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HALF-YEARREPORT2019

VIFORPHARMA

Half Year Report 2019_English_1 1 05.08.2019 13:10:48

PATIENTS AT OUR CORE

About AndyAndy is a chef based in London with his wife Sarah and son Noah. He has lived with iron deficiency since being diagnosed at the age of 16.

Despite living with iron deficiency and Crohn’s disease, he leads an active life and has a passion for food. He successfully competes at international cooking competitions.

Andy recognises the signs and symptoms of iron deficiency and is able to proactively manage his iron levels with his physician, and the support of his wife. Today, Andy enjoys life without restrictions.


Vifor Pharma Ltd. Half-year Report 2019 3

TABLE OF CONTENTS

04 Letter to shareholders06 Highlights09 Vision, mission and strategy10 Performance overview

12 Our products Key growth drivers14 Ferinject®/Injectafer®18 Vifor Fresenius Medical Care Renal Pharma18 RENAL ANAEMIA MANAGEMENT

18 – Erythropoiesis-Stimulating Agents (ESAs)18 – Mircera®18 – Retacrit™18 – Venofer®19 – Vadadustat 19 MINERAL AND BONE MANAGEMENT

19 – Velphoro®19 – Rayaldee® 20 KIDNEY FUNCTION PRESERVATION

20 – Avacopan20 – CCX140 20 CONDITIONS ASSOCIATED WITH KIDNEY

IMPAIRMENT AND ITS TREATMENT

20 – CR84522 Veltassa® 24 Other products24 – Maltofer® 24 – VIT-276325 OM PHARMA

25 – Broncho-Vaxom®25 – Uro-Vaxom®25 – Doxium®

27 2019 Outlook and financial guidance

28 Consolidated interim financial statements30 Consolidated statement of income31 Consolidated statement of

comprehensive income32 Consolidated statement of financial position33 Consolidated statement of changes in equity34 Consolidated statement of cash flows35 Notes to the consolidated financial statements

42 Upcoming dates43 Contact information


Vifor Pharma Ltd. Half-year Report 2019

4

Etienne Jornod Stefan Schulze

LETTER TO SHAREHOLDERS

DEAR SHAREHOLDER,

Vifor Pharma Group achieved a strong financial and operating performance in the first half of 2019, building on the outstanding progress made in 2018. Through sustained focus on the execu-tion of our three strategic growth drivers, we are on track to deliver our ambitious financial and business goals, and to realise our vision of becoming global leader in iron deficiency, nephrology and cardio-renal therapies.

It is now more than two years since we created Vifor Pharma as a stand-alone company. We are very happy to report that the positive momen-tum continued into 2019 and we are well posi-tioned to achieve our objectives for both the full year 2019 and Milestone 2020. Furthermore we are increasingly focused on the goals of Objective 2025.

During the first half of 2019, Vifor Pharma Group further expanded its global leadership position in iron deficiency and continued to move towards leadership in nephrology and cardio- renal therapies. Total net sales increased by 22.2% to CHF 913.3 million, compared to prior year, and reported EBITDA was up 32.6% at CHF 254.6 million compared to CHF 192.0 million in H1 2018.

We have raised our full year guidance for 2019 with net sales expected to exceed 15% and reported EBITDA expected to grow between

25% and 30%. The progress achieved in the first half of 2019 also makes us confident to achieve our Milestone 2020 targets of more than CHF 2 billion net sales and EBITDA in the range of CHF 700 million.

Each of our three growth drivers, Ferinject®/Injectafer®, the joint company Vifor Fresenius Medical Care Renal Pharma, and Veltassa® delivered a strong performance in H1 2019.

FERINJECT®/INJECTAFER®

Ferinject®/Injectafer® expanded its position as the global leader in intravenous (i.v.) iron in value, with strong growth particularly in the areas of gastroenterology in the US, and in chronic heart failure and patient blood management in Europe. By June 2019, the product was approved in 81 countries, with more than 10 million years of patient experience. We continue to expect full year reported growth of approximately 20% and in-market sales for Ferinject®/Injectafer® of more than CHF 1 billion for the full year 2019.

VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA (VFMCRP)

The partnership with Fresenius Medical Care through the joint company VFMCRP is the basis



of our ambition to become the global leader in nephrology. The VFMCRP portfolio continued to grow in the first six months of 2019, due in particular to the recent outstanding success of Velphoro® in the US.

Mircera® also continued to perform strongly, exceeding all expectations, primarily due to the conversion of existing long-acting erythro-poiesis-stimulating agent (ESA) patients within mid-sized and independent dialysis organisations in the US.

Venofer® maintained its position as the world’s leading i.v. iron brand in volume terms, with more than 25 million patient years of experience. The publication of the PIVOTAL study results in Q4 2018 helped to confirm the tolerability of Venofer® as a key differentiator, one of the main reasons the brand retains strong demand after many decades on the market.

In April, we further expanded our partnership with Akebia in the US for vadadustat, creating an opportunity for it to be provided to up to 60% of US dialysis patients, subject to FDA approval.

Velphoro® grew significantly in the US in the first half of 2019. This growth was driven by the update of the KDIGO (Kidney Disease Improving Global Outcomes) guidelines in 2017, to recommend the use of non-calcium-based phosphate binders.

In May, our partner Cara Therapeutics, Inc. announced positive results from the first US phase-III trial of CR845 in haemodialysis patients with moderate-to-severe pruritus associated with chronic kidney disease (CKD). The results showed statistically significant improvements in both the primary and secondary endpoints, with top-line results from a second global phase-III trial expected in H2 2019.

VELTASSA®

Veltassa®, our third strategic growth driver, continued to transform the treatment of patients with hyperkalaemia in the first half of the year. By the end of June, Veltassa® had been prescribed to over 100,000 patients since launch in the US, and is among the fastest growing nephrology drugs in the last ten years.

In May 2019, the Act on the Reform of the Market for Medicinal Products (AMNOG) process for Veltassa® in Germany was completed, with Veltassa® now fully reimbursed. Further re-

imbursement negotiations and launches will continue in line with individual reimbursement timelines across Europe throughout 2019 and 2020. Veltassa® is on track to achieve growth in 2019 of approximately 50%.

We are investing in studies that demonstrate Veltassa®’s benefits to both patients and clini-cians. Positive results from the phase-II AMBER study were announced in May 2019, demonstrat-ing Veltassa®’s potential to help patients with resistant hypertension and CKD to maintain optimal treatment. The DIAMOND study, evaluat-ing the potential of Veltassa® in combination with renin-angiotensin-aldosterone system inhibitors (RAASi) medications to improve patient out-comes, enrolled its first patient in May 2019.

FERROPORTIN

Vifor Pharma also made important progress with its own in-house developed product. In January, we reported positive phase-I results from VIT-2763, an oral ferroportin inhibitor, which aims to treat diseases related to iron overload. This has provided a strong basis for a phase-II study planned to begin in the second half of 2019.

ORGANISATION

The Board of Directors was further strengthened in May by the election of Dr Sue Mahony and Kim Stratton to the Board of Directors. We would like to express our gratitude to Daniela Boss-hardt-Hengartner, Dr Sylvie Grégoire and Fritz Hirsbrunner who stepped down after many years of distinguished service.

Our success in the first half of 2019 was made possible due to the support of our shareholders and dedicated, talented employees across Vifor Pharma Group, who continue to deliver our company mission – helping patients around the world with severe and chronic diseases, lead better, healthier lives.

Yours sincerely,

Etienne Jornod Stefan Schulze Executive Chairman of President of the the Board of Directors Executive Committee and COO



6

HIGHLIGHTS

EQUITY RATIO

–0.8 p.p.

