HALF YEAR REPORT 2011 .

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(1)WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. HALF YEAR REPORT 2011..

(2) CONTENTS ACTELION HALF YEAR REPORT 2011. FINANCIAL REPORT. 03. 09. 03 Building a long-term Business. 10 Unaudited Interim Consolidated Income Statements 11 Unaudited Interim Consolidated Balance Sheets 12 Unaudited Interim Consolidated Statements of Cash Flows. 13 Unaudited Interim Consolidated Statements of Changes in Shareholders’ Equity 14 Notes to the Unaudited Interim Consolidated Financial Statements. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. MANAGEMENT REVIEW.

(3) Management Review Financial Statements. 3. BUILDING A LONG-TERM BUSINESS The performance of our products in the marketplace and the output of our research and development efforts – our pipeline – are the direct results of the ambition set out over a decade ago: to build a long-term business for Actelion with a diverse product and disease portfolio, transforming medical understanding in difficult-to-treat d iseases into tangible results for patients, shareholders, and employees. To achieve this goal, we have taken m easures to maximize the value generated by our current product portfolio and to build and develop our business beyond our core disease areas. In the first half of 2011 Actelion made progress in many of these areas.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. MANAGEMENT REVIEW.

(4) Management Review Financial Statements. 4. SOUND COMMERCIAL PERFORMANCE In a highly challenging environment for the global pharmaceutical industry, and for Swiss companies in particular due to the continuously appreciating Swiss Franc, Actelion delivered a solid commercial performance for the first six months of 2011. However, our financial results are affected by one-off costs and provisions associated with the ongoing Asahi litigation in California. Product sales totaled CHF 890.1 million. Compared to the first half of 2010, this represents an increase of 10% in local currency terms but a decrease of 5% in our reporting currency, highlighting the challenging currency environment. In the US, we expect to benefit for the full year 2011 from an increase in the gross to net sales ratio as a result of lower rebates and discounts. This benefit – effectively a price increase – will, for the remainder of this year, somewhat offset the impact of change in the pulmonary arterial hypertension (PAH) competitive landscape. European markets, despite pharmaceutical spend restrictions and price erosion due to government pressure, delivered continued growth of 10% in local currencies, with all of this growth coming from patient demand. In Japan the rate of new patient recruitment decreased slightly due to the consequences of the natural disaster; overall sales growth, however, is still very strong, with an increase of 24% in local currencies, exclusively from patient demand. Key Financial Data in CHF million. Net Revenues. Results HY 2011. Results HY 2010. in %. 969.9. 1,024.9. (5). Operating Expenses. 1,193.0. 698.2. 71. Operating Income/ (Loss). (223.1). 326.6. –. 346.5. 405.1. (14). (262.3). 254.2. –. (2.20). 2.10. –. 119.306. 121.314. –. Non-GAAP EBIT Net Income Diluted EPS in CHF No of shares in calculation. We have built enduring professional relationships with the PAH community based on a strong data-driven approach. The fact that we have performed breakthrough clinical studies in various patient populations and delivered high quality data has catapulted Tracleer ® to a leadership role in PAH. It is this evidence base that has maintained our leadership role and which allows us to maximize Tracleer in all approved indications and etiologies. Tracleer sales increased by 8% in local currencies (CHF –6%) to reach CHF 789.2 million: growth was mostly driven by Japan and Europe. The PAH landscape has recently changed in the US with a competing product receiving an update to its label. It is difficult to estimate the full impact of the label change at this time; however, although we have seen expansion in the endothelin receptor antagonist market, the label change for the competitor will affect sales growth moving forward.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. MAXIMIZING THE VALUE OF TRACLEER.

(5) Management Review Financial Statements. 5. ACTELION IN PAH BEYOND TRACLEER Today Actelion is more than Tracleer in PAH. Less than five years ago we set ourselves the goal to build a business in PAH beyond Tracleer, the results of which are Ventavis® and Veletri® on the market in the US. In addition we are developing macitentan and selexipag, two compounds that we believe can become the next generation of breakthrough medicines for PAH, with the potential to change the course of the disease. Ventavis continues – despite increased competition in the inhaled prostacyclin market – to be an important contributor to profitability in the US. In addition, we are very pleased with the growth trajectory as well as with the feedback from Veletri prescribers, with sales increasing from USD 2.7 million in the first quarter of 2011 to USD 4.0 million in the second quarter, a total of USD 6.7 million for the first half of 2011. Macitentan, a tissue targeting, highly potent, once-a-day oral endothelin receptor antagonist with improved tolerability is currently being evaluated in the Phase III study, SERAPHIN, and is scheduled to conclude in the first half of 2012. We hope that this placebo-controlled, randomized event-driven study in over 700 patients (some having been followed for more than three years) will be the first oral therapy to show long-term morbidity / mortality outcomes. During its plenary meeting on 06-08 July 2011, the Committee for Orphan Medicinal Products (COMP) at the European Medicines Agency (EMA) adopted a positive opinion recommending macitentan for the treatment of pulmonary arterial hypertension for designation as orphan medicinal product to the European Commission. This recommendation is based on well-justified assumptions that macitentan will be of significant benefit compared to the existing authorized medicinal products or methods at the time of designation. In the United States, the orphan drug designation was granted in September 2009. The Phase III GRIPHON study with Selexipag, a first-in-class IP receptor agonist, will follow a similar study design to SERAPHIN, with the same ultimate goal – to show long-term benefit for patients with PAH. Once again, Actelion has implemented the breakthrough study designs which are required to develop effective oral therapies today.. Actelion has proven that the company has the expertise and infrastructure to successfully register and market a drug beyond PAH. The treatment of digital ulcers in patients suffering from systemic sclerosis continues to be a major growth driver for Tracleer outside the US, as more patients benefit from this therapeutic approach. We have also been successful with Zavesca® in Type 1 Gaucher disease (GD1) and, very importantly, with this molecule becoming the first approved therapy in Niemann-Pick Type C (NP-C) in Europe and several other markets. In the first six months of 2011, Zavesca posted a solid performance, with growth of 10% in local currencies (CHF –3%). The continued increase of NP-C patients on therapy is somewhat masked by some GD1 patients returning to enzyme replacement therapy following a shortage of that therapy in 2010. In addition to our marketing expertise, in the first half of 2011, we also demonstrated our ability to turn scientific know-how into breakthrough tangible results. In May, Actelion became the first company to announce a Phase II study where CRTH2 antagonists can bring clinically relevant benefit to patients suffering from allergic rhinitis – this on top of being the first to demonstrate that this mechanism of action has therapeutic potential in asthma. We also imminently expect the Phase II results of ponesimod, a selective S1P1 receptor agonist, for the treatment of relapsing-remitting multiple sclerosis. If positive, we expect to commence a Phase III program by early 2012. We are also making progress with the development of our antibiotic (INN: cadazolid): though recruitment is slower than anticipated, Clostridium difficile infection study results are now expected in the first half of 2012.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. ACTELION BEYOND PAH.

