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Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
Bring to the physician and
patient innovative treatments for diseases related
to the endothelium
through creative science.
Launch of
Tracleer™ in US
and Canada
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
ready
Message to Shareholders
Robert E. Cawthorn
Chairman of the Board
Jean-Paul Clozel
Chief Executive Officer
Dear Shareholders,
The year 2001 marked the beginning of a new era for Actelion.
Tracleer™, a dual endothelin
receptor antagonist and the first
oral product for the treatment of
pulmonary arterial hypertension
(PAH) was introduced to markets in
the US and Canada in December
2001. This landmark in our company history has been achieved only
4 years after Actelion’s founding in
December 1997.
During 2001, Actelion faced a
delay in the development of
Veletri™ for the treatment of acute
heart failure (AHF). In early 2002, a
registration study in chronic heart
failure with Tracleer™ did not meet
its primary endpoint, but confirmed
the safety profile of the drug. Thus,
in 2002, Actelion will focus its
energy on successfully launching
Tracleer™ in PAH, for which the
company owns the commercial
rights worldwide, while expanding
its development and discovery
pipeline.
Our Initial Public Offering of shares
at the Swiss New Market in April
2000 provided us with the necessary capital to invest substantially
in drug discovery, drug development, regulatory affairs and our
marketing and sales forces.
Actelion is now a fully fledged biopharmaceutical company, with
04 | Actelion Annual Report 2001
subsidiaries in the major markets.
With our business strategy in
place, Actelion is well prepared to
make Tracleer™ the “standard”
treatment for PAH. Expansion into
new areas – whether on our own
or through strategic partnerships –
will help secure our long-term
presence worldwide.
Raising awareness
through global marketing and sales efforts
Tracleer™ tablets for PAH are a
revolutionary advance in the treatment of this severely debilitating
disease. This is a big step for the
more than 100,000 PAH patients
worldwide who previously only had
the option of permanent intravenous therapy. Marketing
approval also marks a big step forward for the company, as Tracleer™
demonstrates that endothelin
receptor antagonism has useful
medical applications.
Tracleer™ tablets represent a therapeutic breakthrough. Many
patients with PAH currently go
undiagnosed. Continuous physician
and patient education, combined
with the promotion of Tracleer™,
will change this situation as our
marketing and sales teams raise
awareness about the disease and
communicate the benefits of
screening and early diagnosis.
for launch
Substantial investments made in
our marketing and sales infrastructure during 2001 fully prepared our
US and Canadian subsidiaries to
market Tracleer™ immediately
after its approval. Our subsidiaries
in the European Union, Switzerland
and Australia are ready to move as
soon as regulatory approval has
been obtained, expected during
2002. In 2001 our new subsidiary
in Japan started the process of
preparing for clinical development
and registration procedures.
On a global level, we are reaching
out to thousands of physicians in
specific medical specializations.
Through these efforts and a dedicated medical marketing department, we will make Actelion the
partner of choice for the medical
community for Tracleer™ in PAH
and other indications, and for products to come.
Approval of Tracleer™, several
months ahead of schedule, was
the result of three factors. First,
well-designed and executed clinical studies, with BREATHE-1
(Tracleer™ pivotal registration
trial) successfully concluded in
early May 2001. Second, the professionalism and dedication displayed daily by our development
and regulatory staff in their interaction with the scientific, medical
and regulatory community. Third,
the integration two years ago of
the clinical research organization
Hesperion Ltd, and the addition of
a strong biometrics department in
2000 proved crucial in shortening
development timelines.
Tracleer™ evaluated in
chronic heart failure
In addition to PAH, we also evaluated Tracleer™ in another indication. The trial program ENABLE
that came to an end in early February 2002 does not support an indication in severe chronic heart failure. On the other hand, the
ENABLE program confirmed the
existing safety profile of Tracleer™,
this time in long-term use.
This safety finding strengthens the
use of Tracleer™ in PAH. It also
supports our strategy to explore
further indications for Tracleer™ in
other promising areas with high
unmet medical need. Clinical
development programs planned in
2001 in chronic obstructive pulmonary disease and idiopathic pulmonary fibrosis are now ready for
implementation during 2002. Other
programs with Tracleer™ are still
in the exploratory phase.
Further studies for
Veletri™
With a powerful concept and the
right teams now in place, Actelion
continues to explore further stud-
ies for its late-stage product
Veletri™. Our medical and scientific staff have analyzed fully the two
studies of Veletri™ in AHF that
were concluded in spring 2001. We
have identified high doses as the
major reason that only one, but not
both studies showed a positive
outcome. A new dose optimization
study was initiated in late 2001 to
be followed by a new registration
study in AHF.
Going forward – drug
discovery research
Actelion is the first biopharmaceutical company to focus on the
organ endothelium as a major
source of its drug discovery projects. Major progress has been
made in five of our own projects.
One new compound, discovered inhouse, is now on track to enter
human clinical trials in the coming
months. Actelion has expanded its
research infrastructure substantially, both in terms of laboratory
space, but even more importantly
in people. With its research focus,
dedicated employees and growing
infrastructure, Actelion is in the
process of building one of the most
innovative drug pipelines in the
industry.
employing more than 400 highlevel professionals as well as
young talent. We hope you share
our pride in the progress made.
Despite some setbacks, we remain
confident that these investments
are the best way to create value.
Unforeseen events excluded, these
investments will result in sustained, long-term value creation.
We appreciate and thank you for
your continued support as we grow
and fortify our new position as
the global leader in endotheliumrelated medicine.
Yours sincerely,
Robert E. Cawthorn
Chairman of the Board
Jean-Paul Clozel
Chief Executive Officer
In 2001, Actelion made substantial
investments to nurture the company into a fully operational biopharmaceutical firm with global reach
Actelion Annual Report 2001 | 05
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
keeping
Year 2001 Highlights
Total Employees Actelion Group
Actelion Pharmaceuticals (incl. Subsidiaries)
Hesperion (incl. Subsidiaries)
Clinical Research
Organization
74
Research &
Development
134
Management & 66
Administration
51 Clinical
Development
85
Sales & Marketing
Big steps keep the
momentum going
Now entering its fifth year of operations, Actelion’s founding business strategy – pursued with ever
more vigor – is to discover, develop and market pharmaceutical
products for endothelium-related
diseases. During 2001, Actelion
strengthened its teams globally
with highly qualified and experienced pharmaceutical personnel in
all functional areas from drug discovery and development to market-
ing and sales. Our in-house expertise enabled us to take a big step in
2001 and put our first product on
the market, Tracleer™, the first
oral endothelin receptor antagonist.
Actelion’s progress in 2001 will
fuel our growth momentum, driven
by empowered individuals and
teams and fostered by a dynamic,
open culture based on the pioneering spirit of scientific discovery.
Tracleer™ (bosentan) in PAH and beyond
February Start of regulatory review in Canada / Priority evaluation granted
Orphan Drug Designation obtained in European Union
and Australia
European Union Marketing Authorization Application
submitted / Start of centralized reviewed procedure
May BREATHE-1 study completed – meets primary endpoints
US NDA supplementary submission
New drug application filed with Swiss regulatory
authority
BREATHE-2 clinical trial began enrollment
BREATHE-3 clinical trial began enrollment
August FDA Advisory Committee voted unanimously 9:0 to
recommend approval
September Start of regulatory review in Australia
Initial pilot study 351 published in The Lancet
Tracleer™ for PAH received ”approvable” letter from
US FDA
November RAPIDS clinical trial in patients with digital ulceration
secondary to scleroderma began patient enrollment
06 | Actelion Annual Report 2001
the momentum
Speed and efficiency
Our teams in clinical development,
regulatory affairs and clinical operations report a long list of achievements, including:
• on-time completion of seven
major multi-center clinical
studies.
• obtaining orphan drug designation for Tracleer™ in pulmonary
arterial hypertension (PAH), in
the US, European Union and
Australia.
• filing of new drug applications
for Tracleer™ in PAH, resulting
in a US and Canadian marketing
launch and ongoing regulatory
review processes in the European Union, Switzerland and
Australia.
Global presence
As a fully fledged biopharmaceutical company with global reach,
Actelion is uniquely positioned to
retain value for the shareholders
by realizing the potential of
US FDA approved Tracleer™ for the treatment of PAH,
including primary pulmonary hypertension and PAH
secondary to various diseases (refer to PAH definition
on page 10).
December Canadian health authorities approved Tracleer™ for
the treatment of PAH
Commercial launch in US
Actelion granted commercial license to Neopharm Ltd
to market Tracleer™ in Israel
Veletri™ (tezosentan) in acute heart failure
March RITZ-2 clinical trial completed – meets primary endpoints
April RITZ-1 clinical trial completed – fails to meet primary
endpoints
Late fall New dose optimization study initiated; results expected by Q3 2002
Growth and global expansion
January Management team strengthened – new appointments
include: Konrad P. Wirz, André J. Mueller, Christian
Chavy, Simon Buckingham and Roland Haefeli
Tracleer™ in PAH and other indications, and of products to come. We
are committed to making our products available worldwide –
whether on our own or through
strategic partnerships. In 2001, we
opened subsidiaries in the UK,
Italy, Canada, Australia, Japan,
Greece and Spain in anticipation of
upcoming market launches.
Dedication to discovery
Our continuing investments in
research scientists, modern labora-
April
June
September
November
December
tories and equipment and strategic
partnering reflect Actelion’s firm
commitment to fuel its future
growth through its own drug discovery efforts. During 2001, the
efforts made to advance our own
pipeline included:
• concentrating on five drug discovery projects.
• doubling our existing laboratory
space.
• attracting experienced, highlevel professionals as well as
young talent.
Italian subsidiary opened in Imola
Canadian subsidiary opened in Laval
First Annual General Meeting of Actelion’s Shareholders held in Basel
Australian subsidiary opened in New South Wales
Actelion four-to-one stock split effective
R.W. Johnson Pharmaceutical Research Institute
(Johnson & Johnson) research collaboration
agreement extended with Actelion for an
additional year
Japanese subsidiary opened in Tokyo
Medical statistics company A.S.C. Srl merged
into Actelion Pharmaceutical Italia
Spanish subsidiary opened in Barcelona
Greek subsidiary opened in Athens
Tracleer™ in chronic heart failure 2002
7 February ENABLE results – phase III study in chronic heart failure does not meet primary efficacy objective but confirms safety profile in long-term use
Actelion Annual Report 2001 | 07
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
build
Entering a New ERA
Endothelin
Fibrosis
Vasoconstriction
Neurohormonal
Activation
Inflammation
Disorders of the endothelin system
are a major cause of cardiopulmonary
diseases, and represent a comprehensive target for the treatment of cardiovascular disorders. As characterized here by an octopus, ERA investigations have already shown ways to
treat or ”loosen the grip” of PAH, with
further efforts underway to evaluate
ERAs in the treatment of other disease forms.
08 | Actelion Annual Report 2001
Pathologic
Hypertrophy
Entering a new ERA –
new insights and building awareness
During 2001, clinical development
of the first endothelin receptor
antagonist (ERA) Tracleer™
secured for Actelion a leading
position in a new era of medicine.
ERAs are a new pharmaceutical
class (new molecular entity) offering a revolutionary approach for
the treatment of the endothelinrelated disorder, pulmonary arterial
hypertension (PAH). Endothelin
receptor antagonism also has substantial potential in other cardiopulmonary indications including
heart failure, as well as fibrosis
and cancer.