CORE EARNINGS¹ PER SHARE

CASH FLOW FROM OPERATING ACTIVITIES

–20.7%

1 Core earnings are defined as reported earnings after minorities adjusted for proportionate amortisation of intangible assets.

+159.6 million CHF

254.6EBITDA

913.3NET SALES

MIL

LIO

N

CH

F

CH

F

MIL

LIO

N

CH

F 2.11 197.9 74.0%

+22.2%

+32.6%

MIL

LIO

N

CH

F



TOTAL FERINJECT®/ INJECTAFER® NET SALES

MIL

LIO

N

CH

FM

ILLI

ON

C

HF276.2

MIRCERA® NET SALES

273.4M

ILLI

ON

C

HF

VELTASSA® NET SALES

62.6

+19.4%

+29.0%

+69.9%



8



VISION, MISSION AND STRATEGY

Our vision

To be global leader in iron deficiency, nephrology and cardio-renal therapies. The partner of choice for specialty pharmaceuticals and innovative, patient-focused solutions.

Our mission

We strive to help patients around the world with severe and chronic diseases lead better, healthier lives.

Our strategy

Building on our history of global leadership in the treat-ment of iron deficiency, we have used our expertise in research and development, in-licensing, manufacturing, regulatory affairs and commercialisation to expand into the complementary fields of nephrology and cardio-renal therapies. By focusing on in-licensing new products, in-house development using our expertise in iron-based therapies and building strong partnerships, we bring innovative products and services to patients around the world.

Our three strategic growth drivers

Ferinject®/Injectafer® Vifor Fresenius Medical Care Renal Pharma (VFMCRP) Veltassa®


10 Vifor Pharma Ltd. Half-year Report 2019

PERFORMANCE OVERVIEW

KEY PROFIT AND LOSS FIGURES

Vifor Pharma Group net sales grew to CHF 913.3 million, a strong increase of 22.2% compared to the previous year or 21.0% on a constant currency basis. EBITDA increased to CHF 254.6 million compared to CHF 192.0 million in the prior period, an increase of 32.6%. This increase was largely due to the strong growth in sales com-bined with cost containment.

The application of the new leasing standard (IFRS 16) resulted in a higher EBITDA in H1 2019 of CHF 8.5 million. IFRS 16 was not retrospectively applied and thus the comparative 2018 reporting period was not restated.

Other operating income declined to CHF 20.4 million from CHF 41.0 million in the prior period. This was primarily due to the expected decrease of royalty payments from CellCept® as well as lower income from partnering activities.

Cost of sales amounted to CHF 373.3 million compared to CHF 288.1 million in the prior period, resulting in a gross profit margin of 60.0% compared to 63.5% in H1 2018. The strong growth of higher margin products such as Ferinject®/Injectafer® was offset by decreasing CellCept® royalties, lower partnering income as well as increasing asset amortisation related to Mircera® rights.

Marketing and distribution expenses amounted to CHF 218.5 million, up 3.6% from the prior period. The main drivers were the investments in pre-launch activities and the commercial organisations to further grow Ferinject®, as well as the continued rollout of Veltassa®.

Investments in R&D amounted to CHF 109.4 million compared to CHF 91.9 million in the prior period. The increase was driven by the initiation of the DIAMOND study for Veltassa®.

General and administration expenses amount-ed to CHF 83.8 million compared to CHF 82.3 million in the prior period. The increase is mainly attributable to higher personnel cost.

The average number of full-time employees (FTE) amounted to 2,764 in H1 2019, compared to 2,658 in H1 2018. The increase of 106 FTEs is driven by an expansion of Vifor Pharma’s com-mercial and production workforce.

Depreciation and amortisation amounted to CHF 106.0 million compared to CHF 76.7 million in the prior period and are mainly included in cost of sales (84% and 89%, respectively) as intangible assets amortisation, principally for Veltassa® and Mircera® rights.

The net financial result amounted to an expense of CHF 8.9 million in H1 2019 compared to an income of CHF 41.8 million in H1 2018. The decrease compared to H1 2018 is mainly due to the material foreign exchange gain of CHF 42.9 million in H1 2018 on USD denominated inter-company loans which were settled on 30 June 2018.

Tax expense amounted to CHF 13.8 million in H1 2019 corresponding to an effective tax rate of 9.9%. The approval of the Swiss tax reform in May 2019 did not have a material impact on the tax expense in 2019.

485.1



Net profit after minorities for H1 2019 de-creased to CHF 65.2 million compared to CHF 118.0 million in the prior period. The de-crease is mainly due to the exceptional foreign exchange gain on USD denominated inter-company loans of CHF 42.9 million in the prior year as well as higher tax expenses.

Core earnings per share amounted to CHF 2.11 in H1 2019, a decrease of 20.7% compared to CHF 2.66 in H1 2018. The decrease is due to the exceptional foreign exchange gain of CHF 42.9 million as well as tax gains due to unrecognised tax losses of CHF 22.4 million in the previous year. Excluding these exceptional impacts in H1 2018 core earnings increased by 27.8%. Core earnings are defined as reported earnings after minorities adjusted for proportionate amortisation of intangible assets of CHF 71.9 million in H1 2019 (H1 2018: CHF 54.5 million).

CASH FLOWS

Cash flow from operating activities amounted to CHF +197.9 million compared to CHF +38.4 million in the prior period. The increase is due to the strong operating result of Vifor Pharma in H1 2019 as well as an optimised net working capital.

Cash flow from investing activities amounted to CHF –71.1 million due to upfront and mile-stone payments for in-licensing agreements of CHF –52.4 million, mainly in respect of the extension of commercialisation rights of Mircera® of CHF –37.7 million.

Cash flow from financing activities amounted to CHF –202.9 million and was mainly influenced by dividend distributions of CHF –174.7 million, whereof CHF –45.0 million was paid to Fresenius Medical Care and CHF –129.7 million was distrib-uted to shareholders of Vifor Pharma in May 2019.

FINANCIAL POSITION

Goodwill and intangible assets amounted to CHF 2,643.0 million at the end of H1 2019 compared to CHF 2,676.0 million at the end of 2018, representing 59.0% of total assets (end of 2018: 59.5%).

Net debt was CHF –242.8 million resulting in a net-debt-to-EBITDA ratio of 0.54 at the end of H1 2019. This is compared to net debt of CHF –179.7 million at the end of 2018. The increase was driven by the dividend distributions of CHF 174.7 million in H1 2019.

With CHF 3,311.7 million of shareholders’ equity, Vifor Pharma Group had a strong equity ratio of 74.0% at the end of H1 2019 compared to 74.8% at the end of 2018. The slight decrease is mainly due to the recognition of lease liabilities with the adoption of IFRS 16. The return on equity after minorities amounted to 2.2% in H1 2019, com-pared to 3.9% in H1 2018.


KEY GROWTH DRIVERS


OUR PRODUCTSHALF-YEAR REPORT 2019


13Vifor Pharma Ltd. Half-year Report 2019

Key growth drivers14 Ferinject®/Injectafer®18 Vifor Fresenius Medical Care Renal Pharma18 RENAL ANAEMIA MANAGEMENT

18 – Erythropoiesis-Stimulating Agents (ESAs)18 – Mircera®18 – Retacrit™18 – Venofer®19 – Vadadustat 19 MINERAL AND BONE MANAGEMENT

19 – Velphoro®19 – Rayaldee® 20 KIDNEY FUNCTION PRESERVATION

20 – Avacopan20 – CCX140 20 CONDITIONS ASSOCIATED WITH KIDNEY IMPAIRMENT

AND ITS TREATMENT

20 – CR84522 Veltassa® 24 Other products24 – Maltofer® 24 – VIT-276325 OM PHARMA

25 – Broncho-Vaxom®25 – Uro-Vaxom®25 – Doxium®

TABLE OF CONTENTS


KEY GROWTH DRIVERS


FERINJECT®/INJECTAFER®

Our first key growth driver Ferinject®/Injectafer® (ferric carboxymaltose) is the market-leading intravenous (i.v.) iron therapy. Ferinject® is commercialised in the US and Belgium under the brand name Injectafer®. By the end of June 2019, the product held the leadership position in i.v. iron therapy, with market approval in 81 countries and over 10 million patient years of experience.