(6) Management Review Financial Statements. 6. MANAGING THE BOTTOM LINE Total net revenues amounted to CHF 969.9 million, an increase of 8% in local currencies. Continued underlying product sales growth was the driving factor as contract revenues decreased slightly, with the final recognition of the remaining deferred revenue from the ongoing orexin collaboration with GSK in the first quarter of this year. During the first six months of 2011 research and development costs decreased by 2%. This decrease reflects the company’s commitment to managing the bottom line, especially when considering the ongoing progress in several projects from our clinical and preclinical pipeline. Selling, general and administration (SG&A) costs for the first six months of the year amounted to CHF 357.4 million, an increase of 4%. The legal expenses related to the Asahi Kasei Pharma Corp. litigation are included in SG&A and effectively account entirely for this increase. Given current exchange rates, should the judgment award remain at USD 577 million the company will likely record an US GAAP operating loss for 2011. On 4 May 2011 a jury in the US awarded Asahi up to USD 577 million in compensatory and punitive damages. Posttrial motions are still before the Judge and, until such time as a judgment is available, the company will make a provision for the full award. The company and its external advisors believe that the verdict is neither supported by the facts nor is it correct as a matter of law. The company is therefore confident that there are significant grounds for a successful appeal, which will be filed in due course. Since charges related to the judgment are exceptional and would distort comparison, they are not included in Non-GAAP EBIT. As a measure of performance we are satisfied with a Non-GAAP EBIT increase of 8% in local currencies reaching CHF 346.5 million. However, the judgment has affected the bottom line, resulting in a net loss of CHF 262.3 million, or a loss of CHF 2.20 per share. The first half of 2011 has shown the importance of building a solid base of reliable revenue generation, providing continued funding for the important opportunities in our pipeline. With the financial performance to-date, we remain confident in the full year 2011 guidance. We believe that total product sales in local currencies will increase in the mid single-digit range and Non-GAAP EBIT also on a local currency basis will grow in the low double-digit range.. At this year’s Annual General Meeting (AGM) on 5 May 2011, Actelion’s shareholders voted to approve the Board’s recommendation that Actelion become the first biotech to offer a regular dividend payment. As a result of their support, our first dividend was paid at CHF 0.80 per registered share five days later. Another result of the shareholders support at the AGM was the approval of a share repurchase program of up to CHF 800 million over the next three years. The company’s strong cash flow generation and balance sheet have allowed it to initiate this program despite the provision made with regard to the Asahi litigation.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. RETURNING VALUE TO SHAREHOLDERS.

(7) Management Review Financial Statements. 7. STRENGTHENED CORPORATE LEADERSHIP AND GOVERNANCE As an initial result of shareholder support at the AGM, two highly experienced industry executives, Dr. Jean-Pierre Garnier and Mr. Robert Bertolini, have joined Actelion’s Board. Both have immediately taken up activities on the relevant Committees, with Dr. Garnier adding his considerable experience to the Nominating and Governance Committee as well as to the Compensation Committee and Mr. Bertolini joining the Finance and Audit Committee. Their experience and expertise, combined with the current talents of the Actelion Board, will provide our company with the right leadership and governance to deliver future success. Additionally Dr. Garnier was nominated by the Board to succeed the current Chairman, Mr. Robert E. Cawthorn when he retires next year. Delivering on our strategy is only possible when we provide the right environment for efficient decision-making and action. Given the company’s rapid growth and the ever-increasing complexity of the healthcare environment, we adapted the structure of Actelion’s leadership team, bringing the changes into effect in June 2011. The creation of the position of Chief Operating Officer (COO) – appointed to Otto Schwarz previously the Head of Business Strategy & Operations – will increase the drive for excellence – a growing demand in these times of operational challenges – while allowing the CEO function to focus even more on strategic matters. At the same time, the company streamlined the membership of its major decision-making bodies such as the Actelion Executive Committee, to ensure transparent, efficient and productive decision-making as well as effective execution.. Phase. Compound. Indication. Study. Results expected. IV. Bosentan. Combination bosentan and sildenafil in PAH. COMPASS-2. –. III. Macitentan. Pulmonary arterial hypertension. SERAPHIN. H1 2012. III. Olesoxime*. Amyotrophic lateral sclerosis. –. H2 2011. III. Selexipag. Pulmonary arterial hypertension. GRIPHON. 2013. II. Cadazolid. Clostridium difficile infection. –. H1 2012. II. CRTH2 Receptor Antoganist. Asthma. –. 2012. II. CRTH2 Receptor Antagonist. Allergic rhinitis. –. Complete. II. Macitentan. Idiopathic pulmonary fibrosis. MUSIC. H2 2011. II. Miglustat. Cystic fibrosis. –. –. II. Ponesimod. Multiple Sclerosis. –. H2 2011. II. Ponesimod. Plaque psoriasis. –. –. II. Cardiovascular. Essential hypertension. –. –. I. S1P1 Receptor Agonist. Immunological disorders. –. –. *option to acquire. In the second half of 2011, we are looking forward to further pipeline progression, with results from several studies anticipated. As mentioned, the Phase II study with ponesimod in multiple sclerosis will reach a conclusion in the coming weeks. This will be followed by macitentan reporting the Phase II results for the exploratory study in idiopathic pulmonary fibrosis – eagerly anticipated since, in addition to determining the future development path in this indication, the study will generate additional safety and tolerability data at the 10 mg dose ahead of the conclusion of the Phase III study in PAH expected next year.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. ANTICIPATED DELIVERY OF PIPELINE RESULTS.

(8) Management Review Financial Statements. 8. By the end of the year we also expect the results of the study with olesoxime – conducted by Trophos – as a treatment for amyotrophic lateral sclerosis (Lou Gehrig’s disease). The results of the study will then determine whether we exercise our option to acquire privately–held Trophos. As demonstrated by the business development opportunity entered into with Trophos, we continue the ongoing effort to identify and evaluate innovation from external sources – not excluding acquisitions – that complement our business approach. Importantly we also expect to deliver several new compounds from our drug discovery efforts into the clinic before the end of the year. We look forward to updating you on our progress.. Andrew J. Oakley CFO. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Dr. Jean-Paul Clozel CEO.

