INSPIRING THE FUTURE.

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(1)actelion ANNUAL REPORT 2010. INSPIRING THE FUTURE.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. ANNUAL REPORT 2010.

(2) Transforming research into reality.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Actelion Today Actelion is a team of more than 2,400 professionals. We come to work each day to change someone’s life. Our freedom to create generates inspirational medicines. Together we are defining our long-term future with the discoveries of today..

(3) contents Actelion annual report 2010. 02. BUSINESS STRATEGY AND OPERATIONS. 18. RESEARCH AND DEVELOPMENT. 28. 02 Milestones 2010 05 Letter to the Shareholders 08 Financial Summary 12 Creating Long-Term Value. 19 Delivering on a Global Scale 20 Actelionʼs Products in the Marketplace 22 The Products 24 Leadership in PAH. 29 Driven by Science 30 The Pipeline 34 Pipeline Progress 36 Maximize the Value of Innovation. CORPORATE GOVERNANCE. CORPORATE SOCIAL RESPONSIBILITY. FINANCIAL REPORT. 40. 58. 62. 41 Group Structure & Shareholders 44 Board of Directors 50 Management Board 53 Compensation, Shareholdings & Loans 55 Shareholders’ Participation Rights 55 Changes of Control & Defense Measures 55 Auditors 56 Information Policy 57 Further Information. 59 Discovering Medicines Responsibly 60 Reaching for the Highest Standards 60 Environment 60 Access to Medicines 61 Our work in Communities 61 Research Ethics 61 Clincal Trial Registry & Results Database. 64 Consolidated Financial Statements 68 Notes to Consolidated Financial Statements 97 Report of Actelion Management 98 Auditors’ Reports 102 Holding Company Statements 104 Notes to the Financial Statements 2010 114 Auditorsʼ Report 116 Contacts. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Actelion TODAY.

(4) 2. MILESTONES STRONG REVENUE GROWTH. employees per function. Total net revenues of CHF 1,929.0 million, an increase of 13% in local currencies as compared to 2009 due to growing product sales.. MANAGING THE BOTTOM LINE Non-GAAP EBIT of CHF 619.3 million, an increase of 19% in local currencies as compared to 2009 – a result of strong revenue growth and continued c ommitment to managing the bottom line.. ENHANCING Earnings per share The Board of Directors has authorized the repurchase of up to CHF 800 million of the company’s common stock over the next three years, enhancing EPS growth without sacri ficing strategic flexibility.. Treating pulmonary arterial hypertension with the target of improving symptoms to, or maintaining patients at, Functional Class II.. TRACLEER – CHANGING LIVES ctelion’s flagship product is currently being A used to treat over 40,000 patients.. VELETRI – NEW PRODUCT LAUNCH ctelion’s fourth product – Veletri, an improved A formulation of i.v. epoprostenol – has been launched in the US for the treatment of PAH. Room temperature stability, at most commonly used concentrations, eliminates the need for ice packs.. Actelion Annual Report 2010. employees per region. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. TRACLEER – GOLD STANDARD IN PAH.

(5) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. VENTAVIS – IMPROVED CONVENIENCE. Total Net Revenues. More than 70% of V entavis patients in the US are using the increased strength 20mcg/ml formulation launched in the second half of 2009.. CHF million. 1,772.6 1,317.4. 3. 1,929.0. 1,473.5. 945.7. MACITENTAN – AHEAD OF SCHEDULE Early completion of enrollment into the large Phase III morbidity/mortality study in PAH could result in data availability early in 2012. 2006. 2007. 2008. 2009. 2010. SELEXIPAG – PRESENTED AT ATS. OPTION TO ACQUIRE TROPHOS ctelion entered into a binding agreement with A Trophos SA, thereby integrating the potential of a late-stage Phase III compound into Actelion’s pipeline. Olesoxime is currently being investigated in amyotrophic lateral sclerosis and is expected to report data in late 2011.. Advancing early-stage pipeline. Non-GAAP EBIT CHF million. 567.9 471.4. 476.8. 2007. 2008. 619.3. 320.4. 2006. 2009. 2010. In total, dose-finding studies for five compounds were initiated in 2010, broadening Actelion’s commitment to multiple therapeutic areas.. MULTIPLE FUTURE OPPORTUNITES By the end of 2010, A ctelion was analyzing six compounds in preclinical development, with around 25 further projects in the drug discovery phase.. Total product sales CHF million. 1,698.0 1,292.1. CORPORATION OF THE YEAR. 924.1. The Pulmonary Hypertension Association named Actelion the 2010 Corporation of the Year, making Actelion the first company to receive this award twice and demonstrating our ongoing commitment to improving the care of patients.. 2006. 2007. 1,826.3. 1,428.9. 2008. 2009. 2010. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Phase II results with selexipag, currently enrolling patients into a large Phase III study in PAH, were presented at the American Thoracic Society (ATS) 2010 International Conference..

(6) 4. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Committed to profitability.

(7) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 5. The Board and Management are proud to report to you, our shareholders, that in 2010 Actelion achieved strong financial results. Your company has also made significant progress in strengthening the pillars required for continued long-term success. Committed to Profitability With a 2010 net profit of CHF 390.6 million and fully diluted earnings per share of CHF 3.22, Actelion demonstrated its ongoing commitment to value creation for shareholders. Actelion grew its total revenues in 2010 by 13% in local currencies to reach CHF 1,929.0 million. Product sales grew by 12% in local currencies to reach CHF 1,826.3 million. Operating profit grew by 50% in local currencies to reach CHF 457.3 million. These results – the best in the 11 years since Actelion became a public company – were achieved in a difficult economic environment for pharmaceuticals in general and specifically for Swiss-based international companies exposed to the strong Swiss currency.. Committed to PAH – today and tomorrow Actelion is a highly profitable life science firm as a result of our leading franchise in pulmonary arterial hypertension (PAH), where our three marketed products Tracleer, Ventavis and Veletri continue to bring significant value to patients. In 2010, we continued to invest appropriately in supporting our existing product portfolio. We also focused on two late-stage clinical compounds – macitentan and selexipag – both under investigation in PAH. The studies are designed to demonstrate that these two compounds significantly improve the outcome for patients by reducing morbidity/mortality. The success of these two studies, expected to report in early 2012 and 2013 respectively, would result in further long-term value creation for patients and shareholders alike. Committed to Innovation in Medicine Throughout 2010, we focused our attention on turning innovation into medicines, one step at a time. Conscious of. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. dear shareholders.

(8) 6. the risks inherent in innovation, the company broadened its preclinical and clinical activities. While two late-stage clinical trials did not meet expectations, and clinical development with almorexant was discontinued in January 2011, other projects moved forward. Consequently, at the end of this reporting period, Actelion has 10 compounds in various stages of clinical development. As a result of our high research and development productivity, we will obtain important data during 2011 on four different projects in mid-stage clinical development in areas of high unmet medical need – Clostridium difficile infection, idiopathic pulmonary fibrosis, autoimmune disorders and allergies. Committed to a Global Infrastructure In 2010, Actelion also continued to strengthen its global reach and its global infrastructure. Actelion now has 29 operative affiliates and is thus present with sales, marketing, distribution, regulatory and medical capabilities in all key pharmaceutical markets. This is true even in Japan,. Actelion Annual Report 2010. where no other biotechnology company has built up its own presence from its inception. We also continued to invest appropriately in the physical infrastructure required to provide our employees with a stimulating and productive working environment. At the end of 2010, a new business center for central corporate functions was opened in Allschwil, just outside Basel/ Switzerland. In the same location, the company will expand its Research and Development facilities in 2011. This commitment to global presence and appropriate infrastructure levels will assure continued leverage going forward. Committed to value-enhancing partnerships Our profitability, our strong PAH franchise, our focus on an innovative pipeline and our global business organization make Actelion an attractive in-licensing partner. This is evidenced by the Trophos agreement we entered into – with the option to acquire the company – in anticipa tion of positive results from their Phase III compound in. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Robert E. Cawthorn.