In the past, earlier discoveries of
the renin-angiotensin-aldosterone
system and the sympathetic nervous system brought new understanding to the field of cardiovascular science. Today the exploration of ERAs has demonstrated
that the potent neurohormone,
endothelin-1 (ET-1), provides
another target for therapeutic
intervention and disease modification.
ing awareness
Endothelin plays an
important role in PAH
Research has established that
blood concentrations of ET-1, one
of the most potent vasoconstrictors known, are significantly raised
in PAH, suggesting a pathogenic
role for endothelin in the progression of this condition. The first oral
ERA Tracleer™ works by blocking
the binding of endothelin to its
receptors, thereby preventing the
harmful effects of endothelin upon
blood vessels. Before Tracleer™
became available, treatment
options were limited. Physicians
could prescribe either high doses
of calcium channel blockers or the
only approved treatment option,
intravenous epoprostenol, which
requires an indwelling
central intravenous
line and a continuous-infusion
pump. Patients
diagnosed with
PAH were usually placed on a
heart transplant list.
This very poor prognosis
emphasizes the need for earlier
detection through education and
awareness and prompter implementation of new treatments. Now
that Tracleer™ offers an oral treatment for PAH, early diagnosis
becomes even more important.
Global pre-marketing
prepares awareness for
launch
As the first ERA approved by regulatory agencies worldwide, the US
and Canadian launch of Tracleer™
for the treatment of PAH in late
2001 was the culmination of an
active year for the Actelion global
development and marketing teams.
Actelion prepared for approval and
marketing of Tracleer™ by:
• establishing and/or reinforcing
our global infrastructure from
medical marketing and marketing and sales through to distribution and drug safety.
• identifying key physicians treating PAH and scleroderma, and
PAH and scleroderma patient
organizations; once identified,
interdisciplinary working groups
were formed to increase awareness of PAH as well as PAH in
scleroderma by communicating
the benefits of screening and
early diagnosis.
• sponsoring continuing medical
education courses, company
symposia and scientific session
presentations of two Tracleer™
studies in PAH – study 351 and
BREATHE-1 – at many key international congresses, including
the American Heart Association,
European Society of Cardiology,
Norepinephrine
Angiotensin II
Endothelin (ET)
Cytokines
Hypertrophy, Apoptosis, Ischemia, Arrhythmias,
Remodeling, Fibrosis
American Thoracic Society,
European Respiratory Society,
American College of Cardiology,
CHEST and American College of
Rheumatology.
• launching an educational website designed for US physicians
to describe the role of endothelin in PAH:
www.endothelinscience.com
• producing patient brochures
in collaboration with the
Pulmonary Hypertension Patient
Association.
Actelion Annual Report 2001 | 09
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
patient
Launch of Tracleer™
Sarah Ing
PAH patient in the US
taking Tracleer™
PAH Classification
by the World Health Organization
Pulmonary Arterial Hypertension (PAH):
• Primary Pulmonary Hypertension (PPH)
• PAH Secondary to:
1. Connective Tissue Disease (i.e., Scleroderma)
2. Congenital Systemic to Pulmonary Shunts
3. Portal Hypertension
4. HIV Infection
5. Drugs/Toxins
6. Persistent Pulmonary Hypertension of the Newborn
7. Other
Pulmonary arterial hypertension
(PAH) is a rare and severely debilitating disease. According to the
US FDA, PAH is defined as abnormally high blood pressure in the
arteries between the heart and
lungs. PAH significantly reduces
the ability of patients to exert
themselves physically without
becoming short of breath. The US
and Canadian marketing approval
of Tracleer™ now offers PAH
patients, for the first time, an oral
treatment to help improve their
exercise ability and slow their rate
of clinical worsening. Previously
approved treatment options were
limited to intravenous epoprostenol that requires patients to
have an indwelling central intravenous line and carry a continuous-infusion pump at all times.
thing was wrong. The doctor diagnosed me with pneumonia, but
that wasn’t it. Finally, after many
tests, they suspected I had a pulmonary embolism and sent me to
the hospital. The test was negative, so they sent me to a specialist in Houston. I was lucky to have
a pulmonary medicine expert recommended immediately. First I
was given a heart catheter, followed by a dose of calcium channel blockers. Both failed to work as
they often do. Only then was I
finally diagnosed with PAH.”
A patient’s story
Twenty-four-year-old Sarah was
pursuing her dream – acting, dancing and stand-up comedy – when
something started going very
wrong.
Actelion wins US FDA
and Canadian approval
of Tracleer™ in PAH
In August 2001, the Cardiovascular
Renal Advisory Committee,
appointed by the US FDA, voted
unanimously 9:0 to recommend
that the US FDA approve Tracleer™
for the treatment of PAH. By early
December – only 1 year after its
initial regulatory filing – and just
26 months after the first patient
was enrolled in the first pivotal
phase III study 351 – the US and
“I was in a play with a very active
role, and I couldn’t keep up with
the dancers. I had danced all my
life and, suddenly, I was wheezing
and out of breath and my heart
was just going a thousand miles an
hour. So then I knew that someNYHA/WHO Functional Assessment of
Pulmonary Arterial Hypertension
Class I
Class II
Class III
Class IV
Symptoms do not limit physical activity.
Ordinary physical activity does not cause undue
discomfort.
Slight limitation of physical activity. The patient
is comfortable at rest, yet experiences symptoms with ordinary physical activity.
Marked limitation of physical activity. The
patient is comfortable at rest, yet experiences
symptoms with minimal physical activity.
Inability to carry out any physical activity. The
patient may experience symptoms even at rest.
Discomfort is increased by any physical activity.
These patients manifest signs of right heart
failure.
Rich et al., WHO Symposium on PPH, Evian, France,1998.
10 | Actelion Annual Report 2001
After Sarah’s diagnosis, she
entered the BREATHE-1 trial and
has been taking Tracleer™ for over
a year. Sarah, who works as a freelance writer, is now back to actively pursuing her acting career.
focused
Canadian authorities approved
Tracleer™ for the treatment of PAH.
Orphan indication –
pending regulatory
filings
Tracleer™ has orphan drug designation in the US, the European
Union and Australia. The regulatory review process is ongoing in the
European Union, Switzerland and
Australia.
Tracleer™ in PAH –
clinical trials
The approval of Tracleer™ by the
US FDA is based on two successfully concluded pivotal trials. The
results of the first study, based on
32 patients, were published in the
prestigious British medical journal,
The Lancet.
Both studies demonstrated that
PAH patients receiving Tracleer™
benefited significantly from treatment. Additionally, the two studies
demonstrated improvements in
patients with PPH and PAH secondary to the connective tissue
disease, scleroderma. Overall, the
measured treatment effect was a
44-meter improvement in walking
distance as measured by a 6minute walk test, compared to
placebo. This improvement was
maintained for up to 7 months.
Tracleer™ showed a significant
improvement in functional status
and breathlessness as well as a
significant delay in the time to
clinical worsening defined as
death, hospitalization, worsening
PAH or initiation of intravenous
therapy (p=0.0015).
tor antagonism. The continued success of Tracleer™ in PAH is based
on our ongoing ability to build
awareness and understanding of
this rare and severely debilitating
disease. In 2001, US launch efforts
were focused heavily on physician
and patient education.
In the US, Tracleer™ is indicated
for PAH patients with WHO class
III or IV symptoms (please refer to
the charts at left), to improve exercise ability and decrease the rate
of clinical worsening. Clinical studies have indicated that there are
potential risks associated with taking Tracleer™. Approximately 11%
of patients receiving Tracleer™
experienced abnormal but
reversible liver enzyme elevations.
It is therefore important that
patients undergo monthly liver
function monitoring. Due to the
risk of birth defects, women who
are pregnant, or could become
pregnant, cannot take Tracleer™.
While receiving Tracleer™, monthly pregnancy tests are required for
women of childbearing potential.
In cooperation with the US FDA,
Actelion developed a unique ongoing patient registration program to
facilitate prescribing, and to assist
with drug reimbursement issues. To
receive Tracleer™, physicians must
enroll patients in the Tracleer™
Access Program, coordinated from
our US subsidiary in South San
Francisco. Tracleer™ is provided
through a closed network of specialty pharmacy distributors selected by Actelion. Once a patient is
enrolled in the program, the distributor’s role is:
• to provide a Medication Guide
for Tracleer™ with each new
prescription shipment of
Tracleer™.
• to have on file a statement from
the prescribing physician committing him/her to provide
patients with monthly reminders
for liver function testing and to
ensure pregnancy prevention.
• to provide patients with information about drug reimbursement programs.
Risk reduction through
awareness and
controlled distribution
Actelion’s first product launch in
2001 ensured our position as the
global leader in endothelin recep-
Special efforts during 2001 included high visibility at international
medical congresses attended by
specialists who treat PAH and
scleroderma. We continue to be
active at scientific sessions by
sponsoring continuing medical
education courses and company
symposia, as well as conducting
meetings and consulting with key
opinion leaders and experts in the
area of PAH and scleroderma. To
ensure that Actelion’s US and
Canadian sales professionals can
competently assist physicians with
their task of screening, diagnosing
and treating patients with PAH,
extensive internal training was
conducted prior to launch. Actelion
US provided unrestricted educational support to pulmonary hypertension patient organizations.
Two websites,
www.endothelinscience.com
and www.tracleer.com,
continue to provide
useful information
about ERAs
and Tracleer™.
“I had danced all my life and, suddenly, I was wheezing and out of breath and my heart was just going a thousand miles an hour.”
Sarah Ing, PAH patient in the US taking Tracleer™
Actelion Annual Report 2001 | 11
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
12 | Actelion Annual Report 2001
revolut
ionary advance
Fully fledged biopharmaceutical company
As a successful biopharmaceutical
company, Actelion’s business strategy focuses on applying the most
modern biotechnology tools to discover,
develop and market
low-molecularweight compounds.
Chemical manufacturing and final
production, while equally important to Actelion’s strategy, are
managed in close collaboration
with contract partners. Our technical team works closely with these
partners to ensure that the highest-quality supply of Tracleer™ is
maintained for sales and ongoing
clinical trials. Rigorous quality assurance procedures are
in place to ensure
that both Actelion
and its partners comply with manufacturing regulations, deliver
products of consistent quality and
provide an adequate supply. In
2001, prior to the launch approvals
in the US and Canada, Actelion
and its manufacturing partners passed
multiple preapproval quality
inspections for Tracleer™ performed by the US FDA and other
regulatory authorities.
Going forward – new
studies ahead
We are further exploring the benefits and safety of Tracleer™ in PAH
to expand its market potential. Two
additional phase IIIb clinical trials
have been underway since May
2001.
• BREATHE-2 is evaluating the
effects of Tracleer™ on hemodynamics when combined with
intravenous epoprostenol treatment in patients with severe primary pulmonary hypertension or
pulmonary hypertension due to
scleroderma.
• BREATHE-3 is investigating the
pharmacokinetics of Tracleer™
in pediatric patients with PAH
after administration of single
and multiple oral doses.
Keeping the momentum
going for Tracleer™
Tracleer™ tablets will become an
important new therapy in PAH. The successful launch of
Tracleer™ in the US
is making Actelion a
new leader in cardiopulmonary
medicine. In 2002 and beyond,
Actelion’s objectives are to:
• establish and enhance awareness of PAH globally (i.e., patient
and care-giver support associations, medical community).
• encourage earlier screening and
diagnosis of patients.
• position Tracleer™ as first-line
therapy through completion of
ongoing trials as well as future
clinical trials.
• evaluate other indications for
Tracleer™.