(9) Management Review Financial Statements. 9. Actelion has delivered a solid operating performance for the first six months of 2011 with total revenues of CHF 969.9 million representing growth of 8% in local currencies. Operating expenses amounted to CHF 1,193.0 million which results in a Non-GAAP EBIT of CHF 346.5 million, an increase of 8% in local currencies. On a US GAAP basis, due to the Asahi litigation provision of CHF 485.2 million, the company reported an operating loss for the first half of 2011 of CHF 223.1 million and a net loss of CHF 262.3 million. This translates into a loss per share of CHF 2.20. In this increasingly difficult environment and unforeseen events excluded, the company remains confident that it will meet the guidance for the full year 2011 with product sales increasing in the mid-single digit range, Cash OPEX flat and Non-GAAP EBIT increasing in the low double digit range, all in local currencies.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. FINANCIAL REPORT.

(10) Management Review Financial Statements. 10. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENTS Six months ended June 30, (in CHF thousands, except per share amounts). Notes. 2011. 2010. (unaudited). (unaudited). Net revenue Product sales. 11. 890,134. 933,210. Contract revenue. 11. 79,783. 91,653. 969,917. 1,024,863. Cost of sales. 101,676. 100,742. Research and development. 228,729. 233,229. Selling, general and administration. 357,433. 342,612. 19,933. 21,647. Total net revenue. Amortization of acquired intangible assets Litigation provision. 485,205. –. Total operating expenses. 8. 1,192,976. 698,230. Operating income (loss). (223,059). 326,633. Interest income. 4,599. 1,543. Interest expense. (6,937). (3,567). Amortization of debt discount and issuance costs. 7. Other financial income (expense), net Income (Loss) before income tax expense Income tax expense Net income (loss). Basic net income (loss) per share. 5. Weighted-average number of common shares (in thousands) Diluted net income (loss) per share. (9,631). (9,225). 1,757. (30,181). (233,271). 285,203. (28,996). (30,997). (262,267). 254,206. (2.20). 2.14. 119,306. 118,912. (2.20). 2.10. 119,306. 121,314. Research and development. 17,654. 16,181. Selling, general and administration. 25,464. 25,003. Total stock-based compensation. 43,118. 41,184. Weighted-average number of common shares (in thousands) 1. 5. Includes employee stock option costs as follows:. The accompanying notes form an integral part of these consolidated financial statements. . Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Operating expenses 1.

(11) Management Review Financial Statements. 11. CONSOLIDATED BALANCE SHEETS (in CHF thousands, except number of shares). Notes. June 30, 2011. December 31, 2010. (unaudited). (audited). 1,238,206. 1,195,945. 150,000. 250,000. Assets Current assets Cash and cash equivalents. 6. Short-term deposits Derivative instruments. 7. 27,292. 35,248. Marketable securities. 7. 15,651. –. Trade and other receivables, net. 520,824. 520,032. Inventories. 59,436. 59,325. Other current assets. 32,306. 43,062. 6,540. 8,000. 2,050,255. 2,111,612. 417,587. 398,956. 18,789. 19,836. Deferred tax assets, current portion Total current assets Property, plant and equipment, net Other non-current assets Intangible assets, net. 211,505. 240,554. Goodwill. 3. 72,378. 75,004. Long-term financial assets. 7. 25,971. 26,706. 40,428. 48,352. 2,836,913. 2,921,020. Trade and other payables. 102,146. 104,275. Accrued expenses. 289,719. 387,345. 6,829. 21,877. Deferred tax assets, less current portion Total assets Liabilities and shareholders' equity. Deferred revenue, current portion. 4. Other current liabilities Short-term financial debt. 22,415. 38,835. 452,886. 444,040. 873,995. 996,372. 4. 7,894. 72,301. 3/8. 501,224. 20,729. 31,499. 36,071. 7. Total current liabilities Deferred revenue, less current portion Other non-current liabilities Pension liability Deferred tax liabilities Total liabilities Shareholders' equity. 372. 343. 1,414,984. 1,125,816. 10. Common shares (par value CHF 0.50 per share, authorized 185,856,410 and 248,019,960 shares; issued 130,320,984 and 129,824,575 shares in 2011 and 2010, respectively). 65,160. 64,912. Additional paid-in capital. 1,168,811. 1,209,857. Accumulated profit. 1,010,550. 1,272,817. Treasury shares, at cost. (627,779). (592,461). Accumulated other comprehensive income (loss). (194,813). (159,921). Total shareholders' equity. 1,421,929. 1,795,204. Total liabilities and shareholders' equity. 2,836,913. 2,921,020. The accompanying notes form an integral part of these consolidated financial statements.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Current liabilities.

(12) Management Review Financial Statements. 12. CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 2011. 2010. (unaudited). (unaudited). (262,267). 254,206. Depreciation and amortization. 41,190. 37,325. Stock-based compensation, incl. treasury shares to members of the Board of Directors. 45,275. 41,791. (847). (1,287). (79,439). (91,573). (Gains) Losses on derivative instruments. 7,969. 11,653. (Gains) Losses on marketable securities. 3,377. –. Amortization of debt discount and issuance costs. 9,631. 9,225. (51,768). (71,841). (in CHF thousands). Cash flow from operating activities Net income Adjustments to reconcile net income to net cash provided from operating activities:. Excess tax benefits from share-based payment arrangements Deferred revenue. Trade and other receivables Inventories. (128). 2,162. Other current assets. 8,399. 13,871. 153. 924. Other assets Trade and other payables. (2,377). (12,669). Accrued expenses. (67,521). (127,106). Other liabilities. 502,689. 1,453. Changes in other operating cash flow items. (1,976). 6,081. Net cash flow provided by operating activities. 152,360. 74,215. (50,000). (90,193). Cash flow from investing activities Purchase of short-term and long-term deposits Proceeds from short-term and long-term deposits. 150,000. 320,000. Purchase of property, plant and equipment. (52,799). (50,760). Proceeds from marketable securities Purchase of intangible assets Acquisition of a business, incl. deferred consideration payments Net cash flow provided by (used in) investing activities. 2,346. –. (3,046). (4,755). (18,375). (42,933). 28,126. 131,359. Dividend payment Payments on capital leases Proceeds from exercise of stock options, net of expense Purchase of treasury shares Excess tax benefits from share-based payment arrangements Net cash flow provided by (used in) financing activities Net effect of exchange rates on cash and cash equivalents Net change in cash and cash equivalents. (95,316). –. (42). (69). 11,165. 16,366. (37,698). (25,000). 847. 1,287. (121,044). (7,416). (17,181). (436). 42,261. 197,722. Cash and cash equivalents at beginning of period. 1,195,945. 877,325. Cash and cash equivalents at end of period. 1,238,206. 1,075,047. The accompanying notes form an intergral part of these consolidated financial statements.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Cash flow from financing activities.