(9) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 7. Jean-Paul Clozel. Committed to shareholders In view of the company’s strong prospects, the Board of Directors will ask shareholders at the upcoming Annual General Meeting to approve the cancellation of shares bought back as part of the ongoing share repurchase program. The repurchase of up to CHF 800 million of shares, over a 3-year period, utilizes part of our strong ongoing cash generation to enhance shareholder return. The size of the repurchase program leaves the company with full strategic flexibility and an undiminished determination to seek innovation from external sources and internalize that potential when appropriate.. Additionally, the Board of Directors has decided to ask shareholder approval for an annual dividend payment of CHF 0.80 per share. Committed to the Future In the course of its regular meetings, the Board of Directors has given much attention to directing and reviewing the company’s strategy. We are committed to continuing this and look forward to reporting to you on these efforts on a regular basis. We are well aware that your support as shareholders has been and will remain fundamental to our ongoing success.. Robert E. Cawthorn Chairman of the Board of Directors. Jean-Paul Clozel Chief Executive Officer. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. development for the rare disease amyotrophic lateral sclerosis. This mortality study is expected to report before the end of 2011. The same assets also allow Actelion to enter into individually tailored partnerships with companies that have the required capabilities to maximize value and manage risk for a number of our development projects..

(10) 8. financial summary. 2010. 2009. %. Net revenues. 1,929.0. 1,772.6. 9. Operating expenses. 1,471.7. 1,433.2. 3. 457.3. 339.4. 35. in CHF million. Operating income Non-GAAP EBIT. 619.3. 567.9. 9. Net income. 390.6. 311.3. 25 27. 3.22. 2.53. No of shares in calculation. Diluted EPS in CHF. 121.394. 122.880. –. Gross cash. 1,445.9. 1,343.6. –. Total assets. 2,921.0. 2,664.9. –. 316,4. 424.2. –. Shareholder’s equity. Cash from operations. 1,795.2. 1,407.7. –. Treasury shares. 10.458. 9.757. –. NET REVENUES During 2010, Actelion not only continued to grow revenues and profit but also strengthened its infrastructure and generated strong cash flow, enabling the company to continue investing for future growth as well as returning cash to shareholders. In October 2010, Actelion announced an CHF 800 million share buyback that will enhance EPS growth going forward without sacrificing strategic flexibility. Total net revenues grew to CHF 1,929.0 million in 2010, an increase of 9%. Growth in local currencies (LC) – masked by the appreciation of the Swiss franc – was even more pronounced, at 13% year on year. Demand for all of Actelion’s products has remained strong, but throughout the year the company observed an increasing impact of pricing pressure and healthcare austerity measures, resulting in reduced healthcare utilization. Also, a continued adverse currency market environment negatively impacted the results, with the US dollar and the euro reaching new all-time lows against the Swiss franc.. Actelion Annual Report 2010. Tracleer continues to be the main driver of performance, with growth continuing across all markets. Ventavis performed very well in the face of increasing competition, and our latest product in the PAH space, Veletri, was launched successfully in the US. Zavesca sales growth was driven by the NP-C indication in Europe. Contract revenues for 2010 amounted to CHF 102.6 million, which represents an increase of 38%. A substantial portion of this increase can be attributed to the final recognition of milestone payments received from Roche in connection with the S1P1 collaboration (CHF 77.2 million). The company also recognized CHF 18.9 million from the GlaxoSmithKline almorexant collaboration, as well as CHF 6.5 million related to other contracts. OPERATING EXPENSES Total operating expenses for 2010 were CHF 1,471.7 million, compared to CHF 1,433.2 million in the previous year. This represents an increase of 3% in Swiss francs and 4% in local currencies. Non-GAAP operating expenses for the full year amount to CHF 1,309.6 million, an increase of 10% in local currencies compared to 2009. Non-GAAP operating expenses exclude all charges related to employee stock options as well as depreciation and amortization, and other one-off items which would distort comparative analysis. Cost of sales amounted to CHF 200.3 million or 11% of sales. This represents a 0.5% decrease due to a USD 10 million payment made to Bayer Schering in 2009. Research and development expenses increased by 4% to reach CHF 484.3 million, compared to CHF 464.1 million during the prior year. Actelion’s pipeline has 10 compounds in clinical development, 3 of which are in Phase III, and 6 projects in preclinical development. The ratio of R&D spend to product sales is 27%, which the company considers an appropriate level of spending. Non-GAAP research and development expenses increased by 3% to reach CHF 428.7 million.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. financial results overview.

(11) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. Gaap Ebit 457.3. CHF million. 371.4. 339.4. 268.2. 142.6. 2006. 2007. 2008. 2009. 2010. “In 2010, we have made signif. icant investments to increase operational efficacy that will drive further margin expansion in 2011.” Andrew J. Oakley, CFO. Earnings per share, DILUTED 3.22. CHF per share. 2.48. 2.53. 2008*. 2009. 1.97. 0.88. 2006*. 2007*. 2010. * Adjusted for the effect of application of ASC 470-20 as of January 1, 2009. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Selling, General and Administration (SG&A) expenses for 2010 amounted to CHF 744.1 million, a 15% increase. The company continued to expand its geographic reach, with emerging markets acting as a strong driver for rest-ofthe-world sales growth. The expanded sales force in Japan continues to deliver excellent results. Some of the main drivers of growth during 2010 were support for all our products in their respective markets and continued investment in education and disease awareness, as well as the generation of new data in Phase IV medical marketing trials and product registries. Although not apparent from the Swiss franc numbers, the company is pleased to report continued margin improvement within the commercial organization. In addition to the impact of exchange rates, this margin improvement is also masked by an increase in legal costs. As announced previously, legal costs have increased due to a lawsuit filed against Actelion Ltd and certain subsidiaries in a Californian Superior Court, in relation to the CoTherix acquisition. Actelion has reviewed the claims, disagrees with the factual and legal assertions, and is preparing to defend itself against the claims in a jury trial which began in February 2011. Another driver of the increase in General and Administration portion is a continued investment in infrastructure to support the organization. At the end of 2010, Actelion employed 2,441 people worldwide, of whom more than 1,000 are located in Allschwil. The company opened a new business center in December 2010 which will house 350 employees. A new building for research and clinical development, also in Allschwil, will be finished in late 2011 to house 380 scientists as of 2012. Actelion continues to believe that having all its research efforts concentrated in one location is most beneficial, as it greatly facilitates open and transparent communication between teams, resulting in rapidly advancing projects Non-GAAP SG&A expenses increased to CHF 680.6 million, compared to CHF 593.5 million during the same period last year.. 9.

