Financial Report 20 ANNUAL REPORT 20 The purpose of Idorsia is to discover, develop and commercialize innovative medicines to help more patients. We have more ideas, we see more opportunities and we want to transform the horizon of therapeutic options. 2 Further parts of the Idorsia Annual Report 2020 Contents Be prepared Business for more Report 20 ANNUAL REPORT 20 Curious to learn more? Reach out to us. Investor Relations Idorsia Pharmaceuticals Ltd Hegenheimermattweg 91 4123 Allschwil Switzerland Phone +41 58 844 10 10 [email protected] © Idorsia Pharmaceuticals Ltd 2020 www.idorsia.com Be prepared Governance for more Report 20 ANNUAL REPORT 20 Curious to learn more? Reach out to us. Investor Relations Idorsia Pharmaceuticals Ltd Hegenheimermattweg 91 4123 Allschwil Switzerland Phone +41 58 844 10 10 [email protected] © Idorsia Pharmaceuticals Ltd 2020 www.idorsia.com Be prepared Compensation 4 Financial Review for more Report 20 ANNUAL REPORT 20 Curious to learn more? Reach out to us. Investor Relations Idorsia Pharmaceuticals Ltd Hegenheimermattweg 91 4123 Allschwil Switzerland Phone +41 58 844 10 10 [email protected] © Idorsia Pharmaceuticals Ltd 2020 www.idorsia.com Consolidated 15 Financial Statements Holding Company 60 Financial Statements Contents navigation > Contents Financial Review Consolidated Financial Statements Holding Company Financial Statements 3 Financial Review Contents navigation Idorsia measures and reports its non-GAAP operating performance, which management believes more Contents accurately reflects the underlying business performance. The Group believes that these non-GAAP financial > Financial Review measurements provide useful supplementary information for investors. These non-GAAP measures Consolidated are reported in addition to, not as a substitute for, Financial Statements US GAAP financial performance. Holding Company Rounding differences may occur Financial Statements nm = not meaningful 4 Idorsia’s key numbers Profit and loss Twelve months ended Dec 31, Fourth quarter US GAAP Non-GAAP US GAAP Non-GAAP (in H milions, eept PS) 2020 2019 2020 2019 2020 2019 2020 2019 Net revenue Produc saes - - - - - - - - onrac reenue – royaies - - - - - - - - onrac reenue – milesones 72 24 72 24 6 4 6 4 onrac reenue – oers - - - - - - - - Operating expenses Resear and deveomen (381) (439) (355) (412) (91) (112) (108) (105) Sein, genera and adminisraie (101) (68) (90) (58) (37) (20) (34) (17) Net results erain inome oss) (411) (482) (372) (446) (123) (127) (136) (118) Ne inome oss) (445) (494) (392) (448) (137) (142) (148) (121) Basi S (3.11) (3.76) (2.75) (3.41) (0.85) (1.08) (0.92) (0.92) iued PS (3.11) (3.76) (2.75) (3.41) (0.85) (1.08) (0.92) (0.92) Cash flow Liquidity and indebtedness Twelve months ended Dec 31, Fourth quarter Dec 31, Sep 30, Dec 31, (in H milions) 2020 2019 2020 2019 (in H milions) 2020 2020 2019 Cash flow Liquidity erain as o (365) (462) (123) (126) as and as euiaens 141 148 263 as raise 843 - 520 - Sor-term deosis 867 668 476 aia expendiure (9) (19) (4) (6) Lon-erm deosis 192 - - Contents Total liquidity 1,200 816 739 navigation Shares Indebtedness Contents Dec 31, Sep 30, Dec 31, oneribe oan 388 386 380 (in milions) 2020 2020 2019 oneribe bonds 199 199 199 > Financial Review Oter finania debt - - - Consolidated Share count Total indebtedness 587 585 579 Issued ommon sares 166.5 142.7 131.2 Financial Statements Equiy deriaies 44.6 44.6 44.6 Holding Company Equiy insrumens 7.9 7.8 7.1 Financial Statements Total potential issued shares 219.0 195.1 183.0 5 Revenue Operating expenses Revenue Operating expenses Twelve months ended Dec 31, Fourth quarter Twelve months ended Dec 31, Fourth quarter (in H ilins) 2020 2019 2020 2019 (in H ilins) 2020 2019 2020 2019 Revenue Operating expenses Pruct saes - - - - Research 107 115 32 29 Contract revenue - raties - - - - evepent 238 297 76 76 Contract revenue - ilestnes 72 24 6 4 Seing 27 9 14 3 Contract revenue - ters - - - - enera an ainistrative 63 49 20 14 US GAAP revenue 72 24 6 4 iestnes pai 9 - 0 - Non-GAAP operating expenses 444 470 142 122 epreiatin an artiatin 19 20 5 5 Revenue of CHF 72 m consisted ontract revenue recognied in Sare-ase compensatin 19 17 5 4 connetion it te ollaoration agreements it eurorine Oter - - (23) - (iense and researc evelopment colaboration H 50 m), Other operating expenses 38 37 (14) 9 US GAAP operating expenses 482 506 128 131 Janssen apritentan HF 11 m), Rche research ollaoration: CHF 6 m), Mocia aridorexant Japan H ) an antera (assignent vaorlone iense: H illion US GAA perating expenses CHF 482 m comprised nn-GAA operating expenses CHF 444 m, epreiation and amortiation CHF 19 m an