(13) Management Review Financial Statements. 13. CONSOLIDATED EQUITY STATEMENTS. Shares. Amount. Additional paid-in-capital. Accumulated profit. Treasury shares. Accum. other comprehensive income (loss). 118,770,610. 64,264. 1,098,840. 882,260. (558,227). (79,486). Common shares (in CHF thousands, except number of shares). At January 1, 2010. Shareholders' equity. 1,407,651. Comprehensive income (loss) net of tax: Net income (loss). 254,206. 254,206. Other comprehensive income (loss): Currency translation adjustment. (11,971). Unrealized gain (loss) on marketable securities. (867). Comprehensive income (loss). Transactions in treasury shares. 774,137. 387. (515,534). 799. 799. 15,979. 16,366. (118). Stock-based compensation expense At June 30, 2010 (unaudited). (867) 241,368. Excess tax benefit and underrealization from share-based payment arrangement Exercise of stock options. (11,971). (24,275). (24,393). 41,075 119,029,213. 64,651. 1,156,575. 41,075 1,136,466. (582,502). (92,324). 1,682,866. Comprehensive income (loss) net of tax: Net income (loss). 136,351. 136,351. Other comprehensive income (loss): Currency translation adjustment. (49,913). (49,913). Not recognized components of net periodic benefit costs. (18,663). (18,663). 979. 979. Unrealized gain (loss) on marketable securities Comprehensive income (loss). 68,754. Excess tax benefit and underrealization from share-based payment arrangement Exercise of stock options Transactions in treasury shares. 523,214. 261. (186,000). 207 11,481. –. Stock-based compensation expense At December 31, 2010 (audited). 207 11,220 (9,959). (9,959). 41,855 119,366,427. 64,912. 1,209,857. 41,855 1,272,817. (592,461). (159,921). 1,795,204. Net income (loss). (262,267). (262,267). Other comprehensive income (loss): Currency translation adjustment. (34,158). Unrealized gain (loss) on marketable securities. (734). Comprehensive income (loss). Transactions in treasury shares. 496,409. 248. (720,450). Dividend payment 119,142,386. 516. 516. 10,917. 11,165. (223). Stock-based compensation expense At June 30, 2011 (unaudited). (734) (297,159). Excess tax benefit and underrealization from share-based payment arrangement Exercise of stock options. (34,158). 65,160. (35,318). (35,541). 43,060. 43,060. (95,316). (95,316). 1,168,811. 1,010,550. (627,779). (194,813). 1,421,929. The accompanying notes form an integral part of these consolidated financial statements.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Comprehensive income (loss) net of tax:.

(14) Management Review Financial Statements. 14. NOTES TO THE UNAUDITED INTERIM C ONSOLIDATED FINANCIAL STATEMENTS (CHF thousands, except share and per share amounts). NOTE 1. BASIS OF PRESENTATION The unaudited condensed interim consolidated financial statements for Actelion Ltd (“Actelion” or the “Group”) have been prepared under Generally Accepted Accounting Principles in the United States (“US GAAP”) for interim financial information. Accordingly, such financial statements do not include all the information and footnotes required by US GAAP for annual financial statements. These interim financial statements should be read in conjunction with the audited financial statements of the Group for the year ended December 31, 2010. All amounts are presented in Swiss francs (“CHF”) unless otherwise indicated.. NOTE 2. ADOPTION OF NEW ACCOUNTING POLICIES. The Group’s revenue arrangements with multiple elements generally relate to collaborative agreements with third parties, which are typical transactions in the biopharmaceutical industry and usually include multiple elements such as product licensing, research and development activities, manufacturing and supply, royalty payments etc. As ASU 2009-13 applies to all arrangements entered into or materially modified after the adoption date and the Group did not enter into any new collaborative agreements, the adoption of this standard did not have a material impact on Group’s financial condition, results of operations and cash flows. It neither led to changes of units of accounting nor to modifications of pattern or timing of revenue recognition. For ongoing disclosures required by ASU 2009-13 – see Note 4. Collaborative agreements.. NOTE 3. ACQUISITIONS AND GOODWILL GeneraMedix In conjunction with the acquisition of epoprostenol sodium from privately-held GeneraMedix Inc. (“GXI”), the Group assumed contingent liabilities related to future patent issuance events in various markets and thus re-measured at fair value at each reporting date using Level 3 inputs. In determining the fair value the Group considered present value calculations of the expected cash-outflows as well probabilities of amounts and timing of settlement of the contingen-. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. ASU 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB EITF As of January 1, 2011, the Group applied prospectively the requirements of ASU 2009-13, Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”), an update to the Multiple- Element Arrangements Subtopic of FASB ASC (“ASC 605-25”). ASU 2009-13 introduced two significant changes to the existing accounting guidance related to changes in the separability criteria for determination of units of accounting and to changes in methods of allocation of a transaction consideration. It eliminated the requirement that objective and reliable evidence of the fair value for the undelivered items exists in order for a delivered item to be treated as a separate unit of accounting and requires arrangement consideration to be allocated at the inception of the arrangement to all deliverables based on their relative selling price. For public entities, ASU 2009-13 became effective for annual reporting periods beginning on or after June 15, 2010..