(12) 10. NON-OPERATING INCOME AND TAX Interest income for the year 2010 amounted to CHF 3.2 million, compared to CHF 4.4 million during 2009. The interest environment in Switzerland continues to be supressed, albeit at slightly higher levels than during 2009, especially during the last quarter of 2010. Interest expense for the year amounted to CHF 2.7 million, compared to CHF 7.5 million during the previous year. As the company still does not carry any interest bearing debt, this charge is mostly related to future payments for Veletri, the improved formulation of intravenous epoprostenol acquired in March 2009. Amortization of debt discount for 2010 amounted to CHF 18.7 million, compared to CHF 17.9 million in 2009. Since 1 January 2009, Actelion has adopted FSP APB 14-1, which bifurcates the convertible bond into debt and equity components and imputes a non-cash interest charge equivalent to “market rates” based on a company’s individual circumstances. This charge is related to the charge on the outstanding 2011 CHF 460 million bond. Other financial income for the year amounted to CHF 1.7 million, compared to an income of CHF 20.0 million in 2009. The current currency environment continues to add great volatility to both gains and losses on the company’s hedge positions, as well as on the valuation of intercompany receivables. Income tax expense for the period under review amounted to CHF 50.3 million, compared to CHF 27.3 million during 2009. This translates into a tax rate of 11.4% compared to 8% for the previous year. As previously announced, the company expected this slight increase in the tax rate, which is likely to stay around current levels for the near future.. Actelion Annual Report 2010. NET INCOME AND EARNINGS PER SHARE Net income for 2010 amounted to CHF 390.6 million, compared to CHF 311.3 million in 2009, an increase of 25%. Basic earnings per share for the same period amounted to CHF 3.28, compared to CHF 2.62 in 2009. On a fully diluted basis, EPS in 2010 was CHF 3.22, compared to CHF 2.53 in 2009. During the first quarter of 2010, the company bought back 529,271 shares, bringing the number of treasury shares held to 10.5 million. In October 2010, the company. “In 2010, with operating income. exceeding 450 million Swiss francs, we report, on a diluted basis, a 27 percent growth in earnings per share, supporting the Board’s proposal of an annual dividend.” Andrew J. Oakley, CFO. announced that the Board of Directors had authorized the repurchase of up to CHF 800 million of the company’s common stock over the next three years and subsequently purchased in the fourth quarter an additional 186,000 shares. Given the company’s solid financial position and robust cash generation, Actelion’s Board of Directors and senior management believe that the share repurchase program represents an appropriate use of the company’s cash, whilst maintaining sufficient flexibility for continued investments in research and development, in-licensing and potential M&A opportunities. At the 2011 and subsequent Annual General Meetings, the Board of Directors will propose that the shares bought through this process be canceled and the issued share capital reduced accordingly.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. OPERATING INCOME AND NON-GAAP OPERATING INCOME Operating income for 2010 reached CHF 457.3 million, an increase of 35% compared to the full year 2009. Non-GAAP operating profit for 2010 amounted to CHF 619.3 million, compared to CHF 567.9 million during 2009. This represents a 9% increase in Swiss francs and a 19% increase in local currencies. Adjusted non-GAAP diluted earnings per share amounted to CHF 4.54, compared to CHF 4.38 for 2009..

(13) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. Research & development spending CHF million. 464.1 374.5 292.1 211.8. 2006. BALANCE SHEET AND CASH FLOW The company’s operating activities continue to generate strong cash flows driven by continued top-line growth and careful management of working capital. Cash from operations for the period under review amounted to CHF 316.4 million, compared to CHF 424.2 million in 2009. The company’s gross cash position as per 31 December 2010 amounted to CHF 1,445.9 million. In addition, the company also holds 10.5 million treasury shares. The increase in product sales as well as a more challenging healthcare environment resulted in trade and other receivables rising to CHF 520.0 million at the end of December, compared to CHF 469.6 million at the end of the previous year. DSO (days sales outstanding) increased to 91 days from 83 days in 2009. Actelion continues to evaluate and actively pursue measures to improve cash collection that include factoring and/or securitization arrangements. Investment in property, plant and equipment for 2010 was CHF 127.6 million for the year, compared to CHF 132.5 million for the previous year. A large proportion of this investment is due to the construction of a new headquarters building in Allschwil, Switzerland, as well as the construction of a new research and development building in the same area. Total property, plant and equipment (PPE) as at year-end was CHF 399.0 million, compared to CHF 281.2 million as at the end of 2009. In keeping with Actelion‘s commitment to maintaining a control infrastructure capable of supporting high-quality financial statements in the face of rapid growth, for the fifth consecutive year, Actelion can announce Internal Controls over Financial Reporting certified as meeting the requirements of the Sarbanes-Oxley Act 2002, section 404 (SOX 404) as at 31 December 2010.. 484.3. 2007. 2008. 2009. 2010. Net income 390.6. CHF million. 306.1. 311.3. 2008. 2009. 239.6. 109.8. 2006. 2007. 2010. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. The buyback is being carried out via a second trading line on the SIX Swiss Exchange, which was established for the purpose of the share repurchase. The second trading line was opened, following regulatory approval, on 25 November 2010 and will be maintained until the end of October 2013 at the latest. Shares purchased on the second trading line are subject to the Swiss federal withholding tax at the rate of 35% on the difference between the repurchase price of the Actelion registered share and its nominal value of CHF 0.50. This withholding tax can be reclaimed by eligible investors.. 11.

(14) WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. CREATING LONG-tERM VALUE..

(15) ctelion has a track record of mastering research A and development to generate sustainable value for patients and shareholders alike. The company’s rich pipeline, broad business organization, tailored partnerships, strong leadership team and inspiring culture are the foundation of further growth and value creation.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. SECURING A SUCCESSFUL FUTURE.

(16) POWERFUL AGILITY. TOGETHER WE INNOVATE. HIGHLY PROFITABLE. Strategy. Since its foundation in 1997, Actelion has grown significantly. In just 13 years, we have built a profitable biotech company with the leading PAH franchise. As a result, our share price has increased 300% since first listing in 2000.. 1. Follow innovation where it leads Pursue top quality science, internally and externally, balanced with medical need and commercial potential. 2. Retain the value of innovation Develop projects ourselves and seek partners when necessary to maximize value. 3. Excel in sales and marketing Expand innovative commercial capabilities to new customers and regions. Manage alliances, putting the product first.. This sustained growth is based on a solid business strategy, built upon a foundation of science and innovation, leadership in PAH, and a global presence. We have demonstrated in the past that we can deliver solutions for healthcare problems in orphan indications, and we are committed to doing so in the future. PROMISING PIPELINE. 4. Drive core values together Culture of Innovation, Trust & Teamwork, Open Communication, and Results Driven.. Our pipeline today reflects the productivity of the founding company philosophy, of science and innovation. We have one of the richest pipelines of any pharmaceutical company of comparable size, with 10 compounds currently in clinical trials,. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Actelion’s four Strategic Principles describe the fundamental priorities required to reach its long-term business objective – to become one of the top biopharmaceutical companies in the world:.

(17) Our R&D efforts have delivered not only first-in-class compounds such as a CRTH2 receptor antagonist but improvements on existing treatments such as macitentan, resulting in a well balanced pipeline in terms of risk, potential benefit for patients and successful growth for Actelion. With this pipeline, we will deliver more news of clinical trial results in 2011 than we have ever delivered before. TAILORED PARTNERSHIPS Our global infrastructure is one of our major assets. With 29 operative affiliates distributed globally, we have local expertise in specialized medicine distribution, regulatory affairs and business acumen, especially within orphan disease indications.Through in-licensing or product acquisition activity, Actelion can utilize these assets and optimize their value.. Actelion also joins forces with qualified industry partners who bring additional expertise or development and marketing power to maximize the value of our innovation and manage risks.. neurial spirit that reflects the innovative nature of our company driving us to further success.. LEADERSHIP AND CULTURE Sustained growth over the past years could only be achieved because of our experienced management and dedicated employees. Our Board and Management, no matter how long they have been with the company, are a diverse, yet aligned team. They consist of industry leaders and financial experts with proven track records.. Hotspot of possibilities. Actelion employees represent a unique blend of strong professionals who are committed to delivering on the company strategy. We are a diverse population of over 2,400 people from more than 50 nations working together with a variety of skills. Each shares their experience and culture to ensure strong collaboration and team work. Every team member is encouraged to engage in their role with a passion and entrepre-. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. and around 30 projects in drug discovery. Almost all of these compounds were discovered in our own research laboratories..