With a favourable benefit-risk profile, Ferinject®/Injectafer® continues to unlock the broad unmet medical need for the treatment of iron deficiency and iron deficiency anaemia, in key therapy areas such as chronic heart failure, nephrology, patient blood management (PBM), women’s health and gastroenterology.

Clinical guidelines support the need for i.v. iron and in particular for Ferinject®/Injectafer® in a number of disease areas. These include cardiol-ogy guidelines (European Society of Cardiology for the diagnosis and treatment of acute and chronic heart failure) and gastroenterology guidelines (European Consensus on the Diagno-sis and Management of Iron Deficiency and Anaemia in Inflammatory Bowel Diseases).

Ferinject®/Injectafer® is on track to achieve in-market sales in excess of CHF 1 billion on a rolling annual basis in the second half of 2019, a year earlier than previously anticipated.

811

countries where Ferinject®/Injectafer® has been approved

Ferinject® in-market sales in CHF potentially already in 2019

10 MIL

LIO

N

years of patient experience

BIL

LIO

N



REPORTED NET SALES IN H1 2019

In H1 2019, overall reported net sales of Ferinject®/Injectafer® increased to CHF 273.4 million, up 19.4% from CHF 229.0 million versus the same prior-year period. This is in line with Vifor Pharma’s commitment to full year growth in excess of 20% at constant exchange rates.

GLOBAL IN-MARKET SALES

Vifor Pharma closely monitors in-market sales to determine actual growth rates for the product. The latest available IQVIA data from March 2019 indicates global moving annual total (MAT) sales of Ferinject®/Injectafer® of approximately CHF 946 million, an increase of 27% versus the same prior-year period. This strong growth was primarily driven by gastroenterology and women’s health in the US, and by chronic heart failure and PBM in Europe.

INJECTAFER® (US)

Injectafer® continues to drive the growth of the i.v. iron market in the US. Vifor Pharma’s US partner American Regent, Inc., a member of the Daiichi-Sankyo Group, recorded net sales of USD 215.9 million in H1 2019, an increase of 19.4% compared to H1 2018. This strong double-digit net sales growth occurred despite the one-time sales gains in the same period for 2018 due to a general US market shortage of INFeD®. In the US, Vifor Pharma received a portion of American Regent’s reported Injectafer® net sales, resulting in reported net sales of CHF 73.6 million in H1 2019, a 23.7% increase compared to CHF 59.5 million in H1 2018.

IMPORTANT AWARENESS ACTIVITIES OUTSIDE THE US

In line with our commitment to further build awareness, improve diagnosis and ensure treatment of the unmet medical need, we launched several key initiatives during the first half of 2019. Among them were global awareness raising efforts on iron deficiency in chronic heart failure, including a strong presence at the European Society of Cardiology (ESC) congress on Heart Failure (HFA) in Athens in May 2019 and the European Renal Association-European Dialysis and Transplant Association ERA-EDTA in Budapest in June 2019.

In addition, our awareness initiatives highlight and promote the fact that ESC guidelines for the diagnosis and treatment of acute and chronic heart failure reference Ferinject® as the recom-mended treatment option for chronic heart failure patients with iron deficiency. Vifor Pharma also continues to support online education of health-care professionals (HCPs) who treat iron deficiency with a particular focus in chronic heart failure.

GEOGRAPHIC EXPANSION

In March 2019, our partner in Japan, Zeria Pharmaceutical Co., Ltd. received the certificate of approval for manufacture and sale of Ferinject®, which is a key step in building access to the Japanese market. Ferinject® will be launched in Japan in H2 2019, pending reimbursement pricing approval. Ferinject® will be the first high dose i.v. iron available on the Japanese market, where there is a significant unmet need in women’s health and gastroenterology.


KEY GROWTH DRIVERS




LIFE CYCLE MANAGEMENT

Ferinject®/Injectafer® has been studied and proven in 28 published randomised intervention-al clinical trials. Vifor Pharma continues to invest in additional clinical studies, including its own trials and investigator-initiated trials, to demon-strate the safety and efficacy of Ferinject®/Injectafer® treatment on various patient groups.

A key focus area for ongoing clinical trials is chronic heart failure, as up to 50% of patients with this condition are iron deficient. Iron deficiency in chronic heart failure is associated with reduced quality of life, lessened exercise capacity and increased risk of hospitalisation. Previous clinical studies (FAIR-HF, CONFIRM-HF, EFFECT-HF) have demonstrated significant beneficial effects of Ferinject® on symptoms, quality of life and exercise capacity. As part of its ongoing commit-ment to improving the lives of heart failure patients, Vifor Pharma supports two large mortality and morbidity outcomes studies in chronic heart failure – the AFFIRM-AHF study and the FAIR-HF2 study. Vifor Pharma’s US partner, American Regent, is conducting the HEART-FID study.

The AFFIRM-AHF study, conducted by Vifor Pharma, is a multi-centre, randomised, controlled trial with 1,100 patients. AFFIRM-AHF is designed as the first study to evaluate the benefit of Ferinject®, in patients hospitalised due to acutely decompensated heart failure receiving Ferinject® treatment after stabilising from the acute episode and prior to exiting the hospital. Results from this study are expected by the end of 2020, which will add to the wealth of evidence that the European Society of Cardiology uses to define and promote its guidelines – particularly around the role of iron in chronic heart failure.

FAIR-HF21 is an investigator-initiated study, led by the University Medical Center Hamburg- Eppendorf, Germany, and supported by The German Centre for Cardiovascular Research and by an unrestricted educational grant from Vifor Pharma. The objective of this study is to show that treatment of patients with systolic heart failure and iron deficiency with intravenous (i.v.) iron (Ferric Carboxymaltose, FCM) versus placebo (i.v. NaCl) can reduce the rate of the combined endpoint of recurrent heart failure hospitalisa-tions and cardiovascular death during at least 12 months follow-up. Approximately 1,200 patients are expected to be enrolled in several countries. Results of this study are expected in 2020.

Vifor Pharma’s US partner, American Regent, Inc. is conducting one of the largest studies of i.v. iron in heart failure, the HEART-FID study. HEART-FID is a randomised, double-blind, multi-centre, prospective, placebo-controlled study to enrol over 3,000 patients to assess the efficacy and safety of Injectafer® in heart failure with iron deficiency and reduced ejection fraction. Results are expected in 2022.

1 Clinicaltrials.gov


KEY GROWTH DRIVERS


The expanding product portfolio of VFMCRP is focused on distinct comorbidities and complica-tions in CKD patients. This includes renal anaemia management, mineral and bone disease manage-ment, kidney function preservation and improve-ment, CKD-associated complications and cardio-renal management including hyperkalae-mia and iron deficiency. VFMCRP is a unique company that combines Vifor Pharma’s pharma-ceutical expertise with Fresenius Medical Care’s experience in dialysis patient care.

RENAL ANAEMIA MANAGEMENT

ERYTHROPOIESIS-STIMULATING AGENTS (ESAs)(MIRCERA®, RETACRIT™)

MIRCERA®

Net sales of Mircera® (methoxy polyethylene glycol-epoetin beta) continued to increase in H1 2019 to CHF 276.2 million, an increase of 29.0% compared to the prior year period.

