer- is terminated by us due to Mylan’s breach, bankruptcy, cialized by Sandoz. If Sandoz terminates the agreement insolvency or failure to meet certain milestones or Mylan’s due to our material breach, in certain specified events adverse competitive behavior we will be granted a license Sandoz retains the non-exclusive right to develop and under certain intellectual property of Mylan to develop commercialize LCP-Feno in the U.S. The agreement is gov- and commercialize LCP-Feno in Europe. erned by laws of the State of New York, U.S. We and Mylan mutually indemnify each other for losses Mylan. In June 2006, we entered into collaboration with resulting from the indemnifying party’s negligent act and Mylan to develop, manufacture and commercialize LCP- breach of its obligations under the terms of the agree- Feno as a generic version of Lipanthyl for the European ment including breach of the warranties given by the market. other party. Mylan will indemnify us for any losses resulting from any litigation initiated against Mylan or us with Under the terms of the agreement we have granted Mylan respect to the commercialization of LCP-Feno in Europe an exclusive license under our intellectual property rights and/or any other litigation necessary in order for Mylan to to develop and commercialize LCP-Feno in Europe and achieve regulatory approval and ability to commercialize Mylan has agreed to use commercially reasonable efforts LCP-Feno in Europe and any claim of product liability with to obtain regulatory approval for and commercialize LCP- respect to LCP-Feno in Europe. To the extent that any Feno in Europe. losses result from a third-party claim for which we are obligated to indemnify Mylan, Mylan will have no obliga- Mylan is responsible for all further cost of developing and tion to indemnify us. commercializing LCP-Feno in Europe and Mylan shall, at its sole cost, conduct all clinical studies and/or other regula- The agreement is governed by English law. tory requirements necessary to support the applications for regulatory approvals in Europe. Mylan bears all respon- H. Lundbeck A/S. Patent license agreement. In August sibility for the submission of the information, processes, 2003, we entered into a patent license agreement with H. techniques and data required in order to obtain marketing Lundbeck A/S pursuant to which H. Lundbeck A/S granted authorizations in Europe. us a perpetual, worldwide, royalty-free, non-exclusive as to the treatment of nervous system diseases and exclu- Mylan will pay to us certain royalties on net sales of LCP- sive for all other uses, license to develop and commercial- Feno less production costs of LCP-Feno by Mylan or its ize drug products using H. Lundbeck A/S‘s modified affiliates in Europe. If certain regulatory and/or commer- release/absorption material technology, and we granted cial milestones are achieved under certain circumstances, H. Lundbeck A/S non-exclusive, perpetual, worldwide, roy- Mylan will also make certain milestone payments to us. alty-free license to our self-cleaning spray nozzle technology to develop and commercialize therapeutic or prophy- Either party may terminate the collaboration relationship lactic drug products for central or peripheral nervous by mutual agreement or on the basis of material breaches system diseases. The license agreement is governed by by the other party or in certain events of bankruptcy or Danish law. insolvency of the other party. We may also terminate the agreement for Mylan’s failure to meet a specified mile- H. Lundbeck A/S. Manufacturing agreement. In April stone or Mylan’s adverse competitive behavior. Mylan may 2006, we entered into an agreement with H. Lundbeck A/ terminate the agreement immediately in the event that it S concerning our use of certain of H. Lundbeck A/S‘s decides not to engage in or continue third-party litigation manufacturing facilities and support areas for the manu- with respect to the licensed intellectual property rights. facture of our product candidates for our clinical studies Should this be the case we may be obligated to return to conducted in Europe. The agreement was amended Mylan all or a portion of any milestones received from in September 2007 to provide the Company with addi- Mylan. tional space and additional equipment at H. Lundbeck A/ S’ facilities. Pursuant to the agreement we have access to In certain circumstances if Mylan wishes not to market or certain manufacturing facilities and support areas, as long sub-license LCP-Feno in a European country or fails to as our requirements follow a pre-agreed manufacturing launch LCP-Feno in such country then we have the option plan (which is subject to regular updating). Under the to revoke the license for that European country; and if we terms of the agreement H. Lundbeck A/S is obligated to decide to do so then we will be granted an exclusive ensure that the manufacturing facilities used by us remain license under certain intellectual property of Mylan relat- approved by the Danish Medicines Agency for the supply ing to LCP-Feno in such European country. of clinical materials intended for clinical studies in the European Union.

I – 83 We and H. Lundbeck A/S will indemnify each other for Agreement with a Top 10 Pharmaceutical Company. losses resulting from third parties’ use of the drug prod- In December 2007 we entered into a feasibility study ucts manufactured pursuant to the agreement except for agreement with an undisclosed Top 10 pharmaceutical losses incurred as a result of the other party’s negligence company (based on annual gross revenues for 2006). Pur- or malpractice. Unless in the event of H. Lundbeck A/S‘s suant to the agreement, we will formulate a drug com- gross negligence or willful misconduct, H. Lundbeck A/S‘s pound using the MeltDose technology. If, upon receipt of liability is limited to DKK 100,000 (€13,411). certain information on the pre-formulation and formulation program, our partner decides to proceed with the Either party may terminate the agreement for material study, we shall manufacture the selected product candi- breaches of the other party. Either party may also termi- date formulations for pre-clinical testing to be performed nate the agreement without any reason by 12 months’ by our partner. In case our partner decides to use the for- notice. Further, with respect to future (unplanned) manu- mulations for clinical studies or commercially, we and our facturing activities, H. Lundbeck A/S may also suspend partner shall start negotiations with the purpose of enter- the agreement for fixed periods of six months if H. Lund- ing into a commercial license agreement. The terms for beck A/S‘s own manufacturing requirements preclude our such commercial license agreement have not been deter- use of the facilities in those fixed periods. mined. Our partner shall pay us certain fixed amounts for our development efforts under the agreement. H. Lundbeck A/S may also terminate the agreement with six months’ notice in the event of certain change of con- Our partner is entitled to ownership of all intellectual trol events relating to us. property rights arising from the development work with the exception of improvements to the MeltDose technol- The agreement is governed by Danish law. The agreement ogy that are not specific to our partner’s drug compound. replaced an agreement concerning use of H. Lundbeck A/ S’s manufacturing facilities entered into during 2004 and The feasibility study agreement shall be in force until the amended in 2005. latter of two years from the execution date or finalization of our partner’s preclinical testing. Our partner has the In October 2006, we entered into a research and develop- right to terminate the agreement for any reason upon 30 ment agreement with H. Lundbeck A/S. See Part I, Section days prior notice. Our partner has the right to terminate 19 “Related Party Transactions” for a description of this the agreement immediately if we become debarred under agreement. pharmaceutical regulations or if such debarment is threatened.

The parties shall mutually indemnify each other for losses arising out of the indemnifying party’s negligent or willful acts unless due to the negligence or willful acts of the party seeking indemniﬁcation.

I – 84 23. Third-Party Information and Statements by Experts and Declarations of any Interest

There are no expert statements or declarations included We confirm that information sourced from third parties in this Offering Circular. has been accurately reproduced and that to the best of our knowledge and belief, and so far as can be ascer- This Offering Circular contains historical market data and tained from the information published by such third party, industry forecasts, including information related to the no facts have been omitted which would render the infor sizes of the markets in which we participate or parts mation provided inaccurate or misleading. thereof, diseases targeted by our product candidates and the number of people affected by such diseases. This Market statistics are inherently subject to uncertainty and information has been obtained from a variety of sources, are not necessarily reflective of actual market conditions. including professional data suppliers, such as IMS Health Such statistics are based on market research which itself Inc. (“IMS Health”, a company listed on the New York is based on sampling and subjective judgments by both Stock Exchange providing business intelligence products the researchers and the respondents, including judgments and services to the pharmaceutical industry), Datamonitor about what types of products and transaction should be Inc., pharmaceutical specialist literature and articles, com- included in the relevant market/market segment defini- pany websites and other publicly available information as tions. well as our knowledge of the markets. The professional data suppliers state that the historical information they provide has been obtained from sources, and through methods, believed to be reliable, but that they do not guarantee the accuracy and completeness of this information. Similarly, industry forecasts and market research, while believed to be reliable, have not been independently verified by us. Neither we nor any of the Joint Global Coordinators and Lead Managers represent that this historical information is accurate. Industry forecasts are, by their nature, subject to significant uncertainty. There can be no assurance that any of the forecasts will materialize.

I – 85 24. Documentation material

The following documents (which include those documents In addition, copies of the Danish Offering Circular and this referred to in Section 29(2) of the Danish Public Compa- Offering Circular, with certain exceptions, including prohi- nies Act) are available for inspection during usual busi- bition on access by persons located in the United States, ness hours on any day (Saturdays, Sundays and public can be downloaded from our website, www.lifecycleph- holidays excepted) at our registered office, Kogle Allé 4, arma.com. DK-2970 Hørsholm, Denmark: (i) our Memorandum of Association and our Articles of Association; (ii) our annual The documents referred to in Section 29(2) of the Danish reports as at and for the financial years ended 31 Decem- Public Companies Act include (i) a copy of the latest ber 2006 and 2007 prepared in accordance with IFRS as annual report, (ii) a statement from the Board of Directors adopted by the EU and the additional Danish disclosure disclosing, to the extent that this would not be detrimen- requirements for annual reports of listed companies; (iii) tal to us due to special circumstances, events of material our annual report as at and for the financial year ended importance which have occurred after the annual report 31 December 2005 prepared in accordance with IFRS as was approved and which affect the Company and (iii) a adopted by the EU and the additional Danish disclosure statement by the auditor on the report of the Board of requirement for annual reports of unlisted companies; (iv) Directors. a statement from the Board of Directors dated 17 March 2008 which, to the extent that this would not be detri- mental to us due to special circumstances, discloses events of material importance which have occurred after the approval of the annual report for the year ended 31 December 2006; (v) a statement from PwC regarding the Board of Directors’ statement; (vi) this Offering Circu- lar; and (vii) the Danish Offering Circular.

I – 86 25. Information on Capital Holdings

For information on material investments held by LifeCycle Pharma in other companies, see Part I, Section 7 “Organi- zational Structure”.

I – 87 II. Financial information 1. Index to Historical Financial Statements

2. Preface to the Financial Statements II - 2

3. Inclusion of material by reference II - 4

4. Audited Financial Statements for 2005, 2006 and 2007 II - 5 Executive Management and the Board of Directors’ Statement on the consolidated ﬁnancial status II - 5 Auditors’ Report II - 6 Income Statement II - 7 Balance Sheet – Assets II - 8 Balance Sheet – Equity and Liabilities II - 9 Cash Flow Statement II - 10 Statement of Changes in Equity II - 11 Notes to the Financial Statements II - 13

II– 1 2. Preface to the Financial Statements

The following sets out audited consolidated financial statements for LifeCycle Pharma A/S for the years ended 31 December 2005, 2006 and 2007.The financial information has been extracted from our published Annual Reports for 2005, 2006 and 2007 with the exceptions described below. Our published Annual Reports for 2007 and 2006 have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and the additional Danish disclosure requirement for the annual reports of listed companies. Our published annual report for 2005 was prepared in accordance with IFRS as adopted by the EU and the additional Danish disclosure requirements for annual reports. The historical financial information included in this Offering Circular has been prepared in accordance with IFRS as adopted by the EU and the additional Danish disclosure requirements for annual reports of listed companies. The published Annual Report for 2007 will be submitted for shareholder approval at the Company’s Annual General Meeting to be held on 24 April 2008.

As of 2 January 2007, the Company established the wholly owned subsidiary LifeCycle Pharma, Inc. thereby forming the LifeCycle Pharma Group. Accordingly, the ﬁnancial statements for the year ended 31 December 2007 have been prepared on a consolidated basis, whereas the ﬁnancial statements for the years ended 31 December 2005 and 2006 only comprise the activities of the parent company.

Effective as of 1 January 2005, the Company changed the accounting policies to be in compliance with IFRS issued by the IASB as adopted by the EU, except for those standards with later effective dates. No attempt has been made to identify future differences that may affect the financial statements of the Company as a result of transactions or events that may occur in the future. Accordingly, potentially significant differences may arise from such transactions or events that have not been identified in the summary of recent IFRS pronouncements given in the financial statements for 2005, 2006 and 2007. No attempt has been made to identify disclosures, presentation or classification differences that would affect the manner in which transactions, events, or results are reflected in the financial statements of the Com- pany or the notes thereto.

The ﬁnancial statements for 2005 included in this Offering Circular have been restated compared to the published Annual Reports to adjust for revenue that should have been recognized in 2004 but was inappropriately recognized in 2005. The restatement reduced revenue and increased net loss for the year by DKK 3,533 thousand in 2005. The statement of cash ﬂows was not impacted.

The impact of the change in accounting policies and the restatement of the 2005 ﬁnancial statements is as follows:

II– 2 2005 As reported Adjustment Adjusted DKK ‘000 DKK ‘000 DKK ‘000 Income statement Revenue 6,287 (3,533) 2,754 Research and development costs (80,919) -(80,919) Administrative expenses (16,170) - (16,170) Operating loss (90,802) (3,533) (94,335) Net loss for the year (91,636) (3,533) (95,169) Basic and diluted earnings per share (1) (0.00658) (0.00024) (0.00682)

Assets per 31 December Other receivables 8,609 - 8,609 Current assets 108,112 - 108,112 Assets 136,357 - 136,357

Equity per 1 January Share premium - 57,411 57,411 Retained earnings (7,815) (53,877) (61,692) Total equity (5,180) 3,533 (1,647)

Equity per 31 December Share premium 242,822 - 242,822 Retained earnings (154,821) - (154,821) Total equity 92,430 - 92,430

(1) Weighted average number of shares for 2005 has been adjusted according to the issue of bonus shares in the ratio 3:1 as resolved at the general meeting on 27 july 2006.

II– 3 3. Inclusion of material by reference

The published Annual Reports for LifeCycle Pharma A/S for 2005, 2006 and 2007 contains management’s reviews, as cross-referenced below, which have not been included in the historical ﬁnancial information in this Offering Circular. Management’s review are only applicable as of the date of publication and have not been updated for which reason information may in certain cases be overruled by the information included in this Offering Circular or be obsolete, in particular with respect to the information included in Part I, Section 10 “Review of Operations and Financial Results”. Furthermore, the statement by the Board of Directors and the Executive Management and the auditor’s report from the published annual reports for 2005, 2006 and 2007 are not included in the following historical ﬁnancial information, but cross-reference have been made, see below. These statements are also only applicable as of the date of publication and have therefore not been updated since the date of publication.

Disclosure Element Reference

Management’s review for the 2007 ﬁnancial year LifeCycle Pharma’s Annual Report for 2007, page 3

Management’s review for the 2006 ﬁnancial year LifeCycle Pharma’s Annual Report for 2006, page 7

Management’s review for the 2005 ﬁnancial year LifeCycle Pharma’s Annual Report for 2005, page 6

Statement by the Board of Directors and LifeCycle Pharma’s Annual Report for 2007, page 32 the Executive Management for 2007

Statement by the Board of Directors and LifeCycle Pharma’s Annual Report for 2006, page 30 the Executive Management for 2006

Statement by the Board of Directors and LifeCycle Pharma’s Annual Report for 2005, page 3 the Executive Management for 2005

Auditor’s Report for 2007 LifeCycle Pharma’s Annual Report for 2007, page 33

Auditor’s Report for 2006 LifeCycle Pharma’s Annual Report for 2006, page 31

Auditor’s Report for 2005 LifeCycle Pharma’s Annual Report for 2005, page 4

The information included by reference is available on the Company’s website www.lifecyclepharma.com.

II– 4 4. Audited Financial Statements for 2005, 2006 and 2007

Executive Management’s and the Board of Directors’ Statement on the Consolidated Financial Statements

The Executive Management and the Board of Directors have considered and adopted the consolidated ﬁnancial statements of LifeCycle Pharma A/S for the ﬁnancial years 2005, 2006 and 2007 on 18 April 2006, 5 March 2007, and 28 February 2008, respectively.

The consolidated financial statements for the financial years 2005, 2006 and 2007 included in this Offering Circular were prepared for the purpose of the offering and are extracted from the published Annual Reports for the financial years 2005, 2006 and 2007.

The consolidated ﬁnancial statements for the ﬁnancial years 2005, 2006 and 2007 have been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for the annual reports of listed companies.

We consider the applied accounting policies to be appropriate and, in our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities, financial position, results of operation and cash flow of the Com- pany for the financial years 2005, 2006 and 2007.

Hørsholm, 18 March 2008

Executive Management

Flemming Ørnskov Hans Christian Teisen

Board of Directors

Claus Braestrup Kurt Anker Nielsen Thomas Dyrberg Chairman

Jean Deleage Gérard Soula

II– 5 Auditors’ Report on the Financial Statements

TO THE SHAREHOLDERS OF LIFECYCLE PHARMA A/S

PricewaterhouseCoopers have audited the published Annual Reports of LifeCycle Pharma A/S for the ﬁnancial years 2005, 2006 and 2007, which have all been provided with an Auditors’ Report without any qualiﬁcations or emphasis of matters.

The consolidated financial statements for the financial years 2005, 2006 and 2007 presented in Part II pages II-5 – II-37 of the Offering Circular for LifeCycle Pharma A/S dated 18 March 2008 are extracts of the published Annual Reports for the financial years 2005, 2006 and 2007 with the exception described in Part II pages II-2 – II-3. The financial statements presented are prepared in accordance with the accounting policies described in Part II pages II-13 – II-19. The accounting policies applied are in accordance with the IFRS as adopted by EU and the additional Danish disclosure requirements for financial statements for listed companies.

We have audited the consolidated ﬁnancial statements for the ﬁnancial years 2005, 2006 and 2007 prepared for the purpose of this Offering Circular which are extracted from the published Annual Reports for the years 2005, 2006 and 2007.

Our audits for the ﬁnancial years 2005, 2006 and 2007 were completed at 18 April 2006, 5 March 2007, and 28 February 2008, respectively. We have not performed any audit procedures subsequent to 28 February 2008.

The Company’s Registered Management and Board of Directors are responsible for the preparation of the consolidated financial statements for the financial years 2005, 2006 and 2007. Our responsibility is to express an opinion on the consolidated financial statements based on our audit.

Management’s Responsibility for the ﬁnancial statements

Management is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of an ﬁnancial statements that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated ﬁnancial statements based on our audit. We conducted our audit in accordance with Danish Auditing Standards. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the consolidated ﬁnancial statements is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁnancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Entity’s preparation and fair presentation of the consolidated ﬁnancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the Financial Statements.

We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualiﬁcation.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the financial position at 31 December 2005, 2006 and 2007 of the Group and of the results of the Group’s operations and cash flows for the financial years 2005, 2006 and 2007 in accordance with IFRS as adopted by EU and the additional Danish disclosure requirements for financial statements for listed companies.

Copenhagen, 18 March 2008

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab

Lars Holtug Claus Køhler Carlsson State Authorised Public Accountant State Authorised Public Accountant

II– 6 Income Statement for the period 1 January – 31 December

2005 2006 2007 Note DKK ‘000 DKK ‘000 DKK ‘000

Revenue 2,754 9,740 64,705 Research and development costs 4,5 (80,919) (129,403) (183,608) General and administrative expenses 4,5 (16,170) (29,395) (54,033) Operating loss (94,335) (149,058) (172,936)

Financial income 6 945 2,993 18,553 Financial expenses 7 (1,779) (1,648) (5,856) Loss before tax (95,169) (147,713) (160,239)

Tax for the year 8 - - -

Net loss for the year (95,169) (147,713) (160,239)

Basic and diluted EPS (DKK) (6.82) (7.65) (5.19)

Weighted average number of shares (1) 13,965,252 19,313,737 30,875,434

(1) Weighted average number of shares during 2005 has been adjusted for the issue of bonus shares at the ratio 3:1 as resolved at the general meeting on 27 July 2006.

II– 7 Balance Sheet – Assets

31 December 31 December 31 December 2005 2006 2007 Note DKK ‘000 DKK ‘000 DKK ‘000

Licenses and rights 9 829 779 729 Intangible assets 829 779 729

Property, plant and equipment 10 16,505 23,264 21,837 Leasehold improvements 10 6,636 5,848 6,220 Prepayments for plant and equipment 10 4,275 - - Property, plant and equipment 27,416 29,112 28,057

Non-current assets 28,245 29,891 28,786

Receivables from capital increase 9,889 - - Trade receivables - 6,707 3,842 Other receivables 8,609 5,430 14,379 Prepayments 2,390 371 3,165 Receivables 20,888 12,508 21,386

Cash and cash equivalents 13 87,224 464,658 331,740

Current assets 108,112 477,166 353,126

Assets 136,357 507,057 381,912

II– 8 Balance Sheet – Equity and Liabilities

31 December 31 December 31 December 2005 2006 2007 Note DKK ‘000 DKK ‘000 DKK ‘000

Share capital 12 4,429 30,370 31,771 Share premium 242,822 717,039 724,645 Translation reserves - - 821 Retained earnings/loss (154,821) (289,326) (431,548) Equity 92,430 458,083 325,689

Finance lease 15 25,280 24,665 20,416 Non-current liabilities 25,280 24,665 20,416

Finance lease 15 5,044 6,081 5,092 Trade payables 10,714 11,957 15,066 Deferred revenue - 373 1,716 Debt to shareholders 46 166 - Other payables 2,843 5,732 13,933 Current liabilities 18,647 24,309 35,807

Liabilities 43,927 48,974 56,223

Equity and liabilities 136,357 507,057 381,912

Notes Investment in subsidiary 11 Financial risks 13 Warrants 14 Other commitments 16 Related parties 17 Fees to auditors appointed by the annual general meeting 19

II– 9 Cash Flow Statement for the Period 1 January to 31 December

2005 2006 2007 Note DKK ‘000 DKK ‘000 DKK ‘000

Operating loss (94,335) (149,058) (172,936) Share-base payment 5 2,040 13,208 18,017 Depreciation and amortisation 4 4,071 5,576 7,004 Net loss on sale of ﬁxed assets - - 60 Changes in working capital 18 2,287 3,116 3,558 Cash ﬂow from operating activities before interest (85,937) (127,158) (144,297)

Interest received 945 2,993 17,914 Interest paid (1,779) (1,648) (4,344) Corporate tax paid 8 - - - Cash ﬂow from operating activities (86,771) (125,813) (130,727)

Purchase of property, plant and equipment (13,572) (7,222) (5,900) Net loss on sale of property, plant and equipment - - (60) Cash transfer to restricted security deposit - - (1,338) Cash ﬂow from investing activities (13,572) (7,222) (7,298)

Proceeds from bank borrowings and finance lease 14,182 5,251 1,118 Instalment on bank borrowings and finance lease (3,941) (4,829) (6,356) Proceeds from issuance of shares, net 177,317 510,047 9,007 Cash flow from financing activities 187,558 510,469 3,769

Increase/decrease in cash and cash equivalents 87,215 377,434 (134,256) Cash and cash equivalent, 1 January 9 87,224 464,658 Cash and cash equivalents at 31 December 87,224 464,658 330,402

Cash and cash equivalents at 31 December comprise:

Restricted bank deposit - - 1,338 Deposit on demand and cash 87,224 464,658 330,402 87,224 464,658 331,740

II– 10 Statement of Changes in Equity

1 JANUARY 2007 - 31 DECEMBER 2007

Share Share Translation Retained Number capital premium reserves earnings/loss Total of shares DKK ‘000 DKK ‘000 DKK’000 DKK ‘000 DKK ‘000

Equity as of 1 January 2007 30,369,816 30,370 717,039 0 (289,326) 458,083

Comprehensive income: Net loss for the year (160,239) (160,239) Exchange rate adjustment of investments in subsidiaries 821 821 Total comprehensive income (159,418)

Warrant exercises 1,400,889 1,401 7,663 9,064 Share-based payment 18,017 18,017 Cost related to capital increase (57) (57)

Equity as of 31 December 2007 31,770,705 31,771 724,645 821 (431,548) 325,689

1 JANUARY 2006 - 31 DECEMBER 2006

Share Share Translation Retained Number capital premium reserves earnings/loss Total of shares DKK ‘000 DKK ‘000 DKK’000 DKK ‘000 DKK ‘000

Equity as of 1 January 2006 4,428,569 4,429 242,822 0 (154,821) 92,430

Comprehensive income: Net loss for the year (147,713) (147,713) Total comprehensive income (147,713) (147,713)

Issuance of shares 12,650,000 12,650 543,950 556,600 Warrant exercises 1,385 1 42 43 Share-based payment 13,208 13,208 Bonus shares 13,289,862 13,290 (13,290) - Cost related to capital increase (56,485) (56,485)

Equity as of 31 December 2006 30,369,816 30,370 717,039 0 (289,326) 458,083

II– 11 1 JANUARY 2005 - 31 DECEMBER 2005

Share Share Translation Retained Number capital premium reserves earnings/loss Total of shares DKK ‘000 DKK ‘000 DKK’000 DKK ‘000 DKK ‘000

Equity as of 1 January 2005 2,634,269 2,634 57,411 0 (61,692) (1,647)

Comprehensive income: Net loss for the year (95,169) (95,169) Total comprehensive income (95,169) (95,169)

Issuance of shares 1,784,022 1,785 186,277 188,062 Warrant exercises 10,278 10 314 324 Share-based payment 2,040 2,040 Cost related to capital increase (1,180) (1,180)

Equity as of 31 December 2005 4,428,569 4,429 242,822 0 (154,821) 92,430

The share capital is not available for distribution, while other reserves are distributable for dividend purposes subject to the provisions of the Danish Public Companies Act.

II– 12 Note 1. Principal activities

LCP is an emerging specialty pharmaceutical company, focused on certain cardiovascular indications and the immunosuppression market. The intention is to approach the transplantation market through our own hospital based specialist sales force and to use marketing and sales partners for the cardiovascular indications. We currently have one product on the market, seven clinical development programs covering ﬁve product candidates and three product candidates in preclinical development.

The company’s proprietary MeltDose technology platform is designed to enhance the release and absorption of drugs in the body by incorporating the drug in a soluble form in a tablet matrix, for example a solid solution. By applying our MeltDose technology to create new versions of existing drugs, we believe we are able to develop products with differentiated characteristics signiﬁcantly faster and cheaper and with a higher success rate as compared with traditional drug development.

Note 2. Accounting policies

BASIS OF PRESENTATION

The financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and adopted by the EU, and additional Danish disclosure requirements for annual reports of listed companies. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The restatement reduced revenue and increased net loss for the year by DKK 3,533 thousand in 2005. Basic and diluted earnings per share was reduced by DKK 0.27 in 2005. The statement of cash ﬂow was not impacted.

The ﬁnancial statements are presented in Danish Kroner (DKK), which is the functional and presentation currency of the parent company.

NEW ACCOUNTING POLICIES

Effective from 1 January 2007, the company has adopted the new and amended standards issued by the International Accounting Standards Board with effective dates as of 1 January 2007. The adoption of these new and amended standards has only affected the ﬁnancial reporting of the company in respect of additional disclosures.

Except for the adoption of the new and amended standards issued by the IASB, the accounting policies are consistent with the accounting policies used prior year’s ﬁnancial statements.

MANAGEMENT’S JUDGEMENTS UNDER IFRS

In preparing financial statements under IFRS, certain provisions in the standards require management’s judgements. Such judgements are considered important to understand the accounting policies and the company’s compliance with the standards. The areas involving higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3, Critical Accounting Estimates and Judgements.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated ﬁnancial statements include LifeCycle Pharma A/S (the parent company) and subsidiaries in which the parent company directly or indirectly exercises a controlling interest through shareholding or otherwise. Accordingly, the consolidated ﬁnancial statements include LifeCycle Pharma A/S and LifeCycle Pharma, Inc. (collectively referred to as the LifeCycle Pharma group).

II– 13 The group’s consolidated ﬁnancial statements have been prepared on the basis of the ﬁnancial statements of the parent company and the subsidiary – prepared under the group’s accounting policies – by combining similar accounting items on a line-by-line basis. On consolidation, intercompany income and expenses, intercompany receivables and payables, and unrealized gains and losses on transactions between the consolidated companies are eliminated.

The recorded value of the equity interests in the consolidated subsidiary is eliminated with the proportionate share of the subsidiary’s equity. The subsidiary is consolidated from the date when control is transferred to the group.

The income statement for the foreign subsidiary is translated into the group’s reporting currency at the year’s weighted average exchange rate and the balance sheet is translated at the exchange rate in effect at the balance sheet date. Exchange rate differences arising from the translation of the foreign subsidiary’s shareholders’ equity at the beginning of the year, and exchange rate differences arising as a result of the foreign subsidiary’s income statement being translated at average exchange rates, are recorded in translation reserves in shareholders’ equity.