Actelion Annual Report 2001 | 13
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
strong
Development
In 2001, Actelion established itself
as the global leader in endothelin
receptor antagonism. This developmental focus has led to both
achievements and delays. The US
and Canadian marketing approvals
for our first product, Tracleer™ in
pulmonary arterial hypertension
(PAH), are our most visible
achievements. The ENABLE program that evaluated Tracleer™ in
severe chronic heart failure did not
demonstrate the level of effectiveness we had hoped. The program
did support, however, the safety
profile in long-term use. A delay
occurred in the RITZ program evaluating Veletri™ in acute heart failure, where one of two trials did
not meet its primary objective.
Life cycle management –
looking ahead
Beyond the initial indication in
PAH, we have an impressive life
cycle management program for
Tracleer™ with five projects underway and two additional projects
planned for 2002 and early 2003.
Actelion’s research and development results show that endothelin
plays a significant role in the
underlying pathophysiological condition of PAH. As part of our ongoing development strategy, we hope
also to show that ERAs play a significant role in other disease
14 | Actelion Annual Report 2001
conditions such as:
• severe vasculopathy
• fibrosis
• inflammation
• cancer
Promoting awareness
for rare diseases
PAH is a rare disease with limited
therapeutic alternatives. To promote awareness for the development of therapies for such rare diseases, Actelion was one of the
sponsors for the second European
Platform for Patient’s Organisations, Science and Industry
(EPPOSI) workshop on “Rare Disease Therapy Development Partnering” which took place on 16 and
17 October 2001 in Paris. EPPOSI
provides a forum for dialogue
between stakeholders interested
in developing therapies for rare
diseases. In the US, Actelion
worked closely as a contributing
sponsor with the National Organization of Rare Diseases.
Endothelin may play an
important role in digital
ulceration secondary to
scleroderma
In the fall of 2001, Actelion
launched a pilot study to evaluate
the prevention and treatment of
digital ulcers in patients with
scleroderma.
development
Life cycle management for Tracleer™ (bosentan)
Indication
Status
PAH
• Registered in the US and Canada
• Pending regulatory approval in
Switzerland, Australia and the
European Union
BREATHE-2 – Combination
Phase IIIb
Ongoing
intravenous epoprostenol in
patients with severe PPH or
PAH due to scleroderma
BREATHE-3 – PAH
Phase IIIb
Ongoing
(WHO class III/IV)
in pediatric patients
Digital ulceration secondary
Pilot Study
Ongoing
to scleroderma
Early PAH patients
Phase III
In preparation
(WHO class I/II) secondary
to scleroderma
Idiopathic pulmonary fibrosis
Phase II Safety
Ongoing
Pulmonary hypertension
Phase II Safety
Ongoing
secondary to chronic obstructive
pulmonary disease
Other indications
In preparation
Ischemic digital ulcers often occur
in patients with scleroderma.
Ulcers can occur on the tips of the
fingers and toes and are caused by
disorders of the small blood vessels, one of the underlying disease
processes involved in scleroderma.
Digital ulcers are intensively painful, slow to heal (3 – 15 months),
leave depressed scars and adversely impact the ability to perform work and daily activities.
Endothelin may play an
important role in scleroderma
From the results of our two pivotal
studies in WHO class III/IV
patients with PAH, including PPH
and PAH secondary to connective
tissue disease (i.e., scleroderma),
we were able to demonstrate that
Tracleer™ is effective in this
patient population. Based on these
findings, we are now preparing to
launch a new phase III clinical
study to evaluate prevention and
treatment in patients with early
stage PAH (WHO class I/II symptoms) secondary to scleroderma.
Recruitment for this trial is
planned to start later in 2002.
Conservative figures estimate that
approximately 90,000 persons in
the US have scleroderma while the
Scleroderma Foundation estimates
this figure at 300,000. Approximately one-third of this population
suffers from PAH. Women are
approximately four times as likely
to develop scleroderma as men.
Scleroderma is an autoimmune
disease causing chronic hardening
and shrinking of the connective tissue and is generally classified as
one of the rheumatic diseases. In
many cases, scleroderma may
lead to severe disability and lifethreatening complications.
Tracleer evaluated in
chronic heart failure
In addition to PAH, we evaluated
Tracleer™ in another indication,
severe chronic heart failure (CHF).
On 7 February 2002, Actelion
announced that the phase III
ENABLE program (ENdothelin
Antagonist Bosentan for Lowering
cardiac Events) evaluating
Tracleer™ in 1,613 patients with
severe CHF (NYHA class IIIb/IV) did
not reach statistical significance in
the two pre-defined primary endpoints: risk reduction in time to
death or hospitalization due to
CHF, and improvement in clinical
status at nine months of treatment. Consequently, the program
does not support an indication for
Tracleer™ in severe CHF.
On the other hand, the ENABLE
program did generate long-term
data about safety in this large
patient population receiving
Tracleer™ for up to 30 months.
The ENABLE program confirmed
the safety profile as observed in
earlier clinical trials. These important safety findings supplement
and strengthen the original safety
information submitted in our initial
new drug application for Tracleer™
in PAH.
The confirmed safety profile for
Tracleer™ supports our life cycle
management strategy to explore
additional indications for Tracleer™.
With our increased confidence and
added vigor, Actelion is exploring
new indications for clinical development programs, for which preparations started in 2001.
Actelion Annual Report 2001 | 15
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
continu
Going forward – new
studies ahead
Chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF) are progressive diseases characterized by airflow limitation (reduction in lung
capacity). Clinical and experimental studies suggest that Tracleer™
could potentially alleviate the
symptoms observed in pulmonary
hypertension secondary to COPD
and in IPF. Two phase II safety
studies began patient enrollment
in early 2002. The preliminary
results should be available by mid2002 and are expected to lead to
the initiation of larger, multi-center
efficacy studies.
Knowledge gained leads
to new solutions –
Veletri™ in acute heart
failure
During 2001, our clinical development, clinical operations and biometrics teams invested considerable time and effort in completing
and analyzing data from the RITZ
trial program in patients with
acute heart failure (AHF). The RITZ
16 | Actelion Annual Report 2001
(Randomized Intravenous TeZosentan) program consisted of two pivotal phase III trials – RITZ-1 and 2,
and two supportive studies, RITZ-4
and 5. RITZ-4 evaluated Veletri™ –
an intravenous dual ERA – in AHF
patients with acute coronary syndromes, and RITZ-5 evaluated the
therapy in patients with pulmonary
edema.
In RITZ-2, a multi-center trial of
292 patients hospitalized for AHF,
the hemodynamic (blood circulation) effects of two doses of
Veletri™ (50 and 100 mg/h) were
compared to placebo on top of conventional therapy. In early 2001,
we announced that the primary
endpoint was achieved with a statistically and clinically significant
change from baseline in cardiac
index at 6 hours with both doses of
Veletri™ compared to placebo. An
increase in this parameter is
understood to improve the efficiency of the heart in patients with
heart failure. Clinical outcomes,
worsening of heart failure or death
within 28 days of follow-up, were
improved in patients treated with
ing momentum
Life cycle management for Veletri™ (tezosentan)
Indication
Status
Optimized dose regimen
Phase II
Ongoing
in acute heart failure patients
Acute heart failure
Phase III
In preparation
50 mg/h compared to those treated
with placebo (40% versus 29%).
While the study was not designed
to demonstrate a statistically significant difference in terms of clinical outcomes, this result represents very encouraging and clinically relevant information.
However, one month later, the second pivotal trial had a neutral outcome based on its primary objective to show significant improvement in symptoms (dyspnea, or
shortness of breath) associated
with AHF. RITZ-1, with 675
patients enrolled, was designed to
evaluate the ability of 50 mg/h of
Veletri™ plus standard treatment
to reduce the clinical symptoms of
AHF, based on the patient’s subjective assessment of dyspnea in the
absence of hemodynamic evaluation.
Outcome of the RITZ
program
In terms of tolerability and safety,
we have learned much from the
combined RITZ clinical trial program results: Veletri™ was associated with dose-dependent adverse
events explained by excess vasodilation. While these drug-related
adverse events are expected with
a vasodilator drug in patients suffering from AHF, their increased
incidence is likely to be explained
by the high doses of Veletri™
administered in the RITZ program.
RITZ-1 results highlighted for us
the challenges faced in demonstrating clinical improvements with
new therapeutic agents in patients
with AHF beyond those observed
with objective central hemodynamic monitoring. Lower doses are
likely to be associated with fewer
side effects. The favorable
risk/benefit ratio shown in the earlier phase II studies, together with
those of RITZ-2, suggest that
doses lower than 50 mg/h might
be as effective in improving cardiac hemodynamics.
Consequently, we started a new
dose-finding study that began
enrollment in late 2001 with lower
doses than those used in the RITZ
program. Our aim from this study
will be to identify an optimal dose
or dose regimen while achieving a
significant hemodynamic effect
with fewer and/or less severe
drug-related adverse events. After
evaluating the results of this new
dosing optimization study we
expect to start a larger phase III
registration trial by the end of
2002.
• continue comprehensive phase
III clinical trial initiatives to
evaluate the safety and efficacy
of Tracleer™ in other indications.
• continue clinical studies of
Veletri™ in AHF.
• continue our close US marketing
partnership with Genentech for
Veletri™ in AHF.
Continuing the
momentum
From Actelion’s development
record it is clear that the ERA drug
class offers great promise for cardiopulmonary diseases and for
heart failure. Actelion’s strategic
objectives now are to:
Actelion Annual Report 2001 | 17
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
growth
Drug Discovery Research
Year of progress and
growth
Year 2001 was an important year
of maturation and expansion for
Actelion’s drug discovery operations. Five of our six projects have
made important advances during
the past year. In the most
advanced of these projects, we
have brought our first compound
into preclinical development. This
compound is the first of a completely novel therapeutic class. We
are now initiating preclinical studies with the goal of preparing this
compound for human clinical trials.
In a separate project, the R. W.
Johnson Pharmaceutical Research
Institute (Johnson & Johnson)
extended their research agreement
Area
Project
Rights
Lead
Discovery
with us for a third year after
expressing their satisfaction with
our progress.
The success of our projects is the
result of our ongoing investment in
people and the tools of drug discovery. We have expanded our
project teams with both young talent and experienced pharmaceutical personnel. Our research laboratory infrastructure underwent a
major upgrade as we doubled our
existing laboratory space. We also
implemented several advanced
technologies to further support our
existing projects and to ensure
that new and innovative drug
targets continue to flow into our
future drug discovery pipeline.
Lead
Preclinical
Optimization
Cardiovascular J&J Collaboration J&J/Actelion
CNS
Project 2
Actelion
Project 3
Actelion
Project 4
Actelion
Project 5
Actelion
Oncology
Exploratory
Actelion
Malaria
Partner
Actelion
Actelion’s drug discovery pipeline grew to five fully staffed projects in 2001. Actelion wholly owns the rights to these projects
with the exception of one that is partnered with Johnson & Johnson (J&J).
18 | Actelion Annual Report 2001
and progress
Our progress in 2001 demonstrates
Actelion’s commitment and ability
to fuel the future growth of the
company by means of its own
research. Important foundations
have been laid for the future
growth of Actelion’s drug discovery
efforts.
Project progress in 2001
First-in-class compound enters preclinical development. Actelion’s
research projects seek to identify
low-molecular-weight compounds
with sufficient pharmacological
potency, selectivity and bioavailability. Stringent criteria are
applied before selection of a compound for development. In 2001,
compounds that satisfy these
requirements were identified in
one of our projects in the cardiovascular field. We have a strong
intellectual property position with
respect to this research project
and the rights to the patent family
reside entirely with Actelion. One
preclinical development candidate
has been selected from among the
best compounds. It has shown
impressive efficacy in pharmacological models of cardiovascular
disease, and is now on track to
enter human clinical trials in 2002.