The increase in sales was primarily driven by gaining additional market share in both H2 2018 and H1 2019, with mid-sized and independent dialysis organisations in the US.

Mircera® is a long-acting ESA, licensed from F. Hoffmann-La Roche to treat symptomatic anaemia associated with chronic kidney disease (CKD). Vifor Pharma has exclusive rights to com-mercialise Mircera® in the US and its territories.

RETACRIT™

Reported net sales of Retacrit™ (epoetin alfa- epbx) in H1 2019 amounted to CHF 2.9 million, following the initiation of commercial activities in November 2018.

Retacrit™ injection is a short-acting ESA and the first and only biosimilar ESA approved for marketing in the US. Vifor Pharma licensed rights from Pfizer to commercialise Retacrit™ in the US dialysis and non-hospital nephrology market, enabling Vifor Pharma to offer customers a full range of ESA treatment options addressing patient needs.

VENOFER®

In H1 2019, net sales of Venofer® increased by 9.6% versus prior year to CHF 65.4 million. The majority of Venofer® sales continue to be in the US where it is the market leading intravenous (i.v.) iron in haemodialysis usage.

Venofer® (iron sucrose (iron (III)-hydroxide sucrose complex) is the trusted gold standard in iron therapy for anaemic dialysis patients and is the originator i.v. iron sucrose product. During the first half of 2019, Venofer® continued to be the leading i.v. iron brand in terms of volume world-wide with more than 25 million patient years’ experience by the end of H1 2019.

Venofer® is a nanomedicine and recognised by the US FDA as a non-biological complex drug. The positive experience of generations of physicians and patients compared to other nanoparticle-based iron products (iron sucrose similars) has helped to secure the position of

VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA (VFMCRP)

The second strategic growth driver is Vifor Fresenius Medical Care Renal Pharma, our joint company with Fresenius Medical Care. VFMCRP is dedicated to addressing the needs of chronic kidney disease (CKD) patients, both in pre-dialysis and dialysis.



Venofer® in the highly competitive environment of low-dose i.v. iron products. The tolerability of Venofer® is a key differentiator and one of the main reasons the brand retains strong demand after many decades on the market.

VADADUSTAT IN DEVELOPMENT

Vadadustat is an oral hypoxia-inducible factor (HIF) prolyl hydroxylase inhibitor, currently in global phase-III development by Akebia Therapeutics, Inc., a US NASDAQ quoted bio-pharmaceutical company, for the treatment of anaemia associated with chronic kidney disease (CKD).

In April 2019, Vifor Pharma and Akebia expanded a previously signed licence agreement to sell vadadustat to Fresenius Medical Care North America, to also include a license to sell vadadus-tat to certain third-party dialysis organisations in the US. This amended licence extends the potential opportunity for vadadustat to access up to 60% of US dialysis patients.

The licence, which is subject both to vadadustat’s approval by the US Food and Drug Administration (FDA) and inclusion in the Centers for Medicare and Medicaid (CMS) End Stage Renal Disease Prospective Payment System (ESRD PPS), will now also be effective during the Transitional Drug Add-on Payment Adjustment (TDAPA) two-year period that is expected to precede the ESRD bundle period.

Akebia’s phase-III clinical development pro-gramme includes INNO2VATE, with the enrolment of approximately 3,900 dialysis patients complete. Top-line readout of INNO2VATE is expected in Q2 2020. Akebia’s overall clinical programme includes evaluation of both daily and three-times-weekly dosing protocols in non-dialysis and dialysis patients, respectively. Vadadustat is an investigational therapy and is not yet approved by the FDA or any regulatory authority.

MINERAL AND BONE MANAGEMENT

VELPHORO®

Net sales of the phosphate binder, Velphoro® increased by 126.6% in H1 2019 to CHF 81.1 million, from CHF 35.8 million in 2018. The strong growth is mainly driven by the US market, where in-market sales increased by 57.1% to CHF 197.4 million in Q1 2019.

In 2017, KDIGO (Kidney Disease Improving Global Outcomes) who develop evidence-based clinical practice guidelines in kidney disease, updated their CKD-Mineral and Bone Disorder guidelines to recommend the use of non-calcium-based phosphate binders for the control of phosphate levels. This has resulted in continued adoption by physicians.

Velphoro® (Polynuclear Iron (III) – Oxyhydroxide, Sucroferric Oxyhydroxide) is a non-calcium, iron-based, chewable phosphate binder approved for the control of phosphate levels in the blood in adults with chronic kidney disease (CKD) on dialysis.

Growing real-world evidence continues to demonstrate the benefits of Velphoro® for patients, with approximately twice as many achieving and maintaining target serum phos-phate levels with half the pill burden, when switched from other phosphate binders. A lower pill burden can increase adherence and lead to lower phosphate levels. Real life data also suggests improved nutritional status which has been associated with improved quality of life for dialysis patients.

RAYALDEE® PRE-COMMERCIAL

Rayaldee® is an orally administered, extended- release formulation of calcifediol, a prohormone of the active form of vitamin D3, for the treatment of secondary hyperparathyroidism (SHPT) in patients


KEY GROWTH DRIVERS


with chronic kidney disease (CKD) with vitamin D insufficiency. Vifor Fresenius Medical Care Renal Pharma (VFMCRP) obtained the rights from OPKO Health Inc., for this indication in key European markets and selected markets outside Europe.

In April 2019, European authorities accepted the marketing authorisation application for Rayaldee® for the treatment of secondary hyperparathy-roidism in adult non-dialysis CKD patients. VFMCRP is seeking marketing authorisation through the decentralised procedure in selected European countries. In June 2019, marketing authorisation application was also submitted in Switzerland. Approvals are expected in 2020.

KIDNEY FUNCTION PRESERVATION

AVACOPAN IN DEVELOPMENT

Avacopan is an orally administered, highly selec-tive inhibitor of the complement C5a receptor1 (C5aR1), being developed for the treatment of orphan and rare renal diseases such as anti-neu-trophil cytoplasmic auto-antibody-associated vasculitis (ANCA-associated vasculitis) and C3 glomerulopathy (C3G). Prior studies have shown the clinical and patient experience benefits of selectively blocking the C5aR1 which leads to pathological pro-inflammatory responses.

The pivotal phase-III ADVOCATE trial data readout is expected in Q4 2019. This is the largest controlled trial in active ANCA-associated vasculitis, with more than 300 patients recruited globally during 52 weeks of treatment.

ChemoCentryx has also advanced enrolment in the randomised controlled clinical phase-IIb trial of avacopan in patients with the very rare kidney disease C3G. C3G is a rare disorder most often seen in younger patients which can progress to end stage renal failure with risk of recurrent disease after transplantation. There is currently no approved treatment for this rare disease.

VFMCRP has a licensing agreement with Chemo-Centryx, Inc., a NASDAQ-quoted biotechnology company, to commercialise avacopan outside the US.

CCX140 IN DEVELOPMENT

CCX140 is an orally administered small molecule that is a highly potent and selective inhibitor of the chemokine receptor CCR2. VFMCRP and ChemoCentryx have launched a joint clinical development programme for CCX140 in patients with focal segmental glomerulosclerosis (FSGS). FSGS causes protein loss from the kidneys and progressive kidney failure. Inhibiting the actions of the CCR2 receptor may reduce proteinuria and preserve renal function through podocyte protection, as well as the reduction in mono-cyte-driven inflammation.