FOREIGN CURRENCY

Transactions in foreign currencies are translated at the exchange rates in effect at the date of the transaction.

Exchange rate gains and losses arising between the transaction date and the settlement date are recognized in the income statement as ﬁnancial items.

Unsettled monetary assets and liabilities in foreign currencies are translated at the exchange rates in effect at the balance sheet date. Exchange rate gains and losses arising between the transaction date and the balance sheet date are recognized in the income statement as ﬁnancial items.

Income Statement

REVENUES

Revenues comprise milestone payments, royalties and cost reimbursement from research and development and commercialization agreements. Revenue is recognized when it is probable that future economic benefits will flow to the company and these benefits can be measured reliably. Further, revenue recognition requires that all significant risks and rewards of ownership of the goods or services included in the transaction have been transferred to the buyer, and that LCP retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods or services sold.

Revenues are stated less of VAT, charges and discounts.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs comprise license costs, manufacturing costs, pre-clinical and clinical trial costs, salaries and other staff costs including pensions, and other costs including cost of premises, depreciation and amortization related to research and development activities.

Research costs are recognized in the income statement in the period to which they relate. Development costs are recognized in the income statement when incurred if the criteria for capitalization have not been met.

A development project involves a single product candidate undergoing a high number of tests to illustrate its safety profile and effect on human beings prior to obtaining the necessary approval from the appropriate authorities. Considering the general risk related to the development of pharmaceutical products, management has concluded that the future economic benefits associated with the individual development projects cannot be estimated with sufficient certainty until the project has been finalized and the necessary market approval of the final product has been obtained. As a consequence all development costs are recognized in the income statement in the period to which they relate.

II– 14 GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses comprise salaries and other staff costs including pensions, ofﬁce supplies, cost of premises, and depreciation and amortization related to administrative activities.

General and administrative expenses are recognized in the income statement in the period to which they relate.

SHARE-BASED PAYMENT

Employees (including executive management), board members and external consultants have been granted warrants. For warrants granted after 7 November 2002 and not vested 1 January 2005, the fair value of the warrants at the grant date is recognized as an expense in the income statement over the vesting period. A corresponding amount is recognized in a reserve under shareholders’ equity.

FINANCIAL INCOME AND EXPENSES

Financial income and expenses comprise interest income and expenses, the interest portion related to ﬁnance lease contracts and realized and unrealized exchange rate gains and losses on transactions denominated in foreign currencies.

CORPORATE TAX

Tax for the year, which consists of current tax for the year and changes in deferred tax, is recognized in the income statement by the portion attributable to the income for the year, and recognized directly in equity by the portion attributable to transactions recognized directly in equity. Current tax payable or receivable is recognized in the balance sheet as tax calculated on the taxable income for the year adjusted for prepaid tax.

Deferred tax is recognized and measured under the liability method on all temporary differences between the carrying amount and tax value of assets and liabilities. The tax value of the assets is calculated based on the planned use of each asset.

Deferred tax is calculated in accordance with the tax regulations and tax rates that are expected to be in effect, considering the laws in force at the balance sheet date, when the deferred tax is estimated to crystallize as current tax. Changes in deferred tax resulting from changed tax rates are recognized in the income statement.

Deferred tax assets, including the tax value of tax losses carried forward, are recognized in the balance sheet at their estimated realizable value, either as a set-off against deferred tax liabilities, if such set-off is permitted for tax purpose, or as net tax assets. Deferred tax assets which are not recognized in the balance sheet are disclosed in a note to the ﬁnancial statements.

Balance Sheet

NON-CURRENT ASSETS

INTANGIBLE ASSETS

Intangible assets comprise acquired patent rights, which are measured at cost less accumulated amortization and impairment losses. The amortization period is determined based on the expected economic and technical useful life, and amortization is recognized on a straight-line basis over the expected useful life, which is 20 years.

TANGIBLE FIXED ASSETS

Tangible fixed assets comprise process plant and machinery, other fixtures and fittings, tools and equipment and leasehold improvements. Tangible fixed assets are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the assets. Subsequent costs are included in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that

II– 15 future economic benefits associated with the assets will flow to the company and the costs of the items can be measured reliably. All repair and maintenance costs are charged to the income statement during the financial periods in which they are incurred.

Depreciation of tangible ﬁxed assets is calculated using the straight-line method to allocate the cost to the residual value of the assets over the expected useful life as follows:

Process plant and machinery: 7 years Other ﬁxtures and ﬁttings, tools and equipment: 3-5 years Leasehold improvements: 7-9 years

Depreciation, impairment losses and gains or losses on disposal of tangible ﬁxed assets is recognized in the income statement as research and development costs or as general and administrative expenses, as appropriate.

IMPAIRMENT OF LONG-LIVED ASSETS

The carrying amount of long-lived assets is tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If there are such indications, an impairment test is performed. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is determined as the higher of an asset’s net selling price and its value in use. Value in use is calculated as the net present value of future cash inflow generated from the asset. For the purposes of assessing impairment, assets are grouped at the lower levels for which there are separately identifiable cash flows (cash-generating units). For corporate assets the assessment is carried out on entity level. Impairment losses are recognized in the income statement under the same line items as the related depreciation or amortization.

CURRENT ASSETS

TRADE RECEIVABLES

Trade receivables are measured in the balance sheet at the lower of amortized cost and net realizable value, which corresponds to the nominal value less provisions for bad debts. Provisions for bad debts are determined on the basis of an individual assessment of each receivable.

OTHER RECEIVABLES

Other receivables are measured at fair value on initial recognition and subsequently measured at amortized cost according to the effective interest method less provision for impairment. Impairment losses are based on an individual evaluation of each amount collectible.

PREPAYMENTS

Prepayments comprise incurred costs related to a future ﬁnancial period. Prepayments are measured at nominal value.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash and deposits with ﬁnancial institutions. Cash and cash equivalents are measured at amortized cost.

II– 16 SHAREHOLDERS’ EQUITY

The share capital comprises the nominal amount of the company’s ordinary shares, each at a nominal value of DKK 1. All shares are fully paid.

The share premium reserve includes amounts paid as premium compared to the nominal value of the shares in connection with the company’s capital increases less external expenses which are directly attributable to the increases.

Translation reserves include exchange rate adjustments of equity investments in subsidiaries.

NON-CURRENT LIABILITIES

PROVISIONS

Provisions are recognized when the company has an existing legal or constructive obligation as a result of events occur- ring prior to or on the balance sheet date, and it is probable that the utilization of economic resources will be required to settle the obligation. Provisions are measured at fair value.

FINANCE LEASES

Leases of property, plant and equipment where the company substantially has all the risks and rewards of ownership, are classified as finance leases. Assets under finance leases are recognized in the balance sheet at the inception of the lease term at the lower of the fair value of the asset or the net present value of the future minimum lease payments. A liability equalling the asset is recognized in the balance sheet, allocated between non-current and current liabilities. Each lease payment is separated between an interest element, recognized as a financial expense, and a reduction of the lease liability.

Assets held under ﬁnance lease are depreciated over the shorter of the asset’s useful life and the lease term.

OPERATING LEASE COMMITMENTS

Leases in which a signiﬁcant portion of the risks and rewards of ownership are retained by the lessor are classiﬁed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged on a straight-line basis to the income statement as research and development costs or as general and administrative expenses, depending on the use of the asset.

The total commitment under operating leases is disclosed in the notes to the ﬁnancial statements.

CURRENT LIABILITIES

TRADE PAYABLES

Trade payables are measured at amortized cost, which is considered to be equal to the fair value due to the short-term nature of the liabilities.

DEFERRED REVENUE

Deferred revenue reﬂects the part of revenue which has not been recognized as income immediately on receipt of payment and which concerns agreements with multiple components which cannot be separated. Deferred revenue is measured at the amount received.

OTHER LIABILITIES

Other liabilities are measured in the balance sheet at amortized cost, which is considered to be equal to the fair value due to the short-term nature of the liabilities.

II– 17 DERIVATIVE FINANCIAL INSTRUMENTS

LCP does not have derivative ﬁnancial instruments.

CASH FLOW STATEMENT

The cash flow statement is presented using the indirect method with basis in operating loss and shows cash flow from operating, investing and financing activities as well as the cash and cash equivalents at the beginning and end of each financial year.

Cash flows from operating activities are calculated as the operating profit/loss adjusted for non-cash operating items such as share-based payment, depreciation, amortization and impairment losses, working capital changes and financial income and expenses received or paid.

Cash ﬂows from investing activities comprise cash ﬂows from purchase and sale of intangible assets and property, plant and equipment.

Cash flows from financial activities comprise cash flows from issuance of shares net of costs, raising and repayment of non-current loans including instalments on finance lease liabilities.

Cash and cash equivalents comprise cash at hand and deposits with ﬁnancial institutions.

The cash ﬂow statement cannot be derived solely from the ﬁnancial statements.

SEGMENT REPORTING

The group is managed and operated as one business unit. No separate business areas or separate business units have been identiﬁed in relation to product candidates or geographical markets. Accordingly, the company’s management has concluded that it is not relevant to disclose segment information on business segments or geographical markets.

DEFINITION OF FINANCIAL RATIOS

BASIC EPS

Basic Earnings per share (EPS) is calculated as the net income/loss from continuing operations for the period divided by the weighted average number of ordinary shares outstanding.

DILUTED EPS

Diluted earnings per share is calculated as the net income/loss from continuing operations for the period divided by the weighted average number of ordinary shares outstanding adjusted for the dilutive effect of share equivalents.

As the income statement shows a net loss, no adjustment has been made for the dilutive effect.

Total assets Assets/Equity = Equity

Total ATP Average number of employees = Annual amount ATP per employee

ATP is a mandatory Danish pension contribution, determined with basis in the number of hours worked in each period.

II– 18 NEW INTERNATIONAL FINANCIAL REPORTING STANDARDS

The IASB has issued and the EU has adopted a number of new standards and made updates to some of the existing standards, the majority of which are effective as of 1 January 2009 or later. The ﬁnancial reporting of LCP is expected to be affected by such new or improved standards to the extent described below.

IAS 1 (Revised) – Presentation of Financial Statements The revised IAS 1 prescribes that transactions with owners are analyzed separately from those relating to the performance of the entity. Further, the revised standard introduces a new statement of comprehensive income and introduces a new terminology for the elements of a set of financial statements. No significant impact is expected on the company’s financial reporting from this revised standard.

IAS 23 (Revised) – Borrowing Costs The revised IAS 23 eliminates the option of expensing all borrowing costs and requires borrowing costs to be capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset. No signiﬁcant impact is expected on the company’s ﬁnancial reporting from this revised standard.

IFRS 8 – Operating Segments IFRS 8, “Operating Segments” replaces IAS 14, “Segment Reporting” and adopts a full management approach to identifying and measuring the results of reportable operating segments. Further, IFRS 8 introduces additional disclosure requirements. No signiﬁcant impact is expected on the company’s ﬁnancial reporting from IFRS 8.

The IASB has issued a number of new interpretations, which are effective for future financial years. Some of these have been adopted by the EU. No significant impact is expected on the company’s financial reporting from these interpretations.

LCP will adopt all the new standards in accordance with the transitional provisions of each standard.

Note 3. Critical accounting estimates and judgments

In preparing financial statements under IFRS, certain provisions in the standards require management’s judgments. Such judgments are considered important to understand the accounting policies and the company’s compliance with the standards. The following summarizes the areas involving higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements.

Revenue Recognition IAS 18, “Revenues” prescribe the criteria to be fulﬁlled for revenue being recognizable. Evaluating the criteria for revenue recognition with respect to the company’s research and development and commercialization agreements requires management’s judgment to ensure that all criteria have been fulﬁlled prior to recognizing any amount of revenue. Any the company’s revenue generating transactions are analyzed by management to ensure recognition in accordance with IFRS.

Internally Generated Intangible Assets IAS 38, “Intangible Assets” prescribes that intangible assets arising from development projects must be recognized in the balance sheet if the criteria for capitalization are met. That means (1) that the development project is clearly deﬁned and identiﬁable; (2) that technological feasibility, adequate resources to complete and a market for the product or an internal use of the project can be documented; and (3) that the company’s management has the intent to produce and market the product or use it internally.

Such an intangible asset shall be recognized if sufﬁcient certainty can be documented that the future income from the development project will exceed the aggregate cost of development, production, sale and administration of the product.

Management believes that future income from the development projects cannot be determined with sufﬁcient certainty until the development activities have been completed and the necessary approvals have been obtained. Accordingly, management has decided not to recognize such internally generated intangible assets at this time.

II– 19 Joint Ventures / Collaboration Agreements Collaboration agreements within the company’s industry are often structured so that each party contributes its respective skills in the various phases of a development project. No joint control exists for such collaborations and the parties do not have any ﬁnancial obligations on behalf of each other. Accordingly, the collaborations are not considered to be joint ventures ad deﬁned in IAS 31, “Financial Reporting of Interests in Joint Ventures”.

Except for the above areas, assumptions and estimates are not considered to be critical to the ﬁnancial statements. No estimates or judgments have been made involving a material risk of signiﬁcant adjustments of the assets or liabilities at the balance sheet date.

Note 4. Depreciation and amortisation

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Licenses and rights 53 50 50 Property, plant and equipment 3,073 4,175 6,060 Leasehold improvements 860 879 894 (Gain)/loss from sale of property, plant and equipment - 472 60 Write-down on a terminated patent 85 - -

Total 4,071 5,576 7,064

Allocated by function: Research and development costs 3,909 5,461 5,628 General and administrative expenses 162 115 1,436

Total 4,071 5,576 7,064

II– 20 Note 5. Staff costs

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Wages and salaries 25,688 37,574 53,035 Pension contributions 2,146 2,686 3,391 Other social security costs 204 282 2,835 Share-based payment 2,040 13,208 18,016

Total 30,078 53,750 77,277

Allocated by function: Research and development costs 21,510 30,993 52,089 General and administrative expenses 8,568 22,757 25,188

Total 30,078 53,750 77,277

Average number of employees (FTEs) 35 44 64

Remuneration of board of directors, executive management and senior managers:

Board of Directors Cash remuneration - - 213 Share-based payment 407 833 574

Total 407 833 787

Executive Management Gross salary 3,865 5,266 4,610 Bonus 169 771 2,482 Pension contributions - - 239 Share-based payment 391 8,817 7,037

Total 4,425 14,854 14,368

Senior Managers Gross salary 2,799 4,116 2,833 Bonus 324 761 720 Share-based payment 376 1,726 1,698

Total 3,499 6,603 5,251

The senior managers have company cars, the costs of which are not included above.

In addition to the notice period for the Executive Management and the senior managers, which varies from 6 to 12 months, the notice period shall be prolonged to 24 months for the CEO Flemming Ørnskov in certain cases in connection with a change of control in the company.

The company’s and the group’s pension schemes are deﬁned contribution schemes and LCP has no additional payment obligations.

II– 21 Note 5. Staff costs, continued

The company has implemented a company-wide (including management) remuneration policy with a bonus element. Hence, a certain percentage of each employee’s remuneration is dependent on the employee and the company speci- ﬁed goals and objectives agreed upon at the beginning of each year. The company intends to gradually increase the bonus element of its remuneration policy in the coming years to further develop a high-performing and ambitious organization.

Board of Directors and Executive Management’s Holdings of Shares and Warrants

As per 31 December 2005 As per 31 December 2006 As per 31 December 2007 Shares Warrants Shares Warrants Shares Warrants

Board of directors Claus Braestrup - - - - 10,000 Kurt Anker Nielsen - - - - - Thomas Dyrberg - - - 8,800 10,000 Jean Deleage - - - - 17,500 Gérard Soula - 50,000 - 50,000 - 67,500

Executive management Flemming Ørnskov - 220,000 - 1,373,138 - 1,373,138 Michael Wolff Jensen 14,632 318,284 16,901 502,284 116,901 402,284

Note 6. Financial Income

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Interest income - - 16,586 Exchange rate gains 326 - 1,967 Other ﬁnancial income 619 2,993 -

Total 945 2,993 18,553

Note 7. Financial Expenses

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Interest expenses 586 131 18 Interest on ﬁnance leases 1,180 1,443 1,624 Interest expenses, shareholders 13 - - Exchange rate losses - 67 4,214 Other ﬁnancial expenses - 7 -

Total 1,779 1,648 5,856

II– 22 Note 8. Tax and Deferred Tax

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Income tax for the year can be explained as follows:

Income/(loss) for the year before tax (95,169) (147,713) (160,239)

Computed tax on the income/(loss) for the year (26,647) (41,360) (40,390) Adjustment to tax for prior year - - 795 Change in tax losses carried forward not capitalized 22,712 40,859 26,622 Change in other deferred tax assets not capitalized 3,674 49 (158) Tax on equity postings - (3,266) (14) Other permanent adjustments 261 3,718 4,086 Change in tax rate - - 9,059

Income tax for the year 0 0 0

Tax rate 28% 28% 25%

Calculated deferred tax asset 43,642 84,550 110,686 Write down to assessed value (43,642) (84,550) (110,686)

Carrying amount 0 0 0

The components of the deferred tax assets are as follows:

Intangible assets 76 89 93 Property, plant and equipment (3,522) (4,601) (2,579) Leasehold improvements (1,858) (1,637) (1,495) Finance leases 8,491 8,609 6,377 Prepayments (1,197) - - Deferred income - - 429 Accrued Liabilities 1,927 1,506 - Tax loss carried forward 39,725 80,584 107,861

Total 43,642 84,550 110,686

The deferred tax asset has been written down, as it is uncertain whether or not the tax asset will be realized in future earnings. The deferred tax asset can be carried forward without limitations.

The effect of the tax rate changing from 28% to 25% effective for 2007 was a reduction of the deferred tax asset in the amount of DKK 9,059 thousand.

II– 23 Note 9. Intangible assets

31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cost at 1 January 1,100 1,000 1,000 Additions - - - Disposals (100) - -

Cost at 31 December 1,000 1,000 1,000

Amortization at 1 January (133) (171) (221) Amortization (53) (50) (50) Amortization regarding disposals for the year 15 - -

Amortization at 31 December (171) (221) (271)

Net book value at 31 December 829 779 729

The weighted average residual term of licenses and rights is approx. (years) 17 16 15

Note 10. Tangible Fixed Assets

Property, Plant and Equipment 31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cost at 1 January 11,365 21,079 31,886 Additions 8,714 1,980 4,633 Transfer from prepayments for property, plant and equipment 1,000 9,426 - Disposals - (599) -

Cost at 31 December 21,079 31,886 36,519

Depreciation at 1 January (1,501) (4,574) (8,622) Depreciation (3,073) (4,175) (6,060) Depreciation on disposals - 127 -

Depreciation at 31 December (4,574) (8,622) (14,682)

Net book value at 31 December 16,505 23,264 21,837

Carrying amount of assets held under ﬁnance leases included above 15,201 20,920 15,849

II– 24 Note 10. Tangible Fixed Assets, continued

Leasehold Improvements 31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cost at 1 January 7,450 8,033 8,124 Additions 583 91 1,267 Disposals - - -

Cost at 31 December 8,033 8,124 9,391

Depreciation at 1 January (537) (1,397) (2,276) Depreciation (860) (879) (895) Depreciation on disposals - - -

Depreciation at 31 December (1,397) (2,276) (3,171)

Net book value at 31 December 6,636 5,848 6,220

Carrying amount of assets held under ﬁnance leases included above 6,636 5,848 5,982

Prepayments for Property, Plant and Equipment 31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cost at 1 January 1,000 4,275 - Additions 4,275 5,151 - Transfer to property, plant and equipment (1,000) (9,426) -

Cost at 31 December 4,275 0 0

Depreciation at 1 January - - - Depreciation - - - Depreciation on disposals - - -

Depreciation at 31 December 0 0 0

Net book value at 31 December 4,275 0 0

II– 25 Note 11. Investment in Subsidiary

31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cost at 1 January - - - Additions - - 2,592 Disposals - - -

Cost at 31 December 0 0 2,592

LifeCycle Pharma, Inc. was established as a wholly owned subsidiary as of 2 January 2007. This subsidiary is domiciled in New York, U.S. and is primarily focused on clinical activities in the U.S. and Canada on behalf of the parent company.

Note 12. Share Capital

On 31 December 2007, the total number of outstanding shares was 31,770,705. Each share has a nominal value of DKK 1 and one vote.

In 2007, the share capital has increased by 1,400,889 shares related to the exercise of vested warrants by current and terminated employees.

On 31 December 2006, the total number of outstanding shares was 30,369,816. Each Share has a nominal value of DKK 1 and one vote. In 2006, the share capital has increased by 1,385 shares related to the exercise of warrants by terminated employees.

Until 27 July 2006, LifeCycle Pharma’s share capital was divided into four share classes, A-, B-, C-, and D- shares. The D-, C-, and B-shares carried preference rights (with the D-shares preferred to the C-shares and the C-shares preferred to the B-shares) to receive proceeds in the occurrence of certain events which included – in additions to liquidations, dissolution and winding up of the Company – a merger or sale of D-, B-, and C-shares that lead to a change of control in the Company (as further deﬁned in the articles of association). The C-shares also carried certain anti-dilution rights. Further, until 27 July 2006, the transferability of the shares (regardless of class) was subject to board consent as to compliance with procedures for transfer stated in any shareholders’ agreements notiﬁed to the board.

The capital increase for cash as of 5 December 2005 had not been registered with the Danish Commerce and Compa- nies Agency (Erhvervs- & Selskabsstyrelsen) as per 31 December 2005, because the cash amount was not fully paid by 31 December 2005. DKK 9.9 million was included as receivable from capital increases. As per 13 January 2006, the full amount was paid and the increase was registered.

At the extraordinary general meeting held on 27 July 2006, LifeCycle Pharma’s shareholders resolved to issue bonus shares in the ration 1:3. As a result, LifeCycle Pharma’s share capital was increased by DKK 13,289,862 on 27 July 2006.

The shares of LifeCycle Pharma were listed in the OMX Nordic Exchange on 13 November 2006 through the IPO of 11 million new shares at an offer price of DKK 44 per share. The initial public offering was subscribed more than 6 times. The joint lead managers’ over allotment option was subsequently exercised in full, leading to the issue of an additional 1.65 million shares.

Through the IPO, LifeCycle Pharma raised a total of DKK 556.6 million in gross proceeds. The IPO produced more than 4,200 new shareholders in Lifecycle Pharma and approximately 50% of the IPO was subscribed outside Denmark.

II– 26 Note 12. Share Capital, continued

CHANGES IN SHARE CAPITAL FROM 2002 TO 2007: The table below sets forth the changes in our issued share capital since the company’s incorporation:

Share classes after Date Transaction Share capital Note capital increase Share price in DKK Pre bonus Post bonus shares shares

21 March 2002 Incorporation 500,000 (1) A-shares 1.00 0.25 13 June 2002 Cash contribution and 1,000,000 (2) A-shares 19.00 4.75 contribution in kind 29 August 2003 Cash contribution 1,746,370 (3) 1,000,000 A-shares 746,370 B-shares 29.53 7.3825 22 March 2004 Cash contribution 2,634,269 (4) 1,508,425 A-shares 1,125,844 B-shares 31.54 7.8850 11 May 2005 Cash contribution 3,908,740 (5) 1,508,425 A-shares 1,125,844 B-shares 1,274,471 C-shares 89.20 22.30 22 August 2005 Cash contribution 3,919,018 (6) 1,518,703 A-shares 1,125,844 B-shares 1,274,471 C-shares 31.54 7.8850 5 December 2005 Cash contribution 4,428,569 (7) 1,518,703 A-shares 1,125,844 B-shares 1,274,471 C-shares 509,551 D-shares 145.49 36.3725 23 January 2006 Cash contribution 4,429,954 (8) 1,520,088 A-shares 1,125,844 B-shares 1,274,471 C-shares 509,551 D-shares 31.54 7.8850 27 July 2006 Capital increase on issuance 17,719,816 6,080,352 A-shares of 3 bonus shares per share 4,503,376 B-shares 5,097,884 C-shares 2,038,204 D-shares N/A N/A 27 July 2006 Reclassiﬁcation of share 17,719,816 (9) 17,719,816 shares N/A N/A classes 13 November 2006 Cash contribution 11,000,000 (10) 28,719,816 shares - 44.00 23 November 2006 Cash contribution 1,650,000 (11) 30,369,816 shares - 44.00 12 March 2007 Cash contribution 144,232 (12) 30,514,048 shares - 3.79 10 September 2007 Cash contribution 1,256,657 (13) 31,770,705 shares - 6.78

Notes: 1 Original issue in March 2002 of 500,000 new shares of nominal value DKK 1. 2 Issuance in June 2002 in connection with the contribution in kind by H. Lundbeck A/S of the intellectual property rights to MeltDose (value DKK 1 million) and a cash subscription by H. Lundbeck A/S of DKK 8.5 million. 3 Issuance of 746,370 B-shares in connection with subscription by Novo A/S, Nordic Biotech K/S and H. Lundbeck A/S. 4 Issuance of 508,425 A-shares and 379,474 B-shares in connection with subscription by Novo A/S, Nordic Biotech K/S and H. Lundbeck A/S. 5 Issuance of 1,274,471 C-shares in connection with subscription by Alta Partners, Lacuna, Novo AS, Nordic Biotech K/S, H. Lundbeck A/S, Jan Møller Mikkelsen, Michael Wolff Jensen and Samuel Zucker. 6 Issuance of 10,278 A-shares in connection with the subscription through the exercise of employee warrants. 7 Issuance of 509,551 D-shares in connection with subscription by Alta Partners, Lacuna, Novo A/S, Nordic Biotech K/S, H. Lundbeck A/S and Jan Møller Mikkelsen, Michael Wolff Jensen, Samuel Zucker and Samireh Kristensen. 8 Issuance of 1,385 A-shares in connection with subscription through the exercise of employee warrants. 9 Reclassiﬁcation of share classes resolved by the general meeting conditional upon completion of the IPO. 10 Issuance of 11 million shares in connection with the initial public offering on 13 November 2006. 11 Exercise of over allotment option, leading to the issue of an additional 1.65 million shares. 12 Issuance of 144,232 shares in connection with subscription through the exercise of employee warrants. 13 Issuance of 1,256,657 shares in connection with subscription through the exercise of employee warrants.

II– 27 Note 13. Financial risks

INTEREST RATE RISK

LCP has an investment policy with the purpose of preserving the company’s capital without significantly increasing the risks. Accordingly, the company seeks to limit any risks related to the interest rate and the fair value of its investments. The company is primarily exposed to interest rate risk ascribable to its cash position and to its finance lease arrangements with respect to tangible fixed assets. Based on the cash position and the lease liability at the end of 2007, a 1% change in the interest rate will impact net financial income of approximately DKK 3.1 million. Please refer to note 15 for further analysis of the interest on the finance leases.

During 2007, the company’s excess cash has been placed in short-term deposits with a major Danish bank, thereby eliminating the fair value risk and reducing the interest rate risk. The cash position at year end and the average interest rate is presented in the following table:

31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Cash and cash equivalents 87,208 464,658 331,740 Average variable interest rate 2.04% 2.85% 4.05 %

Of the above: Demand deposit in EURO’000 11,566 45,902 - Average exchange rate 745.17 745.91 - Average variable interest rate 2.04% 2.65% -

CREDIT RISK

The credit terms on the company’s receivables are considered to be at market conditions, and the company has not encountered any losses as a result of credit risk during the years presented. As regards cash deposits, the company’s bank has a credit rating of Aa1 according to Moody’s. The credit risk ascribable to the company’s receivables is considered low, as such receivables arise from collaboration agreements with large pharmaceutical companies.

LIQUIDITY RISK

The company is exposed to liquidity risk arising from ﬁnance lease obligations (see note 15) and short-term payables.

CURRENCY EXPOSURE

LCP is subject to currency risk, at the company incurs income and expenses in a number of different currencies. Changes in exchange rates of such foreign currencies towards the company’s functional currency may affect the results and cash position.

LCP does not enter into hedge arrangements to reduce the foreign currency exposure. Management assesses and moni- tors the company’s currency exposure on a regular basis. The company’s net position (monetary items) in foreign currencies (for 2005 and 2006, excluding the above demand deposits in EUR) is stated below:

II– 28 Note 13. Financial risks, continued

31 December 31 December 31 December 2005 2006 2007

USD ‘000 (851) (52) (52) EUR ‘000 (289) 123 442 SEK ‘000 (30) (41) (11) GBP ‘000 (24) (12) - CAD ‘000 - (449) (262) CHF’000 - - (23)

The carrying amount approximately equals the fair value.