It promises to be first-in-class
therapy for certain cardiovascular
diseases with a large unmet medical need.
Johnson & Johnson collaboration
renewed for third year. In June
2001, Johnson & Johnson
expressed its satisfaction with the
progress of its research collaboration agreement with Actelion that
began in July 1999, and extended
it for an additional year. Under the
terms of the agreement, Actelion
combines its unique knowledge of
the biology of the vascular
endothelium with expertise in
medicinal chemistry to discover
and characterize compounds targeting this tissue. Johnson & Johnson will develop and commercialize new drugs arising from this
project. Actelion will receive additional research funding and will be
entitled to receive development
milestones and royalties on future
worldwide sales. We have delivered several development candidates for their selection.
Project successes on the horizon.
Our five projects have all progressed substantially in the past
year, and we continue to invest in
these projects with full-fledged
medicinal chemistry optimization
efforts. The fact that our efforts
are paying off is reflected in 6 new
patent applications filed in the
past year, bringing the total to 23.
We expect one or more additional
preclinical development candidates to emerge from these projects by the end of 2002. Together
with the Swiss Tropical Institute
and the University of Cardiff,
Actelion is seeking external funding to staff a partnership project in
the field of malaria. All of our projects represent novel approaches.
Each may lead to novel classes of
drugs in the therapeutic areas of
cardiovascular diseases, central
nervous system (CNS) diseases
and oncology. These projects have
potential in major indications such
as renal failure, sleep disorders,
Alzheimer’s disease and obesity.
Strength in people
The energy and enthusiasm that
our people bring to their work at
Actelion is a decisive factor in the
success of our projects. We deliberately cultivate a dynamic environment in project teams, where
pioneering ideas can flourish and
turn into discoveries. Drawing from
the extensive pharmaceutical
industry talent pool in the Basel
region, Actelion can provide new
employees with a refreshingly
open atmosphere. This has been
particularly important during
Actelion’s rapid growth phase.
Actelion’s drug discovery organization grew from 50 to 70 people in
the past year. To support our
maturing projects, and lay the
foundations for future growth, we
predominantly increased our chemistry staffing and pharmacology
capabilities in the cardiovascular
and CNS areas. This year marked
the addition of an experienced preclinical formulation group that specializes in the physicochemical
characterization and formulation of
drug candidates. We also
increased the staffing in our drug
metabolism and pharmacokinetic
laboratories. The team’s combined
experience proved essential in our
projects’ progress.
More space, new tools
During 2001, we made substantial
improvements in our drug discovery and development infrastructure, including a major expansion
of our Allschwil research facilities
to 3600 m2. These new laboratories
are equipped with the latest and
most advanced technologies,
including robot-assisted highthroughput screening systems
(HTS), compound storage facilities,
protein crystallization equipment
and parallel synthesis and automated purification stations.
Computer-assisted drug discovery.
Our newly added macromolecular
modeling and three-dimensional
visualization capabilities became
an important component of our
research projects in 2001. These
capabilities are providing important insights into the design of our
drug candidates on both our G-protein-coupled receptor and aspartyl
Actelion Annual Report 2001 | 19
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
Actelion relies on a combination of custom-made and
commercial components
for the HTS system. A plate
storage and retrieval system is integrated by a
robotic arm with 96- and
384-well liquid-handling,
8-channel-pipetting, dispensing, plate-washing
and other functional units.
inno
protease platforms (see next
page). Actelion’s research computing infrastructure has been largely
developed in-house, and allows for
capturing and tracking screening
results from our screening assays
and in vivo experiments. In the
past year, we have added important new computing tools,
designed and implemented by us
which we can use to manage our
growing chemical libraries and
register large series of new chemical entities into our compound
repository.
Postgenomic tools identifying
future drug targets. In 2001, we
established a proprietary genearray system that allows simultaneous, reliable gene expression
profiling of hundreds of possible
gene products. Used in combination with our expertise in the biology of the vascular endothelium,
new drug targets are emerging.
The research collaboration agreement signed with Axovan Ltd for
20 | Actelion Annual Report 2001
certain orphan receptors is another
approach for identifying future targets in our drug discovery efforts.
Integrated approach to
discovery and clinical
development
At Actelion, the experience and
talent of our people enable a
smooth and rapid transition of our
projects from preclinical to clinical
development activities. In vitro and
in vivo pharmacology studies,
pharmacokinetic assessments and
metabolism investigations are all
performed in our own laboratories,
and we develop our own dosage
forms. Actelion’s project management coordinates all the preclinical
and clinical development activities
– in-house – from planning the
early clinical studies through to
execution. This integrated
approach to drug discovery and
drug development ensures the efficient and timely advance of our inhouse drug discovery efforts.
vative science
Actelion’s Research Focus
Actelion is a leading player in innovative science related to the endothelium – an organ within every
organ of the body, a single layer of cells covering every surface that comes in contact with blood. The
endothelium forms a thin protective layer to prevent blood clotting. It also synthesizes and releases
substances that constrict or relax blood vessels, thereby regulating blood flow. The endothelium produces and secretes growth factors that regulate the formation of new blood vessels. Dysfunction of
the endothelium is associated with common diseases, such as hypertension, heart failure and atherosclerosis, and with rare disorders, such as pulmonary arterial hypertension. The ability of the endothelium to regulate and guide new blood vessel formation can be very desirable, for instance in the formation of new blood vessels in chronically oxygen deprived tissues or it can be very detrimental, such
as when it contributes to the nourishment and growth of solid tumors. For Actelion, the endothelium
serves as a rich source of ideas for novel therapeutic interventions.
We focus our efforts on two proven categories of drug targets: G-protein-coupled receptors (GPCRs)
and aspartyl protease enzymes. The GPCRs are a family of cell-wall-resident proteins that bind hormones, and transmit the resulting signal to the cell interior by means of a cascade of protein-protein
interactions. More than 100 such receptors are known in humans. Aspartyl proteases (or acid proteases) comprise a family of enzymes with more than 50 known members. Eight such aspartyl proteases are currently known in humans (pepsin, gastricsin, napsin, renin, cathepsin D and E, BACE 1
and 2). Their physiological roles are emerging, as are their links to pathophysiological states such as
cancer, inflammation, and cardiovascular and neurological diseases.
Actelion Annual Report 2001 | 21
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
invest
CFO’s Letter
Foundation laid for
future growth
In its fourth year of operations,
Actelion increased expenditures in
core functions of the business to
ensure a rapid and successful market introduction of its first product,
Tracleer™ for the treatment of
pulmonary arterial hypertension.
These efforts resulted in the
launch and first revenues from
Tracleer™ in the US, only days
after receiving regulatory approval
in November. The market launch of
Tracleer™ was initiated in Canada
following regulatory approval in
December 2001.
Konrad P. Wirz
Chief Financial Officer
Evolution of headcount
Headcount
450
400
350
300
250
200
Jan
Apr
Jul
Sep
Dec
Evolution of Net Liquid Assets
Liquid Assets
300
250
200
In the year under review, overall
operating expenditures amounted
to CHF 129.3 million. These controlled expenses that concern all
areas of our fully fledged biopharmaceutical operations have to be
considered strategic start-up
investments. A distinct focus for
new expenditures was placed on
marketing and sales. Although the
operating expenses exceeded the
prior year by CHF 44 million, the
additional net loss was kept to
CHF 16 million, essentially as the
result of substantially increased
revenues.
150
100
50
0
Dec
Mar
Jun
22 | Actelion Annual Report 2001
Sep
Dec
The beginning of 2002 will show a
further increase in operating losses on a quarterly basis, as the
company intends to maintain its
momentum to establish and market
Tracleer™ worldwide. Actelion will
also increase expenditures in
research to fuel drug discovery
efforts and in development activities for both Tracleer™ line extensions and the forthcoming registration study for Veletri™. Funding of
these efforts is made possible by
the company’s cash position
amounting to CHF 152.2 million at
31 December 2001 and rising
income from product sales
throughout the year, first in North
America and later in other markets, notably the European Union.
Furthermore, the company is prepared to explore other opportunities in the market to finance additional projects if necessary.
With its focus on further expanding its business in the near-term
future, and unforeseen events
excluded, Actelion expects the
company to be profitable – on an
annualized basis – by the year
2004. This would represent a
unique achievement for a biopharmaceutical company only 4 years
after its Initial Public Offering in
the spring of 2000 and only 8 years
after its founding in late 1997.
Operating statement –
higher revenues partially offset increased operating expenses
For the year under review, Actelion
reports net revenues of CHF 64.1
million, an increase of CHF 32.6
for growth
million over 2000. Contributing to
this increase in revenues were:
• recognition of a milestone payment of CHF 57 million (USD 35
million), of which approximately
CHF 6 million have been
deferred into 2002.
• research contribution of CHF 5.3
million (USD 3.2 million) derived
from a research agreement with
R. W. Johnson Pharmaceutical
Research Institute (J & J).
• higher business with third parties of the company’s majorityowned affiliate Hesperion Ltd, a
clinical research organization.
• initial sales revenues from
Tracleer™ of approximately
CHF 3 million.
Operating expenses amount to CHF
129.3 million, up from CHF 85.1
million in the previous year. The
increase in expenses of CHF 44.2
million is driven by the Group’s
controlled and focused growth
strategy. The major part of the
higher operating expense, however,
reflects our efforts to establish the
infrastructure for the successful
launch of our first product,
Tracleer™. New subsidiaries were
established in the UK, Japan, Australia, Greece and Spain, complementing the ones already operating in Switzerland, US, Canada,
France and Germany. Research and
development activities continued
at a high level. The Group’s headcount increased accordingly, pri-
marily in marketing and sales,
exceeding 400 by year end, up
from 227 at the beginning of the
year. As a consequence, marketing
and sales and management and
general expenses experienced the
most significant increase in 2001,
amounting to CHF 51.6 million as
opposed to CHF 15.6 million in
2000.
The resulting operating loss of
CHF 69.5 million (previous year:
CHF 54.5 million) is in line with
Actelion’s policy to bear significant
start-up costs in view of both optimizing the Group’s capabilities in
its core areas of activities as well
as maximizing the potential of
Tracleer™ and other products to
come.
Financial income in 2001 amounts
to CHF 4.7 million, which reflects a
2.4% return based on average net
liquid assets of approximately CHF
200 million. As in prior years, the
negative pre-tax result determined
an income tax benefit (CHF 10.8
million), resulting in a net loss
after tax of CHF 54.6 million, or
CHF 2.65 per share.
Balance sheet, capital
investments, liquidity /
funding principles
Investments in equipment for laboratories and offices amounted to
CHF 9.4 million, CHF 1.9 million
above capital expenditures of CHF
7.5 million in 2000. As a result,
Actelion has some of the latest
and most advanced laboratory
equipment. This brings the total of
the Group’s non-current assets to
CHF 56.3 million net of depreciation. Simultaneous to the launch of
Tracleer™, Actelion invested in
working capital. Inventories
increased from CHF 3.1 million to
CHF 6.2 million and accounts
receivable from Tracleer™ sales
and Hesperion services amounted
to CHF 4.5 million as of 31 December 2001. Nonetheless, the
remaining net liquid asset position
at year end of CHF 152.2 million
provides a solid base to finance
the Group’s future activities until
the phase of more sizeable sales
revenues. In 2001, as in prior
years, the Group did not carry any
interest-bearing liabilities on its
balance sheet, neither was it
involved in any off-balance sheet
financing mechanism. At this
stage, subsidiaries are funded
through inter-company loans in
their respective local currency. The
holding company, Actelion Ltd, provides this funding. In the course of
the year, most of our subsidiaries
were recapitalized in order to
restore their capital base and to
comply with local regulations. Consequently, the investment value in
the holding company books
increased from CHF 41 million as
of 31 December 2000 to CHF 72.2
million at year end 2001.