Two clinical trials LUMINA 1 and LUMINA 2 are currently underway. The first trial in patients with moderate-to-severe protein loss in FSGS, and the second in patients with severe protein loss and clinical nephrotic syndrome primary FSGS. Clinical readout is expected in 2020 and will determine the next steps in clinical development.

VFMCRP has a licensing agreement with Chemo-Centryx, Inc. to commercialise CCX140 outside the US.

CONDITIONS ASSOCIATED WITH KIDNEY IMPAIRMENT AND ITS TREATMENT

CR845 IN DEVELOPMENT

In the US, VFMCRP and Cara Therapeutics, Inc. will promote the investigational medicine to FMCNA (Fresenius Medical Care North America) dialysis clinics under a profit-sharing arrange-ment.



CR845 is a peripherally restricted kappa opioid agonist that targets the peripheral neurons and immune cells. Chronic kidney disease-associated pruritus (CKD-aP) is a devastating systemic itching condition that occurs with high frequency and intensity in patients with chronic kidney disease undergoing haemodialysis. It affects approximately 60–70% of all patients on dialysis. Moderate-to-severe CKD-aP is associated with poor quality of life, depression, and reflects an independent predictor of mortality among haemodialysis patients. There are currently no approved therapies in Europe or the US for treatment of CKD-aP.

CR845 has demonstrated significant reductions in itch intensity and improvement in quality of life measures in haemodialysis patients with moderate-to-severe CKD-aP. It has been specifi-cally designed to mitigate the drawbacks or side effects typically observed with opiates.

In May 2019, Cara Therapeutics, Inc. announced positive results from the KALM-1 US phase-III trial, with statistically significant improvements in the primary and all secondary endpoints in subjects undergoing haemodialysis with CKD-aP. CR845 was generally well tolerated with a safety profile consistent with that seen in earlier clinical trials.

A second phase-III trial (KALM-2) continues to enrol haemodialysis patients with CKD-aP globally, with top line data expected in H2 2019 based on current enrolment expectations. If approved, CR845 will be the first medicine for this indication outside of Japan.

Vifor Fresenius Medical Care Renal Pharma (VFMCRP) has a licensing agreement with Cara Therapeutics, Inc., a NASDAQ-quoted bio-technology company, to commercialise CR845 (difelikefalin) for the treatment of CKD-aP in patients undergoing dialysis globally, excluding the US, Japan and South Korea.


KEY GROWTH DRIVERS


VELTASSA®

Our third strategic growth driver is Veltassa® (patiromer), a treatment for hyperkalaemia (elevated serum potassium levels). Hyperkalaemia is often asymptomatic and can lead to arrhythmia, hospitalisation and sudden death. Hyperkalaemia is frequently associated with chronic kidney disease (CKD) and chronic heart failure and with the use of life-saving renin-angiotensin-aldosterone system inhibitors (RAASi) medications.

In H1 2019, net sales of Veltassa® increased to CHF 62.6 million compared with CHF 36.8 million in H1 2018, an increase of 69.9% (or 65.3% on a constant currency basis), where growth was mostly driven by the US. Net sales in the US were CHF 59.4 million (USD 59.4 million), a significant increase compared to CHF 36.3 million (USD 37.4 million) in H1 2018.

The H1 2019 net sales performance of Veltassa® confirms our expectation that Veltassa® will grow by approximately 50% on a full year basis in 2019.

Since FDA approval and launch in 2015, Veltassa® has experienced steady and sustained growth, while also driving the expansion of the US potassium binder market from CHF 172.8 million in 2016 to CHF 253.9 million in 2018. More than 15,000 physicians had prescribed Veltassa® to more than 100,000 patients since launch in the US at the end of H1 2019, making among the fastest growing drugs in nephrology in the last ten years.

100,000

69.9%

patients treated

more than

net sales increase



REIMBURSEMENT AND REGULATORY APPROVALS

In May 2019, the AMNOG process for Veltassa® in Germany completed, with Veltassa® now successfully reimbursed. Reimbursement was also gained in Belgium and, most recently, in Spain. As of 30 June 2019, Veltassa® has been launched in Sweden, Norway, Denmark, Belgium and Germany. Further reimbursement negotiations and launches will continue in line with individual reimbursement process timelines across Europe throughout 2019 and 2020.

TRANSFORMING THE TREATMENT OF HYPERKALAEMIA

Veltassa® is the first drug to offer an effective and well tolerated innovation for cardiologists and nephrologists in the long-term management of hyperkalaemia in CKD and chronic heart failure patients.

Vifor Pharma is committed to investing in data generation programmes to drive evidence-based best practice using Veltassa® in this patient population. The AMBER study, a phase-II trial, was presented in May 2019 at the National Kidney Foundation Congress in Boston, USA. The study demonstrated that a significantly higher propor-tion of patients with CKD and resistant hyper-tension taking Veltassa®, remained on guideline recommended spironolactone therapy, com-pared to patients taking placebo at week 12.

Vifor Pharma is also now investing in the DIAMOND phase-IIIb study which is designed to evaluate the potential of Veltassa® in combination with RAASi medications. DIAMOND is an outcome-based study addressing cardiovascular mortality and hospitalisation rates. The first patient was enrolled in the DIAMOND study in May 2019. The study is a global, multicentre, double-blind, placebo-controlled trial aiming to study approxi-mately 2,400 patients in over 400 sites. DIAMOND will include patients with heart failure (with or without CKD) and either current hyperkalaemia at screening, or a history of hyperkalaemia in the past year, which led to a reduction or discontinua-tion of RAASi therapy. The primary endpoint of the study is the time-to-first occurrence of cardiovascular death or cardiovascular hospitali-sation. Top-line results are expected in 2022.

In June 2019, the European Medicines Agency (EMA) approved a supplemental new drug application to enable the use of Veltassa® with or without food, potentially providing patients with greater flexibility in incorporating Veltassa® in their daily treatment regimen. The label update was based on results from the phase-IV TOURMALINE study, which showed no statisti-cally significant difference between the groups taking Veltassa® with or without food in achieving serum potassium levels within the target range (3.8 to 5.0 mEq/L). The Federal Drug Administra-tion (FDA) had previously approved the label update based on the TOURMALINE results in May 2018.


OUR PRODUCTS


OTHER PRODUCTS

In addition to the leading intravenous (i.v.) iron therapies, Ferinject®/Injectafer® and Venofer®, Vifor Pharma develops and commercialises other products for iron deficiency and more recently for iron overload.

VIT-2763 IN DEVELOPMENT

Vifor Pharma is using its expertise in understanding the chemistry and biology of iron to develop VIT-2763, the first oral ferroportin inhibitor with the potential for treating diseases with ineffective erythropoiesis and iron overload conditions, such as beta-thalassemia.

Following the positive phase-I study results reported at the beginning of 2019, Vifor Pharma will start a phase-II trial in beta-thalassemia in the second half of 2019. This randomised, controlled, multinational trial will be conducted in patients with non-transfusion-dependent beta-thalassemia and documented iron overload.

In June 2019, both the FDA and the EMA granted an orphan drug designation for VIT-2763.

MALTOFER®

Net sales of Maltofer® decreased by 13.2% compared to the prior year to CHF 29.6 million. This decrease reflects a change in the order schedule of our partners compared to the prior year, mainly in Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, Oman and Latin America.

Maltofer® (Iron polymaltose complex) plays a key role in the management of patients with iron deficiency. It is the originator oral iron poly-maltose complex (IPC) and is a widely accepted and well-tolerated oral iron therapy for infants, children, adolescents and pregnant women.



OM PHARMA PRODUCTS

We continue to optimise our infectious diseases and over-the-counter and prescription product (ID/OTx) portfolio to deliver value to a focused group of patients with high unmet medical need.