(18) 16. “The architecture stands for in. novation, openness and com munication and thus symbolizes core values of our company. The new Business Center offers our employees an innovative, inspiring work environment.” Jean-Paul Clozel, CEO. Actelion Annual Report 2010. The Actelion Business Center is the heart of the Actelion Center in Allschwil, Switzerland. FROM HUMBLE BEGINNINGS In late 1997, Actelion was simply 5 founders – Jean-Paul Clozel, Martine Clozel, Walter Fischli, Andre Mueller, and Tom Widman. Today, Actelion has grown to more than 2,400 employees worldwide, with over 1,000 based at our headquarters in Allschwil. With such rapid growth, we needed space for our growing workforce, but this space had to meet very specific requirements.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. building the future.

(19) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 17. “Innovation can only happen when people exchange ideas and communicate. The structure of our Business Center very much reflects this at every level, not only on each individual floor but also in the interaction between the floors.”Louis de Lassence, Head Corporate Services. The building we asked renowned architects Herzog & de Meuron to create had to reflect the spirit and culture of innovation that we have at Actelion. It had to provide the best environment for our employees to work in – one which emphasized the open communication and team interactions that are fundamental to efficient productivity. The building had to fit into the existing environment in order to increase usability and preserve the value of both the present and the future infrastructure nearby. Today, we have a building that meets all of these requirements in an ideal way – a building that is a key motivator for our organization and which will attract talented professionals in the future. Our strong focus on functionality led us to avoid expensive or luxurious materials, which would only have distracted from the core principles of the building. PROUD TO WORK AT ACTELION We have created a building that we are proud to have associated with Actelion – and one which our employees are proud to work in.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. CHALLENGING CONSTRUCTION Construction proved to be more challenging than originally anticipated, but with the same persistence and solution oriented approach that Actelion employs on a daily basis within its core business, the challenges were overcome in collaboration with the architects..

(20) WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917.

(21) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 19. DELIVERING ON A GLOBAL SCALE REGIONAL PERFORMANCE In 2010, Actelion delivered a strong top-line performance while improving operational leverage. Total product sales for 2010 were CHF 1,826.3 million, an increase of 12% in local currencies. This solid result, achieved in a generally difficult environment for healthcare, was mostly driven by patient demand for Tracleer, with some contribution from pricing effects in the US. The United States delivered 45% of total sales, on a constant currency basis,. an excellent performance despite some initial impact of the US healthcare reform. European countries delivered a very solid performance, contributing 39% of total product sales, again on a constant currency basis and despite difficulties faced on the market. All over Europe, the financial crisis resulted in significant reimbursement restrictions and other cost containment measures – for example, a general price cut of 10% in Germany in August 2010. These measures have also to a certain extent impacted prescribing patterns for orphan drugs. At the end of 2010, the company had 1,006 sales, marketing and medical professionals based in 29 Actelion country organizations, and reached more than 30 additional markets through partnership arrangements.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Business strategy & operations POWERFUL & SUCCESSFUL GROWTH..

(22) 20. SIGNIFICANT CONTRIBUTORS TO GROWTH In 2010, Actelion benefited from the strategic decisions taken in recent years to expand our geographic presence. Almost doubling the sales force in Japan over the past two years has proven very successful, with an increased contribution to total sales as well as operating income. Likewise the establishment of local operations in Finland, Norway and Denmark, where our Tracleer business was previously handled by a partner, has seen improved operational leverage in the Nordic region. Brazil and Turkey are already significant contributors to our business in terms of absolute size as well as growth momentum. In addition, the strengthening and establishment of local operations in Mexico, China, Russia and Poland, as well as increased focus on other markets in Central Eastern Europe, the Middle East and Africa, has resulted in a greater contribution to our growth dynamics.. ACTELION’S PRODUCTS IN THE MARKETPLACE. EARLY study, which remains the only randomized, doubleblind, placebo-controlled study in this mildly symptomatic patient population. THE ONLY APPROVED PEDIATRIC PAH FORMULATION Actelion’s specifically tailored pediatric formulation of Tracleer has been well received by the European PAH community as it becomes available in more and more countries. This once again demonstrates Actelion’s commitment to small patient populations with specific needs. An additional clinical study in children with PAH is under discussion with the FDA. This study may potentially result in the extension of US exclusivity for Tracleer. FURTHER treating patients with DIGITAL ULCERation In Europe, Actelion made significant progress in expanding the utilization of Tracleer to reduce the number of digital ulcers in patients with systemic sclerosis, contributing strongly to the Tracleer growth momentum in 2010. Since patients with systemic sclerosis are also at risk of developing PAH, the outreach to these physicians has had a positive synergy in highlighting the importance of screening for PAH in this patient population.. THE GOLD STANDARD in PAH treatment In 2010, over 40,000 patients around the world were treated with Tracleer (bosentan). Sales of CHF 1,636.1 million represent growth of 13% in local currencies over the previous year. Tracleer was the first oral therapy for the treatment of pulmonary arterial hypertension (PAH) and is today’s gold standard treatment. Tracleer still holds significant future growth opportunities with earlier diagnosis and treatment, especially in Functional Class II (FCII) patients. In addition, we see opportunities for growth from expanded use in patients with severe PAH related to congenital heart disease (Eisenmenger’s syndrome). Guidelines for the diagnosis and treatment of pulmonary hypertension published in the European Heart Journal in 2009 set out clear advice for the assessment of disease severity, stability and prognosis in PAH as well as treatment goals. Based on these guidelines, Actelion has developed a “Treat to a target” strategy, which encourages physicians to treat PAH with the target of improving symptoms to, or maintaining patients at, Functional Class II. This strategy has allowed us to further capitalize on the clinical evidence generated with Tracleer, particularly the. Actelion Annual Report 2010. Flexible. Open. Productive.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. TRACLEER.

(23) IMPROVED PATIENT CONVeNIENCE Ventavis (iloprost), the first inhaled prostacyclin to treat PAH, continued to be a significant contributor to our 2010 revenues in the US, despite being challenged by a competitor in the inhaled prostacyclin market. Sales of Ventavis totaled CHF 118.7 million in 2010, a decline of 10% compared to 2009 in local currencies. By the end of 2010, more than 70% of Ventavis patients were using the increased strength 20mcg/ml formulation, launched in the second half of 2009. This excellent acceptance is driven by improved convenience and positive patient experience.. While Zavesca has received approval for NP-C from various health authorities around the world, Actelion is still in discussion with the US FDA. In March 2010, Actelion received a complete response letter from the FDA, requesting additional preclinical and clinical information. While collecting such information is challenging, Actelion remains committed to bringing an approved treatment to patients suffering from NP-C in the US. In 2010, Actelion also successfully concluded the MAINTENANCE study with oral miglustat (Zavesca) in patients who switched from enzyme replacement therapy to Zavesca. The study findings will be discussed at upcoming scientific meetings, with the aim of further elucidating the optimal use of this oral therapy.. VELETRI. LEVERAGING EXISTING RESOURCES IN 2011. EPOPROSTENOL THERAPY COMES OUT OF THE COLD In April 2010, Actelion launched Veletri (epoprostenol for injection), an improved formulation which, at most commonly used concentrations, is stable at room temperature over 24 hours, eliminating the need for patients to carry ice packs. It is Actelion’s fourth product on the market in the US, further strengthening our PAH franchise. The initial uptake in the US is encouraging. Registration in France and Japan is ongoing with preparation underway in other countries, providing Actelion with further opportunities for growth. Actelion has also been successful in further characterizing the stability of Veletri, resulting in an updated US label in October 2010. This means that patients can now prepare up to one week’s requirements in advance.. Moving forward, Actelion will continue to strengthen the PAH market through our unmatched commercial expertise in the dynamics and drivers of the market. In spite of the difficult pricing environment, we will seek to deliver our PAH therapies to an increasing number of patients. Our global presence and operational effectiveness will allow us to further leverage our infrastructure for our current portfolio, as well as preparing the way for future opportunities such as macitentan and selexipag.. VENTAVIS. ZAVESCA CONTINUED FOCUS ON RARE DISEASES Actelion has made Zavesca (miglustat) widely available for both Niemann-Pick Type C disease (NP-C) and type 1 Gaucher disease (GD1). Sales of Zavesca grew to CHF 68.7 million in 2010, up by 37% in local currencies (29% in CHF). This increase was mainly due to new patients receiving Zavesca for the treatment of NP-C in Europe, as well as GD1 patients who switched to Zavesca as a result of a shortage in supplies of enzyme replacement therapy. Our efforts to raise awareness and knowledge of NP-C have been well received by the medical community and resulted in improved diagnosis of NP-C patients.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 21.