Stock market, shareholder information
As a consequence of the four-toone stock split effective 20 June
2001 and resulting from exercised
options, the number of outstanding
shares reached 21,134,380 at year
end 2001. Actelion’s capital is now
held by over 5,100 shareholders
worldwide. As part of our continued commitment to provide timely
and transparent information to
both shareholders and the investment community at large, we now
have more than 15 research
departments of major banks regularly reporting on our progress.
By 31 December 2001, the four
major initial venture capital investors had reduced their stake in
the company from close to 30% at
the beginning of 2001 to 5.3%. As
of mid-February 2002, Deutsche
Bank, BB Biotech and Orbimed
Advisors held more than 5% each
of the outstanding shares of the
company, marking a general trend
toward institutional investors.
Management, board and related
party ownership exceeded 20%.
Actelion Annual Report 2001 | 23
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
Report of the Group Auditors
To the Annual General Meeting of Actelion Ltd
Allschwil, Switzerland
As auditors of the Group, we have audited the consolidated financial statements (balance sheet, income statement,
statement of cash flows, statement of changes in equity and notes) of Actelion Ltd for the year ended December 31,
2001.
These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to
express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the
legal requirements concerning professional qualification and independence.
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession and with the
International Standards on Auditing issued by the International Federation of Accountants (IFAC), which require that
an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts
and disclosures in the consolidated financial statements. We have also assessed the accounting principles used,
significant estimates made and the overall consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results
of operations and the cash flows in accordance with the International Accounting Standards (IAS) and comply with
Swiss law.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Thomas Brüderlin
Basel, February 26, 2002
24 | Actelion Annual Report 2001
Alex Villiger
Consolidated Income Statement
[CHF]
Fees from cooperations
Net sales
Revenues
Cost of sales
Operating expenses
Research and development
Marketing and sales
Management and general
Total operating expenses
Operating loss
Financial income, net
Net loss before taxes and minority interests
Income tax benefit
Net loss before minority interests
Net income attributable to minority shareholders
Net loss Actelion Ltd
Basic loss per share
Note
1
2
3
4
5
6
7
12 Months Ended December 31,
2001
2000*
55,822,642
30,405,312
8,251,983
1,118,123
64,074,625
31,523,435
4,275,815
894,498
77,680,374
32,896,266
18,752,089
129,328,729
(69,529,919)
69,472,479
5,814,864
9,812,356
85,099,698
(54,470,762)
4,652,602
(64,877,317)
10,842,632
(54,034,685)
(538,460)
(54,573,145)
(2.65)
8,171,816
(46,298,946)
8,096,171
(38,202,775)
(407,804)
(38,610,579)
(2.13)
*Restated for sales of clinical services
The accompanying Notes form an integral part of these Consolidated Financial Statements.
Actelion Annual Report 2001 | 25
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Cons. Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
Consolidated Balance Sheet
Assets
[CHF]
Noncurrent assets
Plant and equipment, net
Investment
Goodwill and other intangible assets
Other assets
Deferred tax assets
Total noncurrent assets
Current assets
Inventories
Accounts receivable
Other current assets
Marketable securities
Cash and cash equivalents
Total current assets
Total assets
December 31,
2001
Note
8
11
9, 10
5
12
13
14
14
2000
16,036,652
1,700,000
9,692,778
3,079,659
25,776,426
56,285,515
10,409,465
950,000
6,516,725
1,806,511
14,828,493
34,511,194
6,246,211
11,337,979
2,240,174
65,177,791
87,012,826
172,014,981
228,300,496
3,058,827
62,414,582
522,617
63,502,272
156,324,100
285,822,399
320,333,593
52,837,150
258,777,733
(115,303,373)
196,311,510
48,676,900
258,597,127
(60,730,228)
246,543,799
1,209,521
671,061
–
187,982
533,751
721,733
377,431
110,562
1,089,869
1,577,862
9,025,720
12,222,481
8,072,911
736,620
30,057,732
228,300,496
56,406,000
8,362,653
5,417,950
1,354,268
71,540,871
320,333,593
Equity and liabilities
Shareholders’ equity
Share capital
Share premium and other reserves
Accumulated loss
Total shareholders’ equity
Minority interest
Noncurrent liabilities
Provisions
Other noncurrent liabilities
Capital leases, less current portion
Total noncurrent liabilities
Current liabilities
Deferred income
Trade and other payables
Accrued expenses
Current portion of capital leases
Total current liabilities
Total equity and liabilities
15
6
18
19
20
18
The accompanying Notes form an integral part of these Consolidated Financial Statements.
26 | Actelion Annual Report 2001
Consolidated Statement of Cash Flows
[CHF]
Operating activity
Net loss
Adjustments to reconcile net income to net cash
– Change in minority interest
– Cumulative translation adjustment
– Deferred tax variation
– Depreciation and amortization
– Provisions
– Change in noncurrent liabilities
– Changes in the composition of working capital
– – Increase/(decrease) in current liabilities
– – Decrease/(increase) in current assets
Net cash provided by operations
Note
12 Months Ended December 31,
2001
2000
(54,573,145)
(38,610,579)
538,460
201,398
(10,947,934)
4,640,309
(377,431)
77,420
(1,876,779)
(260,589)
(9,227,224)
2,126,375
(125,813)
110,562
(41,716,672)
47,011,359
(55,146,235)
63,656,880
(63,154,256)
(47,361,424)
(750,000)
(9,255,211)
(1,642,246)
(2,334,764)
(1,675,518)
(1,273,148)
(16,930,887)
(950,000)
(5,924,851)
(292,714)
–
(63,502,273)
(1,773,976)
(72,443,814)
(1,373,610)
137,284
4,002,174
2,765,848
(1,066,947)
–
247,171,208
246,104,261
Net change in cash position
(69,311,274)
126,299,023
Net increase in cash and cash equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
156,324,100
87,012,826
30,025,077
156,324,100
Investing activities
Increase in investments
Purchase of equipment
Purchase of intangibles
Acquisition of subsidiary
Marketable securities
Deposits and others
Net cash used in investing activity
Financing activities
Net payments on capital leases
Transactions in treasury shares
Issuance of shares, net of formation expenses
Total cash provided by financing activity
6
10
The accompanying Notes form an integral part of these Consolidated Financial Statements.
Actelion Annual Report 2001 | 27
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
Consolidated Statement of Shareholders’ Equity
[CHF except share data]
Common
At December 31, 1999
Conversion of minority interest (6.33%) into preferred B shares
Conversion of preferred shares into common shares
Capital increase
Exercise of stock options and warrants
Loss for the period
Translation adjustments
At December 31, 2000
Exercise of stock options and warrant
Loss for the period
Transactions in treasury shares
Translation adjustments
At December 31, 2001
2,584,800
Number of shares
Preferred
12,350,640
4,000,000
535,320
–
–
19,470,760
11,417,040
933,600
(12,350,640)
–
–
–
–
–
14,001,840
933,600
–
4,000,000
535,320
–
–
19,470,760
1,664,100
–
–
–
21,134,860
–
–
–
–
21,134,860
1,664,100
–
–
–
21,134,860
The accompanying Notes form an integral part of these Consolidated Financial Statements.
28 | Actelion Annual Report 2001
Total
Share capital
Capital account
Share premium
35,004,600
2,334,000
–
10,000,000
1,338,300
–
–
48,676,900
4,160,250
–
–
–
52,837,150
Cumulative translation
adjustments
4,595
–
–
–
–
–
(260,589)
(255,994)
Accumulated loss
25,354,213
–
–
232,713,686
785,222
–
–
258,853,121
Total capital
paid in
60,358,813
2,334,000
–
242,713,686
2,123,522
–
–
307,530,021
(22,119,649)
–
–
–
–
(38,610,579)
–
(60,730,228)
Total shareholders'
equity
38,243,759
2,334,000
–
242,713,686
2,123,522
(38,610,579)
(260,589)
246,543,799
(158,076)
–
137,284
–
258,832,329
4,002,174
–
137,284
–
311,669,479
–
–
–
201,398
(54,596)
–
(54,573,145)
–
–
(115,303,373)
4,002,174
(54,573,145)
137,284
201,398
196,311,510
Actelion Annual Report 2001 | 29
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
Notes to the Consolidated Financial Statements
Summary of significant accounting
policies
Basis of accounting
The consolidated financial statements of the Group have
been prepared under the historical cost convention and in
accordance with International Accounting Standards (IAS)
as issued by the International Accounting Standards Committee (IASC) as explained below and in conformity with
the legal provisions of the Swiss Code of Obligations. Individual items from the previous year have been reclassified
in the consolidated income statement to ensure comparability with the 2001 presentation. The consolidated financial statements are presented in Swiss francs (CHF).
Principles of consolidation
Subsidiary undertakings, which are those companies in
which the Parent Company, directly or indirectly, has an
interest of more than 50% of the voting rights or otherwise has power to exercise control over the operations,
have been consolidated. Subsidiaries are consolidated
from the date on which effective control is transferred to
the Parent Company. All inter-company transactions, balances and unrealized surpluses and deficits on transactions between Group companies have been eliminated.
Separate disclosure is made of minority interests.
Cash and cash equivalents
For the purpose of the cash flow statement, the Group
considers all time deposits with an initial maturity of three
months or less to be cash equivalents. Cash balances are
accounted for on a gross basis, bank overdrafts would be
included in current liabilities.
Financial instruments
The Group adopted IAS 39 “Financial Instruments: Recognition and Measurement,” on January 1, 2001. The effects
of adopting this standard are immaterial with respect to
the consolidated statement of shareholders’ equity. Further information is disclosed in the accounting policies for
marketable securities and available for sale investments.
Available-for-sale securities (marketable securities
and investment)
On January 1, 2001, the Group adopted IAS 39 “Financial
Instruments: Recognition and Measurement” and classified its marketable securities and investments as avail-
30 | Actelion Annual Report 2001
able-for-sale. These are included in noncurrent assets
unless management has the expressed intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to
raise operating capital, in which case they are included in
current assets. Marketable securities and investments
that are deemed to be available-for-sale are stated at fair
value. Any changes in their fair value will be recorded in
the income statement.
Marketable securities consist of equity and debt securities
that are traded in liquid markets. Prior to the adoption of
IAS 39 “Financial Instruments: Recognition and Measurement,” marketable securities were recorded at the lower
of cost or market, valued on an individual basis.
Foreign exchange risk
A significant portion of the Group’s operations are denominated in foreign currencies, mainly in U.S. Dollars. The inherent exposure may adversely impact the Group’s net income
and net assets. Currency exposure is not being hedged.
Interest rate risk
Interest rate risk arises from movements in interest rates,
which could have adverse effects on the Group’s net
income or financial position. Changes in interest rates
cause variations in interest income and expenses on interest-bearing assets and liabilities. In addition, they can
affect the market value of certain financial assets, liabilities and instruments.