The three leading products in the ID/OTx port-folio are Broncho-Vaxom®, Uro-Vaxom® and Doxium®.

BRONCHO-VAXOM®

Net sales of Broncho-Vaxom® decreased 17.2% to CHF 21.6 million in H1 2019 compared to the previous year. This decrease was primarily due to phasing in Russia which is a key market. However, in-market sales of Broncho-Vaxom® were strong with an increase of 15% in volume during the past winter season (October 2018 to March 2019).

Broncho-Vaxom® (lyophilized bacterial lysates) is an extract of different bacterial species used for the treatment and prevention of recurrent respira-tory infections. It stimulates the immune system and the body’s natural defences against a wide spectrum of respiratory pathogens.

URO-VAXOM®

Net sales of Uro-Vaxom® in H1 2019 were CHF 8.4 million, an increase of 9.2% compared to the previous year. Overall market profitability and market share have been increasing consistently in recent years.

Uro-Vaxom® (lyophilized bacterial extract) is an extract of the bacterium Escherichia coli for the treatment and prevention of recurrent urinary tract infections. It stimulates the immune system and the body’s natural defences against urinary pathogens. There is a high medical need to prevent recurrent urinary tract infections, with Uro-Vaxom® listed in various international and local guidelines.

DOXIUM®

Net sales of Doxium® in H1 2019 were CHF 9.8 million, a decrease of 9.4% compared to prior year. This decrease was due to the phasing of shipments in China. The overall in-market perfor-mance in key emerging pharma markets such as Brazil, Turkey, Egypt and China was strong, with growth of 20% in volume (Q1 2018 vs Q1 2019 moving annual total).

Doxium® (calcium dobesilate) is used for the oral treatment of diabetic retinopathy, signs of chronic venous insufficiency in the lower limbs (pain, cramps, paraesthesia, oedema, stasis dermatosis) and haemorrhoidal syndrome.



2019 OUTLOOK AND FINANCIAL GUIDANCE

2019 OUTLOOK

MARKET ACCESS

Ferinject® is expected to be launched in Japan in H2 2019, subject to obtaining reimbursement.

The go-to-market strategy in China for Ferinject® will be announced before the end of 2019.

We expect to partner for the Japanese rights of CCX140 in H2 2019.

CLINICAL TRIALS

The phase-II trial of VIT-2763 (ferroportin inhibitor) in beta-thalassemia patients is planned to start in H2 2019.

The results of the global phase-III ADVOCATE study of avacopan for anti- neutrophil cytoplasmic auto-antibody-associated vasculitis (ANCA-associated vasculitis) are expected in Q4 2019.

The second global pivotal phase-III trial (KALM-2) of CR845 that is being conducted by Cara Therapeutics, Inc. is expected to read-out by the end of 2019.

BUSINESS DEVELOPMENT

One additional in-licensing, product acquisition or corporate transaction is expected before the end of 2019.

FINANCIAL GUIDANCE

In 2019 at constant exchange rates, Vifor Pharma net sales are expected to exceed 15%, reported EBITDA is expected to grow between 25% and 30%.

In 2020 net sales are expected to exceed CHF 2 billion and EBITDA to be in the range of CHF 700 million. Going forward the dividend is expected to remain at the current level of CHF 2 per share.

>15%

25–30%

>2 BILLION

700 MILLION

2019 NET SALES EXPECTED GROWTH

2019 EBITDA EXPECTED TO INCREASE

2020 EXPECTED NET SALES

2020 EBITDA EXPECTED IN THE RANGE OF

CHF

CHF



CONSOLIDATED INTERIMFINANCIAL STATEMENTS

HALF-YEAR REPORT 2019



TABLE OF CONTENTS

30 Consolidated statement of income31 Consolidated statement of

comprehensive income32 Consolidated statement of financial position33 Consolidated statement of changes in equity34 Consolidated statement of cash flows35 Notes to the consolidated financial statements



CONSOLIDATED INTERIM FINANCIAL STATEMENTS

30

CONSOLIDATED STATEMENT OF INCOME

in million CHF — unaudited figures2019

1.1.—30.6.2018

1.1.—30.6.

Net sales 913.3 747.4

Other income 20.4 41.0

Cost of sales (373.3) (288.1)

Gross profit 560.3 500.2

Marketing and distribution (218.5) (210.9)

Research and development (109.4) (91.9)

General and administration (83.8) (82.3)

Operating profit (EBIT) 148.7 115.2

Financial income 5.9 47.5

Financial expenses (14.8) (5.7)

Profit before income taxes (EBT) 139.8 157.0

Income taxes (13.8) 1.0

Net profit 126.0 158.0

Attributable to:

› Shareholders of Vifor Pharma Ltd. 65.2 118.0

› Non-controlling interests 60.9 40.0

Earnings per share in CHF

Basic earnings per share 1.00 1.82

Diluted earnings per share 1.00 1.82




31

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


1.1.—30.6.2018

1.1.—30.6.


Hedging transactions

› Change in fair value (4.5) (0.6)

› Realised in profit or loss 3.6 (0.7)

Translation differences 4.1 (10.9)

Items that will be reclassified subsequently to profit or loss 3.2 (12.2)

Remeasurements of the net defined benefit liability/asset (0.2) (0.7)

Change in fair value of equity securities measured through OCI (9.5) 15.7

Income taxes 0.7 (2.6)

Items that will not be reclassified to profit or loss (9.0) 12.4

Other comprehensive income (5.8) 0.2

Total comprehensive income 120.2 158.2

Attributable to:

› Shareholders of Vifor Pharma Ltd. 61.2 108.7

› Non-controlling interests 59.1 49.5




32

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in million CHF — unaudited figures2019 30.6.

2018 31.12.

Cash and cash equivalents 321.5 400.3

Financial assets 0.8 2.4

Trade and other receivables 522.3 509.0

Income tax receivables 6.5 14.3

Inventories 319.4 281.7

Prepaid expenses and accrued income 40.3 41.2

Current assets 1,210.9 1,248.8

Property, plant and equipment 271.6 274.0

Right-of-use assets 1 70.1 -

Intangible assets 2,643.0 2,676.0

Financial assets 199.3 208.2

Deferred tax assets 82.9 88.4

Non-current assets 3,266.9 3,246.7

Assets 4,477.8 4,495.5

Financial liabilities 100.4 116.2

Lease liabilities 1 14.7 -

Trade and other payables 110.1 156.4

Income tax payables 83.0 80.6

Accrued expenses and deferred income 267.5 240.0

Provisions 5.5 1.3

Current liabilities 581.3 594.4

Financial liabilities 490.9 492.4

Lease liabilities 1 63.1 -

Deferred tax liabilities 19.2 34.4

Employee benefit liabilities 9.7 9.0

Provisions 1.9 0.8

Non-current liabilities 584.8 536.5

Share capital 0.7 0.7

Reserves 2,984.5 3,051.5

Equity attributable to shareholders of Vifor Pharma Ltd. 2,985.1 3,052.1

Non-controlling interests 326.6 312.5

Shareholders' equity 3,311.7 3,364.6

Liabilities and shareholders' equity 4,477.8 4,495.5

1 As a result of the IFRS 16 adoption, new line items were included for the right-of-use assets and both current and non-current lease liabilities. The prior year was not restated, refer to note 5.3 for further details.