As it appears from the table above, the company’s net position in foreign currencies is not considered to be significant. Accordingly, the net effect on the company’s monetary items of a change in any of the listed currencies is not considered to be significant to the company’s results. Changes in currencies will, however, also affect the future income and expenses in such foreign currencies, and may have a significant impact on the company’s operating results and cash flows. The company is primarily exposed to such risk from currency fluctuations between USD and DKK and between EUR and DKK.

Note 14. Warrants

LCP has established warrant programmes for board members, members of executive management, employees, consultants and advisors. All warrants have been issued pursuant by the company’s shareholders or by the Board of directors pursuant to valid authorizations in LCP’s articles of association.

VESTING CONDITIONS

Warrants issued during the period 2003 to 2005 vest in general at 1/36 per month from the date of grant. However, some warrants are not subject to vesting conditions, but vest in full at the time of grant.

Effective from 2006, warrants generally vest at 1/48 per month from the date of grant. However, some warrants are not subject to vesting conditions but vest in full at the time of grant.

Warrants granted prior to 1 July 2004 cease to vest upon termination of the employment relationship regardless of the reason for such termination. Warrants granted after 1 July 2004 cease to vest from the date of termination in the event that (i) a warrant holder resigns without this being due to the company’s breach of contract, or (ii) if LCP terminates the employment relationship where the employee has given the company good reason to do so. The warrant holder will, however, be entitled to exercise vested warrants in the ﬁrst coming exercise period after termination.

Exercise of warrants issued to board members, consultants and other advisors are conditional upon the warrant holder being connected to LCP on the date of exercise. However, if the warrant holder’s position has been terminated without this being attributable to the warrant holder’s actions or omissions, the warrant holder shall be entitled to exercise vested warrants in the pre-determined exercise periods.

II– 29 Note 14. Warrants, continued

EXERCISE PERIODS

Vested warrants may generally be exercised during two three-week periods following publication of LCP’s preliminary annual report and LCP’s interim report for the ﬁrst six months of the relevant ﬁnancial year, respectively.

ADJUSTMENTS

Warrant holders are entitled to an adjustment of the number of warrants issued and/or the exercise price applicable in the event of certain changes to LCP’s share capital at a price other than the market price and in the event of payments of dividends in a given year in excess of 10% of the company’s equity.

The number of warrants issued and the applicable exercise price was adjusted on 27 July 2006 to take into account the issue of bonus shares in the ration 3:1, as resolved at the general meeting on 27 July 2006.

WARRANT ACTIVITY Weighted average Executive Board of Other exercise Employees management directors external Total price DKK

Outstanding 371,364 531,904 103,528 16,000 1,022,796 4.56 as of 1 January 2004

Granted in the year 588,432 548,596 - 18,000 1,155,028 7.89

Outstanding as of 31 December 2004 959,796 1,080,500 103,528 34,000 2,177,824 6.32

Granted in the year 438,000 60,000 270,000 8,000 776,000 19.48 Exercised in the year (41,112) - - - (41,112) 7.89 Cancelled in the year (118,888) - - - (118,888) 7.89

Outstanding as of 31 December 2005 1,237,796 1,140,500 373,528 42,000 2,793,824 9.93

Granted in the year 668,000 1,597,138 - 8,000 2,273,138 40.72 Exercised in the year (5,540) - - -(5,540) 7.89 Cancelled in the year (26,460) (211,250) - - (237,710) 33.20 Change between categories 870,966 (650,966) (323,528) 103,528 - -

Outstanding as of 31 December 2006 2,744,762 1,875,422 50,000 153,528 4,823,712 23.44

Granted in the year 648,500 - 55,000 - 703,500 53.40 Exercised in the year (1,272,657) (100,000) - (28,232) (1,400,889) 6.47 Cancelled in the year (50,181) - - - (50,181) 14.87

Outstanding as of 31 December 2007 2,070,424 1,775,422 105,000 125,296 4,076,142 34.35

In total, as of 31 December 2007, a total of 4,076,142 warrants were outstanding with a weighted average exercise price of DKK 34.35. 2,536,190 of these warrants had vested as of 31 December 2007. For comparison, as of 31 December 2006, a total of 4,823,712 warrants were outstanding with a weighted average exercise price of DKK 23.44 and as of 31 December 2005, a total of 2,793,824 warrants were outstanding with a weighted average exercise price of DKK 9.93.

II– 30 Note 14. Warrants, continued

WARRANT COMPENSATION COSTS

Warrant compensation costs are calculated at the date of grant by use of the Black-Scholes valuation model with the following assumptions: (i) a volatility of 35%, determined as the average of the stock price volatility for a group of Dan- ish and European pharma and biotech companies over 3 years; (ii) no payment of dividends; (iii) a risk free interest rate equalling the interest rate on a 5-year government bond on the date of grant; and (iv) a life of the warrants determined as the average of the date of becoming exercisable and the date of expiry.

Warrant compensation costs are recognized in the income statement over the vesting period of the warrants granted.

During 2007, a total of DKK 18 million was recognized as share-based compensation compared to DKK 13.2 million in 2006 and DKK 2.0 million in 2005.

The warrant compensation costs for 2007 were allocated to research and development costs at DKK 8.0 million (2006: DKK 3.2 million; 2005: DKK 1.0 million) and to general and administrative expenses at DKK 10.0 million (2006: DKK 10.0 million; 2005: DKK 1.0 million).

VALUE OF OUTSTANDING WARRANTS

The aggregate value of outstanding warrants has been calculated at DKK 64 million using the Black-Scholes Option Pric- ing model on the assumption of (i) a share price of DKK 35.70 per share, the closing price as of 31 December 2007, (ii) a volatility of 35%, (iii) no payment of dividends, and (iv) a risk free interest rate of 4.18% annually.

II– 31 Note 14. Warrants, continued

The aggregate value of outstanding warrants as per 31 December 2006 has been calculated at DKK 184 million using the Black-Scholes Option Pricing model on the assumption of (i) a share price of DKK 56.00 per share, the closing price as of 31 December 2006, (ii) a volatility of 35%, (iii) no payment of dividends, and (iv) a risk free interest rate of 3.92% annually.

The following table speciﬁes the weighted average exercise price and the weighted average life of outstanding warrants:

Weighted Weighted Number average exercise average exercise Grant date Grant year of warrants price (DKK) period (months)

4 April 2003 591,444 2.50 100.00 29 August 2003 143,944 7.38 96.00 3 October 2003 266,408 7.38 95.00 19 December 2003 21,000 7.38 93.00 31 December 2003 1,022,796 4.56 91.43

22 March 2004 630,028 7.89 90.00 28 April 2004 273,000 7.89 89.00 16 June 2004 220,000 7.89 87.00 16 December 2004 32,000 7.89 93.00 31 December 2004 2,177,824 6.32 80.80

17 March 2005 214,000 7.89 90.00 20 June 2005 38,000 22.30 87.00 21 September 2005 182,000 22.30 84.00 17 October 2005 100,000 22.30 83.00 7 November 2005 50,000 22.30 82.00 18 November 2005 120,000 22.30 82.00 12 December 2005 72,000 36.37 81.00 16 June * 2004 (40,000) 7.89 87.00 28 April * 2004 (120,000) 7.89 89.00 31 December 2005 2,793,824 9.93 71.34

23 January* 2004 (32,000) 7.89 93.00 10 June 2006 1,024,000 36.37 74.00 30 September* 2006 (211,250) 36.37 74.00 7 September 2006 1,120,757 36.37 74.00 1 December 2006 96,000 44.60 69.00 22 December 2006 32,381 53.00 68.00 31 December 2006 4,823,712 23.44 63.48

5 March 2007 160,000 55.00 68.00 12 March* 2003 (124,232) 3.13 53.00 12 March* 2004 (20,000) 7.89 65.00 9 May 2007 248,000 56.50 76.00 21 August 2007 237,000 52.00 79.00 10 September* 2003 (710,700) 4.61 47.00 10 September* 2004 (428,139) 7.89 51.00 10 September* 2005 (161,999) 15.34 59.00 10 September* 2006 (6,000) 44.60 59.00 27 November 2007 58,500 41.50 81.00 31 December 2007 4,076,142 34.35 56.67

* Warrants from previous period cancelled/exercised in 2005, 2006 and 2007.

II– 32 Note 15. Finance Leases

LCP has ﬁnance lease commitments regarding tangible ﬁxed assets. The debt for these commitments is recognized in the balance sheet.

The future minimum payments and the net present value are stated below:

Future minimum payments 31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

< 1 year 6,590 7,157 6,294 From 1 to 5 years 20,085 20,019 20,082 > 5 years 7,867 5,245 2,827 Total 34,542 32,421 29,203 Financing components (4,218) (1,675) (3,695)

Total 30,324 30,746 25,508

NPV for the ﬁnance lease commitments

< 1 year 5,044 6,081 5,092 From 1 to 5 years 17,191 19,924 18,357 > 5 years 8,089 4,741 2,059

Total 30,324 30,746 25,508

LCP has the right to purchase the assets held under the ﬁnance leases on expiration of the lease agreements. An average internal interest rate of 5.40% (in the interval 4.29% to 6.43%) has been applied for recognition. The carrying amount of the ﬁnance lease commitments is in all material respects equal to the market value.

II– 33 Note 16. Other Commitments

31 December 31 December 31 December 2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Rent commitments 31,669 27,501 48,902 Operating lease commitments regarding property, plant and equipment 2,434 1,625 1,312

Total rent and operating lease commitments 34,103 29,126 50,214

Purchase obligations regarding plant and equipment 4,275 - - Other obligations - 586 -

Total 38,378 29,712 50,214

Total rent and operating leases are due as follows:

< 1 year 4,212 3,891 10,682 From 1 to 5 years 14,607 14,094 29,296 > 5 years 15,284 11,141 10,236

Total 34,103 29,126 50,214

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Expensed rent and operating lease amount to 4,424 4,928 7,197

II– 34 Note 17. Related parties

H. LUNDBECK A/S

H. Lundbeck A/S is considered a related party as it is a major shareholder.

In 2002, LCP entered into a transfer and license agreement with H. Lundbeck, one of our principal shareholders, which gives H. Lundbeck the right to purchase back patent rights granted by H. Lundbeck in case of our insolvency and liquidation. The transfer and license agreement was still in force as of 31 December 2007.

LCP has entered into an agreement with H. Lundbeck concerning maintenance and service of facilities and for use of the facilities at H. Lundbeck. For the period 1 January to 31 December 2005, LCP received maintenance and service for an amount of DKK 518 thousand. For the period 1 January to 31 December 2006, LCP paid DKK 555 thousand for such services and for the period 1 January to 31 December 2007, LCP acquired services in the amount of DKK 794 thousand.

In October 2006, LCP entered into a research and development agreement with H. Lundbeck, under which LCP will perform research and development activities concerning the formulation of two of H. Lundbeck’s internal pre-clinical CNS- related projects. In 2007, LCP has performed research and development work totalling DKK 1,502 thousand under this agreement. No fees were invoiced for 2006.

From 2002 through 2006, LCP leased cars and received administrative assistance from H. Lundbeck, for the period 1 January to 31 December 2005, this amounted to DKK 338 thousand.

In 2004, H. Lundbeck provided a repurchase guarantee of limited duration concerning a lease agreement entered into by LCP. This repurchase guarantee was terminated in 2005.

At 31 December 2005, the amount due by LCP to H. Lundbeck amounted to DKK 46 thousand. At 31 December 2006, the amount due by LCP to H. Lundbeck amounted to DKK 166 thousand. At 31 December 2007, the company had no outstanding balances with H. Lundbeck.

S.S.R. STAINLESS STEEL A/S

S.S.R. Stainless Steel A/S is considered a related party as our Executive Vice President and CFO, Michael Wolff Jensen, has been Chairman of the Board of Directors of this company since 2004.

In May 2003, LCP purchased intellectual property rights related to our self cleaning spray nozzle technology for DKK 100,000 and in connection with the purchase of these intellectual property rights entered into a license agreement with S.S.R. Stainless Steel regarding the use of our self-cleaning spray nozzle technology outside the pharmaceutical area.

LCP acquired manufacturing equipment and related maintenance from S.S.R. Stainless Steel, totalling DKK 35 thousand for the period 1 January to 31 December 2005, DKK 57 thousand for the period 1 January to 31 December 2006 and DKK 371 thousand for the period 1 January to 31 December 2007.

At 31 December 2007, the amount due by LCP to S.S.R. Stainless Steel amounted to DKK 18 thousand.

II– 35 Note 17. Related parties, continued

PHARMASTEEL A/S

Pharmasteel A/S is considered a related party as out Chief Scientiﬁc Ofﬁcer, Dr. Per Holm, holds 33% of the shares in Pharmasteel and is a member of the Board of Directors of Pharmasteel.

LCP has acquired manufacturing equipment from Pharmasteel, in the period 1 January to 31 December 2005 at a total value of DKK 8.6 million, in the period 1 January to 31 December 2006 at a total value of DKK 7,221 thousand and in the period 1 January to 31 December 2007 at a total value of DKK 123 thousand.

LCP had no outstanding balances with Pharmasteel as at 31 December 2007.

MEMBERS OF THE EXECUTIVE MANAGEMENT AND BOARD OF DIRECTORS

The members of the Executive Management and Board of Directors are considered related parties following their positions in the company.

The Executive Management and the Board of Directors have received remuneration from the company, including warrants, as described in note 5 and note 14 to the ﬁnancial statements.

The company has entered into a consultancy agreement with one of the Board members, Dr. Gerárd Soula. During 2007, the company has paid consultancy fees totalling DKK 214 thousand to Dr. Soula and reimbursed travel expenses. No consultancy fees were paid in 2006 or 2005.

LCP had no outstanding balances with Dr. Soula as at 31 December 2007.

OTHER RELATED PARTIES

Other related parties may exist as the members of our Board of Directors and Executive Management holds positions as Board members in other companies, and as the shareholders of LCP may also be shareholders of other companies. Except for the companies listed above, LCP has not identiﬁed any such parties as related parties and no transactions have been identiﬁed as related party transactions as we are not aware of such relationships.

II– 36 Note 18. Changes in working capital

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

Other receivables (2,879) (3,528) (5,977) Prepayments (2,334) 2,019 (2,793) Deferred revenue - 373 1,343 Trade payables 7,011 1,243 1,151 Debts to shareholders (501) 120 - Other payables 990 2,889 9,834

Total 2,287 3,116 3,558

Note 19. Fees to Auditors Appointed by the Annual General Meeting

2005 2006 2007 DKK ‘000 DKK ‘000 DKK ‘000

PricewaterhouseCoopers:

Audit 118 345 275 Other services 705 2,926 633

Total 823 3,271 908

II– 37 III. The Offering 1. Responsibility Statements

Intentionally Omitted

III – 1 2. Risk factors related to the Offering

For a description of risk factors in connection with the Offering reference is made to the section entitled “Risk Factors”, beginning on page 12.

III – 2 3. Key Information

3.1 Working Capital

We believe that our working capital prior to the Offering is sufﬁcient to cover our current requirements at least until the end of 2008.

We believe that our capital resources including the proceeds from the Offering, whether or not fully subscribed, taking into account the binding undertakings of H. Lund- beck A/S and Novo A/S to subscribe for Offer Shares corresponding to total gross proceeds of approximately DKK 163.8 million (approximately € 21.97 million), together with our existing cash balances, revenues generated through royalties from our first commercialized product, Fenoglide, and future anticipated payments from an existing collaboration, while excluding any revenues that we may receive from new collaboration(s), will be sufficient to fund our operations for at least 12 months from the date of first trading of the Offer Shares.

See also “Risk Factors - Risk Related to the Offering - The Offering may proceed without full subscription of the Offer Shares and, if this occurs, we may require substantial additional ﬁnancing to pursue our planned activities, your subscription is nonetheless irrevocable and cannot be withdrawn”.

Many factors have an impact on whether the funds available to us are sufficient, including the scientific progress in our clinical programs, the scope of such programs, obligations to existing and new collaboration partners, our ability to establish commercial relations and license arrangements, our investments in non-current assets, market developments, milestone payments and any future acquisitions that we may undertake. Thus, we may need additional funds and we may seek to obtain additional funding by way of equity or debt financing, collaborative agreements with commercial partners or from other sources.

III – 3 3.2 Capitalization and Debt 3.4 Reasons for the Offering and Use of Proceeds The table below sets out (i) our consolidated shareholders’ equity as at 31 December 2007 and (ii) our consoli- The reasons for the Offering are to provide additional dated shareholders’ equity as at the same date as funding for future clinical development of our product adjusted to reﬂect our receipt of the net proceeds of portfolio, for research and development activities and for approximately DKK 376.9 million (approximately € 50.5 general corporate purposes. million) from the Offering, assuming full subscription of the Offer Shares. The information has been derived from H. Lundbeck A/S and Novo A/S have each made a binding our audited consolidated ﬁnancial statements for 2007 undertaking to exercise its respective Preemptive Rights, included elsewhere in this Offering Circular, adjusted, as and to subscribe for Offer Shares corresponding to total aforesaid. gross proceeds of approximately DKK 163.8 million (approximately € 21.97 million). The Company only has unsecured and unguaranteed debt. Assuming subscription of the maximum number of Offer Shares (24,078,880 Offer Shares), we expect to receive 3.3 Interest of Natural and Legal Persons net proceeds from the Offering of approximately DKK involved in the Offering 376.9 million (approximately € 50.5 million).

As set forth in Part I, Section 14.1 “Board of Directors of We intend to use the net proceeds from the Offering, the Company”, some of the members of our Board of whether or not fully subscribed, together with any reve- Directors have direct interests in/are employed by some nues generated from the sale of our ﬁrst commercialized of our Major Shareholders. The Company is not aware of product, Fenoglide, future milestone payments and any potential conﬂict of interest in relation to the Offer- license fees, and existing cash balances in the further ing that is material to the Company, other than the development of our product portfolio towards commer- above. cialization, including the following direct clinical expenses:

As at 31 December 2007 As at 31 December 2007 As at 31 December 2007 actual adjusted (2) adjusted (3) (in thousands) DKK € (1) DKK € (1) DKK € (1)

Cash and cash equivalents 331,740 44,489 472,008 63,300 708,654 95,037

Finance lease obligations, current portion 5,092 683 5,092 683 5,092 683 Finance lease obligations, long-term portion 20,416 2,738 20,416 2,738 20,416 2,738 Equity Share capital 31,771 4,261 41,406 5,553 55,850 7,490 Share premium 724,645 97,182 855,278 114,701 1,077,480 144,500 Translation reserves 821 110 821 110 821 110 Retained earnings/losses (431,548) (57,875) (431,548) (57,875) (431,548) (57,875) Total equity, net 325,689 43,678 465,957 62,489 702,603 94,226 Total capitalization(4)(5) 351,197 47,099 491,465 65,910 728,111 97,647

Notes: (1) Converted at the rate DKK 7.4566 = €1. (2) Adjusted to reﬂect the issue of 9,635,376 Offer Shares corresponding to gross proceeds of DKK 163.8 million in connection with the binding undertaking by H. Lund- beck A/S and Novo A/S, less estimated costs in connection with the Offering. (3) Adjusted to reﬂect the issue of the Offer Shares assuming full subscription, less estimated costs in connection with the Offering. (4) There has been no material change in our capitalization since 31 December 2007. (5) Excludes cash and cash equivalents.

III – 4 • to fund planned Phase III studies of LCP-Tacro for organ transplantation;

• to fund ongoing Phase II studies of LCP-Tacro for liver transplantation and autoimmune hepatitis;

• to fund ongoing Phase II clinical studies and preparation of Phase III studies of LCP-AtorFen for dyslipidemia;

• to fund ongoing Phase I clinical studies of LCP-Siro for organ transplantation and autoimmune diseases;

• to fund ongoing preclinical and planned Phase I studies for LCP-3301 for organ transplantation and autoimmune diseases.

In addition, the net proceeds from the Offering will be used for such general corporate purposes as staff costs within drug development and administration as well as to obtain and maintain patents and submit registration applications with the FDA and other regulatory authorities. We may also use a portion of the proceeds to co- fund joint development projects with partners.

The amount as well as the timing of our actual expenditures cannot be predicted with certainty, and the speciﬁc use of the net proceeds of the Offering will depend upon numerous factors.

We therefore wish to keep a high degree of freedom as regards the use of the net proceeds from the Offering, and the amounts and timing of the actual expenditures may depart from our estimates. Pending utilization of such net proceeds, we intend to invest such funds in cash deposits, short-term, interest-bearing securities and other similar low-risk investments in and outside Den- mark.

III – 5 4. Information Concerning the Securities to Be Offered

4.1 Type of securities, Allocation Time and 4.2 Applicable law and jurisdiction securities codes This Offering Circular has been prepared in compliance THE PREEMPTIVE RIGHTS with Danish legislation and regulations, including Consoli- dated Act no. 1077 of 4 September 2007 on Securities The allotment free of charge of the Preemptive Rights will Trading, the rules of the OMX Nordic Exchange Copenha- be made to the Existing Shareholders who are registered gen and the Prospectus Order. This Offering Circular is as Shareholders with VP Securities Services on 1 April subject to Danish law. Any dispute which may arise as a 2008 at 12:30 p.m. CET. Shares traded after 27 March result of the Offering shall be brought before the Danish 2008 will be traded ex Preemptive Rights, provided that courts of law. Shares are traded with customary three-day value.

The Preemptive Rights will have the securities code ISIN 4.3 Registration DK0060131043. All Preemptive Rights and Offer Shares will be delivered in An application for trading and official listing of the Pre- book entry form through allocation to accounts with VP emptive Rights on the OMX Nordic Exchange Copenhagen Securities Services through a Danish bank or other insti- has been filed, and the Preemptive Rights are expected to tution authorized as the custodian of such shares. VP be traded on the OMX Nordic Exchange Copenhagen dur- Securities Services is located at Helgeshøj Allé 61, DK- ing the period from 28 March 2008 at 9.00 a.m. CET to 2630 Taastrup. The Preemptive Rights and the Offer 10 April 2008 at 5.00 p.m. CET. Shares are issued in non certificated bearer form. The Offer Shares will be issued to the bearer but may be reg- The Subscription Period for the Offer Shares commences istered in the name of the holder in the Company’s share- on 2 April 2008 at 9.00 a.m. CET and closes on 15 April holder register through the holder’s custodian bank. 2008 at 5.00 p.m. CET.

The Offering is being made at the ratio of 3:4 which 4.4 Currency means that each Existing Shareholders will be allocated three (3) Preemptive Rights per Existing Share and that The Offering will be carried out and trading of the Pre- four (4) Preemptive Rights will be required to subscribe emptive Rights and the Offer Shares will be effected in one (1) Offer Share. Danish kroner.

THE OFFER SHARES The Offer Shares are denominated in Danish kroner.

The Offer Shares issued by the Company upon registra- The following table sets forth, for the periods indicated, tion of the capital increase with the Danish Commerce certain information concerning the exchange reference and Companies Agency shall be of the same class as the rates between the Danish Kroner and the Euro based on Existing Shares and will not be admitted to trading and the Danish Central Bank’s foreign exchange reference rate ofﬁcial listing on the OMX Nordic Exchange Copenhagen expressed in Danish Kroner per €1.00. until such registration has taken place. Accordingly, shareholders and investors should note that the Offer Shares will not be admitted to trading and ofﬁcial listing on OMX Nordic Exchange Copenhagen under a temporary securities code. The Offer Shares will be listed on OMX Nordic Exchange Copenhagen directly under the securities code for the Existing Shares (DK0060048148) following registration of the capital increase with the Dan- ish Commerce and Companies Agency, which is expected to take place on 17 April 2008.

III – 6 Year ended 31 December Period End Average (1) High Low

2001 7.4357 7.4521 7.4684 7.4341 2002 7.4243 7.4304 7.4405 7.4243 2003 7.4446 7.4307 7.4446 7.4234 2004 7.4381 7.4398 7.4524 7.4287 2005 7.4605 7.4519 7.4640 7.4351 2006 7.4560 7.4591 7.4674 7.4528 2007 7.4566 7.4429 7.4624 7.4395 2008 (through 29 February 2008) 7.4515 7.4522 7.5700 7.4451

Notes (1) The simple average of the Danish Central Bank’s daily ofﬁcial exchange rates during the relevant period.

The following table sets forth, for the period indicated, certain information concerning the exchange reference rates between the Danish Kroner and the U.S. dollar based on the Danish Central Bank’s foreign exchange reference rate expressed in Danish Kroner per $1.00.

Year ended 31 December Period End Average (1) High Low

2001 8.4095 8.3188 8.8611 7.8186 2002 7.0822 7.8812 8.6591 7.0822 2003 5.9576 6.5899 7.1592 5.9554 2004 5.4676 5.9901 6.3047 5.4580 2005 6.3241 6.0034 6.3917 5.5061 2006 5.6614 5.9470 6.3082 5.5929 2007 5.0753 5.4456 5.7806 5.0132 2008 (through 29 February 2008) 4.9130 5.0588 5.1456 4.9130

Notes: (1) The simple average of the Danish Central Bank’s daily ofﬁcial exchange rates during the relevant period.

EXCHANGE CONTROL REGULATION IN DENMARK 4.5 Rights attached to the Preemptive Rights and the Offer Shares There are no governmental laws, decrees, or regulations in Denmark that restrict the export or import of capital THE PREEMPTIVE RIGHTS (except for certain investments in areas in accordance with applicable resolutions adopted by the United Nations Four (4) Preemptive Rights confer the right to subscribe and the European Union), including, but not limited to, one (1) Offer Share of nominal DKK 1 each. The Preemp- foreign exchange controls, or that affect the remittance of tive Rights may be traded on the OMX Nordic Exchange dividends, interest or other payments to non-resident Copenhagen during the period from 28 March 2008 at holders of the Offer Shares. As a measure to prevent 9.00 a.m. CET to 10 April 2008 at 5.00 p.m. CET and exer- money laundering and ﬁnancing of terrorism, persons cised in the period from 2 April 2008 at 9.00 a.m. CET to traveling in and out of Denmark carrying amounts of 15 April 2008 at 5.00 p.m. CET (the latter period is the money (including, but not limited to, cash and travelers Subscription Period). checks) worth the equivalent of €15,000 or more must declare such amounts with the Danish Customs Authority The Preemptive Rights may be exercised only by using a when traveling in or out of Denmark. number of Preemptive Rights that allow subscription for a whole number of Offer Shares. If a holder of Preemptive Rights does not have a sufﬁcient number of Preemptive Rights to subscribe for a whole number of Offer Shares, such holder wishing to subscribe for Offer Shares must acquire in the market, during the trading period for Pre- emptive Rights, the number of Preemptive Rights necessary to subscribe for a whole number of Offer Shares or

III – 7 may choose to sell the Preemptive Rights during the same 4.7 Allocation date for Preemptive Rights and period. Preemptive Rights that are not exercised by the Issue date of Offer Shares end of the Subscription Period will lapse with no value, and a holder of Preemptive Rights at such time will not be DATE SET FOR ALLOCATION OF PREEMPTIVE RIGHTS entitled to compensation. The Subscription Period will end on 15 April 2008 at 5.00 p.m. CET. On 1 April 2008 at 12.30 p.m. CET, any person who is registered with VP Securities Services as a shareholder of If the Offering is not completed, the exercise of Preemp- the Company will be allocated Preemptive Rights. Shares tive Rights that has already taken place will automatically traded after 27 March 2008 with customary three-day be cancelled, the subscription price for Offer Shares will value will be traded ex Preemptive Rights provided that be refunded (less any brokerage fees), all Preemptive Shares are traded with customary three-day value. Rights will be null and void, and no Offer Shares will be issued. However, trades of Preemptive Rights executed DATE SET FOR ISSUE OF OFFER SHARES during the trading period for the Preemptive Rights will not be affected. As a result, investors who acquired Pre- Subscription for the Offer Shares may be made from emptive Rights will incur a loss corresponding to the pur- 2 April 2008 at 9.00 a.m. CET to 15 April 2008 at 5.00 chase price of the Preemptive Rights and any brokerage p.m. CET. Accordingly, during this period the Offer Shares fees. Any withdrawal will be notiﬁed immediately to the will be allocated through VP Securities Services by exer- OMX Nordic Exchange Copenhagen and announced as cise of Preemptive Rights. The Offer Shares are expected soon as possible in the same Danish daily newspaper in to be issued by the Company and the capital increase to which the Offering was announced. be registered with the Danish Commerce and Companies Agency on 17 April 2008. The Offering may be withdrawn THE OFFER SHARES and cancelled until the capital increase relating to the Offer Shares has been registered with the Danish Com- The Offer Shares will, when fully paid up and registered in merce and Companies Agency. See Part III, Section 5.6 the Danish Commerce and Companies Agency, have the “Withdrawal of the Offering”. Issuance and admission to same rights as the Existing Shares. Please refer to Part I, trading and ofﬁcial listing of the Offer Shares are Section 21.5 “Description of Shares”. expected to take place on 21 April 2008.