(15) Management Review Financial Statements. 15. cies. At June 30, 2011, and December 31, 2010, the Group applied a discount rate of 7.15% and 7.25%, respectively. This discount rate corresponds to the Bloomberg Composite US Industrial BB yield, which management believes is equivalent to a market participant’s cost of borrowing. As of June 30, 2011, the fair value of the contingent con sideration amounts to CHF 15 million (USD 18 million). Thereof, CHF 5.5 million (USD 6.6 million) included in other current liabilities and CHF 9.5 million (USD 11.4 million) disclosed as other non-current liabilities. Compared to December 31, 2010, the fair value of the contingent consideration has decreased by CHF 1.1 million (USD 1.2 million) due to reversal of contingent consideration expense mainly driven by changes in timing estimates and by CHF 1.9 million due to e ffects of foreign currency translation. The fair value changes of the contingent consideration are included in operating expenses. The maximum undiscounted amount of the contingency remains unchanged at USD 20 million (CHF 16.7 million) and is expected to be paid in 2012 and 2013. December 31, 2010. Reversal of Contingent Consideration Expense due to changes in estimates. Foreign currency translation. June 30, 2011. USD. CHF. USD. CHF. CHF. USD. CHF. 19,176. 18,041. (1,168). (1,099). (1,902). 18,008. 15,040. Except for the effect of foreign currency translation, the net carrying amount of goodwill has not been adjusted in the current reporting period. The following table summarizes the changes in 2011: January 1. Translation effects. June 30. 75,004. (2,626). 72,378. Collaborative agreements with third parties represent the Group’s major agreements with multiple elements. The significant deliverables generally include license fees and milestone payments, which are recognized as contract revenue when the services are performed and collectibility is reasonably assured. License fees are treated as separate units of accounting only if upon careful evaluation of the facts and circumstances in the individual contracts it has been determined that they have a standalone value to the customer. The assessment of standalone value depends on the customer’s ability to recover a substantial portion of the consideration paid to the Group either through resale or use. Revenue from non-refundable, upfront license fees and performance milestones where the Group has continuing involvement is recognized ratably over the estimated performance or agreement period, depending on the terms of the agreement. The recognition of revenue is prospectively adjusted for subsequent changes in the development or agreement period. Revenue associated with performance milestones where the Group has no continuing involvement or service obligation is recognized upon achievement of the milestone. Payments received in excess of amounts earned are classified as deferred revenue until earned. As the adoption of ASU 2009-13 did not lead to changes in units of accounting or modifications of pattern or timing of revenue recognition, reference is made to Note 4. Collaborative agreements in the Group’s audited consolidated financial statements for the year ended December 31, 2010, for additional details on the existing collaborative agreements not further described below.. In 2008 the Group entered into an exclusive worldwide collaboration agreement (excluding Japan) with GlaxoSmithKline (“GSK”) to develop and commercialize the Group’s almorexant, a dual orexin receptor antagonist in Phase III devel opment for treatment of primary insomnia. The Group received an upfront payment of CHF 150 million which has been deferred and amortized over the estimated development period. On January 28, 2011, the Group and GSK announced that clinical development of almorexant has been discontinued. This decision followed a review of data from additional clinical studies, which were conducted to further establish the clinical profile of almorexant, including the tolerability profile. As of March 31, 2011, the Group determined that it has fulfilled all performance obligations related to the. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. NOTE 4. COLLABORATIVE AGREEMENTS.

(16) Management Review Financial Statements. 16. upfront payment and the unamortized deferred revenue balance of CHF 76.5 million has been recognized as contract revenue. Both companies will continue to work on the discovery and development of new orexin receptor antagonist therapies based on the orexin alliance formed in July 2008.. NOTE 5. EARNINGS PER SHARE Basic and diluted earnings per share (“EPS”) are based on weighted-average common shares and generally exclude shares that would have an anti-dilutive effect. In accordance with ASC 260-10-45-19, the Group did not consider any potential common shares in the computation of diluted EPS as of June 30, 2011, due to the loss from continuing operations. For the six months ended June 30, 2010, 14,527,750 anti-dilutive shares were excluded from the EPS calculation. The following table sets forth the basic and diluted earnings per share calculations: June 30, 2011 Basic. June 30, 2010 Diluted. Basic. Diluted. Numerator Net income (loss). (262,267). (262,267). 254,206. 254,206. Net income (loss) available for earnings per share calculation. (262,267). (262,267). 254,206. 254,206. 119,305,810. 119,305,810. 118,911,667. 118,911,667. Convertible bond. –. –. –. 59,538. Share options. –. –. –. 2,342,686. 119,305,810. 119,305,810. 118,911,667. 121,313,892. (2.20). (2.20). 2.14. 2.10. Denominator Weighted-average number of common shares Incremental shares for assumed conversion:. Total average equivalent shares Earnings (loss) per share. NOTE 6. CASH AND CASH EQUIVALENTS. Cash 1 Short-term bank deposits Total 1. June 30, 2011. December 31, 2010. 1,233,570. 1,193,255. 4,636. 2,690. 1,238,206. 1,195,945. Contains CHF 0.6 million pledged for an unused credit line of CHF 5 million (December 31, 2010 - CHF 0.5 million).. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Cash and cash equivalents consisted of the following at:.

(17) Management Review Financial Statements. 17. NOTE 7. FINANCIAL ASSETS AND LIABILITIES The information about Group’s financial assets and liabilities reflects the requirements of the Fair Value Measurements and Disclosures Topic of FASB ASC (“ASC 820”) as well as of the Investments – Debt and Equity Securities Topic of FASB ASC (“ASC 320”). The following table states Group’s financial assets and liabilities carried at fair value:. Financial assets carried at fair value:. June 30, 2011. Level 1. Level 2. December 31, 2010. Level 1. Level 2. 1. Cash and cash equivalents. 1,238,206. 1,238,206. –. 1,195,945. 1,195,945. –. Derivative financial instruments. 27,292. –. 27,292. 35,248. –. 35,248. Debt securities 2. 15,651. 15,651. –. –. –. –. Equity Securities. 12,527. 12,527. –. 13,261. 13,261. –. 1,293,676. 1,266,384. 27,292. 1,244,454. 1,209,206. 35,248. 13. –. 13. –. –. –. 13. –. –. –. Total Financial liabilities carried at fair value: 1 Derivative financial instruments 3 Contingent consideration Total. See Note 2. Aquisitions and Goodwill 13. –. 1. For the six months ended June 30, 2011, no transfers to or from Level 1 and Level 2 took place.. 2. Included in marketable securities.. 3. Included in other short-term liabilities.. The Group determines the fair value of its derivative contracts based on observable inputs, which include foreign exchange rates, counterparty information and other related inputs. Changes in the fair value of all derivative instruments are recognized immediately in other financial income (expense) in the consolidated income statement. Fair value amounts recognized for the right to reclaim and the obligation to return cash collateral arising from derivative instruments recognized at fair value and executed with the same counterparty under a master netting arrangement are not offset. The following tables reflect the contract or underlying principal amounts and fair values of derivative financial instruments analyzed by type of contract as of June 30, 2011 and 2010. Contract or underlying principal amounts indicate the volume of outstanding positions at the balance sheet date and do not represent amounts at risk.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Derivative financial instruments A significant portion of the Group’s operations is denominated in foreign currencies, principally in US Dollars, Euros and Yen. Exposures to fluctuations in foreign currencies and interest rates may adversely impact the Group’s net income and net assets. Derivative financial instruments are deployed to partially offset these risks and are not used for speculative purposes. The Group records all derivatives on the balance sheet at fair value with changes in fair value reported in other financial income (expense), net. The Group’s derivative instruments, while providing economic hedges under the Group’s policies, do not qualify for hedge accounting as defined by the Derivatives and Hedging Topic of FASB ASC (“ASC 815”)..