33

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in million CHF — unaudited figuresShare

capitalTreasury

sharesRetained earnings

Foreign currency

translation reserves

Fair value reserves Total

Non- controlling

interestsTotal

equity

1 January 2018 0.7 (17.7) 3,244.7 (155.7) 1.1 3,073.1 259.4 3,332.5

Net profit - - 118.0 - - 118.0 40.0 158.0

Other comprehensive income - - 2.9 (10.9) (1.3) (9.3) 9.5 0.2

Total comprehensive income - - 120.9 (10.9) (1.3) 108.7 49.5 158.2

Dividends - - (129.6) - - (129.6) (45.0) (174.6)

Transactions on treasury shares - 0.7 (11.5) - - (10.8) - (10.8)

Share-based payments - - 7.5 - - 7.5 - 7.5

30 June 2018 0.7 (17.0) 3,232.0 (166.6) (0.2) 3,048.9 264.0 3,312.9

31 December 2018 0.7 (18.4) 3,250.5 (182.1) 1.4 3,052.1 312.5 3,364.6

Adoption of IFRS 16 1 - - (0.9) - - (0.9) - (0.9)

1 January 2019 0.7 (18.4) 3,249.6 (182.1) 1.4 3,051.2 312.5 3,363.7

Net profit - - 65.2 - - 65.2 60.9 126.0

Other comprehensive income - - (7.1) 4.0 (0.9) (4.0) (1.8) (5.8)

Total comprehensive income - - 58.0 4.0 (0.9) 61.2 59.1 120.2

Dividends - - (129.7) - - (129.7) (45.0) (174.7)

Transactions on treasury shares - 1.8 (2.2) - - (0.4) - (0.4)

Share-based payments - - 2.8 - - 2.8 - 2.8

30 June 2019 0.7 (16.6) 3,178.7 (178.0) 0.5 2,985.1 326.6 3,311.7

1 The adjustments arising from the IFRS 16 adoption, effective 1 January 2019, also include an opening retained earnings impact as the prior year was not restated. Refer to note 5.3 for further details.

At the Annual Shareholder Meeting held on 8 May 2019, a resolution was passed to pay a dividend of CHF 2.00 per share (previous year: CHF 2.00 per share), which corresponds to a payment of CHF 129.7 million for the financial year 2018. This was paid to the shareholders on 14 May 2019.




34

CONSOLIDATED STATEMENT OF CASH FLOWS


1.1.—30.6.2018

1.1.—30.6.


Income taxes 13.8 (1.0)

Depreciation and amortisation 106.0 76.7

Increase in provisions and employee benefit assets and liabilities 2.6 6.1

Net financial result 8.9 (41.8)

Other non-cash items 10.4 12.3

Change in trade and other receivables (14.3) (103.7)

Change in inventories (38.3) (42.9)

Change in trade and other payables (32.8) (16.8)

Change in other net current assets 27.9 35.3

Interest received 2.3 1.3

Interest paid (2.8) (5.5)

Income tax paid (11.9) (39.7)

Cash flow from operating activities 197.9 38.4

Investments in property, plant and equipment (19.6) (26.3)

Investments in intangible assets (58.3) (143.6)

Investments in financial assets and securities (1.0) (18.0)

Proceeds from property, plant and equipment 4.0 0.6

Proceeds from financial assets and securities 3.9 1.5

Cash flow from investing activities (71.1) (185.8)

Dividends paid (174.7) (174.6)

Purchase of treasury shares (4.7) (9.6)

Proceeds from financial liabilities 0.5 134.9

Repayment of financial liabilities (15.5) (114.3)

Repayment of lease liabilities (8.6) -

Cash flow from financing activities (202.9) (163.6)

Effects of exchange rate changes on cash and cash equivalents (2.7) 0.5

Decrease in cash and cash equivalents (78.8) (310.6)

Cash and cash equivalents as at 1 January 400.3 425.1

Cash and cash equivalents as at 30 June 321.5 114.5


NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS


These are the consolidated interim financial statements of Vifor Pharma Ltd. and its subsidiaries (together referred to as “Vifor Pharma” or “the Group”). Vifor Pharma is a pharmaceutical company focused on the development, manufacture and distribution of pharmaceutical products.

KEY EVENTS AND TRANSACTIONSThe financial position and performance of the Group was particularly affected by the following transactions during the reporting period:

(i) Mircera® commercialisation rightsOn 30 March 2019, the Group signed an agreement with Fresenius Medical Care for the extension of the Mircera® commercialisation rights for the first four months of 2020 for consideration of USD 19.5 million. The Group subsequently exercised its option for an additional USD 19.0 million to further extend the rights until the end of August 2020. The total payments were capitalised and will be amortised over the 8-month licence term.

The agreement includes options for Vifor Pharma to further extend the rights until the end of 2021.

(ii) Akebia Therapeutics expansion of licence agreementOn 9 April 2019, the Group announced that the terms of the licence agreement with Akebia Therapeutics (“Akebia”) had been amended, allowing Vifor Pharma to sell vadadustat to certain third-party dialysis organisations, for use in the US. Under the terms of the amended agreement, Akebia is eligible to receive an additional USD 5.0 million payment, for a total of USD 25.0 million, upon approval of vadadustat by the FDA and the earlier of the Centres for Medicare & Medicaid’s (CMS) determination that vadadustat will be reimbursed under the Transitional Drug Add-on Payment Adjustment (TDAPA) or included in the End Stage Renal Disease (ESRD) bundle. These future commitments will be added to the cost of the intangible asset should they become payable.

ABOUT THESE NOTES AND FINANCIAL STATEMENTSThe notes to these consolidated interim financial statements have been organised to help users find and understand the most relevant information. Certain information (e.g. basis of preparation and scope of consolidation, amendments to IFRS, etc.) has been placed at the end of the document and cross-referenced where necessary.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




1 OPERATING SEGMENTFinancial information is reported in a manner consistent with the internal reporting provided to the Board of Directors (Chief Operating Decision Maker). It is presented to the Board of Directors on an aggregate basis for evaluating financial performance and allocating resources. Vifor Pharma continues to report a single operating segment.

2 NET SALES AND OTHER INCOMEThe table below shows the disaggregation of net sales by brand.

in million CHF2019

1.1.—30.6.2018

1.1.—30.6.

Ferinject®/Injectafer® 273.4 229.0

Venofer® 65.4 59.6

Maltofer® 29.6 34.1

Mircera® 276.2 214.0

RetacritTM 2.9 -

Velphoro® 81.1 35.8

Veltassa® 62.6 36.8

Other Rx brands 45.3 53.2

Anti-infectives 52.7 57.1

Third-party production 24.2 27.8

Net sales 913.3 747.4

Geographic areasRevenues are attributed to countries (or regions) based on the country where the sale originates, as represented in the following table:

in million CHF

2019 1.1.—30.6. Switzerland

Europe (excluding

Switzerland) USA Rest of world Group

Net sales 72.2 227.1 514.0 100.0 913.3

Other income 13.2 0.8 0.7 5.7 20.4

Total 85.4 227.9 514.6 105.7 933.7

2018 1.1.—30.6.

Net sales 75.7 216.4 359.9 95.4 747.4

Other income 18.4 0.8 0.4 21.3 41.0

Total 94.1 217.2 360.3 116.8 788.4




3 EXPENSES BY NATURE AND RECONCILIATION TO EBITDAExpenses are presented by function in the statement of income and are presented by nature as follows:

in million CHF 2019

1.1.—30.6.2018

1.1.—30.6.

Cost of materials 207.4 150.7

Personnel expenses 265.0 251.2

Marketing and advertising expenses 62.7 61.6

Other operating expenses 143.9 133.0


Total 785.0 673.2

Depreciation and amortisation are allocated to expenses presented by function as follows:

in million CHF2019

1.1.-30.6.2018

1.1.-30.6.