(24) 22. SCIENTIFIC EXCELLENCE DELIVERING OUTSTANDING VALUE. 1,636.1 in CHF million 2009 CHF 1,508.0 million 8% increase 13% increase in local currencies. 2.8 in CHF million US launch in 2010. VEletri® – An improved formulation of i.v. epoprostenol launched in April 2010. – Stability at room temperature eliminates the need for ice packs, at most commonly used concentrations. – Allows patients to prepare Veletri up to a week in advance.. PRODUCT AVAILABILITY. INDICATION – Pulmonary arterial hypertension Chronic treatment of idiopathic PAH and PAH related to systemic scle rosis in NYHA FC III and IV patients who do not respond adequately to conventional therapy.. Actelion Annual Report 2010. APPROVED IN THE UNITED STATES The registration process for other countries is ongoing.. – Gold standard in PAH treatment with over 40,000 patients currently on therapy. – Treating PAH with the target of improving symptoms to, or maintaining patients at, Functional Class II.. PRODUCT AVAILABILITY. INDICATION – Pulmonary arterial hypertension PAH Functional Class (FC) II, III and IV in the US and other countries and PAH FC II and III in the EU.. APPROVED IN 58 COUNTRIES incl. the EU, Switzerland, the US, Canada, Japan, South Korea, China, Russia, Australia, New Zealand, Brazil and Mexico.. – Digital ulcers. APPROVED IN 43 COUNTRIES incl. the EU, Brazil, Chile, Croatia, Iceland, Israel, Kuwait, Lebanon, Lichtenstein, Norway, Serbia, South Korea, Switzerland, Argentina, Kazakhstan, Russia and Thailand.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. TRACLEER®.

(25) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 23. 68.7 in CHF million 2009 CHF 53.1 million 29% increase 37% increase in local currencies. 118.7 in CHF million 2009 CHF 136.9 million 13% decrease 10% decrease in local currencies. ZAVESCA® – Zavesca is the only disease-modifying therapy reducing the progression of clinically relevant neurological symptoms in patients with NP-C. – Continued commitment to patients with type 1 Gaucher disease.. VENTAVIS® – The first inhaled prostacyclin to treat PAH. – Highly successful launch of the 20mcg/ml formulation which reduces inhalation time.. INDICATION – Niemann-Pick type C disease Progressive neurological manifestations in adult patients and pediatric patients.. APPROVED IN 40 COUNTRIES incl. the EU and EEA countries, Brazil, Canada, South Korea, Russia, Australia, New Zealand, Turkey, Switzerland, Colombia and Mexico.. – Mild to moderate adult type 1 Gaucher disease. Zavesca may be used only in the treatment of patients for whom enzyme replacement therapy is unsuitable.. APPROVED IN 41 COUNTRIES incl. the EU and EEA countries, the US, Canada, Switzerland, Brazil, Australia, Turkey, South Korea, New Zealand, Russia, Colombia and Mexico.. PRODUCT AVAILABILITY. INDICATION – Pulmonary arterial hypertension PAH (WHO Group I) in patients with NYHA Class III and IV symptoms.. APPROVED IN Marketed by Actelion in the United States. Marketed by Bayer Schering Pharma in countries outside the United States.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. PRODUCT AVAILABILITY.

(26) LEADERSHIP IN PAH.. Who could have dreamt that in just over a decade the options for treating patients with pulmonary arterial hypertension (PAH) would advance so far? Not long ago a diagnosis of PAH meant that p atients had only months to live, and clinical trials could only be conducted with a limited number of patients due to the rarity of the diagnosis. Therapy was designed to ease symptoms with, at that time, only intravenous therapy. Today there is so much more. Actelion has become a leader with its global PAH franchise and is committed to changing the paradigm of care once again.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. COMMITMENT TO PATIENTS.

(27) WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Actelion Annual Report 2010.

(28) DATA-DRIVEN MEDICINE. A paradigm change In just 13 years, Actelion has set new standards in the care of PAH. A successful franchise leadership has been forged from a strategy based on innovation, a sound scientific basis and constant communication with the people who matter – physicians, and through them, patients. Groundbreaking research in the 1990s into the field of endothelin sparked the discovery that has led to Tracleer becoming the world’s first and most prescribed dual endothelin receptor antagonist (ERA). This. was not only a first-in-class medication, but the first oral treatment made available to patients who, up until then, had been tied to intravenous drugs. Actelion’s commitment since then has been to continue these inspiring advances. Maximizing the knowledge and expertise that we have gained in this area is the key. Actelion continues to study PAH disease mechanisms, to develop new treatments that are more effective, and to provide expertise that strengthens disease awareness within the medical community.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. TRACLEER (BOSENTAN).

(29) everyone warned us how rare PAH was and in the late ‘90s it was inconceivable that a placebo-controlled trial with an oral agent could show improvement in symptoms” C. Pratt, Scientific Advisory Board. HOW IT ALL BEGAN Actelion’s clinical development program in this neglected area began in the late 1990s by conducting clinical trials with Tracleer in patient groups that, at best, were poorly studied. Our goal was to produce an oral therapy, a significant advancement for patients, who until then had only intravenous therapies. Treatments at that time, had been approved based on studies with limited numbers of patients and could only provide symptom relief. A DECADE OF RESEARCH Tracleer was approved in 2001. Since then, this compound has been successfully studied and developed in more clinical trials than any other PAH drug. This has extended the label and. amplified the benefit for a wider base of patients from children and those exhibiting the early signs of PAH found in Functional Class (FC) II to those more severely affected with FC IV (in the US). Tracleer has been shown to keep some patients at FC II when treatment is started early, or to improve patients from FC III to FC II – a goal that is essential to improve quality of life and longterm outcome. Physicians should consider whether these benefits are sufficient to offset the risk of liver injury in FC II patients, which may preclude future use as their disease progresses. BUILDING THE FRANCHISE Tracleer is not our only PAH asset, it is simply our first. In 2007 and 2009 respectively, Ventavis (iloprost) and Veletri (epoprostenol for injection) were added to our portfolio. Not only do these medications target the prostacyclin pathway; they also increase convenience for patients.. First with macitentan, an optimized ERA, we are aiming to reduce morbidity and mortality for patients with symptomatic PAH for the first time. The SERAPHIN study is the largest double-blind study ever undertaken in PAH, with more than 700 patients. Macitentan, a new compound in development, is a tangible result of the feedback from physicians to experts in the laboratory and the quality of the information gained from clinical experience and post-marketing observational studies. Secondly, selexipag aims to bring the power of prostacyclin treatment to patients in a pill form. It is also another first-in-class, selective IP receptor agonist. Working with our partner Nippon Shinyaku, we aim to free patients from the ties of current inhaled or intravenous therapies. THE LONG-TERM FUTURE. In addition, Actelion has delivered an approved increased strength formulation of Ventavis, which is expected to reduce the time spent inhaling this medication. Veletri, an improved formulation of intravenous epoprostenol, allows patients to prepare up to one week’s requirements in advance. This offers greater convenience, as they no longer have to carry ice packs to continuously cool their medication. DEVELOPMENT today. Searching for new ways to treat PAH. treatment of PAH. Our pipeline already has two Phase III projects due to deliver results early in 2012 and 2013.. Having achieved so much for patients with PAH is encouraging, but not enough. There is still a high demand for further improvement in the diagnosis and. Actelion is committed to patients and to growing its PAH franchise. Our vision is to see better and earlier diagnosis, clinical trials showing improved survival for patients, combination therapy as a standard of care, and ultimately for PAH to be perceived as a slowly progressing chronic disease rather than a rapidly fatal one. We are dedicated to finding new innovative compounds and conducting high-quality clinical trials. Ultimately, it is all about bringing maximum benefit to patients.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. “In the beginning,.