(18) Management Review Financial Statements. Contract or underlying principal amount. Location of gain or (loss) recognized in income on derivatives. Forward rate contracts. 285,116. Other financial income (expense), net. Total. 285,116. Derivative financial instruments not designated as hedging instruments. Amount of gain recognized in income on derivatives. 18. Amount of (loss) recognized in income on derivatives. June 30, 2011 33,198. (9,069). 33,198. (9,069). 10,904. (23,783). 10,904. (23,783). June 30, 2010 Forward rate contracts. 417,026. Total. 417,026. Derivative financial instruments not designated as hedging instruments. Other financial income (expense), net. Asset Derivatives Balance Sheet Location. Liability Derivatives. Fair Value. Balance Sheet Location. 27,292. Other current liabilities. Fair Value. June 30, 2011 Forward rate contracts. Derivative instruments. Total. 27,292. 13 13. December 31, 2010 Forward rate contracts Total. Derivative instruments. 35,248. Other current liabilities. 35,248. – –. As of June 30, 2011, all foreign currency forwards are privately negotiated OTC contracts with maturities of twelve months or less and entered into with counterparties with a minimum Standard & Poor’s credit rating of A+. The Group determines the fair value of these derivative contracts using an income-based industry standard valuation model which utilizes counterparty information and other observable inputs, which include foreign currency spot rates, forwards points and stated maturities.. Marketable securities The Group holds certain equity investments, classified as available-for-sale (“AFS”) marketable securities and recorded under long-term financial assets. As of June 30, 2011, CHF 0.7 million unrealized holding losses (December 31, 2010: CHF 0.1 million unrealized holding gains) related to these securities are included in other comprehensive income. In conjunction with the settlement of the Greek hospital debt for the years 2007 to 2009 (See Note 22. Concentrations in the Group’s audited consolidated financial statements for the year ended December 31, 2010) in 2011 the Group received zero-coupon bonds with maturities from December 2011 to December 2013, which have been classified as AFS and recorded under short-term marketable securities. The bonds can be settled in cash at any time till maturity at the prevailing market rate at the time of sale. As the settlement of the receivables with debt instruments represents a cashless exchange of assets, the transaction did not have an impact on the statement of cash flows, except for the cash proceeds from the sale of these instruments, which are recorded within the investment section in the statement of cash flows. At June 30, 2011, the amortized cost value of these debt securities amounts to EUR 13.1 million (CHF 15.9 million). For the six months ended June 30, 2011, the Group sold a portion of the bonds, received cash proceeds of EUR 1.98 million (CHF 2.4 million) and realized a loss of EUR 0.3 million (CHF 0.3 million).. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Derivative financial instruments include gross unrealized gains of CHF 1.1 million (December 31, 2010: CHF 24.3 million) and gross unrealized losses of CHF 9.1 million, which have been recorded in other financial income (expense), net. For the six months ended June 30, 2011, all unrealized gains and losses relate to foreign currency gains and losses..

(19) Management Review Financial Statements. 19. The following table summarizes Group’s investments in AFS marketable securities in an unrealized loss position as of June 30, 2011: Less than 12 months Amortized cost value. Fair Value. Unrealized Losses 1. 15,881. 15,651. –. June 30, 2011 Debt Securities Equity Securities Total. –. 12,527. 734. 15,881. 28,178. 734. December 31, 2010. 1. Equity Securities. –. 13,261. –. Total. –. 13,261. –. Included in other comprehensive income.. As of June 30, 2011, the Group reviewed the equity securities for impairment in order to determine if the decline in the fair value below cost may be other than temporary. The Group performed analyses of certain indicators, like the length of time and the extent to which the market value of the investment has been less than its cost; the financial conditions and the long-term prospects of the issuer; the volatility and the relative stock performance compared to the corresponding indicators of the sector. Based on these analyses and Group’s intent and ability to hold the equity securities for a period of time sufficient to allow for any anticipated recovery in market value, the Group does not consider the AFS equity investments to be other than temporarily impaired.. Purchase option Trophos On July 19, 2010, the Group obtained, for a consideration of EUR 10 million (CHF 13.4 million), an option to acquire Trophos SA, a French clinical stage pharmaceutical company (“Trophos”) developing drugs for patients with neurodegenerative diseases. The option became effective upon payment of the consideration by the Group in July 2010 and will end two months after the Group’s receipt of the results of an ongoing Phase III study with olesoxime, but not later than December 31, 2012. The Group has the right to terminate the agreement at any time during the option period. The acquisition price will be paid in cash and is partially contingent on market approval of olesoxime by the U.S. Food and Drug Administration (“FDA”) as well as overall pipeline progression of other compounds. Consequently, the ac quisition price might vary between EUR 125 million and EUR 195 million. In line with the Group’s policy to account for purchase options that do not meet the definition of a derivative as outlined in the Codification Master Glossary, the Group recognized this purchase option at cost as a long-term financial asset and subsequently accounts for the option at its original cost, less any recorded impairment losses. As of June 30, 2011, the aggregate carrying amount of the Group’s cost method investment is CHF 13.4 million. As there has been no information or changes in circumstance which would indicate a significant adverse effect on the fair value of the investment, the Group has determined that there is no impairment. In accordance with ASC 825-10-50-16. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. As the Greek debt securities have been issued at a significant discount relative to their face amount, as of June 30, 2011, the fair value of these investments is below their amortized cost value by EUR 0.2 million (CHF 0.2 million). However, taking into consideration the economic downturn and the severe debt crisis currently impacting Greece, the multiple decrease in the country’s risk rating by all major rating agencies in the last six months and the likelihood of the Group being required to sell the securities before recovery of the entire amortized cost basis, which may be at maturity, the Group believes that the decline in market value of the bonds since issuance is attributable to the re duction of the credit quality of the issuer and as such relates to a loss of cash flows expected to be collected. Consequently, for the six months ended June 30, 2011, the Group has recognized other than temporary impairment of EUR 2.5 million (CHF 3 million), which has been included in other financial income (expense), net..