share-based compensation CHF 19 m. Te arua o H relating t te xovan aritratin a been ully reversed in following te ina award granted on ebruary , 2021 y te arbitra triuna ismissing te aim rmer xovan sareholders aeging tat te aquisitin tein by onson Jonson and/or te emerger triggered te aeerated payment o a utstaning miestnes ainy relating to asentan ee te 19 – Commitents, contingent iaiities and guarantees te Contents Consiated inania tatements). navigation Contents > Financial Review Consolidated Financial Statements Holding Company Financial Statements 6 Research and development (“R&D”) expenses Selling, general and administrative (“SG&A”) expenses Twelve months ended Dec 31, Fourth quarter Twelve months ended Dec 31, Fourth quarter (in H ilins) 2020 2019 2020 2019 (in H ilins) 2020 2019 2020 2019 R&D expenses SG&A expenses Research 107 115 32 29 Seing 27 9 14 3 evepent 238 297 76 76 enera an ainistrative 63 49 20 14 iestnes pai 9 - (0) - Non-GAAP SG&A expenses 90 58 34 17 Non-GAAP R&D expenses 355 412 108 105 epreiatin an artiatin 4 3 1 1 epreiatin an artiatin 15 16 4 4 Sare-ase pensatin 8 6 2 1 Sare-ase pensatin 11 11 2 3 Oter - - - - Oter - - (23) - US GAAP SG&A expenses 101 68 37 20 US GAAP R&D expenses 381 439 91 112 n-GAA expenses aunted to CHF 90 m comprising H n-GAA research expenses aunted t CHF 107 m, mprising 27 r ommeria ativities, HF 31 m r inforation systems biolg CHF 26 m), heistry HF 34 m) and precinica ativities an HF 31 m or oter support untions (CHF 47 m). n-GAA evelopment expenses aunted to CHF 238 m comprising CH 8 m r inia ativities inuding CHF 85 m study costs, ainy riven by ate stage studies for aridorexant clasentan, enerimod, ucerastat apritentan and HF 100 m r paraeutia development ativities inuding CHF 47 m r drug sustane and H for rug prdut). n-GAA iestnes aunted t CH or a payment t ertain xovan vendors ho assigned teir potentia miestnes reating t Clasentan see te 3 – Liensing agreements o te Consiated inania tatements). Contents navigation Contents > Financial Review Consolidated Financial Statements Holding Company Financial Statements 7 Operating results Financial results on-GAA and S GAA operating reslts Financial reslts Twelve months ended Dec 31, Fourth quarter Twelve months ended Dec 31, Fourth quarter (in HF millins) 2020 2019 2020 2019 (in HF illins) 2020 2019 2020 2019 Operating results Financial results Contract reenues 72 24 6 4 Interest ince expense), net (1) (0) (0) (1) Operating expenses (444) (470) (142) (122) Oter financial ince expense), (16) (0) (11) (3) Non-GAAP operating income net (372) (446) (136) (118) (loss) Non-GAAP financial income (18) (1) (11) (4) (expense) Operating results ccretin expense (8) (8) (2) (2) Contract reenues 72 24 6 4 ain (lss) n aretale securities (13) 6 (6) (3) US GAAP financial income Operating expenses (482) (506) (128) (131) (39) (3) (19) (9) US GAAP operating income (loss) (411) (482) (123) (127) (expense) The F 3 m ifference eteen te nn-GAA and te AAP n-GAA inancial expense ainly consists currency excange operating lss related t depreciatin an artiation HF 19 m rate lsses n U unds el t cer uture expenses. Te an sare-based cmpensatin HF 19 m CHF iference eteen te nn-GAA and te U AA inancial result inclues te nn-cas accretin epense CHF m relating t te conertile ebt and an unrealied lss HF n maretable securities. Contents navigation Contents > Financial Review Consolidated Financial Statements Holding Company Financial Statements 8 Income tax Net results, EPS and shares ncome tax et results Twelve months ended Dec 31, Fourth quarter Twelve months ended Dec 31, Fourth quarter (n H mllons) 2020 2019 2020 2019 (n H mllons) 2020 2019 2020 2019 Income tax Non-GAAP operating income (372) (446) (136) (118) Income tax enet expense) (2) (1) (0) 1 (loss) Non-GAAP tax benefit (expense) (2) (1) (0) 1 Financal ncome expense) (18) (1) (11) (4) ther tax enet expense) 6 (8) 5 (7) Income tax enet expense) (2) (1) (0) 1 US GAAP income tax benefit Non-GAAP net income (loss) (392) (448) (148) (121) 4 (9) 5 (6) (expense) US GAAP operating income (loss) (411) (482) (123) (127) Financal ncome expense) (39) (3) (19) (9) The reconcilaton beteen non-GAP and US GAP ncome tax Income tax enet expense) 4 (9) 5 (6) expense results manly rom the tax effect on share-based US GAAP net income (loss) (445) (495) (137) (142) Net loss attrutale to compensation H m). 0 1 0 0 noncontrolln nterests US GAAP net income (loss) Both S- and non-GAP tax expense ncluded an ncrease o the attributable to Idorsia's (445) (494) (137) (142) shareholders aluation allowance o H 55 m, manly related to deferred tax assets arsin rom operatin losses hch can be carred orard or years.