4.6 Resolutions, authorizations and approvals to 4.8 Negotiability and transferability of Shares proceed with the Offering and the Offer Shares

BOARD MEETING APPROVING THE CAPITAL INCREASE NEGOTIABILITY AND TRANSFERABILITY

The Offer Shares will be issued in accordance with Article The Existing Shares are and the Offer Shares will be nego- 9 of the Articles of Association which authorizes the tiable under Danish law and freely transferable. Board of Directors to issue up to 25,000,000 Shares of DKK 1 each. The authorization was approved at the Company’s Extraordinary General Meeting of shareholders 4.9 Danish regulations governing mandatory held on 14 March 2008. takeover bids, redemption of shares and disclosure requirements Pursuant to this authority, the Board of Directors passed a resolution on 17 March 2008 to increase the Company’s MANDATORY BIDS share capital. The maximum capital increase is DKK 24,078,880 nominal value (24,078,880 Offer Shares of The Danish Securities Trading Act includes rules concern- DKK 1 each). The capital increase will be effected with ing public offers for the acquisition of shares. Preemptive Rights to the Existing Shareholders at the ratio of 3:4. Four (4) Preemptive Rights confer the right If a shareholding is transferred, directly or indirectly, in a to subscribe one (1) Offer Share with a nominal value of company with one or several share classes admitted to DKK 1 at the Offer Price of DKK 17. trading and ofﬁcial listing on a stock exchange or admitted for trading at an authorized marketplace, the acquirer shall enable all shareholders of the company to dispose of their shares on identical terms if such transfer involves that the acquirer:

III – 8 • will hold the majority of voting rights in the company; 4.10 Public takeover bids by third parties for the Company’s Shares during the previous or current • becomes entitled to appoint or dismiss a majority of financial year the members of the company’s board of directors; No take-over bids by third parties for the Company’s • obtains the right to exercise a controlling influence Shares have been presented during the previous or cur- over the company according to the articles of associa- rent financial year. tion or otherwise in agreement with the company;

• according to the agreement with other shareholders, 4.11 Taxation will control the majority of voting rights in the company; or The following is a summary of certain Danish income tax and U.S. federal income tax considerations relating to an • will be able to exercise a controlling influence over the investment in the Preemptive Rights and the Offer Shares. company and will hold more than one-third of the vot- The summary is for general information only and does not ing rights. purport to constitute tax or legal advice. It is specifically noted that the summary does not address all possible tax Exemptions from the mandatory bid requirement may be consequences relating to an investment in the Preemptive granted under certain circumstances by the Danish FSA. Rights and the Offer Shares. The summary is based solely upon the tax laws of Denmark and the U.S. in effect on the SQUEEZE OUT Offering Circular Date. Both the Danish and U.S. tax laws may be subject to change, possibly with retroactive effect. According to Section 20b of the Danish Public Companies Act, shares in a company may be redeemed in full or in The summary does not cover investors to whom special part by a shareholder holding more than nine-tenths of tax rules apply, including professional investors, and the shares and the corresponding voting rights in the therefore, for example, may not be relevant to certain company. Such redemption may be effected by the major- institutional investors, insurance companies, banks, stock ity shareholder together with the board of directors in a brokers and investors liable for tax on return on pension joint decision. A minority shareholder may in the same investments. manner require the majority shareholder holding more than nine-tenths of the shares to redeem the minority Investors in the Preemptive Rights and the Offer Shares shareholder’s shares. are advised to consult their tax advisers regarding the applicable tax consequences of acquiring, holding, exer- MAJOR SHAREHOLDINGS cising and disposing of the Preemptive Rights and the Shares based on their particular circumstances. Investors Pursuant to Section 29 of the Danish Securities Trading who may be affected by the tax laws of other jurisdictions Act, a shareholder in a listed company is required to notify should consult their tax advisors with respect to the tax the listed company and the Danish FSA as soon as possi- consequences applicable to their particular circumstances. ble when the shareholder’s stake represents 5% or more of the voting rights in the company or the nominal value accounts for 5% or more of the share capital, and when a Danish Taxation change of a holding already notified entails that the limits of 5, 10, 15, 20, 25, 50 or 90% and the limits of one- DIVIDENDS third and two-thirds of the share capital’s voting rights or nominal value are reached or are no longer reached. Shareholders who are subject to full taxation in Denmark

The notification shall provide information about the full Dividends received by individuals, who are subject to full name, address or, in the case of undertakings, registered taxation in Denmark, are taxed as share income. For the office, the number of shares and their nominal value and calendar year 2008, share income is taxed at the rate of share classes as well as information about the basis on 28% for share income up to DKK 46,700 (for married cou- which the calculation of the holdings has been made. ples DKK 93,400), at the rate of 43% for share income Failure to comply with the notification requirements is exceeding DKK 46,700 (for married couples DKK 93,400) punishable by a fine. but not exceeding DKK 102,600 (for married couples DKK 205,200 in total) and at the rate of 45% for share income When the company has received a notification, it must exceeding DKK 102,600 (for married couples DKK publish the content of such notification as soon as possi- 205,200 in total). Accordingly, provided that the amount ble. of dividends received together with other share income does not exceed DKK 46,700 (for married couples DKK

III – 9 93,400 in total), individuals are not subject to any further tion between Denmark and the U.S. (the “Treaty”), divi- taxation beyond the withholding tax. The relevant thresh- dends are subject to Danish withholding tax at a maxi- olds are for the income year 2008 and are subject to mum rate of 15%. This rate may be reduced to 5% if the annual adjustment. dividends are paid to a company holding more than 10% of the share capital in the company paying the divi- Dividends paid to individuals, who are subject to full taxa- dends. In both cases, the beneficial owners must be U.S. tion in Denmark, are generally subject to a withholding Holders eligible for Treaty benefits in compliance with tax of 28%. the procedures for claiming benefits as briefly described above. Companies which hold less than 15% of the shares in a company that declares dividends are in 2008 liable to pay A separate regime for the reduction of withholding tax to tax on 66% of the dividends received at a flat rate of the applicable tax treaty rate is available to residents of 25%. Hence, the effective tax rate is 16.5% and tax may certain jurisdictions, such as the U.S. In order to qualify be withheld at this rate. There are specific rules that apply for this regime, an eligible holder of shares must deposit with regard to tax exempt dividend payments to compa- his shares with a Danish bank, and the shareholding must nies holding more than 15% for at least 12 months (this be registered and administered through VP. In addition, requirement of ownership percentage will be reduced to such shareholders must provide documentation from the 10% for 2009 and later years) of the shares in the Danish relevant foreign tax authority as to the shareholder’s tax company paying the dividends. residence and eligibility under the relevant treaty. A special form prepared by the Danish Tax Authorities must be Shareholders who are not subject to full taxation in Den- used. The shareholder can agree with the relevant custo- mark dian bank that the bank procures the relevant form.

Under Danish law, dividends paid in respect of shares are Distribution of additional shares in connection with an generally subject to Danish withholding tax at the rate of increase of the share capital made as part of a pro rata 28%. Non-residents of Denmark are not subject to addi- distribution to all shareholders of a company (bonus tional Danish income tax in respect of dividends received shares as well as the allocation of Preemptive Rights) will on shares, normally irrespective of whether they hold generally not be subject to Danish tax. shares in connection with a trade or business conducted from a permanent establishment in Denmark. DISPOSAL OF SHARES

There are specific rules that apply with regard to tax Shareholders who are subject to full taxation in Denmark exempt dividend payments to companies holding more than 15% (this requirement of ownership percentage will Individuals are taxed on share income from the sale of be reduced to 10% for 2009 and later years) of the shares at the rate of 28% for the first DKK 46,700 in shares in the Danish company paying the dividends if the 2008 (for married couples DKK 93,400), at the rate of shareholder is resident in an EU member state that has a 43% for income exceeding DKK 46,700 but not exceeding double taxation treaty with Denmark. In such situations, DKK 102,600 (for married couples DKK 205,200 in total) there is normally no withholding tax. and at the rate of 45% for income exceeding DKK 102,600 (for married couples DKK 205,200 in total). The Non-resident shareholders may be eligible for a refund of relevant thresholds are for the income year 2008 and are a part of the withholding tax where the shareholders are subject to annual adjustment. They include all share entitled to, and comply with the procedures for claiming income derived by the individual or married couple benefits under a relevant double taxation treaty. Eligible respectively. Losses for individuals may be offset against shareholders who comply with certain certification proce- share income from listed shares for the year, including dures may thus claim a partial refund of the withholding dividends from certain listed shares acquired before 1 Jan- tax from the Danish tax authorities, which will reduce the uary 2006. Any residual loss may be offset against the effective withholding tax rate prevailing to the relevant share income from listed shares of a cohabiting spouse. double taxation treaty rate (normally 15%). The claim for Any losses not utilized may be carried forward for set-off refund must be certified by the shareholder’s local tax against share income from listed shares for future years. authorities on special forms prepared by the Danish tax authorities. The certified form must then be submitted to In the event that shares have been acquired by individuals the Danish tax authorities. at different dates and at different prices, the purchase price will, for the purposes of calculating the capital gain Denmark has concluded double taxation treaties with in the event of a partial sale, be determined as the aver- approximately 80 countries, including the U.S., Switzer- age purchase price. land, Norway, Japan, Australia and all members of the European Union. Under the current income tax conven-

III – 10 For individuals, if a Preemptive Right is sold, the sales Distributions in connection with a reduction of share capi- price is taxable as share income. The Preemptive Right will tal will be taxed as dividends and not as capital gains. It be considered to have been acquired for DKK 0, so the is possible to apply for an exemption from the Danish tax entire sales price will be taxed as share income. authorities allowing such dividends to be taxed as capital gains. The distribution would, however be considered to Capital gains realized by companies on shares held for be a capital gain if the shareholder is a company resident less than three years are taxed at a flat rate of 25%. in an EU or double taxation treaty country and owns at Losses exceeding tax-exempt dividends (or the part that least 15% of the shares for at least 12 months, i.e., fulfils is tax exempt, i.e., 34% of the dividends) received on the the requirements for receiving tax exempt dividend. same shares can be offset against gains from the sale of other shares held for less than three years. Such losses A sale of listed shares to the issuing company will, for can be carried forward indefinitely. Danish tax purposes, be taxed as capital gains. The shareholder can notify the Danish tax authorities that the Capital gains realized by companies from the sale of sale rather should be considered as a payment of divi- shares held for three years or more are tax exempt. dend if the shareholder is not a shareholder that fulfils Losses are not deductible and cannot be offset against the above described requirements for receiving tax other taxable gains. exempt dividend.

In the event that the Shares have been acquired by com- TRANSFER TAXES/STAMP DUTIES panies at different dates, the Shares acquired first will be deemed to be sold first according to the first-in, first-out Transfer of shares is not subject to any Danish share (“FIFO”) principle. transfer tax or Danish stamp duty.

Distributions in connection with a reduction of share capi- U.S. TAXATION tal will be taxed as dividend; however, the dividend will be qualified as share gain if the recipient is a company that Internal Revenue Service Circular 230 Notice. To owns at least 15% of the shares for at least 12 months, ensure compliance with Internal Revenue Service Cir- i.e., a company that fulfils the requirements for receiving cular 230, prospective investors are hereby notified tax exempt dividend. that: (a) any discussion of United States federal tax issues contained or referred to in this Offering Circu- Allocated Preemptive Rights, which entitle the holder to lar is not intended or written to be used, and cannot subscribe shares at a price below market price, will be be used, by prospective investors for the purpose of deemed to have been acquired at the same time as the avoiding penalties that may be imposed on them underlying shares. Allocated Preemptive Rights will be under the Internal Revenue Code; (b) such discussion deemed to have been acquired at DKK 0. Upon the sale is written in connection with the promotion or mar- of allocated Preemptive Rights, a company’s sales price is keting of the transaction or matters addressed taxed at the rate of 25% if the underlying shares have herein; and (c) prospective investors should seek been held for less than three years. If the underlying advice based on their particular circumstances from shares have been held for three years or more, the sales an independent tax advisor. price is not subject to taxation, provided that the company is not itself in the business of trading shares. The following is a summary of the material U.S. federal income tax consequences of the acquisition, ownership A sale of listed shares to the issuing company will be and disposition of Preemptive Rights or Shares by a U.S. qualified as capital gain. The shareholder can notify the Holder. This summary deals only with persons that are Danish tax authorities that the sale should be qualified as U.S. Holders and that will hold the Shares as capital a distribution of dividend if the shareholder is not a com- assets. The discussion does not cover all aspects of U.S. pany that fulfils the conditions for receiving tax-exempt federal income taxation that may be relevant to, or the dividend. actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of Shareholders who are not subject to full taxation in Den- Preemptive Rights or Shares by particular investors, and mark does not address state, local, foreign or other tax laws. In particular, this summary does not address tax consider- A non-resident of Denmark will generally not be subject ations applicable to investors that own (directly or indi- to Danish tax on the allocation of preemptive rights or on rectly) 10% or more of our voting shares, nor does this the sale or other disposition of preemptive rights or summary discuss all of the tax considerations that may be shares. relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws, such as certain financial institutions, insurance companies, part-

III – 11 nerships or other entities classified as partnerships for Preemptive Rights as described above. Such election must U.S. federal income tax purposes, investors liable for the be made by the U.S. Holder on the tax return for the year alternative minimum tax, individual retirement accounts in which the distribution occurs and must satisfy the and other tax-deferred accounts, tax-exempt organiza- requirements of the Treasury Regulations. tions, dealers in securities or currencies, investors that will hold the Shares as part of straddles, hedging transac- The holding period of the Preemptive Rights will include tions or conversion transactions for U.S. federal income the period for which the U.S. Holder has held the Shares tax purposes or investors whose functional currency is not with respect to which the Preemptive Rights are distrib- the U.S. dollar. uted. The holding period of a purchaser of the Preemptive Rights will commence on the date of purchase. If a U.S. The summary is based on the tax laws of the U.S., includ- Holder of Preemptive Rights exercises the right to pur- ing the Internal Revenue Code of 1986, as amended, its chase Offer Shares, the holding period of the Offer legislative history, existing and proposed regulations Shares will commence on the date of the exercise and will thereunder, published rulings and court decisions, as well not include any period for which the holder of the Pre- as on the income tax treaty between the U.S. and Den- emptive Rights held the Shares with respect to which the mark (the “Treaty”), all as of the date hereof and all sub- Preemptive Rights were distributed or the period for ject to change at any time, possibly with retroactive which the holder held the Preemptive Rights. effect. The exercise of Preemptive Rights to purchase Offer THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSE- Shares will not cause a U.S. Holder to recognize income. QUENCES SET OUT BELOW IS FOR GENERAL INFORMATION The U.S. Holder’s basis in the Offer Shares purchased by ONLY. ALL PROSPECTIVE PURCHASERS SHOULD CONSULT exercise of the Preemptive Rights will equal the sum of THEIR OWN TAX ADVISERS AS TO THE PARTICULAR TAX the basis, if any, in the Preemptive Rights exercised to CONSEQUENCES TO THEM OF OWNING THE SECURITIES, purchase the Offer Shares and the amount paid for the INCLUDING THEIR ELIGIBILITY FOR THE BENEFITS OF THE Offer Shares. TREATY, THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND POSSIBLE CHANGES A sale of the Preemptive Rights generally will be taxed in IN TAX LAW. the same manner as described for a sale of Offer Shares under “Sale or Other Disposition” below. PREEMPTIVE RIGHTS DIVIDENDS The allocation of the Preemptive Rights to U.S. Holders will be treated for U.S. federal income tax purposes as a General. Subject to the PFIC rules discussed below, distri- distribution of a stock right with respect to the Shares butions paid by us out of our current or accumulated held by each shareholder. The receipt of the Preemptive earnings and profits (as determined for U.S. federal Rights will not be included in the gross income of a U.S. income tax purposes), before reduction for any Danish Holder. Under proposed Treasury Regulations, the distri- withholding tax paid by us with respect thereto, generally bution will not be treated as a distribution under the PFIC will be taxable to a U.S. Holder as foreign source dividend rules discussed below. income, and will not be eligible for the dividends received deduction allowed to corporations. Distributions in excess If the fair market value of the Preemptive Rights at the of current and accumulated earnings and profits will be time of the distribution equals fifteen percent (15%) or treated as a return of capital to the extent of the U.S. more of the fair market value of the Shares at such time Holder’s basis in the Offer Shares and thereafter as capi- the U.S. Holder will be required to allocate the adjusted tal gain. However, we do not expect to determine earn- basis of the Shares immediately before the distribution of ings and profits in accordance with U.S. federal income the Preemptive Rights between the Shares and the Pre- tax principles. Therefore, U.S. Holders should expect that emptive Rights in proportion to their relative fair market a distribution with respect to our Shares will be reported values immediately after the distribution. If the fair mar- as a dividend. ket value of the Preemptive Rights at the time of the distribution is less than fifteen percent (15%) of the fair For taxable years beginning before 1 January 2011, cer- market value of the Shares at such time, the U.S. Holder tain dividends paid by a foreign corporation are taxable to will have a basis of zero in the Preemptive Rights received non-corporate U.S. Holders at the rate normally applicable unless the U.S. Holder makes an election to allocate the to long-term capital gains, provided the foreign corpora- adjusted basis of the Shares between the Shares and the tion qualifies for the benefits of a comprehensive income tax treaty with the U.S. which meets certain requirements, such as the Treaty, and the non-corporate U.S. Holders satisfy certain holding period requirements. The Company believes that it qualifies for the benefits of the

III – 12 Treaty. Non-corporate U.S. Holders should consult their U.S. Holders that are accrual basis taxpayers must convert tax advisors to determine whether they are eligible to be Danish taxes into U.S. dollars at a rate equal to the aver- taxed at this favorable rate. A qualified foreign corpora- age exchange rate for the taxable year in which the taxes tion does not include any foreign corporation which is a accrue. All U.S. Holders must convert taxable dividend PFIC in the taxable year the dividend is paid or in the pre- income into U.S. dollars at the spot rate on the date ceding taxable year. received. This exchange difference may reduce the U.S. dollar value of the credits for Danish taxes relative to the Foreign Currency Dividends. Dividends paid in Danish Kro- U.S. Holder’s federal income tax liability attributable to a ner will be included in income in a U.S. dollar amount cal- dividend. culated by reference to the exchange rate in effect on the day the U.S. Holder receives the dividends, regardless of Prospective purchasers should consult their tax advisers whether the U.S. Holder converts the Danish Kroner into concerning the foreign tax credit implications of the pay- U.S. dollars. If dividends received in Danish Kroner are ment of Danish taxes. converted into U.S. dollars on the day they are received, the U.S. Holder generally will not be required to recognize SALE OR OTHER DISPOSITION foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or Subject to the PFIC rules discussed below, upon a sale or loss if it does not convert the amount of such dividend other disposition of Offer Shares, a U.S. Holder generally into U.S. dollars on the date of its receipt. will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the Effect of Danish Withholding Taxes. As discussed in “Dan- amount realized on the sale or other disposition and the ish Taxation - Dividends - Shareholders who are not sub- U.S. Holder’s adjusted tax basis in the Shares, each deter- ject to full taxation in Denmark”, under current law pay- mined in U.S. dollars. This capital gain or loss will be long- ments of dividends by us to foreign investors are subject term capital gain or loss if the U.S. Holder’s holding to a 28% Danish withholding tax. The rate of withholding period in the Shares exceeds one year. For a non-corpo- tax applicable to U.S. Holders that are eligible for benefits rate U.S. Holder, the maximum long-term capital gains under the Treaty is reduced to a maximum of 15%. For rate is 15%. Any gain or loss generally will be U.S. source. U.S. federal income tax purposes, U.S. Holders will be treated as having received the amount of Danish taxes PASSIVE FOREIGN INVESTMENT COMPANY withheld by us, and as then having paid over the withheld CONSIDERATIONS taxes to the Danish taxing authorities. As a result of this rule, the amount of dividend income included in gross While we do not believe we were a PFIC in 2006 or 2007, income for U.S. federal income tax purposes by a U.S. we may be a PFIC for U.S. federal income tax purposes for Holder with respect to a payment of dividends will be 2008 or any other taxable year. A foreign corporation will greater than the amount of cash actually received (or be a PFIC in any taxable year in which, after taking into receivable) by the U.S. Holder from us with respect to the account the income and assets of the corporation and payment. certain subsidiaries pursuant to the applicable “look- through rules”, either (i) 75% or more of its gross income Subject to certain limitations, a U.S. Holder will generally is “passive income”, such as dividends, interest, rents and be entitled to a credit against its U.S. federal income tax royalties (the “income test”), or (ii) 50% or more of the liability, or a deduction in computing its U.S. federal tax- average quarterly value of its assets is attributable to able income, for Danish income taxes withheld by us. U.S. assets that produce passive income or are held for the Holders that are eligible for benefits under the Treaty will production of passive income (the “asset test”). not be entitled to a foreign tax credit for the amount of any Danish taxes withheld in excess of the 15% maximum Whether we meet the income test for the current taxable rate, with respect to which the holder can obtain a refund year or any future year will depend on a number of fac- from the Danish taxing authorities. The limitation on for- tors, including our ability to earn milestone payments, eign taxes eligible for credit is calculated separately with license fees, royalties and other income from our opera- respect to specific classes of income. The rules governing tions. We expect that our book assets will consist largely foreign tax credits are complex and, therefore, you should of cash and cash equivalents for the current tax year and consult your own tax advisor regarding the availability of the foreseeable future. Consequently, whether we meet foreign tax credits in your particular circumstances. the asset test will depend largely on the value of our Instead of claiming a credit, you may, at your election, goodwill, which is considered part of our operating assets deduct such otherwise creditable Danish taxes in comput- that are not held for the production of passive income. ing your taxable income, subject to generally applicable The value of our goodwill may be determined based upon limitations under U.S. law. the price at which our Shares will trade on the OMX Nor- dic Exchange Copenhagen. Due to the possibility of substantial fluctuations in the price of our Shares we cannot

III – 13 provide any assurance whether we will meet the asset the exchange is located and the rules of the exchange test in any given year. Accordingly, we cannot offer any ensure that these requirements are actually enforced; and assurance that we will not be a PFIC for any taxable year (iv) the rules of the exchange effectively promote the even if we meet the income test with respect to any such active trading of listed stocks. The IRS has not identified year. specific foreign exchanges that meet these criteria. We believe that the OMX Nordic Exchange Copenhagen, on If we are a PFIC in any year during which a U.S. Holder which our Shares are traded, satisfies these four require- owns Shares and the U.S. Holder has not made a mark to ments. For these purposes, the Shares generally will be market or qualified electing fund election (each as considered regularly traded during any calendar year dur- described below), the U.S. Holder generally will be subject ing which they are traded, other than in de minimis quan- to special rules (regardless of whether we continue to be tities, on at least 15 days during each calendar quarter a PFIC) with respect to (i) any “excess distribution” (gen- (or on at least 1/6 of the days remaining in the quarter in erally, any distributions received by the U.S. Holder on the which an initial public offering occurs). Any trades that Shares in a taxable year that are greater than 125% of have as their principal purpose meeting this requirement the average annual distributions received by the U.S. will be disregarded. Holder in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Shares) and (ii) A U.S. Holder that makes a mark to market election must any gain realized on the sale or other disposition of include as ordinary income for each year an amount equal Shares. Under these rules (a) the excess distribution or to the excess, if any, of the fair market value of the gain will be allocated ratably over the U.S. Holder’s hold- Shares at the close of the taxable year over the U.S. ing period, (b) the amount allocated to the current tax- Holder’s adjusted basis in the Shares. An electing holder able year and any taxable year prior to the first taxable may also claim an ordinary loss deduction for the excess, year in which we are a PFIC will be taxed as ordinary if any, of the U.S. Holder’s adjusted basis in the Shares income, and (c) the amount allocated to each taxable over the fair market value of the Shares at the close of year other than the current taxable year will be subject to the taxable year, but this deduction is allowable only to tax at the highest rate of tax in effect for the applicable the extent of any net mark to market gains for prior class of taxpayer for that year and an interest charge will years. The U.S. Holder’s basis in the Shares will be be applied. If we cease to be a PFIC, a U.S. Holder may adjusted each year to reflect any such income or loss make an election (a “deemed sale election”) to be treated amounts. Gains from an actual sale or other disposition for U.S. federal income tax purposes as having sold its of the Shares will be treated as ordinary income, and any Shares on the last day of our last taxable year during losses incurred on a sale or other disposition of the which we were a PFIC. A U.S. Holder that makes a Shares will be treated as an ordinary loss to the extent of deemed sale election will cease to be treated as owning any net mark to market gains for prior years. Once made, stock in a PFIC. However, gain recognized by a U.S. Holder the election cannot be revoked without the consent of as a result of making the deemed sale election will be the IRS unless the Shares cease to be marketable. If we taxed as ordinary income and will be subject to the inter- are a PFIC for any year in which the U.S. Holder owns the est charge rules described above. Shares but before a mark to market election is made, the interest charge rules described above will apply to any If we are a PFIC, a U.S. Holder generally will be subject to mark to market gain recognized in the year the election is similar rules with respect to distributions to us by, and made. dispositions by us of the stock of, any direct or indirect subsidiaries we may have in the future that are also PFICs Alternatively, a timely election to treat us as a qualified (“Lower – tier PFIC’s”). electing fund (a “QEF Election”) under the Internal Reve- nue Code could be made to avoid the foregoing rules with U.S. Holders can avoid the treatment described above by respect to excess distributions and dispositions. We will making a mark to market election with respect to the comply with all reporting requirements necessary for you Shares (but not with respect to the stock of any lower – to make a QEF Election and will, as promptly as practica- tier PFIC), provided that the Shares are “marketable”. ble following the end of any taxable year in which we Shares will be marketable if they are regularly traded on determine that we are a PFIC, provide to registered hold- certain U.S. stock exchanges, or on a foreign stock ers of Shares with U.S. addresses, and to other share- exchange if (i) the foreign exchange is regulated or super- holders upon request, information necessary for such an vised by a governmental authority of the country in which election. If a U.S. Holder makes a QEF Election, a U.S. the exchange is located; (ii) the foreign exchange has Holder would be currently taxable on its pro rata share of trading volume, listing, financial disclosure, and other our ordinary earnings and net capital gain (at ordinary requirements designed to prevent fraudulent and manipu- income and capital gains rates, respectively) for each tax- lative acts and practices, remove impediments to, and able year of ours for which we are classified as a PFIC, perfect the mechanism of, a free and open market, and regardless of whether dividend distributions were to protect investors; (iii) the laws of the country in which received. For the purposes of determining gain or loss on

III – 14 the disposition (including redemption or retirement) of BACKUP WITHHOLDING AND Shares, a U.S. Holder’s initial tax basis in the Shares will INFORMATION REPORTING be increased by the amount so included in gross income with respect to the Shares and decreased by the amount Payments of dividends and other proceeds with respect of any non-taxable distributions on the Shares. In general, to Shares in the U.S. by a U.S. paying agent or other U.S. a U.S. Holder making a timely QEF Election will recognize, intermediary will be reported to the IRS and to the U.S. on the sale or disposition (including redemption and Holder as may be required under applicable regulations. retirement) of Shares, capital gain or loss equal to the Backup withholding may apply to these payments if the difference, if any, between the amount realized upon U.S. Holder fails to provide an accurate taxpayer identifi- such sale or disposition and that U.S. Holder’s adjusted cation number or certification of foreign or other exempt tax basis in those Shares. Such gain will be long-term if status or fails to report all interest and dividends required the U.S. holder held the Shares for more than one year to be shown on its U.S. federal income tax returns. Cer- on the date of disposition. tain U.S. Holders (including, among others, corporations) are not subject to backup withholding. U.S. Holders Each U.S. Holder who desires to make a QEF Election must should consult their tax advisers as to their qualification individually make the QEF Election. The QEF Election is for exemption from backup withholding and the procedure effective for the U.S. Holder’s taxable year for which it is for obtaining an exemption. made and all subsequent taxable years and may not be revoked without the consent of the U.S. Internal Revenue Service. In general, a U.S. Holder must make a QEF Elec- tion on or before the due date for filing its income tax return for the first year to which the QEF Election will apply.