Depreciation Amortisation Depreciation Amortisation

Cost of sales 9.6 79.2 9.4 59.1

Marketing and distribution 4.1 0.5 0.9 0.2

Research and development 1.6 - 1.2 -

General and administration 10.0 1.0 4.2 1.8

Total 25.2 80.7 15.7 61.0

Reconciliation from EBIT to EBITDA

in million CHF 2019

1.1.—30.6.2018

1.1.—30.6.

Operating profit (EBIT) 148.7 115.2


EBITDA 254.6 192.0




4 FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUEThe Group’s financial instruments, measured at fair value at the reporting date, are shown in the tables below.

in million CHF 2019 30.6. Level 1 Level 2 Level 3

Financial assets measured at fair value

Publicly traded securities 139.3 139.3

Derivative financial instruments 0.5 0.5

Venture funds 57.6 57.6

Financial liabilities measured at fair value

Contingent consideration liabilities from business combinations 12.1 12.1

in million CHF 2018

31.12. Level 1 Level 2 Level 3

Financial assets measured at fair value

Publicly traded securities 148.6 148.6


Venture funds 55.6 55.6

Financial liabilities measured at fair value


Contingent consideration liabilities from business combinations 12.2 12.2

The fair value of the level 3 financial assets and financial liabilities measured have not changed materially compared to the previous-year financial statements. The valuation methods applied have remained consistent.

5 OTHER DISCLOSURESVifor Pharma Ltd. is a Swiss company limited by shares with its head office in St. Gallen. The registered office is at Rechenstrasse 37, 9014 St. Gallen, Switzerland. Vifor Pharma shares are traded on the SIX Swiss Exchange under securities no. 36474934 (ISIN CH0364749348).

The Board of Directors authorised the 2019 consolidated interim financial statements for publication on 8 August 2019.

5.1 Basis of preparation and scope of consolidationExcept for the adoption of new standards effective as of 1 January 2019, as described below, the consolidated interim financial statements have been prepared using the same accounting principles as the annual financial statements for the year ending 31 December 2018 and comply with IAS 34 Interim Financial Reporting. Several other amendments and an interpretation apply for the first time in 2019, but do not have an impact on the consolidated interim financial statements of the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ending 31 December 2018 as they update previously published information. More detailed information about the accounting policies is given in the notes to the consolidated financial statements for 2018.




5.2 Swiss tax reformOn 19 May 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (TRAF) which will enter into force on 1 January 2020. The tax reform provides for an abolishment of the privileged tax regimes on cantonal level. At the same time, many cantons decided to reduce their corporate income tax (CIT) rate, and other cantons will decide about a reduction of the CIT in the second half of 2019. This required a revaluation of the deferred tax assets and liabilities to the newly enacted future tax rates. As a consequence the deferred tax assets recorded on the balance sheet were reduced by CHF –15.7 million and the deferred tax liabilities were reduced by CHF –16.4 million as at 30 June 2019. The net impact of the deferred tax revaluation resulted in a deferred tax income of CHF +0.7 million.

5.3 Amendments to IFRSThis note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 January 2019. The Group has adopted IFRS 16 using the simplified transition approach and has not restated comparatives for the 2018 reporting period. The adjustments arising from the new standard are therefore recognised in the opening balance sheet on 1 January 2019.

(i) Previously disclosed operating lease commitments and the lease liabilitiesOn adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incre-mental borrowing rate as of 1 January 2019. The weighted average incremental borrowing rate (IBR) applied to the lease liabilities on 1 January 2019 was 2.4%.

in million CHF2018

31.12.

Total operating lease commitments (IAS 17) 79.4

Discounted operating lease commitments (2.4% IBR) 74.5

The difference of CHF 4.6 million between the lease liabilities recognised as at 1 January 2019 and the discounted operating lease commitments disclosed as at 31 December 2018 is mainly due to the inclusion of certain lease extension options for IFRS 16 that are considered reasonably certain to be exercised.

in million CHF Lease liabilities

Carrying amounts as at 01.01.2019 79.1

Change in lease portfolio 6.5

Lease payments (8.5)

Unwinding of discount 0.9

Translation differences (0.2)


Current lease liabilities 14.7

Non-current lease liabilities 63.1





(ii) Right-of-use assets and the transition impactThe lease assets were measured retrospectively as if the new standard had always been applied, discounted using the incremental borrowing rate on 1 January 2019. The recognised amounts and movements in the reporting period are as follows:

in million CHF Operating buildings Vehicles Total

Net carrying amounts as at 01.01.2019 63.0 8.3 71.3

Change in lease portfolio 0.1 6.4 6.5

Depreciation (5.3) (2.3) (7.6)

Translation differences (0.0) (0.2) (0.2)


Cost 87.4 18.9 106.4

Accumulated depreciation (29.6) (6.7) (36.3)


The cumulative effect of applying the standard on 1 January 2019 is recognised as an adjustment (reduction) to opening retained earnings. This adjustment of CHF 0.9 million (net of deferred tax) arises from the difference in the measurement of the lease liability and corresponding right-of-use asset on 1 January 2019.

(iii) Practical expedients appliedIn applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard: – the use of a single discount rate to a portfolio of leases with reasonably similar characteristics, – the accounting for operating leases with a remaining lease term of less than 12 months as at

1 January 2019 as short-term leases on a lease-by-lease basis, – and the use of hindsight in determining the lease term where the contract contains options to

extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.

(iv) Leasing activities and how these are accounted forThe Group mainly leases office space and vehicles. Leases were previously classified as either finance or operating leases. Payments made under operating leases (net of any incentives received) were charged to profit or loss on a straight-line basis over the lease term. From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use. Each lease payment is allocated between the liability and finance cost. The right- of-use asset is depreciated over the shorter of the assets useful life and the lease term on a straight-line basis.

Critical judgement in determining the lease termIn determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. Potential future cash outflows of CHF 38.3 million have not been included in the lease liability because it is not reasonably certain that the leases will be extended.



The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

– fixed payments (including in-substance fixed payments), less any lease incentives receivable – variable lease payments that are based on an index or a rate – the exercise price of a purchase option if the lessee is reasonably certain to exercise that option

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

– the amount of the initial measurement of lease liability – any lease payments made at or before the commencement date less any lease incentives received

The Group has elected not to separate lease and non-lease (service) components for leases of vehicles.

Payments associated with certain short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Leases of low-value assets comprise mainly IT-equipment and small items of office furniture.

5.4 Contingent liabilities and commitmentsVifor Pharma has entered into strategic arrangements with various companies in order to gain access to potential new products. Future payments may become due to partners upon achievement of certain milestones as defined in the collaboration agreements. The maximum amount of future commitments for such payments amounts to CHF 1,877.3 million (31 December 2018: CHF 1,890.2 million).

5.5 Exchange ratesThe table below shows the exchange rates against the CHF of the main currencies of relevance for the consolidated interim financial statements.

2019 30.6.

2018 31.12.

2019 30.6.

2018 30.6.

Half-year rate Year-end rate Average rate Average rate

USD 0.98 0.98 1.00 0.97

EUR 1.11 1.13 1.13 1.17

5.6 Subsequent eventsNo significant transactions occurred between 30 June 2019 and 8 August 2019, the date on which the consolidated interim financial statements were authorised for publication, that would need to be disclosed.



VIFOR PHARMA

Key corporate dates in 2020 12 March 2020 Annual Results 2019 Press conference Analyst conference —14 May 2020 Annual Shareholder Meeting— 6 August 2020 Half-year Results 2020

UPCOMING DATES




ImprintVifor Pharma Group

This report is available to download at viforpharma.com

In the case of any discrepancy in the interpretation of the short version of the French or German texts of this report, the English text of the full version shall be authoritative.

Typeset and printed by Neidhart + Schön Group AG

2019 © Vifor Pharma Ltd.

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