Foreign currencies
The income statements of foreign subsidiaries are translated into the Group’s reporting currency at monthly average exchange rates and the corresponding balance sheets
are translated at the period-end exchange rate. Exchange
differences arising from the translation of the net investment in foreign subsidiaries are taken to “Cumulative
Translation Adjustment” in shareholders’ equity.
Foreign currency transactions are accounted for at the
exchange rates prevailing at the date of the transactions.
Gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies are recognized in the statement of operations in the corresponding period.
Accounts receivable
Accounts receivable are carried at anticipated realizable
value. An estimate is made for doubtful receivables based
upon periodic review of all outstanding amounts. Bad
debts are written off when identified.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined by the first-in first-out
method. Where necessary, provision is made for obsolete,
slow-moving or defective inventory.
Property, plant and equipment
Property, plant and equipment are recorded at cost and are
stated at historical cost less accumulated depreciation.
Depreciation expense is recorded utilizing the straight-line
method over the estimated useful life of the assets.
Assets are written down to their estimated residual value.
The useful lives are summarized as follows:
Group of assets
Useful life [years]
Laboratory furniture and installations
Laboratory equipment
Office furniture
Data-processing equipment and software
7–10
5
5
3
The costs of repairs and maintenance are capitalized only
if they improve the related asset or extend its useful life.
Leases
Leases of property, plant and equipment where the Group
assumes a substantial part of benefits and risks of ownership are classified as finance leases. Finance leases are
capitalized at the estimated present value of the underlying lease payments. Each lease payment is allocated
between the liability and finance charges so as to achieve
a constant rate of interest on the balance outstanding. The
corresponding rental obligations, net of finance charges,
are included in short- and long-term debt. The interest element of the finance charge is recorded as interest expense
in the income statement over the lease period. The plant
and equipment acquired under finance leasing contracts
are depreciated over the useful life of the asset.
Leases of assets under which the lessor effectively retains
all the risks and benefits of ownership are classified as
operating leases. Payments made under operating leases
are charged to the income statement on a straight-line
basis over the period of the lease.
Patents and trademarks – change in accounting
policy
In the prior year, costs associated with the filing and registration of patents and trademarks were capitalized and
amortized using the straight-line method over their estimated useful lives, not exceeding 20 years. In the current
year, the policy has been changed so that all such costs
are fully expensed in the period in which they occur. Had
this policy been in effect in the prior year, the results of
operations would not have been materially different.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net assets
of the acquired company undertaking at the date of acquisition. The Group amortizes goodwill on a straight-line
basis over a period of 20 years from the date of acquisition, in line with IAS 22 (revised). The carrying amount of
goodwill is reviewed annually and written down for permanent impairment where it is considered necessary.
Provisions
The Group recognizes provisions when it has a present
legal or constructive obligation to transfer economic benefits as a result of past events and a reasonable estimate
of the obligation can be made.
Employee entitlements to annual leave are recognized
when they accrue to employees. A provision is made for
annual leave as a result of services rendered by employees up to the balance sheet date.
Retirement benefits
The Group maintains retirement plans covering all of its
employees including its executive officers. In addition to
retirement benefits, the Group provides benefits on the
death or long-term disability of its employees. The plans
are considered defined benefit plans. See also note 22
“Employee benefits.”
The Swiss retirement plans are structured according to the
principles of the Swiss Occupational Benefits Law (BVG)
and are substantially identical to the BVG program except
that the Group plan also covers salaries above the salary
limit of the BVG. The Group and its employees pay retirement contributions, which are defined as a percentage of
the employees’ covered salaries, to a collective pension
fund operated by an insurance company. Interest is credited to the employees’ accounts at the minimum rate provided in the plan, payment of which is guaranteed by the
insurance contract. The contributions, which the Group is
called upon to pay in respect of a particular period, are
recorded as expense in that period.
Actelion Annual Report 2001 | 31
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
Revenue recognition
Revenue arising from multi-element development and copromotion agreements is recognized on the basis of cost
of efforts up to the reporting date, divided by the total
expected research and development costs, multiplied by
the total expected contractual payments under the
arrangement. However, revenue is limited to the amount
of nonrefundable cash payments received and the subsequent milestone payments that have become due and
payable at the reporting date.
Sales are recognized on delivery or on providing services
to third parties.
Cost of sales
Cost of sales comprises manufacturing costs and related
production overhead measured at standard costs, royalty
expenses directly related to product sales and costs for
conduct of clinical services.
Research and development
Research and development costs are expensed as
incurred.
32 | Actelion Annual Report 2001
Deferred income taxes
Deferred taxes are provided, using the liability method, for
all temporary differences between the tax bases of assets
and liabilities and their carrying values for financial
reporting purposes. Deferred tax assets relating to the
carryforward of unused tax losses are recognized to the
extent that future taxable profit is expected to be available against which the unused tax losses can be utilized.
To determine deferred tax, currently enacted tax rates are
used net of the beneficial effect of specific agreements to
which the Group is a party.
Impairment
The Group periodically reviews the recoverability of fixed
assets and capitalized intangibles through discounting
estimated expected future cash flows (without interest
charges) of these assets. An impairment loss is recorded
only if the carrying amount of the asset exceeds the higher
of its fair value and its value in use.
Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing
the net profit/(loss) attributable to the shareholders by the
weighted average shares outstanding during the period.
1. Fees from cooperations
[CHF]
Genentech down payments
Fees from other cooperation agreements and services
Total fees
Year ended December 31,
2001
2000
50,000,000
24,675,000
5,822,642
5,730,312
55,822,642
30,405,312
In January 2001, Genentech made a down payment of
total CHF 56.4 million (USD 35 million) of which CHF 6.4
million is not reflected in the 2001 income statement. In
accordance with the applied revenue recognition policy,
the remaining amount of CHF 6.4 million is deferred and
will be recorded as revenue in 2002.
2. Net sales
Reflect product sales of TracleerTM and sales of clinical
services.
3. Employee costs
[CHF]
Wages and salaries
Social security costs
Pension costs – employer contribution
Other employee-related costs
Total employee-related costs
Number of employees expressed as average full time equivalents
Year ended December 31,
2001
2000
38,347,797
16,411,764
2,639,708
2,144,517
2,951,690
1,464,125
6,411,328
2,641,368
50,350,523
22,661,774
329
146
4. Financial income, net
[CHF]
Interest income
Interest (expense)
Net foreign exchange gains
Net gain/(loss) on marketable securities and other income
Total financial income, net
Year ended December 31,
2001
2000
7,434,750
7,315,455
(218,917)
(200,847)
1,899,909
1,787,116
(4,463,140)
(729,908)
4,652,602
8,171,816
Actelion Annual Report 2001 | 33
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
5. Taxes
The income tax benefit credited to the income statement comprises:
Year ended December 31,
2001
2000
(378,420)
(480,332)
11,221,052
8,576,503
10,842,632
8,096,171
16.7%
17.5%
[CHF]
Current tax
Deferred tax
Total
Effective tax rate
Deferred income taxes debited to the share premium in respect of formation expenses comprise:
[CHF]
Deferred tax
2001
293,118
2000
(650,721)
2001
23,330,357
2,446,069
25,776,426
2000
12,783,561
2,044,932
14,828,493
Deferred income tax asset at December 31 comprises:
[CHF]
Tax loss carryforwards
Temporary differences
Total
At December 31, 2001, the Group had unused tax losses of
CHF 113,062,522. If not used, these tax losses will expire
as follows:
[CHF]
After 4 years
After 5 years
After more than 5 years
Total
4,531,209
19,313,707
89,217,606
113,062,522
Based on expected future profit, the Group is of the opinion that it is more likely than not that all tax losses will be
used before they expire. Therefore a deferred tax asset
was recognized in the amount of CHF 23,330,357 relating
to all tax loss carryforwards.
At December 31, 2001, the Group had deductible temporary differences in the amount of CHF 23,145,848 for
which a deferred tax asset of CHF 2,446,069 was recognized.
34 | Actelion Annual Report 2001
6. Minority interests
[CHF]
January 1
Purchase of minority interest in Actelion Pharmaceuticals Ltd
Change in minority interest due to capital increase
Change in minority interest due to result of the year
December 31
2001
671,061
–
–
538,460
1,209,521
2000
2,547,840
(2,334,000)
49,417
407,804
671,061
On March 6, 2000, the minority shareholders of Actelion
Pharmaceuticals Ltd converted their shares (6.33%) of
Actelion Pharmaceuticals Ltd into 933,600 shares of
Actelion Ltd.
The Group’s share in Hesperion Ltd was reduced in
October 2000 from 70% to 64.17% as a result of the issue
of additional shares to an employee foundation. Minority
interests at December 31, 2001 consist of 35.83% of
Hesperion Ltd and are held by management and employees of that company.
7. Earnings per share
Basic loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of
shares outstanding during the year.
[CHF except share data]
Net loss attributable to shareholders
Weighted average number of shares outstanding
Basic loss per share
Year ended December 31,
2001
2000
(54,573,145)
(38,610,579)
20,561,372
18,094,552
(2.65)
(2.13)
Actelion Annual Report 2001 | 35
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
8. Plant and equipment
Office
equipment
Laboratory
equipment
Other
Total
December 31, 1999
Additions
Depreciation charge
1,111,999
4,189,913
(825,144)
3,559,625
3,232,113
(956,670)
39,869
65,660
(7,901)
4,711,493
7,487,686
(1,789,715)
December 31, 2000
4,476,768
5,835,068
97,628
10,409,464
23,604
4,404,723
64,029
(2,160,244)
–
4,758,220
–
(1,670,595)
–
268,504
–
(61,054)
23,604
9,431,447
64,029
(3,891,892)
6,808,880
8,922,693
305,079
16,036,652
5,526,895
(1,050,127)
7,440,660
(1,605,592)
109,274
(11,646)
13,076,829
(2,667,365)
4,476,768
5,835,068
97,628
10,409,464
10,019,251
(3,210,371)
12,198,880
(3,276,187)
377,778
(72,699)
22,595,909
(6,559,257)
6,808,880
8,922,693
305,079
16,036,652
[CHF]
Exchange differences
Additions
Acquisitions
Depreciation charge
December 31, 2001
December 31, 2000
Historical cost
Accumulated depreciation
Net book value
December 31, 2001
Historical cost
Accumulated depreciation
Net book value
Additions include CHF 199,840 and CHF 1,562,834 assets leased under capital leases for the years ended December 31,
2001 and 2000, respectively. Depreciation charged on assets leased under capital leases is CHF 858,419 and CHF 682,573
for the years ended December 31, 2001 and 2000, respectively. Accumulated depreciation for assets leased under capital
leases is CHF 2,096,460 and CHF 1,238,041 at December 31, 2001 and 2000, respectively.
9. Goodwill and other intangible assets
36 | Actelion Annual Report 2001
[CHF]
Goodwill
Other intangible
assets
Total
December 31, 1999
Additions
Depreciation charge
6,501,040
–
(325,052)
59,631
292,714
(11,608)
6,560,671
292,714
(336,660)
December 31, 2000
6,175,988
340,737
6,516,725
Additions
Depreciation charge
2,282,224
(441,380)
1,642,246
(307,037)
3,924,470
(748,417)
December 31, 2001
8,016,832
1,675,946
9,692,778
December 31, 2000
Historical cost
Accumulated depreciation
6,501,040
(325,052)
355,127
(14,390)
6,856,167
(339,442)
Net book value
6,175,988
340,737
6,516,725
December 31, 2001
Historical cost
Accumulated depreciation
8,783,264
(766,432)
1,997,373
(321,427)
10,780,637
(1,087,859)
Net book value
8,016,832
1,675,946
9,692,778
10. Acquisition of subsidiary
13. Accounts receivable
On January 1, 2001, the Group acquired 100% of the outstanding voting common stock of ASC S.r.l. ASC is
conducting biometrical research in the context of new
medicines’ trials. The acquisition was accounted for under
the purchase method and the operating results of ASC
S.r.l. have been included in the Group’s consolidated
financial statements with effect from January 1, 2001.