Based on the nature of our expected income, the expected composition of our assets and our business prospects, we do not expect to have significant ordinary earnings or net capital gain in any taxable year in which we may be classified as a PFIC. Accurate predictions of the nature of our income and the composition of our assets, however, are particularly difficult in view of the volatile nature of the earnings patterns in technological industries such as emerging pharmaceutical and biotechnology industries and available interest rates. Accordingly, there can be no assurance that our expectations described above will be fulfilled. Investors should consult their own tax advisors concerning the applicability of the PFIC rules and the merits of making a QEF Election if we are a PFIC for any taxable year.

If we are a PFIC with respect to any taxable year, each U.S. Holder must ﬁle IRS Form 8621, reporting distributions received and gains realized with respect to each PFIC in which it holds a direct or indirect interest. Prospec- tive purchasers should consult their tax advisers regarding our status as a PFIC and the potential application of the PFIC regime.

III – 15 5. Terms and Conditions of the Offering

5.1 Terms of the Offering, subscription ratio and 5.2 Offering and proceeds allocation of Preemptive Rights The Offering comprises a maximum of 24,078,880 Offer On 1 April 2008 at 12:30 p.m. CET, anyone who is regis- Shares with a nominal value of DKK 1 each. tered with VP Securities Services as a shareholder of the Company will be entitled to and allocated three (3) Pre- The gross proceeds of the Offering will total approxi- emptive Rights for each Existing Share. mately DKK 409.3 million (approximately € 54.9 million) (estimated net proceeds of approximately DKK 376.9 mil- The Offering is not underwritten. lion (approximately € 50.5 million)), if the maximum number of Offer Shares is subscribed. There is no minimum Four (4) Preemptive Rights will entitle the holder to sub- subscription required. scribe for one (1) Offer Share. Accordingly, the holder will have the right, upon payment of the Offer Price, to sub- The gross proceeds from the binding undertaking by scribe for one (1) Offer Share for every four (4) Preemp- H. Lundbeck A/S and Novo A/S in connection with the tive Rights. No fractional Offer Shares will be issued. Offer Offering is approximately DKK 163.8 million (approxi- Shares may be subscribed for by using one or more sub- mately € 21.97 million). scription forms.

Shares traded after 27 March 2008 with customary three- 5.3 Completion of the Offering day value will be traded ex Preemptive Rights provided that Shares are traded with customary three-day value. The Offering will only be completed if and when the Offer Shares subscribed are issued by the Company upon regis- The Preemptive Rights and the Offer Shares are delivered tration of the capital increase with the Danish Commerce by allocation to accounts through the book-entry facilities and Companies Agency which is expected to take place on of VP Securities Services. 17 April 2008.

The Offer Shares will not be issued or admitted to trading An announcement concerning the results of the Offering and official listing on the OMX Nordic Exchange Copenha- is expected to be made on 17 April 2008. See Part III, Sec- gen until registration of the capital increase has taken tion 5.11. “Publication of the Offering”. place with the Danish Commerce and Companies Agency. Accordingly, shareholders and investors should note that the Offer Shares will not admitted to trading and official 5.4 Subscription Period listing on OMX Nordic Exchange Copenhagen under a temporary securities code. The Offer Shares will be listed The Subscription Period for the Offer Shares commences on OMX Nordic Exchange Copenhagen directly under the on 2 April 2008 at 9.00 a.m. CET and closes on 15 April securities code for the Existing Shares (DK0060048148) 2008 at 5.00 p.m. CET. following registration of the capital increase with the Danish Commerce and Companies Agency, which is See Part III, Section 5.12 “Procedure for exercise of and expected to take place on 21 April 2008. dealings in Preemptive Rights and treatment of Preemp- tive Rights” below for a description of the procedure of Upon trading and official listing of the Offer Shares, the exercise and subscription. Offer Shares will be accepted for clearance through Euro- clear and Clearstream.

The Preemptive Rights will be admitted to trading and ofﬁcial listing on the OMX Nordic Exchange Copenhagen under the securities code DK0060131043. The temporary securities code for the Offer Shares is DK0060131126. The Existing Shares are listed on the OMX Nordic Exchange Copenhagen under the securities code DK0060048148.

III – 16 5.5 Expected timetable of principal events If the Offering is not completed, the exercise of Preemptive Rights that has already taken place will automatically be Last day of trading of Existing cancelled, the subscription price for Offer Shares will be Shares cum Preemptive Rights: 27 March 2008 refunded (less any brokerage fees) to the last registered First day of trading of Existing owner of the Offer Shares at the time of withdrawal, all Shares ex Preemptive Rights: 28 March 2008 Preemptive Rights will be null and void, and no Offer Shares Trading period for Preemptive will be issued, potentially causing investors who may have Rights commences on the OMX acquired Preemptive Rights and/or rights to Offer Shares (in Nordic Exchange Copenhagen: 28 March 2008 an off-market transaction) to incur a loss. In relation to the Allocation Time: 1 April 2008 at 12.30 p.m. CET withdrawal of the Offering, see the section herein entitled through the computer system of “Risk Factors - Risks Related to the Offering”. However, VP Securities Services trades of Preemptive Rights executed during the trading Subscription Period for Offer 2 April 2008 (the day after the period for the Preemptive Rights will not be affected. As a Shares begins: Allocation Time) result, investors who acquired Preemptive Rights will incur a Trading period for Preemptive loss corresponding to the purchase price of the Preemptive Rights ends: 10 April 2008 at 5.00 p.m. CET Rights and any brokerage fees. Any withdrawal will be noti- Subscription Period for Offer ﬁed immediately to the OMX Nordic Exchange Copenhagen Shares ends: 15 April 2008 at 5.00 p.m. CET and announced as soon as possible in the same Danish Publication of the results of the Not later than two Banking Days daily newspaper in which the Offering was announced. Offering: after the end the Subscription Period (expected to be on 17 April 2008) 5.7 Reduction of subscription Completion of the Offering: The Offering will only be completed if and when the Offer Not applicable. Shares subscribed are issued by the Company upon registration of the capital increase with the 5.8 Minimum and/or Maximum Subscription Danish Commerce and Companies Amounts Agency which is expected to take place on 17 April 2008. The minimum number of Offer Shares that a holder of Ofﬁcial listing of and trading Preemptive Rights may subscribe will be one (1) Offer in Offer Shares under existing Share, requiring the exercise of four (4) Preemptive Rights securities code expected to take and the payment of the Offer Price. The number of Offer place: 21 April 2008 Shares that a holder of Preemptive Rights may subscribe is not capped. However, the number is limited to the number of Offer Shares which may be subscribed through 5.6 Withdrawal of the Offering the exercise of the Preemptive Rights acquired.

The Offering may be withdrawn at any time prior to registration of the capital increase relating to the Offer Shares 5.9 Revocation of Subscription Orders has taken place with the Danish Commerce and Companies Agency. The Rights Issue Agreement provides that the Joint Instructions to exercise Preemptive Rights are irrevocable. Global Coordinators and Lead Managers may require us to withdraw the Offering at any time prior to the registration of the capital increase relating to the Offer Shares upon 5.10 Payment notiﬁcation of termination of the Rights Issue Agreement. The Joint Global Coordinators and Lead Managers are enti- Upon exercise of the Preemptive Rights, the holder must tled to terminate this Agreement upon the occurrence of pay DKK 17 per Offer Share for which he or she subscribes. certain exceptional and unpredictable circumstances, such as force majeure. The Rights Issue Agreement also contains Payment for the Offer Shares shall be made in Danish kro- closing conditions which we believe are customary for offer- ner at the time of subscription, however, not later than ings such as the Offering and the closing of the Offering is 15 April 2008 at 5.00 p.m. CET, against registration of the dependent on compliance with all of the closing conditions Offer Shares in the transferee’s account with VP Securities set forth in the Rights Issue Agreement. If one or more Services. Holders of Preemptive Rights are required to closing conditions are not met, the Joint Global Coordina- adhere to the account agreement with their Danish custo- tors and Lead Managers may, at their discretion, also termi- dian or other ﬁnancial intermediaries through which they nate the Rights Issue Agreement and thereby require us to hold Shares. Financial intermediaries through whom a withdraw the Offering. holder may hold Preemptive Rights may require payment by an earlier date.

III – 17 5.11 Publication of the results of the Offering permissible to subscribe for the Offer Shares, (ii) is unable to represent or warrant that such person is not in the U.S. The results of the Offering will be communicated in a or such other jurisdiction in which it would not be permis- company announcement which is expected to be released sible to subscribe for the Offer Shares, (iii) is acting for through the OMX Nordic Exchange Copenhagen not later persons in the U.S. or such other jurisdiction in which it than two Banking Days after the end of the Subscription would not be permissible to subscribe for the Offer Shares Period (expected to be on 17 April 2008). other than on a discretionary basis, or (iv) appears to the Company or its agents to have executed its exercise instructions or certifications in, or dispatched them from, 5.12 Procedure for exercise of and the U.S. or such other jurisdiction in which it would not be dealings in Preemptive Rights and treatment permissible to make an offer of the Offer Shares. of Preemptive Rights See Part III, Section 5.13 “Jurisdictions in which the Offering The Preemptive Rights will be traded on the OMX Nordic will be made and restrictions applicable to the Offering’’. Exchange Copenhagen. Account holders who exercise their Preemptive Rights Holders of Preemptive Rights wishing to subscribe for shall be deemed to have represented that no Preemptive Offer Shares must do so through their own custodian Rights are being exercised by or for the account or benefit institution, in accordance with the rules of such institu- of persons located in the U.S. (subject to certain exception. The time until which notification of exercise may be tions with respect to QIBs in accordance with procedures given will depend upon the holder’s agreement with, and established by the Company in accordance with applicable the rules and procedures of, the relevant custodian insti- law) or such other jurisdictions in which it would not be tution or other financial intermediary and may be earlier permissible to make an offer of the Offer Shares. than the end of the Subscription Period. Once a holder has exercised his Preemptive Rights, the exercise may not Any holder who exercises his Preemptive Right shall be be revoked or modified. deemed to have represented that he has complied with all applicable laws. Custodian banks exercising Preemptive Upon payment of the Offer Price and exercise of Preemp- Rights on behalf of beneficial holders shall be deemed to tive Rights during the Subscription Period, the Offer have represented that they have complied with the offer- Shares will be allocated through VP Securities Services at ing procedures set forth in this Offering Circular. Neither the close of any Banking Day. The Offer Shares will not be the Preemptive Rights nor the Offer Shares have been issued or admitted to trading and official listing on the registered under the Securities Act. OMX Nordic Exchange Copenhagen until registration of the capital increase has taken place with the Danish Com- Upon expiry of the Subscription Period, the Preemptive merce and Companies Agency. The admission to trading Rights will lapse without value and the holders will not be and official listing of the Offer Shares under the existing entitled to any compensation. Due to the subscription securities code on the OMX Nordic Exchange Copenhagen ratio of 3:4 and the number of Existing Shares in the is expected to take place on 21 April 2008. Company prior to the Offering (32,105,174 Shares), there will be an excess of two (2) Preemptive Rights even if all Exercise instructions, without the required supporting doc- the Offer Shares are subscribed. Holders of Preemptive umentation, sent from a person located in the U.S. or such Rights who do not wish to exercise their Preemptive other jurisdiction in which it would not be permissible to Rights to subscribe for Offer Shares may sell their Pre- subscribe for the Offer Shares will be deemed to be emptive Rights during the trading period for the Preemp- invalid, and no Offer Shares will be credited to institutions tive Rights, and the transferee may use the acquired Pre- with addresses inside the U.S. or such other jurisdictions emptive Rights to subscribe for Offer Shares. Holders in which it would not be permissible to subscribe for the wishing to sell their Preemptive Rights should instruct Offer Shares without the required supporting documenta- their custodian banks accordingly. tion. The Company and the Joint Global Coordinators and Lead Managers will reject any exercise of Preemptive The Joint Global Coordinators and Lead Managers may, Rights in the name of any person who, without providing from time to time, exercise, acquire and sell Preemptive required supporting documentation such as the investor Rights and acquire, sell or subscribe for Offer Shares. letter applicable to persons located in the U.S., (i) provides for acceptance or delivery of Offer Shares an address in the U.S. or such other jurisdiction in which it would not be

III – 18 5.13 Jurisdictions in which the Offering will be RESTRICTIONS ON OFFERS AND SALES IN THE U.S. made and restrictions applicable to the Offering The Preemptive Rights and the Offer Shares have not WHERE THE OFFERING WILL BE MADE been approved by the U.S. Securities and Exchange Commission, any state securities commission in the The Offering consists of a public offering in Denmark and U.S. or any other U.S. regulatory authority, nor have a private placement in other jurisdictions. any of such regulatory authorities passed upon or endorsed the merits of the Offering or the accuracy RESTRICTIONS APPLICABLE TO THE OFFERING or adequacy of this Offering Circular. Any representation to the contrary is a criminal offence in the U.S. GENERAL RESTRICTIONS The Preemptive Rights and the Offer Shares have not The distribution of this Offering Circular and the Offering been and will not be registered under the U.S. Securities may, in certain jurisdictions, be restricted by law, and this Act of 1933, as amended (the “Securities Act”), or any Offering Circular may not be used for the purpose of, or state securities laws in the U.S. Any person in the U.S. in connection with, any offer or solicitation by anyone in wishing to exercise Preemptive Rights or subscribe for any jurisdiction in which such offer or solicitation is not Offer Shares must execute and deliver an investor letter authorized or to any person to whom it is unlawful to satisfactory to the Company and the Joint Global Coordi- make such offer or solicitation. This Offering Circular does nators and Lead Managers to the effect that such person not constitute an offer of or an invitation to exercise or is a “Qualified Institutional Buyer” (“QIB”) within the purchase any Preemptive Rights or subscribe Offer Shares meaning of Rule 144A under the Securities Act and satis- in any jurisdiction in which such offer or invitation would fies certain other requirements. be unlawful. The Company and the Joint Global Coordina- tors and Lead Managers require persons into whose pos- Any person who wishes to exercise Preemptive Rights and session this Offering Circular comes to inform themselves subscribe Offer Shares will be deemed to have declared, of and observe all such restrictions. Neither the Company warranted and agreed, by accepting delivery of this Offer- nor the Joint Global Coordinators and Lead Managers ing Circular and delivery of Preemptive Rights to Offer accept any legal responsibility for any violation by any Shares, either that he is exercising the Preemptive Rights person, whether or not a prospective purchaser of Pre- and subscribing for the Offer Shares in an offshore trans- emptive Rights or Offer Shares, of any such restrictions. action as defined by Regulation S of the Securities Act, or that he is exercising the Preemptive Rights and subscrib- This Offering Circular may not be distributed or otherwise ing for the Offer Shares in his capacity as a QIB and that made available, and the Offer Shares may not be directly he will not re-sell, pledge or otherwise transfer the Pre- or indirectly offered, sold or subscribed and the Preemp- emptive Rights or the Offer Shares except (i) in an off- tive Rights may not be directly or indirectly offered, sold, shore transaction meeting the requirements of Regulation acquired or exercised in the U.S., Canada, Australia or S of the Securities Act, (ii) pursuant to an effective regis- Japan, unless such distribution, offering, sale, acquisition, tration statement, or (iii) pursuant to an exemption from exercise or subscription is permitted under applicable laws registration. of the relevant jurisdiction, and the Company and the Joint Global Coordinators and Lead Managers receive sat- In addition, until the expiration of the 40-day period isfactory documentation to that effect. The Offering Circu- beginning on the Offering Circular Date, an offer to sell or lar may not be distributed or otherwise made available, a sale of the Preemptive Rights and the Offer Shares the Offer Shares may not be directly or indirectly offered, within the U.S. by a broker/dealer (whether or not it is sold or subscribed and the Preemptive Rights may not be participating in the Offering) may violate the registration directly or indirectly offered, sold, acquired or exercised in requirements of the Securities Act if such offer to sell or any other jurisdiction, unless such distribution, offering, sale is made otherwise than pursuant to the foregoing. sale, acquisition, exercise or subscription is permitted under applicable laws of the relevant jurisdiction. The RESTRICTIONS ON SALES IN THE EUROPEAN Company and the Joint Global Coordinators and Lead ECONOMIC AREA Managers may require receipt of satisfactory documentation to that effect. In relation to each Relevant Member State (not including Denmark), an offer to the public of any Preemptive Rights Due to such restrictions under applicable legislations and or Offer Shares may not be made in any Relevant Member regulations, the Company expects that certain investors State prior to the publication of a prospectus which has residing in the U.S., Canada, Australia, Japan and other been approved by the competent authority in such Rele- jurisdictions may not be able to receive this Offering Cir- vant Member State or, where relevant, approved in cular and may not be able to exercise their Preemptive another Relevant Member State and notified to the com- Rights or subscribe the Offer Shares. petent authority in such Relevant Member State, all

III – 19 pursuant to the Prospectus Directive, except that with together being referred to as “Relevant Persons”). The effect from and including the date of implementation of Preemptive Rights and the Offer Shares are only available the Prospectus Directive in such Relevant Member State, to, and any invitation, offer or agreement to subscribe, an offering of Preemptive Rights and Offer Shares may be purchase or otherwise acquire such Preemptive Rights or made to the public at any time in such Relevant Member Offer Shares will be engaged in only with, Relevant Per- State: sons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents. • to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized RESTRICTIONS ON SALES IN CANADA, or regulated, whose corporate purpose is solely to AUSTRALIA AND JAPAN invest in securities; The Preemptive Rights and the Offer Shares have not • to any legal entity fulfilling at least two of the follow- been approved, disapproved or recommended by any for- ing conditions (1) an average of at least 250 employ- eign securities and exchange commissions nor have any ees during the last financial year; (2) a total balance of such authorities passed upon or endorsed the merits sheet of more than €43 million and (3) an annual net of the offering or the accuracy or adequacy of this Offer- turnover of more than €50 million, as shown in its last ing Circular. annual or consolidated accounts;

• to fewer than 100 natural or legal persons (other than 5.14 Intentions of Major Shareholders of the qualified investors as defined in the Prospectus Direc- Company, Executive Management or the Board tive) subject to obtaining the prior consent of the Joint of Directors to participate in the Offering Global Coordinators and Lead Managers, for any such offer; or H. Lundbeck A/S and Novo A/S have each made a binding undertaking to exercise its Preemptive Rights to subscribe • in any other circumstances falling within Article 3(2) of for, in aggregate, 9,635,376 Offer Shares corresponding the Prospectus Directive; to total gross proceeds of approximately DKK 163.8 million (approximately € 21,97 million). provided that no such offer of Offer Shares shall result in a requirement for the publication by the Company or any The Company has not received any indications from its Joint Global Coordinator and Lead Manager of a prospec- Executive Management or the members of its Board of tus pursuant to Article 3 of the Prospectus Directive. Directors as to whether they expect to participate in the Offering. For the purposes of the above, the expression an “offer of Preemptive Rights and Offer Shares to the public” in relation to Preemptive Rights and Offer Shares in any Rel- 5.15 Plan of distribution evant Member State means the communication in any form and by any means of sufficient information on the Not applicable. terms of the Offering, the Preemptive Rights and Offer Shares so as to enable an investor to decide to exercise or acquire Preemptive Rights or subscribe for Offer 5.16 Pre-Allotment Information Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in There is no pre-allotment of Offer Shares. that Member State.

RESTRICTIONS ON SALES IN THE UNITED KINGDOM 5.17 Over allotment Information

This communication is only being distributed to, and is There is no over-allotment of Offer Shares. only directed at, (i) persons who are outside the United Kingdom or (ii) investment professionals falling within article 19(5) of the Financial Services and Markets Act 5.18 Offer Price 2000 (ﬁnancial promotion) order 2005 (the “Order”) or (iii) high net worth companies, and other persons to The Offer Shares are offered at DKK 17 per Share with a whom it may lawfully be communicated, falling within nominal value of DKK 1 each, free of brokerage fees. article 49(2)(a) to (d) of the Order (all such persons

III – 20 5.19 Price Disparity RIGHTS ISSUE AGREEMENT

No persons have been granted the right to subscribe In connection with the Offering, the Company and the Offer Shares at a preferential price, and consequently Joint Global Coordinators and Lead Managers have there is no price disparity. entered into the Rights Issue Agreement.

The Company has given certain representations and war- 5.20 Payment Intermediaries ranties to the Joint Global Coordinators and Lead Manag- ers. The Company has furthermore undertaken to indem- Euroclear Bank S.A./N.V. nify the Joint Global Coordinators and Lead Managers for 1 Boulevarde de Roi Albert II certain matters related to the Offering. The Rights Issue B-1210 Brussels Agreement provides that the Joint Global Coordinators Belgium and Lead Managers may require us to withdraw the Offer- ing at any time prior to the registration of the capital Clearstream Banking S.A. increase relating to the Offer Shares upon notiﬁcation of 42 Avenue JF Kennedy termination of the Rights Issue Agreement. The Joint L-1855 Luxembourg Global Coordinators and Lead Managers are entitled to Luxembourg terminate this Agreement upon the occurrence of certain exceptional and unpredictable circumstances, such as force majeure. The Rights Issue Agreement contains clos- 5.21 Placing and Underwriting ing conditions which we believe are customary for offerings such as the Offering and the closing of the Offering Danske Markets (a division of Danske Bank A/S) and UBS is dependent on compliance with all of the closing condi- Limited are Joint Global Coordinators and Lead Managers. tions set forth in the Rights Issue Agreement. If one or more closing conditions are not met, the Joint Global ADDRESSES OF JOINT GLOBAL COORDINATORS AND Coordinators and Lead Managers may, at their discretion, LEAD MANAGERS also terminate the Rights Issue Agreement and thereby require us to withdraw the Offering. See Part III, Section The addresses of the Joint Global Coordinators and Lead 5.6 “Withdrawal of the Offering”. Managers are: The Offering is not underwritten. • Danske Markets (a division of Danske Bank A/S) (CVR- no. 61126228), Holmens Kanal 2-12, DK-1092 Copen- hagen K, Denmark; and

• UBS Limited, 1 Finsbury Avenue, London, EC2M 2PP, United Kingdom.

III – 21 6. Admission to Trading and Ofﬁcial Listing

The Preemptive Rights will be admitted to trading and ofﬁcial listing on the OMX Nordic Exchange Copenhagen and the trading period for the Preemptive Rights will commence on 28 March 2008 at 9.00 a.m. CET and will close on 10 April 2008, at 5.00 p.m. CET under the ISIN Code DK0060131043.

Upon registration of the capital increase relating to the Offer Shares with the Danish Commerce and Companies Agency which is expected to take place on 17 April 2008, the Offer Shares are to be issued and admission to trading and ofﬁcial listing of Offer Shares under the existing securities code is expected to commence. See Part III, Section 5.1 “Terms of the Offering, subscription ratio and allocation of Preemptive Rights”.

The Existing Shares are listed on the OMX Nordic Exchange Copenhagen in the following ISIN Code DK0060048148.

6.1 Market Maker Agreement

The Company has entered into a market maker agreement with Danske Bank according to which Danske Bank will act as market maker for the our Shares.

6.2 Price Stabilization and Short Positions

In connection with the Offering, the Joint Global Coordina- tors and Lead Managers may from the commencement of the trading period for Preemptive Rights and until 30 days after the ﬁrst day of trading and ofﬁcial listing of the Offer Shares effect transactions which stabilize or maintain the market price of the Preemptive Rights (stabilizing actions regarding the Preemptive Rights will only take place during the trading period for Preemptive Rights), the Offer Shares and the Existing Shares at levels above those which might otherwise prevail in the open market. The Joint Global Coordinators and Lead Managers are, however, not obliged to effect any such transactions. Such transactions, if commenced, may be discontinued at any time.

III – 22 7. Selling Security Holders and Lock-Up Agreements

7.1 Shareholders that have indicated that they LOCK-UP AGREEMENT WITH THE BOARD OF DIRECTORS expect to sell their Shares or Preemptive Rights AND EXECUTIVE MANAGEMENT

The Company has not received any indications from The members of the Board of Directors and of the Execu- shareholders that they intend to sell their Shares or Pre- tive Management have each agreed for the period start- emptive Rights. ing on the date of this Prospectus and ending 180 days counted from the completion of the Offering (expected to take place on 21 April 2008) not to sell, offer for sale, 7.2 Lock-up agreements in connection with the enter into any agreement regarding the sale of, pledge or Offering in any other way directly or indirectly transfer shares in the Company or other securities exchangeable into shares The Company, its Board of Directors and Executive Man- in the Company or warrants or other options to acquire agement have entered into lock-up agreements with the shares in the Company nor to announce the intention to Joint Global Coordinators and Lead Managers. make any such act without the prior written consent of the Joint Global Coordinators and Lead Managers. Such LOCK-UP AGREEMENTS WITH THE COMPANY consent is not to be unreasonably withheld or delayed by the Joint Global Coordinators and Lead Managers. The The Company has undertaken until 180 days counted obligation shall not apply to the acquisition, subscription from the completion of the Offering (expected to take or disposal of Company Securities in relation to the exer- place on 21 April 2008) not to issue, sell, offer for sale, cise by such persons of their rights in accordance with enter into any agreement regarding the sale of, pledge or existing or future employee shareholdings and warrant in any other way directly or indirectly transfer the Shares programs and the obligation does not cover Preemptive in the Company or other securities exchangeable into Rights and Offer Shares acquired by such persons after Shares in the Company or warrants or other options to the date of this Offering Circular. acquire Shares in the Company (together “Company Secu- rities”) or to announce the intention to make any such act without the prior written consent of the Joint Global Coordinators and Lead Managers. Such consent is not to be unreasonably withheld or delayed, if the transaction is motivated by reasonable business considerations attributable to the Company. The above-mentioned obligation of the Company shall not apply to transfers or issues of Company Securities to the Company’s employees and its subsidiary’s employees, Executive Management or Board of Directors’ members in relation to the exercise by such persons of their rights in accordance with the existing or future employee shareholding and warrant programs.

III – 23 8. Net Proceeds and Aggregate Costs

The gross proceeds of the Offering will total approximately DKK 409.3 million (approximately € 54.9 million) (estimated net proceeds of approximately DKK 376.9 million (approximately € 50.5 million)), if the maximum number of Offer Shares is subscribed.

Assuming that all the Offer Shares are subscribed, the estimated expenses payable by the Company in connection with the Offering are as stated in Table 10 below.

Table 10. Costs of the Offering

Costs if maximum number of DKK Offer Shares is subscribed (millions)

Selling commission to the Joint Global 14.3 Coordinators and Lead Managers Advertising 0.8 Printing costs 0.6 Public fees 0.3 Fees to auditors and legal advisors 9.9 Other expenses 1.2 Subscription commission 0.3 Total costs 27.4

In connection with the Offering, we have undertaken to pay an advisory fee of DKK 5.0 million to the Joint Global Coordinators and Lead Managers.

In connection with the Offering, we have undertaken to pay a subscription commission of 0.25% per Offer Share to the account-holding banks. Fees and commission to the Joint Global Coordinators and Lead Managers and subscription commission to custodian institutions are variable, and the costs therefore depend on the results of the Offering.

III – 24 9. Dilution

Our equity value as of 31 December 2007 was DKK 325,689 thousand. Adjusted for the increase of our equity from exercise of warrants on 14 March 2008, our pro forma equity amounts to DKK 327,951 thousand or DKK 10.21 per Share. The equity per Share is determined by dividing our equity value by the total number of outstanding Shares. After giving effect to the issue of the maximum number of Offer Shares (24,078,880 Offer Shares) at the Offer Price of DKK 17.00 per Share, and deducting commissions and estimated expenses, our pro forma equity value as of 31 December 2007 would have been approximately DKK 704,865 thousand or DKK 12.55 per Share. This represents an immediate increase in equity value per Share of DKK 2.34 to our shareholders, and an immediate dilution in adjusted equity per Share of DKK 4.45 to subscribers of Offer Shares. The following table illustrates the per Share dilution that investors in the Offer Shares will experience:

Offer Price per Share DKK 17 Equity Per Share of nominal DKK 1 DKK 10.21 Increase in equity value per Share attributable to new investors DKK 2.34 Equity value per Share after the Offering (1)(2) DKK 12.55 Dilution per Share to new investors DKK 4.45

Notes: (1) Dilution is determined by subtracting equity value per Share after the Offering from the Offer Price per Share. (2) Further dilution will occur upon exercise of outstanding warrants. Upon completion of the Offering, the number of warrants will increase and the exercise price thereof will decrease as the Offer Price is lower than the market price of the Shares of the Company. See Part I, Section 21.2 “Warrant Programs”.