(20) Management Review Financial Statements. 20. through 19, the fair value of the purchase option has not been estimated for disclosure purposes as the cost to obtain this fair value estimate are excessive considering the materiality of the investment to the Group.. Financial liabilities carried at amortized cost As of June 30, 2011, and December 31, 2010, Group’s financial liabilities carried at amortized cost amount to CHF 452.9 million and CHF 444 million, which represents the net carrying amount of the liability component of the 2006 convertible bond 2006 Convertible bond In November 2006, the Group issued CHF 460 million in convertible bonds (“2006 convertible bond”). The 2006 convertible bond is structured as a zero coupon convertible bond with a yield to maturity of zero percent. The conversion price is CHF 54.17 per share, issue and redemption price were set at 100% and is non-callable for life. On or after June 30, 2007, and until the 30th trading day prior to the maturity date on November 22, 2011, the 2006 convertible bond is, in accordance with its terms, convertible free of charge into cash up to the principal amount and any conversion value above the principal amount may be settled, at the option of the Group, into cash or shares or a combination of cash and shares. The shares to be delivered to bondholders upon conversion amount to 8,492,099. Due to the cash conversion option the Group bifurcates the liability and equity components of the bond, applying an effective interest rate of 3.995% to determine the carrying amount of the liability component. For the six months ended June 30, 2011 and 2010, the Group recognized interest expense of CHF 8.9 million and CHF 8.5 million, respectively, which relate to the amortization of the discount on the liability component. As of June 30, 2011, the unamortized discount and the net carrying amount of the liability are CHF 7.1 million and CHF 452.9 million, respectively. The discount is being amortized till maturity date of the bond. The fair value of the bond at June 30, 2011, is 99.60% of the principal amount. The if-converted value of the bond is below its principal amount by CHF 108.3 million. As the 2006 convertible bond is convertible since June 30, 2007, for cash up to the principal amount and there are no contingencies to be met for the bondholders to be able to convert, the 2006 convertible bond is classified as shortterm debt.. The Group invests its excess cash in deposits with major banks and other high quality money market instruments. The majority of the financial institutions is either protected by a state guarantee or owned by public authorities. Deposits and other money market investments mature on average within eight months and the Group has not incurred any related losses. In addition, the Group reviews on an ongoing basis the creditworthiness of counterparties to foreign exchange and interest rate agreements. The Group has not experienced and does not expect to incur any significant losses from failure of counterparties to perform under the agreements. There are no significant concentrations of credit risk related to the Group’s investments in money market instruments and derivatives with any individual counterparty. As of June 30, 2011, and December 31, 2010, approximately 53% and 51% of trade accounts receivables are due from public institutions funded by governmental agencies in certain Southern European countries. The Group monitors the economic conditions and the associated impact on the financial markets and its business. Based on its review of the local economic environment, of the historical payment patterns and on analyses of days sales outstanding in these countries, the Group believes that the deterioration of the credit and economic conditions as well as the inherent variability of timing of cash receipts have resulted and may further result in an increase in the average length of time that it takes to collect the accounts receivables outstanding in these countries.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Credit and interest rate risk Cash and cash equivalents, short-term deposits, marketable securities, derivatives and accounts receivable are financial instruments, which potentially subject the Group to concentrations of credit risk..

(21) Management Review Financial Statements. 21. NOTE 8. COMMITMENTS, CONTINGENCIES AND GUARANTEES Commitments In the context of its ongoing facility expansion, the Group has entered into capital commitments totalling CHF 15.6 million, which are expected to be paid during 2011 and 2012. In the ordinary course of business the Group has entered into purchase commitments related to long-term manu facturing and supply agreements in the total amount of CHF 0.8 million for 2011, CHF 4.8 million for 2012, CHF 3.5 million for 2013, CHF 3.4 million for 2014 and CHF 4.1 million for 2015.. On November 19, 2008, plaintiff Asahi Kasei Pharma Corporation (“Asahi”) filed a complaint at the State Court in California, US, against Actelion Ltd and its subsidiaries Actelion Pharmaceuticals US Inc., Actelion Pharmaceuticals Ltd, Actelion US Holding Company, CoTherix, Inc. (“CoTherix”) and three individual officers. The action arises from a dispute involving the license and development agreement between Asahi and CoTherix for the drug compound fasudil that has been terminated upon the acquisition of CoTherix in 2007. In its Third Amended complaint Asahi asserted claims for interference with contract, interference with prospective economic advantage, breach of confidentiality agreement, breach of common law duty of confidence, claims under California’s false advertising statute, and violations of California’s Cartwright Act, and violations of California’s unfair competition law. Asahi voluntarily dismissed the claim under the false advertising statute. The Court granted summary adjudication on the Cartwright Act claims and granted CoTherix summary adjudication on all claims against it. Asahi filed an interlocutory appeal against CoTherix’s summary adjudication. The trial began in February 2011 at the State Court in San Mateo County, California. On May 4, 2011, a jury awarded Asahi USD 547 million in compensatory damages and USD 30 million in punitive damages. In a subsequent motion Actelion requested an election between damages of USD 358.95 million for alleged lost profits and USD 187.4 million for alleged development costs. In addition, from either amount the motion requested a deduction of USD 78.4 million from the previous payment related to the arbitration proceedings in 2009 (See Note 14. in the audited consolidated financial statements for the year ended December 31, 2009). In addition, Asahi recently dismissed the claims as to California`s unfair competition law. As of June 30, 2011, the State Court has not issued a judgement on the jury verdict and Actelion’s motions. Consequently, the Group recorded a provision of USD 577 million (CHF 485.2 million), which represents the full amount awarded to Asahi by the jury and which led to a net loss for the six months ended June 30, 2011. Upon judgement, which is expected in the third quarter of 2011, the provision will be appropriately adjusted. Should the judgement confirm the jury awards, it is more likely than not that Group’s operating result for the year ending December 31, 2011, would be negative. Until delivery of the judgement interest may be. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Contingencies The Group records accruals for loss contingencies to the extent that their occurrence is deemed to be probable and the related damages are estimable. If a range of liability is probable and estimable and some amount within the range appears to be a better estimate than any other amount within the range, the Group accrues that amount. If a range of liability is probable and estimable and no amount within the range appears to be a better estimate than any other amount within the range, the Group accrues the minimum of such probable range. Litigation claims that the Group is involved in include highly complex issues which are subject to substantial uncertainties and, therefore, the probability of loss and an estimation of damages are difficult to ascertain. Consequently, the Group cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess of amounts accrued for these contingencies. These assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions (See Note 1. Description of business and summary of significant accounting policies: Use of estimates). The Group’s assessments are based on estimates and assumptions that have been deemed reasonable by management. Litigation is inherently unpredictable, and excessive verdicts do occur. Although the Group believes to have substantial defences in these matters, Actelion could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations in any particular period..