(31) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 29. DRIVEN BY SCIENCE Through our leading role in the science of the endothelium, integration of scientific advances and feedback from the medical community, Actelion has established a pulmonary arterial hypertension franchise. Next to strengthening this franchise, our research and development strategy is now focused on generating new disease franchises for the future. At the end of 2010, Actelion had around 30 projects across the spectrum of the drug discovery process, including six compounds undergoing preclinical development.. At the end of this reporting period, Actelion had one compound – a second S1P1 receptor agonist – in Phase I and six different compounds in Phase II, investigated in eight indications. Three compounds were in Phase III, the final stage before submission for marketing approval: macitentan and selexipag, both under investigation for pulmonary arterial hypertension and olesoxime for amyotrophic lateral sclerosis, the result of our search for innovation from external sources. During 2010, two Phase III clinical studies concluded without reaching statistical significance on the primary endpoint. In January 2011, Actelion together with GlaxoSmithKline, decided to discontinue clinical development of almorexant.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Research & Development HARNESSING THE MAGIC OF DISCOVERY..

(32) OLESOXIME TRANSFORMING INSPIRING DISCOVERIES INTO ADVANCED MEDICINES – THE PIPELINE Delivering on our mission to bring innovative medicines to patients, the Actelion clinical development pipeline is comprised of 10 innovative compounds, including three in late-stage development. The n ovel compounds address a broad range of diseases, including cardiovascular and immunological disorders as well as central nervous system disorders and infectious disease.. Amyotrophic Lateral Sclerosis Phase III study led by Trophos SA with option to buy Enrollment: 512 patients (complete) Potential reporting: H2 2011. PONESIMOD. MACITENTAN IDIOPATHIC PULMONARY FIBROSIS Phase II study: MUSIC Enrollment: 178 patients (complete) Potential reporting: H2 2011. CARDIOVASCULAR Essential Hypertension Phase II study. Status of January 2011. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. Multiple Sclerosis Phase II study Enrollment: 464 patients (complete) Potential reporting: H2 2011.

(33) MACITENTAN Pulmonary Arterial Hypertension Phase III study: SERAPHIN Enrollment: 742 patients (complete) Potential reporting: Early 2012. Pulmonary Arterial Hypertension Phase III study: GRIPHON Est. enrollment: 670 patients Potential reporting: H2 2013 Partner: Nippon Shinyaku. PONESIMOD Plaque Psoriasis Phase II study Est. enrollment: 320 patients Potential reporting: 2012. CRTH2 RECEPTOR ANTAGONIST ALLERGIC RHINITIS Phase II study Enrollment: 579 patients (complete) Potential reporting: H1 2011. ANTIBIOTIC CLOSTRIDIUM DIFFICILE Infection Phase II study Est. enrollment: 92 patients Potential reporting: H2 2011. MIGLUSTAT CRTH2 RECEPTOR ANTAGONIST Asthma Phase II study: CONTROL Est. enrollment: 412 patients Potential reporting: H1 2012. Cystic Fibrosis Phase II study Est. Enrollment: 16 patients Potential reporting: 2012. S1P1 RECEPTOR AGONIST IMMUNOLOGY Phase I program. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. SELEXIPAG.

(34) 32. The expansion of Actelion’s portfolio Preclinical Marketed Clinical. 2002. 2004. DRUG DISCOVERY Actelion’s RESEARCH STRATEGY Actelion’s research strategy, from its inception, has been focused on finding truly innovative medicines – drugs which address novel targets or enable the treatment of diseases with high unmet medical need ultimately improving the lives of patients. We focus on target families, leveraging our knowledge and expertise. We use this expertise to address a variety of therapeutic areas including cardiovascular disorders, central nervous system disorders, infectious diseases, cancer, and immunological disorders. In addition, we have integrated two new areas of focus – fibrosis and neurodegeneration. We aim to tackle diseases through multiple mechanisms, delivering novel therapies to patients, with maximum impact on the selected diseases. Our single center of research is an important aspect of the research strategy, allowing our multidisciplinary teams to work closely together. The resulting exchange of ideas and collaborative mentality increase productivity, with a shared enthusiasm to advance projects. Led by three heads of research – responsible for Chemistry, Biology and Pharmacology & Preclinical Development –the teams tackle the projects from different angles and then join forces to find the best solutions.. Actelion Annual Report 2010. 2006. 2008. 2010. MOLECULES TO MEDICINE The concentrated efforts of the Drug Discovery group, comprising 387 professionals at the end of 2010, have resulted in rapid expansion of our drug discovery pipeline. In total, we have around 30 projects in different stages of Discovery. This includes new targets in the early stages of assay development, projects undergoing high-throughput screening, and projects where our lead compounds are being optimized to become candidates for preclinical and clinical development. The productivity of our Drug Discovery organization is reflected by the six novel chemical entities in Preclinical Development at the end of 2010.. CLINICAL DEVELOPMENT Throughout 2010, the Clinical Development group achieved its key mission of moving the development pipeline forward. Not only has there been significant progress in the most advanced projects, with recruitment into studies or the monitoring of a large number of study patients, but we have also initiated five dose-finding programs in a broad variety of disorders – multiple sclerosis (MS), psoriasis, asthma, seasonal allergic rhinitis and Clostridium difficile infection. In addition to these achievements, the Clinical Development team has also continued to improve its processes and systems in order to ensure Actelion has state-of-theart drug development capabilities to meet the needs of an increasing number of projects.. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. 2000.