[CHF]
Trade receivables
Accounts receivable
from cooperations
Other accounts receivable
Down payment Genentech
Total accounts receivable
Year ended December 31,
2001
2000
4,509,382
–
4,061,173
150,000
2,767,424 5,858,582
– 56,406,000
11,337,979 62,414,582
Details of net assets acquired are as follows:
Fair value of net assets acquired
2,334,764
(52,540)
Goodwill
2,282,224
Purchase price [CHF]
14. Cash and cash equivalents/
marketable securities
[CHF]
The assets and liabilities arising from the acquisition that
are included in the consolidated balance sheet of the
Group at January 1, 2001 were as follows:
Marketable securities
Cash at bank and in hand
Short-term bank deposits
Total liquid funds
Year ended December 31,
2001
2000
65,177,791 63,502,273
51,823,989 13,900,900
35,188,837 142,423,200
152,190,617 219,826,373
[CHF]
Accounts receivable
Accounts receivable from Actelion
Fixed assets
Other assets
Trade payables
Accrued expenses
Fair value of net assets acquired (100%)
76,704
760,856
64,029
2,133
(333,182)
(518,000)
52,540
Short-term deposits denominated in USD amount to
CHF 10 million and CHF 3.2 million in 2001 and 2000,
respectively, in EUR to CHF 8 million at December 31,
2001.
The weighted average effective interest rates obtained on
short-term bank deposits were 3.6% and 3.1% in 2001 and
2000, respectively.
In October 2001, ASC S.r.l. was merged with Actelion
Pharmaceuticals Italia S.r.l.
15. Share capital
11. Investment
[CHF]
Axovan Ltd
Year ended December 31,
2001
2000
1,700,000
950,000
At December 31, 2001, the issued share capital amounts
to CHF 52,837,150 consisting of 21,134,860 common
shares with a nominal value of CHF 2.50 each. The shares
are registered and fully paid-up.
12. Inventories
[CHF]
Intermediates
Finished products
Total inventories
Year ended December 31,
2001
2000
5,566,571 3,058,827
679,640
6,246,211 3,058,827
Actelion Annual Report 2001 | 37
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
16. Conditional capital
Since inception, the Company has created conditional
capital for the establishment of stock option plans,
convertible bonds as well as for the potential issuance of
shares in relation with certain credit facilities. At
December 31, 2001, the Company has conditional capital
of CHF 9,434,450.
Movements in conditional capital are as follows:
[CHF]
January 1, 2000
Creation of conditional capital for convertible bonds/loans
Creation of conditional capital for employee stock option plans
Exercise of options and warrant
8,553,000
2,100,000
3,000,000
(1,338,300)
December 31, 2000
12,314,700
Creation of conditional capital for Employee Stock Option Plans
Creation of conditional capital for convertible bonds/loans
Exercise of options and warrant
500,000
780,000
(4,160,250)
December 31, 2001
9,434,450
17. Authorized capital
19. Deferred income
The Annual General Meeting of April 9, 2001 authorized
the Company to create capital to be used for strategic purposes. The Board of Directors is authorized to increase
until April 9, 2003 the share capital by an amount of not
more than CHF 5,000,000 by issuance of not more than
2,000,000 fully paid-in registered shares with a nominal
value of CHF 2.50 per share.
Deferred income consists of the amounts received at year
end under multi-element licensing and co-promotion
agreements that had not yet been recognized as revenue
in the income statement.
18. Financing arrangements
[CHF]
Capital Leases
At December 31, 2001 and 2000, the Group had obligations outstanding under capital lease commitments. The
commitments are as follows:
[CHF]
Within one year
Later than one year and not
more than 5 years
Total
38 | Actelion Annual Report 2001
2001
736,620
2000
1,354,268
533,751
1,270,371
1,089,869
2,444,137
20. Accrued expenses
Accrued expenses
Accrued compensation
expenses
Total receivables
Year ended December 31,
2001
2000
4,467,842 3,445,128
3,605,069
8,072,911
1,972,822
5,417,950
21. Commitments and contingencies
Licensing-in agreements with Roche
The Group has acquired the license for the use of
tezosentan and bosentan. In consideration for obtaining
these rights and following certain events (“milestones”),
the Group has made cash payments in the amount of CHF
3,500,000 and CHF 4,000,000 for the years ended December 31, 2001 and 2000, respectively. The payments have
been recorded as research and development expense in
the income statement. The Group is required to make further payments if further milestones are achieved in the
development and commercialization of the licensed compounds. In 2002, the Group expects to make payments of
about CHF 6 million for achievement of further milestones.
Furthermore, under the agreements, the Group is required
to pay royalties related to net sales of the products, consistent with industry standards.
Research and development agreement
In June 1999, the Group concluded a research, development and commercialization agreement with Johnson &
Johnson. The agreement has a two-year term expiring on
June 30, 2001, with an option for a third year at the discretion of Johnson & Johnson. Johnson & Johnson elected
for the third year ending on June 30, 2002. Under the
agreement, the Group has agreed to employ a minimum
number of scientists to conduct research. Johnson & Johnson has paid the Group on a quarterly basis in connection
with this research agreement.
Operating lease commitments
At December 31, 2001, the future minimum lease
payments under noncancelable operating leases were:
[CHF]
Within one year
Later than one year and
not more than 5 years
Later than five years
Total
Year ended December 31,
2001
2000
3,940,116 3,003,530
14,502,695 11,608,412
1,374,902 1,430,056
19,817,713 16,041,998
Operating lease commitments comprise mainly future
rental payments for offices and laboratories.
Capital commitments
At December 31, 2001, capital commitments which have
not been recognized in the financial statements amounted
to:
[CHF]
Research equipment
Building
591,000
8,650,000
Actelion Annual Report 2001 | 39
Consolidated Financial Statements
24
Report of the Group Auditors
24
Consolidated Income Statement
25
Consolidated Balance Sheet
26
Consolidated Statement of Cash Flows
27
Consolidated Statement of
Shareholders’ Equity
28
Notes to the Consolidated
Financial Statements
30
22. Employee benefits
Pension costs in Switzerland amounted to CHF 2,901,000
and CHF 2,194,000 in 2001 and 2000, respectively, excluding company contributions to state plans. The Group funds
these plans with amounts in compliance with funding
requirements, laws and regulations. The costs of the
defined benefit plans are based upon actuarial valuations
of the plans made during 2001.
The unrecognized liability/(asset) consists of:
[CHF]
Present value of funded obligations
Fair value of plan assets
Total (excess)/deficit
Unrecognized actuarial (gains)/losses
Unrecognized liability/(asset)
Liability in the balance sheet
Year ended December 31,
2001
2000
18,993,000
10,453,000
18,612,000
10,456,000
381,000
(3,000)
(358,000)
(975,000)
23,000
(978,000)
–
–
The amounts recognized in the income statement are as follows:
[CHF]
Current service costs
Interest costs
Expected return on plan assets
Change in unrecognized assets
Total pension expense/(income)
Year ended December 31,
2001
2000
3,004,000
1,005,000
631,000
256,000
(734,000)
(272,000)
–
1,205,000
2,901,000
2,194,000
The Group has not recognized any assets or liabilities in
connection with the information provided above.
The principal weighted average actuarial assumptions
used for accounting purposes were:
Discount rate
Expected return on plan assets
Future salary increases
Future pension increase
40 | Actelion Annual Report 2001
2001
4.0%
5.0%
3.0%
1.5%
2000
4.0%
5.0%
3.0%
1.5%
23. Employee stock option plans
There are six separate stock option plans: the Founders’
Plan, the Chairman’s Plan, and the 2001, 2000, 1999 and
1998 Employee Plans. They are administered by the Board
of Directors.
No compensation expense has been recognized for
options granted under any of these plans except to the
extent that the social security costs related to the
issuance of options has been expensed.
Founders’ plan
A total of 1,200,000 shares are authorized for issuance
under this plan. At December 31, 2001 and 2000, all
options had been granted and vested.
2001, 2000, 1999 and 1998 employee plans
Options under the Employee Plans are granted at the
beginning of employment or service. The options vest on a
pro-rata basis quarterly 4 years from the date of grant,
with a one-year initial cliff vesting. All options expire no
later than ten years from the date of grant. A total of
200,000, 960,000, 720,000 and 1,200,000 shares are
authorized for issuance under the 2001, 2000, 1999 and
1998 Plans, respectively. At December 31, 2001 and 2000,
there are 99,032 and 513,408 options, respectively, available for grant under these Plans. At December 31, 2001
and 2000, 1,364,321 and 715,352 shares, respectively, are
vested under these Plans.
Chairman’s plan
A total of 120,000 shares were authorized for issuance
under this plan. At December 31, 2001 and 2000, all
options had been granted and vested.
Summary of option plans
Share options outstanding at the end of the year have the following terms:
Exercise Price [CHF]
Up to 25
From 25.1 to 50.0
From 50.1 to 75.0
From 75.1 to 100.0
From 100.1 to 150.0
From 150.1 to 250.0
Total
Weighted average price of options outstanding
December 31, 2001
1,215,160
80,160
489,464
–
287,788
210,176
2,282,748
December 31, 2000
50.10
18.48
2001
3,284,472
653,624
(1,616,100)
(39,248)
2,282,748
2000
2,984,160
721,632
(402,120)
(19,200)
3,284,472
2,835,480
–
155,680
–
204,480
88,832
3,284,472
Movements in the number of share options outstanding are as follows:
[Share options]
January 1
Granted
Exercised
Cancelled
December 31
Actelion Annual Report 2001 | 41
Holding Company Statements
43
Report of the Statutory Auditors
43
Holding Company Balance Sheet
44
Holding Company Income Statement
45
Notes to the Financial Statements
46
24. Stock warrant
On March 4, 1999, the Group obtained an irrevocable credit
facility from Basler Kantonalbank in the amount of CHF
10,000,000 and issued a warrant in connection thereto.
Basler Kantonalbank received the right to buy 133,200
shares at an exercise price of CHF 7.50, and 48,000 shares
at an exercise price of CHF 10.42. The warrant was fully
vested on the date of the initial public offering.
In 2001 and 2000, Basler Kantonalbank exercised its right
to buy 48,000 shares and 133,200 shares, respectively. At
December 31, 2001, the warrant was fully exercised.
25. Significant subsidiaries
Company
Country
Location
Actelion Pharmaceuticals Australia Pty Ltd
Actelion Pharmaceuticals Canada Inc
Actelion Pharmaceuticals France SAS
Actelion Pharmaceuticals Deutschland GmbH
Actelion Pharmaceuticals Hellas MEPE
Actelion Pharmaceuticals Italia S.r.l.
Actelion Pharmaceuticals Japan Ltd
Actelion Pharmaceuticals España S.L.
Actelion Pharmaceuticals Ltd
Actelion Pharmaceuticals UK Ltd
Actelion Registration Ltd
Actelion Pharmaceuticals US, Inc
Hesperion Ltd
Australia
Canada
France
Germany
Greece
Italy
Japan
Spain
Switzerland
United Kingdom
United Kingdom
United States
Switzerland
Sydney
Laval
Paris
Freiburg
Athens
Milan
Tokyo
Barcelona
Allschwil
London
London
South San Francisco
Allschwil
26. Related party transactions
Senior executive and board compensation
Total remuneration for senior executives of the Group
amounted to CHF 2,241,959 (9 members) and CHF
1,566,252 (6 members) in 2001 and 2000, respectively.