(22) Management Review Financial Statements. 22. imposed on the total amount of the provision starting from the date of the jury verdict. The Group provided for the estimated amount of interest. The Group will appeal the entire judgement. The amount of cash to be paid, if any, or the timing of such payment will depend on the outcome of the appeal process. As resolution of the case is not expected within the next twelve months the provision has been recorded as non-current liability. In September 2010, a Group’s subsidiary received a subpoena from the US Attorney’s Office for the Northern District of California, requesting documents relating, among others, to marketing and sales practices of Tracleer ® (bosentan) in the United States. As of June 30, 2011, the investigation is ongoing and the Group cannot evaluate the final outcome.. Guarantees In order to secure its obligations from derivative trading, cash pooling and forward transactions in foreign currencies, the Group has issued guarantees and a letter of indemnity to various financial institutions in the total amount of CHF 75.6 million. In the ordinary course of business the Group has entered into certain guarantee contracts and letters of credit amounting to CHF 6.5 million. The guarantees primarily relate to operating leases and credit lines for subsidiaries in foreign jurisdictions. Due to the nature of these arrangements, the Group has never been required to make payments under these contracts and does not expect any potential required future payments to be material.. NOTE 9. PENSION PLANS Swiss Employee Pension Plan The Group maintains a pension plan (the “Basic Plan”) covering all of its employees in Switzerland. The Plan insures remuneration up to a maximum annual base salary of CHF 150,000 as well as additional cash incentives paid vol untarily by the Group to its employees. In addition to retirement benefits, the Basic Plan provides benefits on death or long-term disability of its employees.. Swiss Management Pension Plan The Group also maintains a defined benefit plan (“the Swiss Management Pension Plan”) that also provides retirement benefits and risk insurance for death and disability for components of remuneration in excess of the maximum insurable amount of base salary described in the previous paragraph. The Swiss Management Pension Fund insures base salary above CHF 150,000, and annual incentives, up to an aggregate maximum of CHF 820,800. It is funded through contributions by the Group and its employees. In addition, the Group maintains other pension plans outside Switzerland, which are insignificant to the Group. The Group uses a measurement date of December 31 for all pension plans.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. The Basic Plan is organized under the legal form of a pension foundation. The Group and its employees pay retirement contributions, which are defined as a percentage of the employees’ covered salaries. Interest is credited to the employees’ accounts at the minimum rate provided in the Basic Plan, payment of which is guaranteed by the insurance contract, which represents the Basic Plan’s primary asset. Future benefit payments are managed by the insurance company..

(23) Management Review Financial Statements. 23. Net periodic benefit costs for the Group’s defined benefit pension plans include the following components: Six months ended June 30,. Service cost Interest cost Expected return on plan assets Amortization of net (gain) loss Net periodic benefit cost. 2011. 2010. 9,824. 7,834. 3,090. 3,048. (3,224). (2,719). 819. 99. 10,509. 8,262. NOTE 10. SHAREHOLDERS’ EQUITY Authorized capital The Annual General Meeting (“AGM”) on April 24, 2009, approved the creation of authorized share capital to an amount of not more than CHF 31 million by issuance of not more than 62 million fully paid-in registered shares to be used for strategic and/or financial business purposes. The authorization expired unutilized on April 24, 2011. Conditional capital Since inception, the Group has created conditional capital for the establishment of share option plans, convertible bonds and similar forms of financing. At June 30, 2011, the Group had conditional capital of CHF 27.8 million of which CHF 11.6 million relate to share option plans and CHF 16.2 million to convertible bonds and similar forms of financing. Movements in conditional capital are as follows:. Forfeited Challenge Award options Exercise of options December 31 , 2010 Forfeited Challenge Award options Exercise of options June 30, 2011. 28,882 (135) (649) 28,098 (82) (248) 27,768. Treasury shares At June 30, 2011, the Group held 11,178,598 treasury shares including those acquired via the share repurchase program (December 31, 2010: 10,458,148). The average purchase price of all treasury shares held amounts to CHF 56.16 (December 31, 2010: CHF 56.65). Treasury shares acquired via the Share Repurchase Program (“SRP”) On October 21, 2010, the Group announced the repurchase of up to CHF 800 million of the Company’s common stock over the next three years. At the Annual General Meeting (“AGM”) on May 5, 2011, the shareholders approved to cancel the shares bought through this program and to reduce the issued share capital accordingly. The buyback, which is carried out via a second trading line on the SIX Swiss Exchange, will be completed no later than October 31, 2013. As at June 30, 2011, the Group had acquired total 951,500 treasury shares at an average price of CHF 50.09 through the SRP (December 31, 2010: 186,000 treasury shares at an average price of CHF 53.54). Treasury shares bought on the first trading line At June 30, 2011, the Group held 10,227,098 treasury shares mainly acquired on the first trading line on the SIX Swiss Exchange (December 31, 2010: 10,272,148) at an average price of CHF 56.72 (December 31, 2010: CHF 56.71). During 2011, the members of the Board of Directors received 45,558 treasury shares at an average price of CHF 52.83 as compensation.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. December 31 , 2009.

(24) Management Review Financial Statements. 24. Treasury shares are deducted from equity at their cost value and are shown as a separate component of shareholders’ equity. The Group intends to use the repurchased stock to offset dilution caused by the issuance of shares related to the Group’s share-based payment plans and shares issued upon conversion of the convertible bond. Call options In connection with the 2006 convertible bond, the Group used a portion of the proceeds to purchase call spread options on its own shares from an international financial institution to mitigate the exposure to potential dilution from con version of the 2006 convertible bond. The total premium paid was CHF 20.6 million, which has been recorded as a reduction in shareholders’ equity. The number of options purchased is 8.5 million with a lower strike price at CHF 54.17 and an upper strike price at CHF 58.92. The call spread will expire in tranches during November and December 2011. Dividends The AGM on May 5, 2011, approved a cash dividend for 2010 of CHF 0.80 per share. On May 11, 2011, the Group distributed gross dividends of CHF 95.3 million to its shareholders.. NOTE 11. SEGMENT AND GEOGRAPHIC INFORMATION The Group operates in one segment of discovering, developing and commercializing drugs for unmet medical needs. The chief operating decision-makers, which are comprised of the Group’s executive committee, review the profit and loss of the Group on an aggregated basis and manage the operations of the Group as a single operating unit. The Group currently derives product revenue from sales of Tracleer ® (bosentan), Zavesca® (miglustat), Ventavis® (iloprost) and Veletri® (epoprostenol for injection). Contract revenue is derived from collaboration and service agreements with third parties. Product revenue attributable to individual countries is based on location of the customer. The Group’s geographic information is as follows: Switzerland. United States. Europe. Other. Total. Product revenue from external customers. 12,142. 364,225. 341,615. 172,152. 890,134. Contract revenue from external customers. 79,705. –. –. 78. 79,783. 373,518. 35,858. 3,539. 4,672. 417,587. Product revenue from external customers. 11,875. 420,788. 350,723. 149,824. 933,210. Contract revenue from external customers. 91,599. –. –. 54. 91,653. 264,400. 41,198. 5,028. 5,128. 315,754. June 30, 2011. Property, plant and equipment. Property, plant and equipment. NOTE 12. SUBSEQUENT EVENTS The Group evaluated subsequent events till July 19, 2011, which represents the date the consolidated financial statements were available to be issued.. Actelion Half Year Report 2011. WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. June 30, 2010.

(25) WorldReginfo - e781f3c2-3035-4cdf-ba4a-a0183f8ae4fe. Actelion, Tracleer, Zavesca, Ventavis and Veletri are trademarks registered in the United States and other countries. Copyright © 2011 Actelion Pharmaceuticals Ltd.

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