(35) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. PIPELINE ANALYSIS To ensure that Actelion has the right balance of low and higher risk projects in its portfolio, the company is focussing on projects where we have accumulated years of experience (e.g. PAH) and projects where we enter new territories with compounds that have a mechanism of action not yet explored (e.g. CRTH2 receptor antagonism). We consider factors such as the potential benefit for patients and growth for the company, while bearing in mind the risks associated with the development of a compound, the time required for its thorough evaluation and the associated costs. BALANCING RISK The development of an innovative compound into a future therapy is a complex undertaking and, by the nature of the business, awareness of the chances of success must accompany every step of the development process. Risk can be mitigated based on the company’s own experience, as well as the experience of others. For example, Actelion’s selective S1P1 receptor agonist, ponesimod, will benefit from the precedent set by a new S1P receptor agonist now available on the market. The information available from this product supports the validity of the S1P1 mechanism of action, and its approval has clarified the regulatory review process. This gives us the confidence to further pursue this exciting concept.. On the other hand, Actelion currently has a novel compound under investigation for asthma. In this indication, the regulatory requirements are very clear, but our compound works by antagonizing the CRTH2 receptor – a new mechanism of action; as a result, the innovation is without precedent, which increases the associated risk. CONSTANT DELIVERY When considering timelines for development, we assess the speed at which a product’s efficacy and safety can be determined. For example, the course of infection and response to treatment with an antibiotic is generally rapidly established. But in diseases where progression is variable, such as asthma, MS or PAH, the development path to assess efficacy of a potential therapy is longer. We also assess the predictive power of a study: with an antibiotic, we can gain a wealth of efficacy data at the preclinical and in vitro stage. At every stage, we have to compare where we are today with where we need to go, remaining aware of the competitive landscape. With macitentan in PAH, a core competence for Actelion, there is a long development path but we are close to delivering results. In this area of clinical development, Actelion has a wealth of knowledge and there is a clear regulatory pathway. Macitentan is an endothelin receptor antagonist, a mechanism of action discovered by Actelion scientists. In addition, we have the experience and scientific insights required to understand our comparative data on this potent, novel compound. This explains why the results of the clinical study of macitentan in PAH, potentially available in early 2012, are so eagerly anticipated.. ADVANCING THE PIPELINE Actelion is forging ahead as the result of the progress made in 2010. We continue to build our experience in several therapeutic areas, while also developing new areas of expertise in clinical development, such as infectious diseases, in anticipation of future innovation delivered from our preclinical pipeline. While 2010 has seen many study initiations and ongoing progress, 2011 will be a year in which many programs report study results.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. DATA FOR DECISIONS For a science-driven company like Actelion, the knowledge and data that we generate become the heart of the business. Only with the most reliable data are we able to take decisions on when and how to advance our clinical projects. With the implementation of new technologies and structures to collect, validate and analyze data, we are well positioned to fully explore and understand both the benefits for patients and any potential risks of compounds in the clinical pipeline.. 33.

(36) 34. PHASE IV PROGRAM BOSENTAN (TRACLEER) IN PULMONARY ARTERIAL HYPERTENSION COMPASS-2 is a double-blind, prospective, event-driven study evaluating the effects on progression of pulmonary arterial hypertension (PAH) in two groups of patients, one receiving sildenafil monotherapy and the other receiving a combination of sildenafil and bosentan. Both bosentan and sildenafil are approved treatments for PAH, exerting their effects through different pathological pathways.. PHASE III PROGRAMS As of the end of 2010, Actelion was studying four compounds in Phase III programs – macitentan and selexipag both in pulmonary arterial hypertension, olesoxime in amyotrophic lateral sclerosis (through our agreement with Trophos SA) and almorexant in insomnia. In the course of 2010, two Phase III clinical studies concluded without reaching statistical significance on the primary endpoint. The first study evaluated bosentan in patients suffering from idiopathic pulmonary fibrosis. The second evaluated clazosentan in reducing vasospasmrelated morbidity and all-cause mortality in clipped patients following aneurysmal subarachnoid hemorrhage (aSAH). While both studies demonstrated a trend in favor of treatment, the findings did not support the initiation of regulatory proceedings. As a consequence, enrollment into a second study with clazosentan was discontinued. On 28 January 2011, Actelion and GlaxoSmithKline announced that the clinical development of the Phase III investigational dual orexin receptor antagonist, almorexant, has been discontinued. The decision follows a review of data from clinical studies which were conducted to further establish the clinical profile of almorexant, including the tolerability profile. GSK and Actelion remain committed to conducting further research to better understand the potential of orexin receptor antagonism in sleep disorders and other indications. 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.. Actelion Annual Report 2010. MACITENTAN IN PULMONARY ARTERIAL HYPERTENSION The most advanced compound of Actelion’s Phase III programs is macitentan in patients with symptomatic pulmonary arterial hypertension. The SERAPHIN study is evaluating the efficacy and safety of this highly potent, tissue-targeting, endothelin receptor antagonist through the primary endpoint of morbidity and all-cause mortality. Global enrollment was completed in December 2009 with a total of 742 patients. The study is event-driven and, based on the progress observed, results could become available early in 2012. SELEXIPAG IN PULMONARY ARTERIAL HYPERTENSION In 2010, Actelion continued global enrollment of patients into the GRIPHON study, a multicenter, double-blind, placebo-controlled morbidity/mortality trial evaluating the efficacy and safety of oral selexipag in patients with pulmonary arterial hypertension. Early estimates of results’ availability point to 2013, but as an event-driven study timelines are subject to change. The Phase III program is based on the encouraging results obtained in a Phase II study with this first-in-class selective IP receptor agonist. This study demonstrated – in a statistically significant manner – safety, efficacy and tolerability in 43 patients suffering from PAH and already receiving standard care with oral PAH medications. The results were presented at the 2010 American Thoracic Society Conference. OLESOXIME IN AMYOTROPHIC LATERAL SCLEROSIS In July 2010, Actelion and Trophos entered into a binding agreement whereby Actelion obtained an exclusive option to acquire privately-held Trophos SA, a clinical-stage pharmaceutical company based in France. The decision on whether Actelion will exercise the option to acquire Trophos will be made upon completion of the ongoing pivotal Phase III study with olesoxime, expected by the end of 2011. The study – conducted by Trophos SA – completed enrollment in the first quarter of 2010 with 512 patients diagnosed with amyotrophic lateral sclerosis (ALS, often referred to as Lou Gehrig’s disease) and receiving the standard of care. The study is an 18-month randomized, parallelgroup, double-blind, placebo-controlled trial evaluating the efficacy and safety of olesoxime in combination with standard of care against standard of care alone. It has benefited from protocol advice obtained from the European Medicines Agency (EMA).. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. CLINICAL DEVELOPMENT PIPELINE PROGRESS.

(37) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. Actelion initiated five Phase II dose-finding studies in 2010, as well as completing enrollment into the proof-of concept study for macitentan in idiopathic pulmonary fibrosis. ponesimod IN MULTIPLE SCLEROSIS AND PSORIASIS Actelion’s selective S1P1 receptor agonist, INN ponesimod, is currently in development as an immunomodulator with the potential for once-a-day oral dosing for multiple autoimmune disorders. In 2010, enrollment into the dose-response study for patients with relapsing-remitting multiple sclerosis was concluded with a total of 464 patients, and consequently results are expected in the second half of 2011. The study is evaluating the efficacy, safety, and tolerability of three doses administered for 24 weeks. In November 2010, Actelion commenced a study to evaluate the efficacy, safety, and tolerability of two doses of this compound in patients with moderate to severe chronic plaque psoriasis. The study is estimated to enroll 320 patients, and the study drug will be administered for up to 28 weeks. ACTELION’S CRTH2 RECEPTOR ANTAGONIST IN ASTHMA AND ALLERGIC RHINITIS Actelion’s CRTH2 receptor antagonist blocks the effects of prostaglandin D2 (PGD2) in inflammation and, as a consequence, the amplification and maintenance of allergic reactions. Following positive data obtained in a proof-ofmechanism study with this compound in mild asthma, Phase II dose-ranging studies in both asthma and allergic rhinitis were initiated in the fourth quarter of 2010. The clinical study in allergic rhinitis targeted the cedar pollen season in the US, which runs from December to March. Enrollment is complete with 579 patients and study results are expected in the first half of 2011. MACITENTAN IN IDIOPATHIC PULMONARY FIBROSIS Actelion’s experience with endothelin receptors provides a strong rationale for these receptors being important targets for potential future treatments in idiopathic pulmonary fibrosis (IPF). Actelion is conducting an exploratory study with macitentan, which completed enrollment at the end of June 2010 with 178 patients. Patients are followed for one year and therefore study r esults are expected in the second half of 2011. These results, together with the detailed analysis of the data generated with bosentan, will allow Actelion to better understand the role of dual endothelin. receptor antagonism in IPF and make appropriate development decisions. ACTELION’S NOVEL ANTIBIOTIC IN CLOSTRIDIUM DIFFICILE infection Following encouraging Phase I results, Actelion’s first potent, novel antibiotic commenced global enrollment into a Phase II dose-finding study in the fourth quarter of 2010. The study is designed to investigate the efficacy, safety and tolerability profile of this compound in the indication of Clostridium difficile infection (CDI). CDI is the main cause of hospital-acquired diarrhea and antibiotic-associated colitis, the incidence and mortality of which is rising in many countries. The deficiencies of current treatments for CDI include high recurrence rates and limited efficacy against hypervirulent strains, as well as the risk for selection of resistance. This makes CDI an area of high unmet medical need. MIGLUSTAT IN CYSTIC FIBROSIS Cystic fibrosis is associated with the malfunction of a chloride channel which regulates the salt content in the fluid covering the surface of the nose and lungs. The transport of ions creates an electrical potential difference which can be measured in the nose by a non-invasive test. At the end of 2010, Actelion was initiating a Phase II clinical study with miglustat in cystic fibrosis. This exploratory study will investigate the effect of miglustat on the nasal potential difference. Cardiovascular Compound In 2010, Actelion initiated a proof-of-concept study with its novel cardiovascular compound in essential hypertension.. PHASE I PROGRAM Actelion is currently evaluating a second selective S1P1 receptor agonist in Phase I.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. PHASE II PROGRAMS. 35.