In 2001, Board members excluding executives of the Company (6 members) received total monetary compensation
of CHF 90,000 and total grants of 5,000 share options
under the employee stock option plan.
42 | Actelion Annual Report 2001
Ownership
interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
64%
Consolidation
method
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Report of the statutory auditors
To the Annual General Meeting of Actelion Ltd
Allschwil, Switzerland
As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income
statement and notes) of Actelion Ltd for the year ended December 31, 2001.
These financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning
professional qualification and independence.
Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which
require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts
and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company's articles of incorporation.
We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Thomas Brüderlin
Alex Villiger
Basel, February 26, 2002
Actelion Annual Report 2001 | 43
Holding Company Statements
43
Report of the Statutory Auditors
43
Holding Company Balance Sheet
44
Holding Company Income Statement
45
Notes to the Financial Statements
46
Balance Sheet
Assets
[CHF]
Current assets
Liquid funds
Marketable securities
Accounts receivable from
– subsidiaries
– others
Prepayments and accrued income
Total current assets
Noncurrent assets
Financial assets:
– Investments in subsidiaries
– Other investment
– Long-term loans to subsidiaries
Intangible assets:
– Incorporation and capital increase costs
Total noncurrent assets
Total assets
December 31,
2001
2000
38,635,228
59,083,781
142,937,756
63,502,273
–
230,443
931,721
98,881,173
34,609,269
–
3,472,506
244,521,804
72,156,405
1,700,000
118,091,271
41,041,621
950,000
–
11,708,474
203,656,150
302,537,323
15,311,082
57,302,703
301,824,507
421,005
421,005
190,887
190,887
52,837,150
251,049,804
(1,770,636)
302,116,318
302,537,323
48,676,900
250,785,222
2,171,498
301,633,620
301,824,507
Equity and liabilities
Current liabilities
Accounts payable and accrued liabilities
Total current liabilities
Shareholders’ equity
Share capital
Legal reserves – share premium
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
44 | Actelion Annual Report 2001
Income Statement
[CHF]
Financial income
Total income
Year ended December 31,
2001
2000
9,480,339
6,170,405
9,480,339
6,170,405
Administrative expenses
Financial expenses
Amortization of incorporation and capital increase costs
Changes in value of financial assets
Total expenditure
923,401
5,777,081
3,602,608
3,119,383
13,422,473
378,328
734,917
2,701,956
–
3,815,201
Profit before tax
(3,942,134)
2,355,204
Income taxes
Net income for the year
–
(3,942,134)
(183,706)
2,171,498
Actelion Annual Report 2001 | 45
Holding Company Statements
43
Report of the Statutory Auditors
43
Holding Company Balance Sheet
44
Holding Company Income Statement
45
Notes to the Financial Statements
46
Notes to the Financial Statements 2001
1. Accounting principles
The financial statements of Actelion Ltd have been prepared in accordance with the accounting principles as
prescribed by Swiss Company Law.
2. Material investments
Company
Country
Location
Actelion Pharmaceuticals Australia Pty Ltd
Actelion Pharmaceuticals Canada Inc
Actelion Pharmaceuticals France SAS
Actelion Pharmaceuticals Deutschland GmbH
Actelion Pharmaceuticals Hellas MEPE
Actelion Pharmaceuticals Italia S.r.l.
Actelion Pharmaceuticals Japan Ltd
Actelion Pharmaceuticals España S.L.
Actelion Pharmaceuticals Ltd
Actelion Pharmaceuticals UK Ltd
Actelion Registration Ltd
Actelion Pharmaceuticals US, Inc
Hesperion Ltd
Axovan Ltd
Australia
Canada
France
Germany
Greece
Italy
Japan
Spain
Switzerland
United Kingdom
United Kingdom
United States
Switzerland
Switzerland
Sydney
Laval
Paris
Freiburg
Athens
Milan
Tokyo
Barcelona
Allschwil
London
London
South San Francisco
Allschwil
Allschwil
Ownership
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
64%
23%
3. Share capital
At December 31, 2001, the issued share capital amounts to CHF 52,837,150 consisting of 21,134,860 common
shares with a nominal value of CHF 2.50 each. The shares are registered and fully paid-up.
4. Conditional capital
Since inception, the Company has created conditional capital for the establishment of stock option plans, convertible bonds as well as for the potential issuance of shares in relation with certain credit facilities. At December 31,
2001, the Company has conditional capital of CHF 9,434,450.
Movements in conditional capital are as follows:
[CHF]
January 1, 2000
Creation of conditional capital for convertible bonds/loans
Creation of conditional capital for Employee Stock Option Plans
Exercise of options and warrant
8,553,000
2,100,000
3,000,000
(1,338,300)
December 31, 2000
12,314,700
Creation of conditional capital for Employee Stock Option Plans
Creation of conditional capital for convertible bonds/loans
Exercise of options and warrant
500,000
780,000
(4,160,250)
December 31, 2001
46 | Actelion Annual Report 2001
9,434,450
5. Authorized capital
The Annual General Meeting of April 9, 2001 has authorized the Company to create capital to be used for strategic
purposes. The Board of Directors is authorized to increase until April 9, 2003 the share capital by an amount of not
more than CHF 5,000,000 by issuance of not more than 2,000,000 fully paid-in registered shares with a nominal
value of CHF 2.50 per share.
6. Treasury shares
During 2001, the Group traded 38,290 own shares with an average purchase price of CHF 52.35 and average sales
price of CHF 55.94. At December 31, 2001, the Group had no holdings in own shares.
7. Significant shareholders at December 31, 2001
According to the information available to the Board of Directors, the following shareholders held a significant percentage of shares:
Name
2001
Percentage of
share capital
Management and Directors*
20.3%
Deutsche Bank
6.2%
Chase Nominees
6.2%
OrbiMed Advisors
5.2%
Biotech Invest
5.2%
Atlas Venture Fund III L.P.
–
TVM Technoventure
Management III GmbH & Co. KG
–
2000
Percentage of
voting rights
Percentage of
share capital
Percentage of
voting rights
20.3%
5.0%
5.0%
5.2%
5.2%
–
14.3%
–
–
–
–
7.88%
14.3%
–
–
–
–
7.88%
–
6.16%
6.16%
*No individual has holdings exceeding 5%.
Proposed appropriation of available earnings
Available earnings
Retained earnings at the beginning of the year
Net income/(loss) for the year
Total available earnings/(loss carried forward)
Appropriation to general legal reserve
Balance to be carried forward
2001
2000
2,061,498
(3,942,134)
(1,880,636)
2,171,498
2,171,498
–
(1,880,636)
–
(110,000)
2,061,498
Actelion Annual Report 2001 | 47
Message to Shareholders
04
Year 2001 Highlights
06
Entering a New ERA
08
Launch of Tracleer™
10
Development
14
Drug Discovery Research
18
CFO’s Letter
22
Consolidated Financial Statements
24
Holding Company Statements
43
Shareholder Information
48
share
Shareholder Information
Share price
The following table shows the reported high and low quarterly closing share price of the
Actelion shares on the SWX New Market during the year 2001.
Actelion Ltd
Actelion Pharmaceuticals Australia Pty Ltd
Australia (100%)
Actelion Pharmaceuticals Canada Inc
Canada (100%)
First Quarter *
Second Quarter
Third Quarter
Fourth Quarter
High
186.25
145
56.75
78
Low
117.50
49
37
44.45
On 31 December 2001, the last reported closing share price was CHF 78 and market capitalization of Actelion Ltd was CHF 1.6 billion, compared with a share price (*) of CHF 184
and market capitalization of CHF 3.6 billion the previous year. The total number of shareholders on 31 December 2001 was 5,115.
* Share price reflects the adjusted four-to-one stock split that took effect on 20 June 2001.
Actelion Pharmaceuticals Deutschland
GmbH
Germany (100%)
Actelion Pharmaceuticals España S.L.
Spain (100%)
Actelion Pharmaceuticals France SAS
France (100%)
Actelion Pharmaceuticals Hellas MEPE
Greece (100%)
Actelion Pharmaceuticals Italia S.r.l.
Italy (100%)
Actelion Pharmaceuticals Japan Ltd
Japan (100%)
Actelion Pharmaceuticals Ltd
Switzerland (100%)
Actelion Pharmaceuticals UK Ltd
UK (100%)
Actelion Pharmaceuticals US, Inc
USA (100%)
Hesperion Ltd
Clinical Research Organization
Switzerland (64%)
US IL NL
48 | Actelion Annual Report 2001
Listing
Actelion Ltd is organized under Swiss law
and is the holding company of the
Actelion Group. The company’s initial
equity funding was provided in 1998 and
1999 in two separate rounds of financing
totaling CHF 66 million.
The registered shares of Actelion Ltd have
been listed on the SWX New Market
since 6 April 2000 (symbol: ATLN). A total
of 1,000,000 primary shares were placed
at the company’s Initial Public Offering
(IPO), at a price of CHF 260 per share.
Actelion’s IPO was effected through an
international banking syndicate led by
Credit Suisse First Boston and constituted
one of the largest ever for a biopharmaceutical company, raising CHF 246.6
million.
On 20 June 2001, Actelion Ltd announced
a four-to-one split in its shares. As of this
day, there were 21,001,580 shares outstanding with a new nominal value of
CHF 2.50. The number of outstanding
shares reached 21,134,380 at year end
2001.
Investor Relations
Calendar 2002
March 27
Media/Analyst
Conference
April 19
Annual General Meeting
of Shareholders
May 8
Q1 Results
June 5
R & D Day
August 7
Q2 Results
November 7 Q3 Results
holder value
Board of Directors
Back row (standing pictured left to right)
Werner Henrich
Fred J. Meyer
Front row (seated pictured left to right)
Robert E. Cawthorn Chairman
Retired Vice Chairman, Omnicom Group
Jane Royston
Senior Vice President, F. Hoffman La-Roche
(Pharmaceuticals Division)
André J. Mueller
Rudolf Maag
Senior Vice President, Head of Strategic
Development
Branco Weiss Professor of Entrepreneurship
& Innovation, Swiss Federal Institute
of Technology, Lausanne
Thomas Widmann Vice-Chairman
Jean-Paul Clozel
Founder, Senior Vice President, Head of
Business Development
Former CEO, Synthes-Stratec, Inc.
Joël Besse
Retired Chairman and CEO, Rhône-PoulencRorer
Founder, Chief Executive Officer
Senior Principal, Atlas Venture
Scientific Advisory
Board
Business Executive Board
Joël Ménard
Professor of Public Health, University Pierre
et Marie Curie, Paris
Donald Hilvert
Professor of Chemistry at the Swiss Federal
Institute of Technology (ETH), Zürich
Richard Tsien
Professor of the Department of Molecular
and Cellular Physiology, Stanford University,
Palo Alto
Jean-Paul Clozel
Konrad P. Wirz
Isaac Kobrin
Founder, Chief Executive Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Head of Clinical
Development
Simon Buckingham
Christian Chavy
Louis de Lassence
President, Head of US, Canada, Asia Pacific
President, Head of Europe, Middle East,
Latin America
Vice President, Head of Corporate Operations
Craig Pratt
Professor of Medicine and Cardiology, Baylor
College of Medicine, Houston
Actelion Annual Report 2001 | 49