III – 25 10. Additional information

10.1 Advisors 10.2 Availability of the Offering Circular

• Danish legal counsel to the Company: Requests for copies of this Offering Circular may be addressed to: Mazanti-Andersen, Korsø Jensen & Partnere, St. Kongensgade 69, DK-1264 Copenhagen K, Denmark Danske Bank A/S, Corporate Actions Holmens Kanal 2-12 • United States legal counsel to the Company: DK-1092 Copenhagen K Tel. +45 70 23 08 34 Satterlee Stephens Burke & Burke LLP, Email address: [email protected] 230 Park Avenue, New York, New York 10169, U.S. This Offering Circular can also, with certain exceptions, • Independent Auditor to the Company: including prohibition on access by persons located in the U.S., be downloaded from the Company’s website: PricewaterhouseCoopers Statsautoriseret Revisions- www.lifecyclepharma.com. aktieselskab, Strandvejen 44, DK-2900, Hellerup, Copenhagen, Denmark The distribution of this Offering Circular and the offering of the Preemptive Rights and the Offer Shares is, in cer- • Joint Global Coordinators and Lead Managers: tain jurisdictions, restricted by law. This Offering Circular does not constitute an offer to sell or an invitation to Danske Markets (a division of Danske Bank A/S), subscribe or purchase any of the Preemptive Rights or the Holmens Kanal 2-12, DK-1092 Copenhagen K, Offer Shares in any jurisdiction in which such offer or invi- Denmark; tation is not authorized or to any person to whom it is unlawful to make such an offer or invitation. Persons into UBS Limited, 1 Finsbury Avenue, London, EC2M 2PP, whose possession this Offering Circular comes are United Kingdom required to inform themselves about and to observe any such restrictions. • Danish legal counsel to the Joint Global Coordinators and Lead Managers:

Kromann Reumert, Sundkrogsgade 5, DK-2100 Copenhagen Ø, Denmark

• International legal counsel to the Joint Global Coordinators and Lead Managers:

Davis Polk & Wardwell, 99 Gresham Street, London EC2V 7NG, United Kingdom

III – 26 11. Deﬁnitions

Allocation Time 1 April 2008 at 12:30 p.m. CET, the time when anyone who is registered with VP Securities Services as a shareholder of the Company will be entitled to and allocated three (3) Preemptive Rights for each Existing Share

Banking Day A day on which banks in Denmark are open for business

Board of Directors The Board of Directors of LifeCycle Pharma A/S, whose members currently consist of Claus Braestrup (Chairman), Thomas Dyrberg, Dr. Jean Deleage, Dr. Gérard Soula and Kurt Anker Nielsen

Clearstream Clearstream Banking S.A., 42 Avenue JF Kennedy, L-1855 Luxembourg

Closing Date 21 April 2008, the date on which delivery of the Offer Shares is expected to take place

Company LifeCycle Pharma A/S, company reg. (CVR) no. 26527767

Danske Markets Danske Markets, (a division of Danske Bank A/S), company reg. (CVR) no. 61126228

Euroclear Euroclear Bank S.A./N.V., 1 Boulevarde de Roi Albert II, B-1210 Brussels, Belgium

Exchange Act The U.S. Securities Exchange Act of 1934, as amended

Executive Management Flemming Ørnskov, President and Chief Executive Officer, Hans Christian Teisen, Senior Vice President and Chief Financial Officer, Michael Beckert, President and Chief Medical Officer, and Peter G. Nielsen, Executive Vice President of Pharmaceutical Development and CMC

Existing Shareholders Shareholders registered with VP Securities Services as shareholders of the Company as at 1 April 2008 at 12:30 p.m. CET

Existing Shares 32,105,174 existing shares of nominal value DKK 1 per share in LifeCycle Pharma A/S immediately prior to the Offering

IFRS International Financial Reporting Standards

Joint Global Coordinators Danske Markets and UBS Limited and Lead Managers

LifeCycle Pharma LifeCycle Pharma A/S, company reg. (CVR) no. 26527767, Kogle Allé 4, DK-2970 Hørsholm, Denmark

Major Shareholders H. Lundbeck A/S, Novo A/S and Alta Partners, which includes Alta BioPharma Partners III, L.P., Alta BioPharma Partners III, GmbH & Co. Beteiligungs KG, and Alta Embarcadero BioPharma Partners III, LLC

Offering Offering of up to 24,078,880 new Shares of DKK nominal value 1 each at a price of DKK 17 per Share with Preemptive Rights to Existing Shareholders at the ratio of 3:4

Offer Price DKK 17 per Share

Offer Shares 24,078,880 new Shares being offered

III – 27 OMX Nordic Exchange OMX Nordic Exchange Copenhagen A/S Copenhagen

Preemptive Rights Preemptive rights allocated to Existing Shareholders to subscribe for Offer Shares

Prospectus Order Executive Order No. 1232 of 22 October 2007 issued by the Danish Financial Supervisory Authority on the requirements for prospectuses

Registered Management Flemming Ørnskov, President and Chief Executive Ofﬁcer, and Hans Christian Teisen, Senior Vice President and Chief Financial Ofﬁcer

Securities Act The U.S. Securities Act of 1933, as amended

Shares The Company’s ordinary shares of nominal value DKK 1 per share

Subscription Period 2 April to 15 April 2008

U.S. Holder A beneﬁcial owner of Shares that is for U.S. federal income tax purposes (i) a citizen or resident of the U.S., (ii) a corporation, or other entity treated as a corporation, created or organized under the laws of the U.S. or any State thereof, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust

VP Securities Services VP Securities Services A/S

III – 28 12. Glossary

AB-rated Drug products that are AB-rated are considered by the FDA to be therapeutically equivalent, and health care providers may conﬁdently substitute the generic product for the reference-listed drug, relying on the fact that their safety and effectiveness should be the same.

American Heart A U.S. national voluntary health agency whose mission is to reduce disability and death from Association (AHA) cardiovascular diseases and stroke.

Area Under the Curve (AUC) Provides a graphic depiction of the total amount of drug that is present in the blood for a given period of time.

Bioavailability The speed at which a drug substance is absorbed in the bloodstream and the fraction of dose that reaches the blood circulation. Often expressed as the relative bioavailability as the area under the plasma concentration curve relative to a reference formulation, e.g. oral formulation vs. a formulation administered intravenously directly in the bloodstream (absolute bioavailability).

Current Good That part of the pharmaceutical quality assurance which ensures that products are consistently Manufacturing produced and controlled in conformity with current good manufacturing practices and quality standards Practice ((cGMP) appropriate for their intended use and as required by the product speciﬁcation.

Contract Manufacturing A company that offers manufacturing services, with volume capabilities ranging from small amounts Organization (CMO) for preclinical research and development to larger volumes necessary for clinical trials purposes and commercialization.

Clinical Research An independent organization that has been delegated some or all of a sponsor’s responsibility for the Organization (CRO) initiation and oversight of a clinical investigation.

European Medicines A decentralized body of the European Union responsible for the scientiﬁc evaluation of applications for Agency (EMEA) European marketing authorization for medicinal products.

Federal Food, Drug and U.S. federal legislation on food, cosmetics and drug safety. Cosmetic Act (FDCA)

Food and Drug The U.S. federal agency responsible for enforcing the Food and Drug laws enacted by U.S. Congress Administration (FDA) regarding the research, manufacture, and safety of food, biologics, devices, drugs and cosmetics.

Food Effect Intake of food has an effect on the body’s absorption of drugs and therefore interacts with the bioavailability.

Gastrointestinal (GI) Adjective referring collectively to the stomach and small and large intestines.

Good Clinical Practices (GCP) Describes the practices, responsibilities and actions that must be followed in any clinical trial to ensure the safety of study participants and the quality of the data.

Hatch-Waxman Act or Legislation that allows manufacturers of generic drugs to ﬁle abbreviated applications for approval by the Hatch-Waxman Amendments FDA. Also known as the Drug Price Competition and Patent Term Restoration Act of 1984.

High Density Lipoprotein A lipoprotein that contains relatively small amounts of cholesterol and triglycerides. Also sometimes (HDL) referred to as the “good” cholesterol.

Immunosuppression Suppression of the immune response as by drugs or radiation, in order to prevent the rejection of transplants or to control autoimmune diseases.

III – 29 Investigational New Drug A submission to the FDA to register a drug for human testing that includes the results of all preclinical (IND) application investigations along with a proposal for the clinical study design.

Late stage Describes a stage of clinical development of Phase II or later.

Low Density Lipoprotein A lipoprotein that contains relatively high amounts of cholesterol. Also sometimes referred to as the (LDL) “bad” cholesterol.

Marketing Authorization A complete dossier of information including chemical, pharmaceutical, biological, and clinical data which Application (MAA) is sent to a regulatory authority to support a request for marketing authorization in the European Union.

New Chemical Entity A novel medicinal product where the active ingredient is a chemical substance that has not previously (NCE) been approved by the FDA.

New Drug Application Document submitted to the FDA as a request for approval to market the drug. It is submitted after the (NDA) sponsor has signiﬁcant proof of the safety and efﬁcacy of the drug; mandatory under the Federal Food, Drug and Cosmetic Act.

Orange Book Orange Book is the common name of the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations”, which lists, among other things, patents protecting the active ingredient, formulation and method of use of a drug product, as well as the therapeutic equivalence ratings for reference-listed drugs and their generic copies.

Paragraph IV Paragraph IV certiﬁcation is a declaration that a patent listed in the Orange Book is invalid and/or will not certiﬁcation be infringed by the generic drug in an ANDA or in the branded drug in a 505(b)(2) NDA.

Pharmacodynamic Science that studies the action of the drug on the body, particularly the chemical reactions between the drug and its cellular targets that produce both therapeutic and toxic effects.

Pharmacokinetic Science that studies the actions of the body on the drug, including parameters such as absorption, distribution, metabolism, and elimination of drugs (ADME).

Phase I study Clinical trial involving the initial introduction of a compound into healthy human subjects prior to introduction into patients who have the disease the investigational drug is being studied to treat.

Phase I/II study Initial clinical trial involving the use of patients rather than healthy human subjects.

Phase II study Clinical trial typically involving a small sample of the intended patient population to assess the efﬁcacy of the compound for a speciﬁc indication, to determine dose tolerance and the optimal dose range as well as to gather additional information relating to safety and potential adverse effects.

Phase III study Extensive clinical studies in a large number of patients. The drug is tested against placebos and existing treatments, if available. The studies are often double-blinded and require detailed statistical evaluations.

Triglycerides (TG) A form of fat. A triglyceride consists of three molecules of fatty acid combined with a molecule of the alcohol glycerol. Triglycerides serve as the backbone of many types of lipids (fats). Triglycerides come from the food we eat as well as being produced by the body.

30-month stay The automatic prohibition of FDA action on an ANDA or a 505(b)(2) NDA with a Paragraph IV certification if the holder of the patent or the holder of the NDA files a patent infringement suit against the applicant within 45 days after being notified of the certifications.

III – 30 Page left blank intentionally IV. Appendices 1. Articles of Association of LifeCycle Pharma A/S (Registration no 26 52 77 67)

Name, Registered Ofﬁce and Objects nominal DKK 1,000 and maximum nominal DKK 591,444. of the Company The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association and ARTICLE 1 form an integral part hereof.

The Company’s name is LifeCycle Pharma A/S. On 29 August 2003 the Board of Directors issued, pursuant to authorisation from the general meeting, 143,944 ARTICLE 2 warrants, each conferring a right to subscribe for nominal DKK 1 share at a subscription price of DKK 7.3825 per The registered ofﬁce of the Company is in the municipal- nominal DKK 1 share and resolved simultaneously, at one ity of Rudersdal. or more times, to increase the share capital with minimum nominal DKK 1,000 and maximum nominal DKK ARTICLE 3 143,944. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association The objects of the Company are to engage in medical and form an integral part hereof. research, production and sale of such products and related business. On 3 October the Board of Directors issued, pursuant to authorisation from the general meeting, 266,408 warrants, each conferring a right to subscribe for nominal The Company’s Share Capital DKK 1 share at a subscription price of DKK 7.3825 per nominal DKK 1 share and resolved simultaneously, at one ARTICLE 4 or more times, to increase the share capital with minimum nominal DKK 1,000 and maximum nominal DKK The Company’s share capital is nominal DKK 32,105,174 266,408. The terms and conditions for the warrants have divided into shares of DKK 1 each and multiples hereof. been adopted as Exhibit 1 to the Articles of Association The share capital has been fully paid up. and form an integral part hereof.

On 19 December 2003 the Board of Directors issued, pur- Warrants suant to authorisation from the general meeting, 21,000 warrants, each conferring a right to subscribe for nominal ARTICLE 5 DKK 1 share at a subscription price of DKK 7.3825 per nominal DKK 1 share and resolved simultaneously, at one Pursuant to authorisation from the general meeting, the or more times, to increase the share capital with mini- Board of Directors has issued in total 5,679,462 warrants mum nominal DKK 1,000 and maximum nominal DKK (adjusted after the issue of bonus shares in July, 2006) to 21,000. The terms and conditions for the warrants have the Company’s employees, board members, consultants been adopted as Exhibit 1 to the Articles of Association and advisors, and determined the terms and conditions and form an integral part hereof. as follows (all numbers adjusted after the issue of bonus shares in July, 2006): On 22 March 2004 the Board of Directors issued, pursuant to authorisation from the general meeting, 259,148 On 4 April 2003 the Board of Directors issued, pursuant warrants, each conferring a right to subscribe for nominal to authorisation from the general meeting, 591,444 war- DKK 1 share at a subscription price of DKK 7.8850 per rants, each conferring a right to subscribe for nominal nominal DKK 1 share and resolved simultaneously, at one DKK 1 share at a subscription price of DKK 2.50 per nomi- or more times, to increase the share capital with mini- nal DKK 1 share and resolved simultaneously, at one or mum nominal DKK 1,000 and maximum nominal DKK more times, to increase the share capital with minimum 259,148. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association and form an integral part hereof.

IV – 1 On 22 March 2004 the Board of Directors issued, pursu- DKK 1 share at a subscription price of DKK 22.30 per ant to authorisation from the general meeting, 370,880 nominal DKK 1 share and resolved simultaneously, at one warrants, each conferring a right to subscribe for nominal or more times, to increase the share capital with mini- DKK 1 share at a subscription price of DKK 7.8850 per mum nominal DKK 1,000 and maximum nominal DKK nominal DKK 1 share and resolved simultaneously, at one 100,000. The terms and conditions for the warrants have or more times, to increase the share capital with mini- been adopted as Exhibit 1 to the Articles of Association mum nominal DKK 1,000 and maximum nominal DKK and form an integral part hereof. 370,880. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association On 18 November 2005 the Board of Directors issued, pur- and form an integral part hereof. suant to authorisation from the general meeting, 120,000 warrants, each conferring a right to subscribe for nominal On 28 April 2004 the Board of Directors issued, pursuant DKK 1 share at a subscription price of DKK 22.30 per to authorisation from the general meeting, 273,000 war- nominal DKK 1 share and resolved simultaneously, at one rants, each conferring a right to subscribe for nominal or more times, to increase the share capital with mini- DKK 1 share at a subscription price of DKK 7.8850 per mum nominal DKK 1,000 and maximum nominal DKK nominal DKK 1 share and resolved simultaneously, at one 120,000. The terms and conditions for the warrants have or more times, to increase the share capital with mini- been adopted as Exhibit 1 to the Articles of Association mum nominal DKK 1,000 and maximum nominal DKK and form an integral part hereof. 273,000. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association On 12 December 2005 the Board of Directors issued, pur- and form an integral part hereof. suant to authorisation from the general meeting, 72,000 warrants, each conferring a right to subscribe for nominal On 20 June 2005 the Board of Directors issued, pursuant DKK 1 share at a subscription price of DKK 36.3725 per to authorisation from the general meeting, 30,000 war- nominal DKK 1 share and resolved simultaneously, at one rants, each conferring a right to subscribe for nominal or more times, to increase the share capital with mini- DKK 1 share at a subscription price of DKK 22.30 per mum nominal DKK 1,000 and maximum nominal DKK nominal DKK 1 share and resolved simultaneously, at one 72,000. The terms and conditions for the warrants have or more times, to increase the share capital with mini- been adopted as Exhibit 1 to the Articles of Association mum nominal DKK 1,000 and maximum nominal DKK and form an integral part hereof. 30,000. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association On 10 June 2006 the Board of Directors issued, pursuant and form an integral part hereof. to authorisation from the general meeting, 1,104,000 warrants, each conferring a right to subscribe for nominal On 20 June 2005, the Company decided, pursuant to DKK 1 share at a subscription price of DKK 36.3725 per authorisation from the general meeting, to issue 8,000 nominal DKK 1 share and resolved simultaneously, at one warrants, each conferring a right to subscribe for nominal or more times, to increase the share capital with mini- DKK 1 share at a subscription price of DKK 7.8850 per mum nominal DKK 1,000 and maximum nominal DKK nominal DKK 1 share and resolved simultaneously, at one 1,104,000. The terms and conditions for the warrants or more times, to increase the share capital with mini- have been adopted as Exhibit 2 to the Articles of Associ- mum nominal DKK 1,000 and maximum nominal DKK ation and form an integral part hereof. 8,000. The terms and conditions for the warrants have been adopted as Exhibit 1 to the Articles of Association On 7 September 2006 the Board of Directors issued, pur- and form an integral part hereof. suant to authorisation from the general meeting, 1,120,757 warrants, and resolved simultaneously, at one On 21 September 2005 the Board of Directors issued, or more times, to increase the share capital with mini- pursuant to authorisation from the general meeting, mum nominal DKK 1,000 and maximum nominal DKK 182,000 warrants, each conferring a right to subscribe for 1,120,757. The terms and conditions for the warrants nominal DKK 1 share at a subscription price of DKK 22.30 have been adopted as Exhibit 2 to the Articles of Associ- per nominal DKK 1 share and resolved simultaneously, at ation, however with the deviation set out below and form one or more times, to increase the share capital with an integral part hereof: minimum nominal DKK 1,000 and maximum nominal DKK 182,000. The terms and conditions for the warrants have a) The exercise price shall correspond to the offer price been adopted as Exhibit 1 to the Articles of Association (determined according to the bookbuilding method) and form an integral part hereof. which is used in connection with an IPO, if any, of the company. On 17 October 2005 the Board of Directors issued, pursuant to authorisation from the general meeting, 100,000 warrants, each conferring a right to subscribe for nominal

IV – 2 b) If an IPO is not carried out the exercise price shall be On 5 March 2007 the Board of Directors resolved to exer- determined as the subscription price used in connec- cise the authorisation under article 8 hereof to issue tion with the next capital increase in the company. 160,000 warrants and resolved simultaneously, at one or more times, to increase the share capital with minimum c) The warrants vest with 1/48 per month from the date nominal DKK 1,000 and maximum nominal DKK 160,000. of allocation. If an IPO is carried out prior to the end of The authorisation under article 8 hereof is therefore 2006, 1/10 of the warrants originally granted shall reduced from a denomination of 371,619 to a denomina- vest automatically at the time of the IPO and the 4 tion of 211,619. The terms and conditions of the issued year vesting period for the remaining unvested war- warrants have been adopted as Exhibit 1 to the articles of rants shall be shortened with 4.8 months. If the price association and shall form an integral part hereof. The of the company’s shares on the first anniversary date exercise price has been determined to DKK 55 and 1 war- of the company’s IPO corresponds to the offer price rant therefore confers the right to subscribe nominal DKK with addition of 50 % then a further 1/10 of the war- 1 share against cash contribution of DKK 55 and the warrants originally granted shall vest automatically and the rants vest with 1/48 per month from 5 March 2007. Fur- 4 year vesting period for the remaining unvested war- ther, the first exercise period shall be 21 days from the rants shall be further shortened by 4.8 months on the publication of the Company’s preliminary annual financial first anniversary date of the IPO. report for 2007. The last exercise period shall be 21 days after publication of the Company’s interim financial report On 1 December 2006 the Board of Directors resolved to for the first 6 months of 2013. exercise the authorisation under article 8 hereof to issue 96,000 warrants and resolved simultaneously, at one or On 9 May 2007 the Board of Directors resolved to exer- more times, to increase the share capital with minimum cise the authorisation under article 8 hereof to issue nominal DKK 1,000 and maximum nominal DKK 96,000. 248,000 warrants and resolved simultaneously, at one or The authorisation under article 8 hereof is therefore more times, to increase the share capital with minimum reduced from a denomination of 500,000 to a denomina- nominal DKK 1,000 and maximum nominal DKK248,000. tion of 404,000. The terms and conditions of the issued The authorisation under article 8 hereof is therefore warrants have been adopted as Exhibit 1 to the articles reduced from a denomination of 811,619 to a denomina- of association and shall form an integral part hereof. The tion of 563,619. The terms and conditions of the issued exercise price has been determined to DKK 44.60 and 1 warrants have been adopted as Exhibit 1 to the articles of warrant therefore confers the right to subscribe nominal association and shall form an integral part hereof. The DKK 1 share against cash contribution of DKK 44.60 and exercise price has been determined to DKK 56.50 and 1 the warrants vest with 1/48 per month from 1 December warrant therefore confers the right to subscribe nominal 2006. Further, the first exercise period shall be 21 days DKK 1 share against cash contribution of DKK 56.50 and from the publication of the Company’s preliminary annual the warrants vest with 1/48 per month from 9 May 2007. financial report for 2007. The last exercise period shall be Further, the first exercise period shall be 21 days from the 21 days after publication of the Company’s interim finan- publication of the Company’s preliminary annual financial cial report for the first 6 months of 2012. report for 2007. The last exercise period shall be 21 days after publication of the Company’s interim financial report On 22 December 2006 the Board of Directors resolved to for the first 6 months of 2013. exercise the authorisation under article 8 hereof to issue 32,381 warrants and resolved simultaneously, at one or On 21 August 2007 the Board of Directors resolved to more times, to increase the share capital with minimum exercise the authorisation under article 8 hereof to issue nominal DKK 1,000 and maximum nominal DKK 32,381. 237,000 warrants and resolved simultaneously, at one or The authorisation under article 8 hereof is therefore more times, to increase the share capital with minimum reduced from a denomination of 404,000 to a denomina- nominal DKK 1,000 and maximum nominal DKK 237,000. tion of 371,619. The terms and conditions of the issued The authorisation under article 8 hereof is therefore warrants have been adopted as Exhibit 1 to the articles of reduced from a denomination of 563,619 to a denomina- association and shall form an integral part hereof. The tion of 326,619. The terms and conditions of the issued exercise price has been determined to DKK 53 and 1 war- warrants have been adopted as Exhibit 1 to the articles of rant therefore confers the right to subscribe nominal DKK association and shall form an integral part hereof. The 1 share against cash contribution of DKK 53 and the war- exercise price has been determined to DKK 52 and 1 warrants are fully vested as of the time of grant. Further, the rant therefore confers the right to subscribe nominal DKK first exercise period shall be 21 days from the publication 1 share against cash contribution of DKK 52 and the war- of the Company’s preliminary annual financial report for rants vest with 1/48 per month from 21 August 2007. 2007. The last exercise period shall be 21 days after pub- Further, the first exercise period shall be 21 days from the lication of the Company’s interim financial report for the publication of the Company’s interim report for the first 6 first 6 months of 2012. months of 2008. The last exercise period shall be 21 days

IV – 3 after publication of the Company’s preliminary annual 220,000. The terms and conditions for the warrants have financial report for 2013. been adopted as Exhibit 1 to the Articles of Association and form an integral part hereof. On 27 November 2007 the Board of Directors resolved to exercise the authorisation under article 8 hereof to issue On the Company’s extraordinary general meeting held on 58,500 warrants and resolved simultaneously, at one or 16 December 2004, the Company decided to issue more times, to increase the share capital with minimum 32,000 warrants, each conferring a right to subscribe for nominal DKK 1,000 and maximum nominal DKK 58,500. nominal DKK 1 share at a subscription price of DKK The authorisation under article 8 hereof is therefore 7.8850 per nominal DKK 1 share and resolved simultane- reduced from a denomination of 326,619 to a denomina- ously, at one or more times, to increase the share capital tion of 268,119. The terms and conditions of the issued with minimum nominal DKK 1,000 and maximum nominal warrants have been adopted as Exhibit 1 to the articles of DKK 32,000. The terms and conditions for the warrants association and shall form an integral part hereof. The have been adopted as Exhibit 1 to the Articles of Associ- exercise price has been determined to DKK 41.50 and 1 ation and form an integral part hereof. warrant therefore confers the right to subscribe nominal DKK 1 share against cash contribution of DKK 41.50 and On the Company’s extraordinary general meeting held on the warrants vest with 1/48 per month from 27 November 17 March 2005, the Company decided to issue 214,000 2007. Further, the first exercise period shall be 21 days warrants, each conferring a right to subscribe for nominal from the publication of the Company’s preliminary annual DKK 1 share at a subscription price of DKK 7.8850 per financial report for 2008. The last exercise period shall be nominal DKK 1 share and resolved simultaneously, at one 21 days after publication of the Company’s interim report or more times, to increase the share capital with mini- for the first 6 month of 2014. mum nominal DKK 1,000 and maximum nominal DKK 214,000. The terms and conditions for the warrants have On 28 February 2008 the Board of Directors resolved to been adopted as Exhibit 1 to the Articles of Association exercise the authorisation under article 8 hereof to issue and form an integral part hereof. 185,000 warrants and resolved simultaneously, at one or more times, to increase the share capital with minimum On the Company’s extraordinary general meeting held on nominal DKK 1,000 and maximum nominal DKK 185,000. 7 November 2005, the Company decided to issue 50,000 The authorisation under article 8 hereof is therefore warrants, each conferring a right to subscribe for nominal reduced from a denomination of 268,119 to a denomina- DKK 1 share at a subscription price of DKK 22.30 per tion of 83,119. The terms and conditions of the issued nominal DKK 1 share and resolved simultaneously, at one warrants have been adopted as Exhibit 1 to the articles of or more times, to increase the share capital with mini- association and shall form an integral part hereof. The mum nominal DKK 1,000 and maximum nominal DKK exercise price has been determined to DKK 33.00 and 1 50,000. The terms and conditions for the warrants have warrant therefore confers the right to subscribe nominal been adopted as Exhibit 1 to the Articles of Association DKK 1 share against cash contribution of DKK 33.00 and and form an integral part hereof. the warrants vest with 1/48 per month from 28 February 2008. Further, the first exercise period shall be 21 days ARTICLE 7 from the publication of the Company’s preliminary annual financial report for 2008. The last exercise period shall be On 22 August 2005 the Company’s employees exercised 21 days after publication of the Company’s interim report 10,278 (41,112 after adjustment following bonus issue in for the first 6 month of 2014. July 2006) warrants and subscribed for nominal DKK 10,278 (41,112 after adjustment following bonus issue in ARTICLE 6 July 2006) shares in the Company. On 23 January 2006 the Company’s employees exercised 1,385 (5,540 after The Company has on extraordinary general meetings adjustment following bonus issue in July 2006) warrants issued in total 516,000 warrants (adjusted after the issue and subscribed for nominal DKK 1,385 (5,540 after of bonus shares in July, 2006), and determined the terms adjustment following bonus issue in July 2006) shares in and conditions as follows (all adjusted after the issue of the Company. On 12 March 2007 the Company’s employ- bonus shares in July, 2006): ees exercised 144,232 (numbers after adjustment following bonus issue in July 2006) warrants and subscribed for On the Company’s extraordinary general meeting held on nominal DKK 144,232 shares in the Company. On 10 Sep- 16 June 2004, the Company decided to issue 220,000 tember 2007 the Company’s employees exercised warrants, each conferring a right to subscribe for nominal 1,256,657 (numbers after adjustment following bonus DKK 1 share at a subscription price of DKK 7.8850 per issue in July 2006) warrants and subscribed for nominal nominal DKK 1 share and resolved simultaneously, at one DKK 1,256,657 shares in the Company. On 14 March or more times, to increase the share capital with mini- 2008 the Company’s employees exercised 334,469 (num- mum nominal DKK 1,000 and maximum nominal DKK bers after adjustment following bonus issue in July 2006)

IV – 4 warrants and subscribed for nominal DKK 334,469 shares The exercise price for warrants, which are issued pursu- in the Company. In total 36,337 (145,348 after adjust- ant to the authorisation, shall at a minimum correspond ment following bonus issue in July 2006) and 341,431 to the market price of the Company’s shares on the warrants have been annulled or have lapsed unexercised. date of issuance of the warrants. The other terms for the warrants issued pursuant to this authorisation, There are hereafter 3,926,673 outstanding warrants including payment for the warrants, duration, exercise (after adjustment following bonus issue in July 2006), periods, vesting periods, adjustments as a result of cor- which have not been exercised, of which porate changes etc. shall be determined by the Board of Directors. • 107,864 can be exercised at a subscription price of DKK 7.3825 per nominal DKK 1 shares, The Board of Directors is according to the Companies Act section 40 b, subsection 3 entitled to make such amend- • 398,142 can be exercised at a subscription price of ments to the Articles of Association which are connected DKK 7.8850 per nominal DKK 1 shares, with the issuance of warrants comprised by this clause or the exercise thereof. • 404,279 can be exercised at a subscription price of DKK 22.30 per nominal DKK 1 shares, Authorisation to increase the share capital • 884,750 can be exercised at a subscription price of DKK 36.3725 per nominal DKK 1 shares, ARTICLE 9

• 1,120,757 can be exercised at the offer price used in The Board of Directors is in the period up until 1 July 2011 connection with the Company’s listing on the stock authorised, at one or more times, to increase the Compa- exchange, ny’s share capital with up to nominal DKK 25,000,000.