(38) WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. MAXIMIZE THE VALUE OF INNOVATION..

(39) CREATING OPPORTUNITIES TOGETHER. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. With a global infrastructure and well-established local operating companies in all major and emerging markets, and our close relationships with physicians and payors, Actelion has the maturity to offer tailored partnerships or in-licensing opportunities to maximize the utilization of innovative science..

(40) TAILOR-MADE PARTNERSHIPS Actelion alliance with. Nippon Shinyaku Actelion and Nippon Shinyaku entered into an exclusive worldwide alliance in April 2008 to collaborate on selexipag – an orally-available long-acting selective prostacyclin IP receptor agonist – for patients suffering from pulmonary arterial hypertension. This compound was originally discovered and synthesized by Nippon Shinyaku. Together, we have rapidly advanced selexipag into Phase III development. It is currently being evaluated in the GRIPHON trial, which is enrolling patients around the world. Actelion is responsible for global development and ultimately commercialization of selexipag outside Japan, while the two companies will co-develop and co-commercialize in Japan.. STRATEGIC DIRECTION Actelion’s strategy is to gain access to innovation, whether developed internally or found externally, that can be developed into new drugs and marketed globally to maximize value and reward.. Actelion collaboration with. Trophos SA Actelion and Trophos entered into a binding agreement in July 2010 whereby Actelion obtained an exclusive option to acquire privately-held Trophos SA, a clinical stage pharmaceutical company. Trophos’ lead compound olesoxime is being investigated in a Phase III study in amyotrophic lateral sclerosis, an orphan disease also known as Lou Gehrig’s disease. This study is expected to report data by the end of 2011; at this time, Actelion may exercise the option to acquire Trophos. The two companies also agreed on a research collaboration on Trophos’ proprietary CNS assay, used to screen compounds for the ability to block neuronal degeneration processes. This will create synergies with Actelion’s in-house compound library and expertise in the field of neurological disorders.. Actelion’s record in orphan diseases is evident. When we entered into uncharted territories in the late 1990s, clinical trials and submission dossiers had to be designed with no clear regulatory direction or requirements. Actelion overcame these challenges and now successfully markets products for orphan diseases in all major and emerging markets worldwide.. Creating value together. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. PROVEN SUCCESS.

(41) Despite the hurdles involved in developing drugs for orphan diseases, it is critical that the quality of research is not compromised. Actelion has the expertise which is even more important in this area: – Design and execution of clinical trials for patients with rare diseases – Regulatory and submission dossier compilation – In-depth relationships with physicians – Local market knowledge – Reimbursement and pricing expertise – Set-up and execution of the necessary post-marketing patient monitoring systems LOCAL INFRASTRUCTURE FOR LOCAL initiatives Actelion’s affiliates integrate themselves into the local community to develop this expertise. Where others might have been happy to stop and reap the rewards, we have continued to invest in innovation, using as much information as possible from the medical community in the disease areas we enter.. Regulatory and lifecycle management is enhanced by the in-depth insights that our affiliates have gained through these collaborations. The affiliates have the infrastructure and freedom to identify local needs and implement strategies for maximal product utilization. Learning from physicians, they develop long-term relationships to ensure maximum benefits to patients around the world. Not limited to global deals, our affiliates have the capacity to leverage their own infrastructure to ensure maximum benefits for Actelion and its partners. Our Canadian affiliate is a prime example of such local initiatives, securing exclusive local distribution agreements with Medexus for Metoject and Basilea for Toctino (alitretinoin), with other partnership contracts negotiated in Brazil. ASSETS Our infrastructure is global. We have 29 operative affiliates and are the only biotech company of this size to establish our own affiliate presence in Japan. We have developed relationships and estab-. lished high credibility in all major and emerging markets, which allows us to build and penetrate markets deeply and efficiently. With the facilities of a mature and professional organization, Actelion remains true to the speed and flexibility of its biotech roots. Faster decisions and responsiveness make collaborations easier. We are in a position to leverage our experience, especially with a focus on orphan diseases, to create, defend and expand markets together with partners looking for a dedicated team to maximize the value of their innovation. We are able to tailor alliances individually and ensure a win-win scenario for both parties. We recognize the value of scientific advances for the potential that they can deliver. Access to innovation is not a short-term undertaking for Actelion – it is a long-term strategy. We choose partners who wish to grow together and share risks.. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. ORPHAN DISEASE EXPERTISE.


(43) Actelion Today Business Strategy & Operations R&D Corporate Governance Corporate Social Responsibility Financial Report. 41. Actelion’s Articles of Association, its By-Laws (including the Charters of the Board Committees) and its Policy on Ethical Conduct, all provide the basis for its principles of Corporate Governance. These documents can be found on www.actelion.com under “Our company”, “Corporate responsibility”, “Policies & Charters”.. GROUP STRUCTURE AND SHAREHOLDERS GROUP STRUCTURE DESCRIPTION OF ACTELION’S OPERATIONAL GROUP STRUCTURE Actelion Ltd is the Group’s holding and finance company. Actelion Pharmaceuticals Ltd, based in Allschwil, a 100%. subsidiary of Actelion Ltd, is in charge of drug discovery, development, registration, production, quality assurance, safety, marketing coordination, Group management and coordination. Actelion Pharmaceuticals Ltd further holds some of the intellectual property rights of the Group. Actelion Registration Ltd, a 100% subsidiary of Actelion Ltd, is based in London and holds the marketing authorizations for products marketed by Actelion in the EU. Actelion Clinical Research, Inc., based in New Jersey, a 100% subsidiary of Actelion US Holding Company, performs clinical development on behalf of the Group. Actelion Pharmaceuticals Israel Ltd, based in Ramat Gan, a 100% subsidiary of Actelion Ltd, performs clinical operations on behalf of the Group. Actelion Finance SCA and Actelion Partners SNC, both based in Luxembourg, Actelion Participation GmbH, based in Allschwil, and Actelion Cyprus Limited, based in Nicosia, all four 100% subsidiaries of Actelion Ltd, as well as. Actelion Annual Report 2010. WorldReginfo - 29f0b039-4a0d-45b2-88c2-92a2511c7917. CORPORATE GOVERNANCE WHERE DOORS ARE OPEN AND INFORMATION IS SHARED..