• 90,000 may be exercised a price of DKK 44.60 per Capital increases according to this authorisation can be share of nominally DKK 1, carried out by the Board of Directors by way of contributions in kind (including e.g. take over of existing busi- • 32,381 may be exercised at a price of DKK 53 per nesses), conversion of debt and/or cash capital contribu- share of nominally DKK 1, tions and can be carried out with or without preemptive subscription rights for the Company’s shareholders at the • 160,000 may be exercised at a price of DKK 55 per discretion of the Board of Directors. share of nominally DKK 1, The new shares shall be negotiable shares issued to • 248,000 may be exercised at a price of DKK 56.50 per bearer, but may be recorded on name. The new shares share of nominally DKK 1, shall not have any restrictions as to their transferability and no shareholder shall be obliged to have the shares • 237,000 may be exercised at a price of DKK 52 per redeemed fully or partly. The shares shall be with the share of nominally DKK 1, same rights as the existing share capital on the date of the capital increase. The new shares shall give rights to • 58,500 may be exercised at a price of DKK 41.50 per dividends and other rights in the Company from the time share of nominally DKK 1, and which is determined by the Board of Directors in connection with the decision to increase the share capital. • 185,000 may be exercised at a price of DKK 33.00 per share of nominally DKK 1. The company’s shares ARTICLE 8 ARTICLE 10 The Board of Directors is until 23 April 2012 authorised, at one or more times, to issue up to 83,119 warrants, The Company’s shares shall be bearer shares, but may be each conferring a right to subscribe for 1 share of nomi- recorded on name in the Company’s Share Register. The nal DKK 1 in the Company, and to implement the corre- Company’s Share Register shall be kept and maintained by sponding increase of the share capital. The warrants can VP Securities Services A/S, Helgeshøj Allé 61, P.O. Box 20, be issued to employees, executive directors, board mem- 2630 Taastrup. bers, consultants and advisors to the Company and its subsidiaries without preemptive subscription rights for The Company’s shares are issued through VP Securities the Company’s shareholders. Services and dividends are in accordance with the rules applicable from time to time for VP Securities Services

IV – 5 paid by way of transfer to accounts designated by the annual statement from the Board of Directors and man- shareholders. agement, shall be available for inspection by the shareholders at the Company’s ofﬁce and shall be forwarded to The Company’s shares are negotiable instruments. all shareholders recorded in the Share Register who has requested this. No shares carry special rights. The agenda of the Annual General Meeting shall include: No shareholder shall be obliged to have shares redeemed in whole or in part by the Company or others. 1. Report on the Company’s activities during the past year.

General meetings 2. Presentation of audited annual report with auditor’s statement for approval and granting of discharge to ARTICLE 11 the Board of Directors and management.

General Meetings of the Company shall be held in Greater 3. Resolution on application of proﬁts or covering of Copenhagen. losses as per the adopted annual report.

General Meetings shall be convened with a notice of mini- 4. Election of board members and alternates, if any. mum 8 days and maximum 4 weeks by publication in minimum 1 national newspaper and by announcement on the 5. Election of auditor. Danish Commerce and Companies Agency’s IT information system. A convening notice shall, furthermore, be for- 6. Any motions from the Board of Directors and/or warded in writing by ordinary mail to all shareholders shareholders. recorded in the Share Register who have requested such notification. The convening notice shall contain the ARTICLE 14 agenda for the General Meeting. If the agenda contains proposals, the adoption of which require a qualified At General Meetings, each share of DKK 1 shall carry one majority, the convening notice shall contain a specification vote. of such proposals and their material contents. Any shareholder is entitled to attend General Meetings, ARTICLE 12 vote and exercise other shareholder rights provided that the shareholder, not later than 5 days prior to the General The Annual General Meeting shall be held within 4 Meeting, has requested the Company to issue an admis- months after the expiry of the financial year. Motions sion card. Admission cards will be issued to shareholders from shareholders shall, in order to be considered at the who are recorded in the Company’s Share Register or Annual General Meeting, be filed with the Board of Direc- against presentation of a deposit transcript from VP Secu- tors at the latest 4 weeks before the Annual General rities Services or the relevant bank. The transcript must Meeting. not be dated more than 8 days before the date of presentation. Extraordinary General Meetings shall be held according to resolutions by the General Meeting or the Board of Direc- Any shareholder is entitled to attend in person or be rep- tors or upon written request to the Board of Directors resented by proxy and may attend together with an advi- from one of the elected auditors and if a request is pre- sor. It is a condition that the representative presents a sented by shareholders representing in aggregate at least written power of attorney, which is dated. A power of 1/10 of the share capital. A request from shareholders attorney cannot be given for a period in excess of 1 year. representing at least 1/10 of the share capital shall specify the motion to be considered by the General Meeting. Members of the press shall have access to the General The General Meeting shall in this case be convened within Meetings, provided that they can present press cards. 14 days from the date the motion has been presented to the Board of Directors. ARTICLE 15

ARTICLE 13 Decisions at General Meetings shall be adopted by a simple majority of votes unless mandatory legislation or the At the latest 8 days before a General Meeting, the agenda Articles of Association provide otherwise. and the complete proposals which shall be considered by the General Meeting, and in respect to the Annual Gen- eral Meeting also the audited annual report and the

IV – 6 In case of equality of votes the motion shall be deemed Management annulled. ARTICLE 18 A Chairman appointed by the Board of Directors shall pre- side over the General Meeting. The Chairman shall settle The Board of Directors shall employ a management con- all matters relating to the legality of the General Meeting, sisting of 1-5 members to attend to the day-to-day man- the business conducted at the meeting and the voting. agement of the Company, and the Board of Directors shall Minutes of the proceedings at the General Meeting shall determine the terms and conditions of the employment. be entered in a Minute Book and the minutes shall be The management shall perform its duties in accordance signed by the Chairman. with the guidelines and directions issued by the Board of Directors.

Board of directors Guidelines for incentive pay ARTICLE 16 ARTICLE 19 The Company shall be governed by the Board of Directors, consisting of no less than 3 and no more than 9 board On the general meeting held on March 14, 2008, the members, elected by the General Meeting. The Board of Company adopted general guidelines for incentive pay to Directors is elected for one year at a time. the members of the board of directors and executive management. A number of alternate board members corresponding to the number of board members may be elected. Alternate board members shall also be elected for one year at a Authorisation to bind the company time. ARTICLE 20 Any board member shall retire from the Board of Directors at the Annual General Meeting following immediately after The Company shall be bound by the joint signatures of a his attaining the age of 70. member of the Board of Directors and a registered manager or by the signatures of the entire Board of Directors. ARTICLE 17

The Board of Directors shall elect their Chairman from Audit their own number. ARTICLE 21 The Board of Directors shall adopt its own Rules of Proce- dure and ensure that the Company conducts its activities One or more state-authorised public accountants, elected in conformity with the Articles of Association and the leg- by the General Meeting for one year at a time, shall audit islation in force at any time. the Company’s annual reports.

The Board forms a quorum when more than half of the board members are present. Board resolutions require Accounting Year/annual Report simple majority. In case of parity of votes the Chairman’s vote shall be casting. ARTICLE 21

The Chairman shall convene board meetings whenever he The Company’s accounting year shall be the calendar ﬁnds it necessary, or when any board member or member year. of management so requests. The Company’s annual report shall present a true and fair Minutes of the proceedings at board meetings shall be view of the Company’s assets and liabilities, its ﬁnancial entered into a Minute Book, which shall be signed by all position and results. present board members. •••••

As adopted latest at the board meeting held 14 March 2008.

IV – 7 2. Appendix 1 to the Articles of Association of LifeCycle Pharma A/S

Pursuant to authorization granted by the shareholders of 2.2 LifeCycle Pharma A/S (hereinafter “LifeCycle Pharma”) the The granting of warrants shall not be subject to payment Board of Directors of LifeCycle Pharma has resolved that from the Warrant Holders. the following terms and conditions shall apply to warrants granted to employees, consultants, advisors and board 2.3 members during 2003, 2004, 2005, 2006, 2007 and LifeCycle Pharma shall keep records of granted warrants 2008: and update the records at suitable intervals.

1. General 3. Vesting

1.1 3.1 LifeCycle Pharma A/S (hereinafter ”LifeCycle Pharma”) has The warrants shall be vested with 1/36 per month from decided to introduce an incentive scheme for LifeCycle the date of grant of the warrants. The board may have Pharma ’s employees, consultants, advisors and board determined a different vesting period in its decision to members (hereinafter collectively referred to as “Warrant issue warrants. Holders”). The scheme is based on issuance of options, also called warrants (hereinafter only referred to as “war- 727,364 warrants, which are issued to LifeCycle Pharma’s rants”), which are not subject to payment. employees, consultants, advisors and board members on board meetings of respectively 4 April 2003, 3 October 1.2 2003 and 19 December 2003, shall, however, be vested A warrant is a right, but not an obligation, during fixed with 1/36 per month from the date of employment. periods (exercise periods) to subscribe for new shares in LifeCycle Pharma at a price fixed in advance (the exercise 554,580 warrants, which are issued to JMM Invest ApS on price). The exercise price, which shall correspond to the board meetings of respectively 4 April 2003, 29 August market price at the date of issuance, shall be determined 2003 and 22 March 2004 shall be fully vested as from the by the board of directors. Each warrant carries the right time of the issuance. to subscribe for nominal DKK 1 share in LifeCycle Pharma at the subscription price determined by the board of 227,636 warrants which are isued to JMM Invest ApS and directors at the date of issuance. 83,244 warrants which are issued to LifeCycle Pharma’s Chief Financial Officer Michael Wolff Jensen on the board 1.3 meeting of 22 March 2004 vest fully and may, in addition Warrants will be offered to employees, consultants, advi- to the ordinary exercise periods, (in case they have not sors and board members in LifeCycle Pharma at the dis- lapsed before then) be exercised immediately before one cretion of the Board of Directors after suggestion from of the events described in clauses 5.10, 5.11 and/or 6.1 the management. The number of warrants offered to below. each individual shall be based on an individual evaluation of the Warrant Holder’s duties. It shall appear from the 3.2 individual Warrant Holder’s warrant certificate how many If the stipulated fraction does not amount to a whole warrants have been granted to the Warrant Holder and number of warrants, the number shall be rounded down what the exercise price for the warrant is. to the nearest whole number.

3.3 2. Granting/subscription of warrants Warrants shall only be vested to the extent the Warrant Holder is employed by LifeCycle Pharma, cf. however 2.1 clause 3.4 to 3.6 below. Warrant Holders who wish to subscribe the offered warrants shall sign a Warrant Certiﬁcate with this Appendix attached.

IV – 8 3.4 3.8 IIn the event that the Warrant Holder terminates the If the Warrant Holder takes leave – other than maternity employment contract and the termination is not a result leave – and the leave exceeds 60 days, the dates when of breach of the employment terms by LifeCycle Pharma, the warrants shall be vested shall be postponed by a and in the event that LifeCycle Pharma terminates the period corresponding to the duration of the leave. employment contract and the Warrant Holder has given LifeCycle Pharma good reason to do so, then the vesting of warrants shall cease from the time the employment is 4. Exercise terminated, meaning from the first day when the Warrant Holder is no longer entitled to salary from LifeCycle 4.1 Pharma, not-withstanding that the Warrant Holder has When a warrant has been vested, it may be exercised dur- actually ceased to perform his/her duties at an earlier ing the exercise periods. The exercise periods run for 21 date. In addition hereto the Warrant Holder’s right, if any, days from and including respectively the day after the to receive warrants granted after termination of the Company’s publication of i) the annual report notification employment shall cease. With respect to warrants issued – or if such notification is no published – the annual to employees of LifeCycle Pharma on the board meetings report and ii) the interim report (6 months report). The of 4 April 2003, 3 October 2003, 19 December 2003, 22 last exercise period shall run for 21 days following the March 2004, 28 April 2004 and on the General Meeting date of the publication of the interim report for the first 6 on 16 June 2004 (previous Appendices A, B and D) months of 2012. excluding warrants granted to JMM Invest ApS on the board meetings held on 4 April 2003 and 22 March 2004 As concerns 2,145,820 warrants, which are issued to JMM (previous Appendix C) the foregoing clause 3.4 applies Invest ApS and to LifeCycle Pharma’s employees, consul- regardless of the reason for termination of the employ- tants, advisors and board members on board meetings of ment contract. respectively 4 April 2003, 29 August 2003, 3 October 2003, 19 December 2003, 22 March 2004, 28 April 2004 3.5 and on the General Meeting on 16 June 2004, the last In the event that the Warrant Holder terminates the exercise period is, however, 21 days following the date of employment contract and the termination is a result of the publication of the interim report for the first 6 months breach of the employment terms by LifeCycle Pharma, or of 2011. in the event that LifeCycle Pharma terminates the employment contract and the Warrant Holder having not given 4.2 LifeCycle Pharma good reason to due so, then warrants If the last day of an exercise period is Saturday or Sunday, shall continue to vest as if the Warrantholder was still the exercise period shall also include the first weekday employed by LifeCycle Pharma. This clause 3.5 only following the stipulated period. applies to warrants issued to employees of LifeCycle Pharma on the board meetings held on 20 June 2005, 21 4.3 September 2005, 17 October 2005 og 12 December 2005 When warrants have been vested, the Warrant Holder as well as the General Meetings held on 16 December shall be free to choose, which exercise period to apply for 2004, 17 March 2005, as well as 7 November 2005(previ- the vested warrants, cf. however, clause 4.5 below ous Appendices E and F) as well as on board meetings or regarding material breach. It is, however, a condition for General Meetings held after 7 November 2005. exercise that the Warrant Holder in a given exercise period exercises warrants, which give a right to subscribe 3.6 minimum nominal DKK 1,000 shares. Should the Warrant Holder materially breach the terms of the employment, the vesting of warrants shall cease from 4.4 the date when the Warrant Holder is dismissed due to the Warrants not exercised by the Warrant Holder during the material breach. last exercise period shall become null and void without further notice or compensation or payment of any kind to 3.7 the Warrant Holder. Warrants issued to consultants, advisors and board members only vest to the extent that the consultant, advisor 4.5 or board member acts on behalf of LifeCycle Pharma as a The Warrant Holder’s exercise of warrants is in principle consultant, advisor or board member. conditional upon the Warrant Holder being employed in LifeCycle Pharma at the time when warrants are exercised. In case of termination of the employment the following shall apply:

IV – 9 a. In the event that the Warrant Holder is terminating the b. In the event that the Warrant Holder terminates the employment contract and the termination is not a employment contract and the termination is a result of result of breach of the employment by LifeCycle breach of the employment by LifeCycle Pharma, or in Pharma, and in the event that LifeCycle Pharma termi- the event that LifeCycle Pharma terminates the nates the employment contract and the Warrant Holder employment contract and the Warrant Holder have not having given LifeCycle Pharma good reason to do so,, given LifeCycle Pharma good reason to do so, the War- the Warrant Holder is ony entitled to exercise the warrant Holder is entitled to exercise the warrants as if rants vested at the time of termination. Exercise shall the Warrant Holder were still employed with LifeCycle take place during the first coming exercise period after Pharma. Exercise shall take place in accordance with termination of the employment, however the Warrant the general terms and conditions regarding exercise of Holder shall always have minimum 3 months from the warrants stipulated in clause 4.1 – 4.5. This provision date of termination to decide if warrants shall be exer- shall apply if the employment contract is terminated cised. To the extent that the first coming exercise due to your retirement This clause 5.5(b) only applies period commences within 3 months from the date of to warrants issued to employees of LifeCycle Pharma actual termination the Warrant Holder shall be entitled on the board meetings held on 20 June 2005, 21 Sep- to exercise the warrants in the exercise period follow- tember 2005, 17 October 2005 og 12 December 2005 ing the first coming exercise period. All vested warrants as well as the Geneal Meetings held on 16 December not exercised by the Warrant Holder according to this 2004, 17 March 2005 and 7 November 2005 (previous clause shall become null and void without further Appendices E and F) as well as on board meetings or notice or compensation or payment of any kind. General Meetings held after 7 November 2005.

With respect to warrants issued to employees of Life- c. If the employment is terminated as a consequence of Cycle Pharma on the board meetings of 4 April 2003, 3 summary dismissal of the Warrant Holder on grounds October 2003, 19 December 2003, 22 March 2004, 28 of material breach, all warrants not exercised at that April 2004 and on the General Meeting on 16 June time shall become null and void without notice or com- 2004 (previous Appendices A, B and D) excluding war- pensation.As concerns warrants issued to employees rants granted to JMM Invest ApS on the board meetings of LifeCycle Pharma on the board meetings held on 20 held on 4 April 2003 and 22 March 2004 (previous June 2005, 21 September 2005, 17 October 2005 og Appendix C), clause 4.5 (a) above applies in all 12 December 2005 as well as the Geneal Meetings instance where the employment of the warrantholder held on 16 December 2004, 17 March 2005, and 7 by LifeCycle Pharma ceases including also as a result of November 2005 (previous appendices E and F) as well illness, death, disability, retirement or death, cf. how- as on board meetings or General Meetings held after 7 ever, clause 4.5(d) in ﬁne, below. November 2005 then if the material breach is committed prior to the dismissal the vesting and the right to As concerns 554,580 warrants, which are issued to exercise warrants shall be deemed to have ceased at JMM Invest ApS on the board meetings held on 4 April the time of the material breach. The Warrant Holder 2003, 29 August 2003 and 22 Marts 2004 (previous shall in this case, after demand from LifeCycle Pharma, Appendix C), clause 4.5(b) above does not apply. be obligated to sell to LifeCycle Pharma shares which Rather, Clause 4.5(a) as written below applies: have been subscribed though exercise of warrants, after the date of the material breach. The shares shall In the event that the CEO’s employment is terminated be sold at a price corresponding to the subscription by LifeCycle Pharma due to a material breach by the price paid by the Warrant Holder. CEO of the employment contract or in the event that the CEO should terminate the employment contract d. As concerns warrants issued to employeesof LifeCycle without this being due to a breach of the employment Pharma on the board meetings held on 20 June 2005, conract by the LifeCycle Pharma, the Warrant Holder 21 September 2005, 17 October 2005 og 12 Decem- shall (irrespective of clauses 3.1 – 3.3.), to the extent ber 2005 as well as the Geneal Meetings held on 16 that it wishes to exercise warrants, exercise the war- December 2004, 17 March 2005, and 7 November rants in the ﬁrst coming exercise periode after the date 2005 (previous appendices E and F) as well as on of the CEO’s actual cessation of the employment. If board meetings or General Meetings held after 7 warrants are not exercise accordingly the warrant shall November 2005 then if the employment is terminated automatically be deemed null and void without any due to the death of the Warrant Holder all warrants compensation or payment of any kind to the Warrant not exercised by the Warrant Holder shall become null Holder. and void. For all warrants issued during 2003 – 2005 as well as on board meetings or General Meetings held after 7 November 2005, however, the LifeCycle Pharma Board of Directors may decide to enable the estate of the Warrant Holder to exercise the issued warrants

IV – 10 whether they have been vested at the time of the The exercise price for each warrant not yet exercised shall death or not on the condition that exercise be effected be multiplied by the factor: during the ﬁrst exercise period commencing after the death. A α = (A+B) 4.6 If the The Warrant Holder is a consultant, advisor or and the number of warrants not yet exercised shall be board member the exercise of warrants is in principle multiplied by the factor: conditional upon the Warrant Holder being connected to LifeCycle Pharma in this capacity at the time when war- 1 rants are exercised. In case that the consultant’s, advi- α sor’s or board member’s relationship with LifeCycle Pharma should cease without this being attributable to where: the Warrant Holder’s actions or omissions the Warrant Holder shall be entitled to exercise vested warrants in the A = the nominal share capital before issue of bonus exercise periods set forth in clause 4.1 above. shares, and B = the total nominal value of bonus shares. LifeCycle Pharma’s board of directors is in the event of a listing of the company’s shares on a stock exchange enti- If the adjusted exercise price and/or the adjusted number tled at its discretion to change the exercise periods in of shares does not amount to whole numbers, each num- order to coordinate these with applicable rules for insider ber shall be rounded down to the nearest whole number. trading. 5.5 Changes of capital at a price different from the market 5. Adjustment of warrants price:

5.1 If it is decided to increase or reduce the share capital in Changes in LifeCycle Pharma’s capital structure causing a LifeCycle Pharma at a price below the market price (in change of the potential possibility of gain attached to a relation to capital decreases also above the market price), warrant shall require an adjustment of the warrants. warrants shall be adjusted as follows:

5.2 The exercise price for each non-exercised warrant shall be Adjustments shall be made so that the potential possibil- multiplied by the factor: ity of gain attached to a warrant in so far as possible shall remain the same before and after the occurrence of an (A × K) + (B × T) α = incident causing the adjustment. The adjustment shall be (A+B) × K carried out with the assistance of LifeCycle Pharma’s external advisor. The adjustment may be effected either and the number of non-exercised warrants shall be multi- by increase or reduction of the number of shares that can plied by the factor: be issued in accordance with a warrant and/or an increase or reduction of the exercise price. 1 α 5.3 Warrants shall not be adjusted as a result of LifeCycle where: Pharma’s issue of employee shares, share options and/or warrants as part of employee share option schemes A = nominal share capital before the change in capital (including options to Directors, advisors and consultants) B = nominal change in the share capital as well as future exercise of such options and/or war- K = market price of the share prior to change in the rants. Warrants shall, furthermore, not be adjusted as a share capital, and result of capital increases following the Warrant Holders’ T = subscription price/reduction price in relation to the and others’ exercise of warrants in LifeCycle Pharma. change in the share capital

5.4 If the adjusted exercise price and/or the adjusted number Bonus shares of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. If it is decided to issue bonus shares in LifeCycle Pharma, warrants shall be adjusted as follows:

IV – 11 5.6 5.8 Changes in the nominal value of each individual share: Other changes in LifeCycle Pharma’s capital position:

If it is decided to change the nominal value of the shares, In the event of other changes in LifeCycle Pharma’s capi- warrants shall be adjusted as follows: tal position causing changes to the financial value of warrants, warrants shall (save as provided above) be adjusted The exercise price for each non-exercised warrant shall be in order to ensure that the changes do not influence the multiplied by the factor: financial value of the warrants.

A The calculation method to be applied to the adjustment α = B shall be decided by an external advisor appointed by the Board of Directors. and the number of non-exercised warrants shall be multiplied by the factor: It is emphasized that increase or reduction of LifeCycle Pharma’s share capital at market price does not lead to 1 an adjustment of the subscription price or the number of α shares to be subscribed. where: 5.9 Winding-up: A = nominal value of each share after the change, and B = nominal value of each share before the change Should LifeCycle Pharma be liquidated, the vesting time for all non-exercised warrants shall be changed so that If the adjusted exercise price and/or the adjusted number the Warrant Holder may exercise his/her warrants in an of shares does not amount to whole numbers, each num- extraordinary exercise period immediately preceding the ber shall be rounded down to the nearest whole number. relevant transaction.

5.7 5.10 Payment of dividend: Merger and split:

If it is decided to pay dividends, the part of the dividends If LifeCycle Pharma merges as the continuing company, exceeding 10 per cent of the equity capital shall lead to warrants shall remain unaffected unless, in connection adjustment of the exercise price according to the follow- with the merger, the capital is increased at a price other ing formula: than the market price and in that case warrants shall be adjusted in accordance with clause 5.5. U – Umax E2 = E1 – A If LifeCycle Pharma merges as the terminating company or is split, the continuing company may choose one of the where: following possibilities:

E2 = the adjusted exercise price • The Warrant Holder may exercise all non-exercised war- E1 = the original exercise price rants (inclusive of warrants not yet vested) immediately U = dividends paid out before the merger/split, or Umax = 10 per cent of the equity capital, and A = total number of shares in LifeCycle Pharma • New share instruments in the continuing company/ companies of a corresponding ﬁnancial pre-tax value If the adjusted exercise price does not amount to a whole shall replace the warrants. On split the continuing number, it shall be rounded down to the nearest whole companies may decide in which company/companies number. the Warrant Holders shall receive the new share instruments. The equity capital that shall form the basis of the adjustment above is the equity capital stipulated in the Annual 5.11 Report to be adopted at the General Meeting where divi- Sale and exchange of shares: dends shall be approved before allocation hereof has been made in the Annual Report. If more than 50 per cent of the share capital in LifeCycle Pharma is sold or is part of a share swap, LifeCycle Pharma may choose one of the following possibilities:

IV – 12 • The warrant scheme shall continue unchanged. 7. Subscription for new shares by exercise of warrants • The Warrant Holder may exercise all non-exercised warrants that are not declared null and void (inclusive of 7.1 warrants not yet vested) immediately before the sale/ Subscription for new shares by exercise of issued war- swap of shares. Furthermore, the Warrant Holder shall rants must be made through submission by the Warrant undertake an obligation to sell the acquired shares on Holder no later than the last day of the relevant exercise the same conditions as the other shareholders (when period at 16:00 to LifeCycle Pharma of an exercise notice selling). drafted by LifeCycle Pharma. The exercise notice shall be ﬁlled in with all information. The company must have • Share instruments in the acquiring company of a corre- received the exercise price for the new shares, payable as sponding pre-tax value shall replace the issued war- a cash contribution, by the last day of the relevant exer- rants. cise period.

5.12 7.2 Common provisions regarding 5.9-5.11: If the limitation period set forth in clause 7.1 expires as a result of LifeCycle Pharma not having received the ﬁlled-in If one of the transactions mentioned above is made, Life- exercise notice or the payment by 16:00 of the last day Cycle Pharma shall inform the Warrant Holder hereof by of the exercise period, the subscription shall be deemed written notice. Upon receipt of the written notice, the invalid, and in this situation the Warrant Holder shall not Warrant Holder shall have 2 weeks – in cases where the be considered as having exercised his/her warrants for a Warrant Holder may extraordinarily exercise warrants, see possible subsequent exercise period. 5.9-5.11 – to inform LifeCycle Pharma in writing whether he/she will make use of the offer. If the Warrant Holder 7.3 has not answered LifeCycle Pharma in writing within the Warrants not exercised by the Warrant Holder during the limit of 2 weeks or fails to pay within the ﬁxed time, war- last exercise period, cf. above, shall become null and void rants shall become null and void without further notice or without notice or compensation. compensation. 7.4 The warrant holder’s rights in connection with decisions When the capital increase caused by exercise of warrants made by any competent company body, see 5.9-5.11, has been registered with the Danish Commerce and Com- shall be contingent on subsequent registration of the rel- panies Agency, the Warrant Holder shall receive proof of evant decision with the Danish Commerce and Companies his shareholding in LifeCycle Pharma. Agency provided that registration is a condition of its validity. 8. The rights of new shares

• the shares shall be negotiable instruments,

• the shares are issued through the VP Securities Ser- vices

• no shares shall carry special rights.

IV – 13 • no shareholder shall be obliged to have his shares 10. Tax implications redeemed in whole or in part by the Company or others. 10.1 • LifeCycle Pharma’s shareholders shall hold no pre-emp- The tax implications connected to the Warrant Holder’s tive rights to subscribe for warrants; subscription for or exercise of warrants shall be of no concern to LifeCycle Pharma. • LifeCycle Pharma’s shareholders shall hold no pre-emptive rights to subscribe for new shares issued on the basis of warrants; 11. Governing Law and Venue

• new shares issued as a result of exercise of warrants 11.1 shall carry the right to dividend and other rights in Acceptance of warrants, the terms and conditions thereto LifeCycle Pharma from the time of registration of the and the exercise, and terms and conditions for future capital increase with the Danish Commerce and Com- subscription for shares in LifeCycle Pharma shall be gov- panies Agency. erned by Danish law.

8.2 11.2 LifeCycle Pharma shall pay all costs connected with grant- Any disagreement between the Warrant Holder and Life- ing of warrants and later exercise thereof. LifeCycle Phar- Cycle Pharma in relation to the understanding or imple- ma’s costs in connection with issue of warrants and the mentation of the warrant scheme shall be settled amica- related capital increase are estimated to DKK 45,000. bly by negotiation between the parties.

11.3 9. Other provisons If the parties fail to reach consensus, any disputes shall be settled in accordance with “Rules for hearing of cases 9.1 in the Copenhagen Arbitration”. The Copenhagen Arbitra- The value attached to the subscription right shall not be tion shall appoint one arbitrator who shall settle the dis- included in the Warrant Holder’s salary, and any agree- pute according to Danish law. ment made between the Warrant Holder and LifeCycle Pharma regarding pension or the like shall therefore not 11.4 include the value of the Warrant Holder’s warrants. In the event of discrepancies between the English and the Danish text the Danish text shall prevail. 9.2 If a relevant authority should establish that the issuance and/or exercise of warrants shall be considered a salary allowance with the consequence that LifeCycle Pharma shall pay holiday allowance or the like to the Warrant Holder on the basis of the value of warrants, the subscription price shall be increased in order to compensate LifeCycle Pharma for the amounts that have been paid to the Warrant Holder in the form of holiday allowance or the like.

9.3 The fact that LifeCycle Pharma offers warrants to Warrant Holders shall not in any way obligate LifeCycle Pharma to maintain the employment.

IV – 14 3. Appendix 2 to the Articles of Association of LifeCycle Pharma A/S

Pursuant to authorisation in the articles of association 2.2 the Board of Directors has resolved that the following The subscription of warrants granted shall not be subject terms and conditions shall apply to warrants which are to payment from the Warrant Holders. granted to the management, other employees, consultants, advisors and board members according to the 2.3 authorisation: LifeCycle Pharma shall keep records of granted warrants and update the records on a continuous basis.

1. General 3. Vesting 1.1 LifeCycle Pharma A/S (hereinafter ”LifeCycle Pharma”) has 3.1 decided to introduce an incentive scheme for LifeCycle The provisions of this clause 3 regarding vesting of war- Pharma ’s management, other employees, consultants, rants shall not apply to warrants, which are granted to advisors and board members (hereinafter collectively such Warrant Holders (hereinafter referred to as “Salaried referred to as “Warrant Holders”). The scheme is based Employees”) who are comprised by the Danish Act on use on issuance of options, also called warrants (hereinafter of purchase rights and subscription rights regarding only referred to as “warrants”), which are not subject to shares etc. in employments (in Danish: lov om brug af payment. køberet eller tegningsret til aktier m.v. i ansættelses- forhold) (the “Stock Option Act”). Warrants granted to 1.2 Salaried Employees are deemed vested in full upon the A warrant is a right, but not an obligation, during fixed time of grant; however, the exercise of the warrants is periods (exercise periods) to subscribe for new shares in subject to restrictions laid down in clause 4. LifeCycle Pharma at a price fixed in advance (the exercise price). Each warrant carries the right to subscribe for 3.2 nominal DKK 1 share in LifeCycle Pharma against payment The warrants shall be vested with 1/48 per month from 1 of an exercise price of DKK 36.3725. January 2006, however from 1 November 2005 for War- rant Holders who are board members, irrespective of the 1.3 date of grant of the warrants covered by this Appendix G. Warrants will be offered to the management, other employees, consultants, advisors and board members in 3.3 LifeCycle Pharma as decided by the general meeting and/ If the stipulated fraction does not amount to a whole or at the discretion of the Board of Directors after sug- number of warrants, the number shall be rounded down gestion from the management. The number of warrants to the nearest whole number. offered to each individual shall be based on an individual evaluation of the Warrant Holder’s duties. It shall appear 3.4 from the individual Warrant Holder’s warrant certificate Warrants shall only be vested to the extent the Warrant how many warrants have been granted to the Warrant Holder is employed by LifeCycle Pharma, cf. however Holder and what the exercise price for the warrant is. clause 3.5 to 3.7 below.

3.5 2. Granting/subscription of warrants In the event that the Warrant Holder terminates the employment contract and in the event that LifeCycle 2.1 Pharma terminates the employment contract (notwith- Warrant Holders who wish to subscribe the offered war- standing the reason), then the vesting of warrants shall rants shall sign a Warrant Certiﬁcate with this Appendix G cease from the time the Warrant Holder actually resigns attached and a Shareholders Agreement regulating the from his position, notwithstanding whether the Warrant relationship between the Warrant Holders and LifeCycle Holder still is entitled to salary from LifeCycle Pharma. In Pharma’s other shareholders. addition hereto the Warrant Holder’s right, if any, to receive warrants granted after termination of the employment shall cease.

IV – 15 3.6 Where: Should the Warrant Holder materially breach the terms of the employment, the vesting of warrants shall cease from A = the registered number of shares of nominally DKK 1 the date when the Warrant Holder is dismissed due to the in LifeCycle Pharma before exercise of warrants and material breach. other convertible share instruments

3.7 B = the number of shares of nominally DKK 1 being the Warrants issued to consultants, advisors and board mem- result of the full exercise of all issued but not yet bers only vest to the extent that the consultant, advisor vested and/or exercised warrants and other share or board member acts on behalf of LifeCycle Pharma as a instruments entitling the holder to subscribe for consultant, advisor or board member, meaning that the shares in LifeCycle Pharma vesting of warrants shall cease from the time where (a) the consultant/adviser informs LifeCycle Pharma or C = the highest value of (i) the price per share, which receives information from LifeCycle Pharma that the party was used in connection with the issue of D-shares concerned shall no longer be a consultant/advisor to Life- in LifeCycle Pharma in December 2005 or (ii) the Cycle Pharma or such earlier date when it becomes appar- highest subscription price per share, which is used ent to the consultant/advisor that the relationship is ter- in connection with a later issue of shares. minated and where (b) the board member resigns from the board of directors. If the Change of Control Event occurs after listing of Life- Cycle Pharma’s shares on the stock exchange, and the 3.8 Change of Control Event is carried out on the basis of a If the Warrant Holder takes leave – other than maternity total value of LifeCycle Pharma, which is leave – and the leave exceeds 60 days, the dates when the warrants shall be vested shall be postponed by a • higher than 150 % of the valuation of LifeCycle period corresponding to the entire duration of the leave. Pharma, which was established in connection with the listing of the shares on the stock exchange based on 3.9 the IPO-price per share (hereinafter referred to as the If, prior to listing of LifeCycle Pharma’s shares on the “IPO-Value”), then 100 % of the Warrant Holder’s war- stock exchange, rants shall vest in full upon the occurrence of the Change of Control Event. (i) LifeCycle Pharma mergers with another company, or the share capital of LifeCycle Pharma is part of a • between 100 % and 150 % (inclusive) of the IPO- share swap, on conditions whereby the then current Value, then 75 % of the Warrant Holder’s warrants, shareholders of LifeCycle Pharma do not control a which have not yet vested, shall vest in full upon the majority of the shares of the company resulting occurrence of the Change of Control Event. from the merger or the share swap; or The provisions of this clause 3.9 shall only apply to War- (ii) more than 50 % of the share capital in LifeCycle rant Holders who, upon the grant of the warrants, are Pharma is sold to a third party registered members of LifeCycle Pharma’s management board and Board of Directors and to LifeCycle Pharma’s (each of the above events hereinafter referred to as a Chief Scientiﬁc Ofﬁcer, Vice President (Medical Affairs) and “Change of Control Event”), then the Warrant Holder’s Vice President (Commercial Operations). warrants shall vest as set out below:

If the Change of Control Event is carried out at a total 4. Exercise price for the shares in LifeCycle Pharma, which is 4.1 • > 1,25 * (A + B ) * C When a warrant has been vested, it may be exercised during the exercise periods. The exercise periods run for 21 then 100 % of the Warrant Holder’s warrants shall vest days from and including respectively the day after the in full upon the occurrence of the Change of Control Company’s publication of i) the annual report notification Event. – or if such notification is no published – the annual report and ii) the interim report (6 months report). The • > (A + B ) * C but ≤ 1,25 * (A + B ) * C first exercise period shall run from the publication of the annual report notification for 2007 and the last exercise then 75 % of the Warrant Holder’s warrants shall vest period shall run for 21 days following the date of the in full upon the occurrence of the Change of Control publication of the interim report for the first 6 months of Event. 2012.

IV – 16 4.2 b. In the event that the Warrant Holder terminates the If the last day of an exercise period is Saturday or Sunday, employment contract and the termination is a result of the exercise period shall also include the first weekday a material breach of the employment by LifeCycle following the stipulated period. Pharma, or in the event that LifeCycle Pharma terminates the employment contract and the Warrant Holder 4.3 have not given LifeCycle Pharma good reason to do so, When warrants have been vested, the Warrant Holder the Warrant Holder is entitled to exercise the warrants shall be free to choose, which exercise period to apply for vested as if the Warrant Holder were still employed the vested warrants, cf. however, clause 4.5 (concerning with LifeCycle Pharma. Exercise shall take place in Warrant Holders who are not Salaried Employees) and accordance with the general terms and conditions clause 4.6 (concerning Warrant Holders who are Salaried regarding exercise of warrants stipulated in clause 4.1 Employees) below. It is, however, a condition for exercise – 4.5. This provision shall apply if the employment that the Warrant Holder in a given exercise period exer- contract is terminated due to your retirement. cises warrants, which give a right to subscribe minimum nominal DKK 1,000 shares. c. If the employment is terminated as a consequence of summary dismissal of the Warrant Holder on grounds 4.4 of material breach, all warrants not exercised at that Warrants not exercised by the Warrant Holder during the time shall become null and void without notice or com- last exercise period, cf. above, shall become null and void pensation If the material breach is committed prior to without further notice or compensation or payment of the dismissal the vesting and the right to exercise war- any kind to the Warrant Holder. rants shall be deemed to have ceased at the time of the material breach. LifeCycle Pharm is in this case 4.5 entitled to decide that the Warrant Holder, after This clause 4.5 only applies to Warrant Holders who are demand from LifeCycle Pharma, shall be obligated to not Salaried Employees. sell to LifeCycle Pharma shares which have been subscribed though exercise of warrants, after the date of The Warrant Holder’s exercise of warrants is in principle the material breach. The shares shall be sold at a price conditional upon the Warrant Holder being employed in corresponding to the subscription price paid by the LifeCycle Pharma at the time when warrants are exer- Warrant Holder. cised. In case of termination of the employment the following shall apply: d. If the employment is terminated due to the death of the Warrant Holder all warrants not exercised by the a. In the event that the Warrant Holder is terminating the Warrant Holder shall become null and void. However, employment contract and the termination is not a the LifeCycle Pharma Board of Directors may grant an result of a material breach of the employment by Life- exemption from this provision to enable the estate of Cycle Pharma, and in the event that LifeCycle Pharma the Warrant Holder to exercise the issued warrants terminates the employment contract and the Warrant whether they have been vested at the time of the Holder having given LifeCycle Pharma good reason to death or not on the condition that exercise be effected do so,, the Warrant Holder is only entitled to exercise during the first exercise period commencing after the the warrants vested at the time of termination. Exer- death. cise shall take place during the first coming exercise period after termination of the employment, however 4.6 the Warrant Holder shall always have minimum 3 This clause 4.6 only applies to Warrant Holders who are months from the date of termination to decide if war- Salaried Employees. rants shall be exercised. To the extent that the first coming exercise period commences within 3 months In case the Salaried Employee resigns from his/her posi- from the date of actual termination the Warrant Holder tion in the Company due to his/her own termination or shall be entitled to exercise the warrants in the exer- due to the Company’s termination of the Salaried Employ- cise period following the first coming exercise period. ee’s employment with the Company, the Salaried Employ- All vested warrants not exercised by the Warrant ee’s position will be as laid down in sections 4 and 5 of Holder according to this clause shall become null and the Stock Option Act. void without further notice or compensation or payment of any kind.

IV – 17 This implies the following: In case that the consultant’s, advisor’s or board member’s relationship with LifeCycle Pharma should cease a. In the event that the Salaried Employee resigns from without the consultant, advisor or board member having his/her position in the Company due to his/her own given good reason for this, the consultant/advisor/board termination of the employment, the Salaried Employ- member is, however, entitled to exercise the warrants as ee’s right to exercise warrants that have been granted if the party concerned was still a consultant, advisor/ to him/her will lapse. Warrants, where the exercise board member. Exercise shall take place in accordance period has commenced prior to the termination of the with the general terms and conditions regarding exercise employment, may, however, be exercised in the period of warrants stipulated in clauses 4.1 – 4.4 and 4.7. until termination of the employment. b. In the event that the Salaried Employee resigns from 5. Adjustment of warrants his/her position in the Company due to the Company’s termination of the employment, which is not due to 5.1 breach on the part of the Salaried Employee, the Sala- Changes in LifeCycle Pharma’s capital structure causing a ried Employee will remain entitled to all warrants that change of the potential possibility of gain attached to a have been granted to him/her, irrespective of whether warrant shall require an adjustment of the warrants. the exercise period has commenced prior to the termination of his/her employment. The same applies in 5.2 those instances mentioned in the Stock Option Act, Adjustments shall be made so that the potential possibil- section 4(2) (resignation due to age/retirement) and ity of gain attached to a warrant in so far as possible shall section 4(3) (resignation due to material breach on the remain the same before and after the occurrence of an part of the Company). incident causing the adjustment. The adjustment shall be carried out with the assistance of LifeCycle Pharma’s c. In the event that the Salaried Employee resigns from external advisor. The adjustment may be effected either his/her position in the Company due to the Company’s by increase or reduction of the number of shares that can termination of his/her employment, which is due to be issued in accordance with a warrant and/or an increase breach on the part of the Salaried Employee, or the or reduction of the exercise price. Salaried Employee is justly dismissed by the Company, the Salaried Employee’s right to all warrants that have 5.3 been granted to him/her will lapse upon termination of Warrants shall not be adjusted as a result of LifeCycle the employment. Warrants, where the exercise period Pharma’s issue of employee shares, share options and/or has commenced prior to the termination of the Salaried warrants as part of employee share option schemes Employee’s employment, may however be exercised in (including options to Directors, advisors and consultants) the period until the termination of the employment. as well as future exercise of such options and/or warrants. Warrants shall, furthermore, not be adjusted as a 4.7 result of capital increases following the Warrant Holders’ If the Warrant Holder is a consultant, advisor or board and others’ exercise of warrants in LifeCycle Pharma. member the exercise of warrants is in principle conditional upon the Warrant Holder being connected to Life- 5.4 Cycle Pharma in this capacity at the time when warrants Bonus shares are exercised. In case that the consultant’s/advisor’s/ board member’s relationship with LifeCycle Pharma If it is decided to issue bonus shares in LifeCycle Pharma, should cease (cf. clause 3.7), the Warrant Holder is only warrants shall be adjusted as follows: entitled to exercise the warrants vested at the time of termination. Exercise shall take place during the first com- The exercise price for each warrant not yet exercised shall ing exercise period after termination of the relationship, be multiplied by the factor: however the consultant/advisor/board member shall always have minimum 3 months from the date of termi- A α = nation to decide if warrants shall be exercised. To the (A+B) extent that the first coming exercise period commences within 3 months from the date of actual termination the consultant/advisor/board member shall be entitled to exercise the warrants in the exercise period following the first coming exercise period. All vested warrants not exercised by the consultant/advisor/board member according to this clause shall become null and void without further notice or compensation or payment of any kind.

IV – 18 and the number of warrants not yet exercised shall be 5.6 multiplied by the factor: Changes in the nominal value of each individual share:

1 If it is decided to change the nominal value of the shares, α warrants shall be adjusted as follows: where: The exercise price for each non-exercised warrant shall be multiplied by the factor: A = the nominal share capital before issue of bonus shares, and A α = B B = the total nominal value of bonus shares. the number of non-exercised warrants shall be multiplied If the adjusted exercise price and/or the adjusted number by the factor: of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. 1 α 5.5 Changes of capital at a price different from the market where: price: A = nominal value of each share after the change, and If it is decided to increase or reduce the share capital in B = nominal value of each share before the change LifeCycle Pharma at a price below the market price (in relation to capital decreases also above the market price), If the adjusted exercise price and/or the adjusted number warrants shall be adjusted as follows: of shares does not amount to whole numbers, each number shall be rounded down to the nearest whole number. The exercise price for each non-exercised warrant shall be multiplied by the factor: 5.7 Payment of dividend: (A × K) + (B × T) α = (A+B) × K If it is decided to pay dividends, the part of the dividends exceeding 10 per cent of the equity capital shall lead to and the number of non-exercised warrants shall be multi- adjustment of the exercise price according to the follow- plied by the factor: ing formula:

1 U – Umax E2 = E1 – α A where: where:

A = nominal share capital before the change in capital E2 = the adjusted exercise price B = nominal change in the share capital E1 = the original exercise price K = market price of the share prior to change in the U = dividends paid out share capital, and Umax = 10 per cent of the equity capital, and T = subscription price/reduction price in relation to the A = total number of shares in LifeCycle Pharma change in the share capital If the adjusted exercise price does not amount to a whole If the adjusted exercise price and/or the adjusted number number, it shall be rounded down to the nearest whole of shares does not amount to whole numbers, each num- number. ber shall be rounded down to the nearest whole number. The equity capital that shall form the basis of the adjustment above is the equity capital stipulated in the Annual Report to be adopted at the General Meeting where dividends shall be approved before allocation hereof has been made in the Annual Report.

IV – 19 5.8 In the event that continuing company has chosen option Other changes in LifeCycle Pharma’s capital position (b) and the continuing company terminates the employment contract of a Warrant Holder, who is not a Salaried In the event of other changes in LifeCycle Pharma’s capi- Employee, within 6 months from the final completion of tal position causing changes to the financial value of war- the merger/split and the Warrant Holder having not given rants, warrants shall (save as provided above) be adjusted the company good reason to do so, then the Warrant in order to ensure that the changes do not influence the Holder may exercise all non-exercised warrants (including financial value of the warrants. warrants not yet vested) during the first coming exercise period after termination of the employment, however the The calculation method to be applied to the adjustment Warrant Holder shall always have minimum 3 months from shall be decided by an external advisor appointed by the the date of the termination to decide if warrants shall be Board of Directors. exercised. To the extent that the first coming exercise period commences within 3 months from the date of It is emphasized that increase or reduction of LifeCycle actual termination the Warrant Holder shall be entitled to Pharma’s share capital at market price does not lead to exercise the warrants in the exercise period following the an adjustment of the subscription price or the number of first coming exercise period. All warrants not exercised by shares to be subscribed. the Warrant Holder according to this clause shall become null and void without further notice or compensation or 5.9 payment of any kind. Winding-up 5.11 Should LifeCycle Pharma be liquidated, the vesting time Sale and exchange of shares for all non-exercised warrants shall be changed so that the Warrant Holder may exercise his/her warrants in an If more than 50 per cent of the share capital in LifeCycle extraordinary exercise period immediately preceding the Pharma is sold or is part of a share swap, LifeCycle relevant transaction. Pharma may choose one of the following possibilities:

5.10 a. The warrant scheme shall continue unchanged (includ- Merger and split ing any modified vesting pursuant to clause 3.9 with respect to Warrant Holders who are not Salaried If LifeCycle Pharma merges as the continuing company, Employees). warrants shall remain unaffected unless, in connection with the merger, the capital is increased at a price other b. The Warrant Holder is given the opportunity to exercise than the market price and in that case warrants shall be all non-exercised warrants that are not declared null adjusted in accordance with clause 5.5. and void (inclusive of all warrants not yet vested; clause 3.9 does not apply) immediately before the If LifeCycle Pharma merges as the terminating company or sale/swap of shares with the effect that the Warrant is split, the continuing company may choose one of the Holder at the same time becomes obliged to sell the following possibilities: shares acquired by the Warrant Holder on the same conditions as the other shareholders (when selling). a. The Warrant Holder is give the opportunity to exercise all non-exercised warrants (inclusive of all warrants not c. Share instruments in the acquiring company of a corre- yet vested; clause 3.9 does not apply) immediately sponding pre-tax value shall replace the issued war- before the merger/split, or rants (including any modified vesting pursuant to clause 3.9 with respect to Warrant Holders who are not b. New share instruments in the continuing company/ Salaried Employees). companies of a corresponding financial pre-tax value shall replace the warrants (including any modified vest- In the event that LifeCycle Pharma has chosen option (a) ing pursuant to clause 3.9 with respect to Warrant or (c) and LifeCycle Pharma terminates employment con- Holders who are not Salaried Employees). On split the tract of a Warrant Holder, who is not a Salaried Employee, continuing companies may decide in which company/ within 6 months from the completion of the sale/swap of companies the Warrant Holders shall receive the new shares and the Warrant Holder having not given LifeCycle share instruments. Pharma good reason to do so, then the provisions of clause 5.10, last paragraph shall apply.

IV – 20 5.12 7.2 Common provisions regarding 5.9-5.11: If the limitation period set forth in clause 7.1 expires as a result of LifeCycle Pharma not having received the ﬁlled-in If one of the transactions mentioned above is made, Life- exercise notice or the payment by 16:00 of the last day Cycle Pharma shall inform the Warrant Holder hereof by of the exercise period, the subscription shall be deemed written notice. Upon receipt of the written notice, the invalid, and in this situation the Warrant Holder shall not Warrant Holder shall have 2 weeks – in cases where the be considered as having exercised his/her warrants for a Warrant Holder may extraordinarily exercise warrants, see possible subsequent exercise period. 5.9-5.11 – to inform LifeCycle Pharma in writing whether he/she will make use of the offer. If the Warrant Holder 7.3 has not answered LifeCycle Pharma in writing within the Warrants not exercised by the Warrant Holder during the limit of 2 weeks or fails to pay within the ﬁxed time, war- last exercise period, cf. above, shall become null and void rants shall become null and void without further notice or without notice or compensation. compensation. 7.4 The warrant holder’s rights in connection with decisions When the capital increase caused by exercise of warrants made by any competent company body, see 5.9-5.11, has been registered with the Danish Commerce and Com- shall be contingent on subsequent registration of the rel- panies Agency, the Warrant Holder shall receive proof of evant decision with the Danish Commerce and Companies his shareholding in LifeCycle Pharma. Agency provided that registration is a condition of its validity. 8. The rights of new shares

6. Transfer, pledge and enforcement 8.1 New shares subscribed for by exercise of issued warrants 6.1 shall in every respect have the same rights as the present Issued warrants shall not be subject to charging orders, shares in LifeCycle Pharma in accordance with the Articles transfer of any kind, including in connection with division of Association for LifeCycle Pharma in force from time to of property on divorce or legal separation, for ownership time. For the time being, the following shall apply: or as security without the consent of the Board of Direc- tors. The Warrant Holder’s warrants may, however, be • the value of each share shall be DKK 1 or multiples transferred to the Warrant Holder’s spouse/cohabitant hereof, and/or issue in the event of the Warrant Holder’s death. The Warrant Holder is obliged to ensure (e.g. by a mar- • the shares are bearer shares, but may be recorded on riage settlement duly registered with the court of Århus) name in the Company’s share register, that issued warrants are the Warrant Holder’s separate estate (in Danish: særeje) in the event of separation or • the shares shall be negotiable instruments, divorce. • the shares are issued through the VP Securities Ser- vices 7. Subscription for new shares by exercise of warrants • no shares shall carry special rights.

7.1 • no shareholder shall be obliged to have his shares Subscription for new shares by exercise of issued war- redeemed in whole or in part by the Company or oth- rants must be made through submission by the Warrant ers. Holder no later than the last day of the relevant exercise period at 16:00 to LifeCycle Pharma’s board of directors • LifeCycle Pharma’s shareholders shall hold no pre-emp- represented by the management of an exercise notice tive rights to subscribe for warrants; drafted by LifeCycle Pharma. The exercise notice shall be ﬁlled in with all information. The company must have • LifeCycle Pharma’s shareholders shall hold no pre-emp- received the exercise price for the new shares, payable as tive rights to subscribe for new shares issued on the a cash contribution, by the last day of the relevant exer- basis of warrants; cise period.

IV – 21 • new shares issued as a result of exercise of warrants 10. Governing Law and Venue shall carry the right to dividend and other rights in LifeCycle Pharma from the time of registration of the 10.1 capital increase with the Danish Commerce and Com- Acceptance of warrants, the terms and conditions thereto panies Agency. and the exercise, and terms and conditions for future subscription for shares in LifeCycle Pharma shall be gov- 8.2 erned by Danish law. LifeCycle Pharma shall pay all costs connected with granting of warrants and later exercise thereof. LifeCycle Phar- 10.2 ma’s costs in connection with issue of warrants and the Any disagreement between the Warrant Holder and Life- related capital increase are estimated to DKK 25,000. Cycle Pharma in relation to the understanding or implementation of the warrant scheme shall be settled amica- bly by negotiation between the parties. 9. Other provisons 10.3 9.1 If the parties fail to reach consensus, any disputes shall The value attached to the subscription right shall not be be settled in accordance with “Rules for hearing of cases included in the Warrant Holder’s salary and is not in the Copenhagen Arbitration”. The Copenhagen Arbitra- included in the basis for calculation of holiday allowance tion shall appoint one arbitrator who shall settle the dis- and holiday supplement (in Danish: feriegodtgørelse og pute according to Danish law. ferietillæg), and any agreement made between the War- rant Holder and LifeCycle Pharma regarding pension or 10.4 the like shall therefore not include the value of the War- In the event of discrepancies between the English and rant Holder’s warrants. the Danish text the Danish text shall prevail.

9.2 If a relevant authority should establish that the issuance and/or exercise of warrants shall be considered a salary allowance with the consequence that LifeCycle Pharma shall pay holiday allowance or the like to the Warrant Holder on the basis of the value of warrants, the subscription price shall be increased in order to compensate LifeCycle Pharma for the amounts that have been paid to the Warrant Holder in the form of holiday allowance or the like.

9.3 The fact that LifeCycle Pharma offers warrants to Warrant Holders shall not in any way obligate LifeCycle Pharma to maintain the employment.

IV – 22

The Company

LifeCycle Pharma A/S Kogle Allé 4, DK-2970 Hørsholm, Denmark

Joint Global Coordinators and Lead Managers

Danske Markets (a division of Danske Bank A/S) UBS Limited Holmens Kanal 2-12, DK-1092 Copenhagen K 1 Finsbury Avenue, London, EC2M 2PP Denmark United Kingdom

Legal Advisers To the Company

As to U.S. law As to Danish law

Satterlee Stephens Burke & Burke LLP Mazanti-Andersen, Korsø Jensen & Partnere 230 Park Avenue, New York, NY 10169, U.S. St. Kongensgade 69, DK-1264 Copenhagen K, Denmark

To the Joint Global Coordinators and Lead Managers

As to U.S. law As to Danish law

Davis Polk & Wardwell Kromann Reumert 99 Gresham Street, London EC2V 7NG, Sundkrogsgade 5, DK-2100 Copenhagen Ø, United Kingdom Denmark

Auditors

PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab Strandvejen 44, DK-2900 Hellerup, Denmark

Issuing Agent

Danske Bank A/S Holmens Kanal 2-12, DK-1092 Copenhagen K, Denmark

Registrar of Shareholders

VP Securities Services A/S Helgeshøj Allé 61, DK-2630 Taastrup, Denmark LifeCycle Pharma A/S Kogle Allé 4 DK-2970 Hørsholm Denmark Telefon +45 70 33 33 00 Facsimile +45 36 13 03 19 CVR nr: 26527767 www.lifecyclepharma.com