Serendex by Heidemann Grafisk

TABLE OF CONTENTS

THE RESPIRATORY SYSTEM • Your lungs are part of a group of organs and tissues that all work together to help you breathe. This system is called the respiratory system. • The lungs are different from most of the other organs in your body because their delicate tissues are directly connected to the outside environment. • When resting, the average adult breathes around 12 to 20 times a minute and takes in around 11,000 liters of air every day. • Serendex Pharmaceuticals was established in 2008 and develops drugs for inhalation to treat respiratory conditions for patients who currently have no other treatment options. • On average, an employee in Serendex has 16 years of experience within the pharmaceutical industry.

MANAGEMENT OVERVIEW 4 Chairman and CEO statement 5 Key figures 6 Market overview OUR STRATEGY AND INDICATIONS 8 Strategy 10 Portfolio & pipeline 14 Pulmonary alveolar proteinosis (GM-CSF) 18 Acute respiratory distress syndrome (GM-CSF) 20 Cystic fibrosis (GM-CSF) 22 Bronchiectasis (GM-CSF) 24 Diffuse alveolar hemorrhage (FVIIa) 26 Nebulizer 28 Great beginnings in Giessen 30 Key achievements in 2014 32 Outlook for 2015 34 Financial review 36 Corporate governance 38 Investor information 40 Management’s statement 41 Glossary 42 Independent auditor’s statement FINANCIAL STATEMENTS 44 Group annual accounts 2014 66 Parent annual accounts 2014

16 years

Editor Serendex Pharmaceuticals A/S Contents Serendex Pharmaceuticals A/S &Schultz Design & production Carina Kruse Heidemann Grafisk Photos Camilla Hey Jesper Rais

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

MANAGEMENT OVERVIEW

CHAIRMAN & CEO STATEMENT 2014 was a satisfactory year with significant progress and exciting changes at Serendex. The significant pre-clinical platform for GMCSF was successfully established during 2014 and it will continue to enhance Serendex’s robust development pipeline, which holds great promise for patients, who have no other satisfactory options. With well-defined development pathways already delineated, we are highly motivated to continue the advancement to become a global late-stage drug development company focusing on the treatment of life threatening lung diseases. In 2014 it became even more evident that there is an urgent and global clinical need for a more efficient treatment of pulmonary alveolar proteinosis (PAP) patients. The input from clinicians within the pulmonary area and from potential strategic partners

Kim Arvid Nielsen CEO 4

Karin Verland Chairman of the Board

have strengthened the strategic focus on future clinical studies within pulmonary alveolar proteinosis (PAP), cystic fibrosis (CF), bronchiectasis (BE) and acute respiratory distress syndrome (ARDS). The pipeline is highly competitive as it comprises IP-rights, nebulizers with exclusivity as well as obtained orphan drug designations (ODD). Another important product in the pipeline is Factor VIIa (FVIIa). We noted strong indications that the company will be able to secure an active pharmaceutical ingredient (API) that will allow us to escalate and speed up the development program considerably, which could lead to market approval for FVIIa for inhalation within less than five years. The business model of Serendex is founded on the idea to produce and develop wellknown biological products, which have previously been administered as systemical drugs. In 2014 Serendex entered a worldwide exclusive agreement with PARI Pharma GmbH securing the rights to use PARI Pharma e-Flow® nebulizer system for future inhalation indications with GM-CSF. Management believe this is a great leap forward for Serendex as the device is a key component in the drug delivery strategy.

A new and more diverse ownership structure was gained through an IPO on the Oslo Stock Exchange/Axess. As part of the IPO process, the Board of Directors was strengthened with significant pharmaceutical experience and strong business acumen to reflect the development of Serendex. The IPO and subsequent listing was finalized on 11 July in 2014, and resulted in a gross proceeds of DKK 57 million. Reflecting on the changes and the solid performance of the drug development strategy in the past year, the Board concluded 2014 with the unanimous decision to seek further funding in 2015 to enable Serendex to continue to fully explore the development strategy.

Looking ahead, there are great opportunities in the Serendex development strategy to advance the products to market. The introduction of more advanced pharmaceuticals for patients with lung diseases, will enable such patients to live more active and fulfilling lives and at the same time create value for stakeholders. In this effort, we at Serendex are more than grateful to the patients, clinicians, collaborators, employees and shareholders who have contributed to developing the product portfolio and we hope that you will continue to support us in delivering strong results. It is the commitment, ingenuity and passion of everyone associated with Serendex that will continue to fuel our success. We thank you for your trust in us and will continue to share our progress with you.

KEY FIGURES Seen over a five-year period the development of the Company is described by the following financial highlights: GROUP DKK thousand

2014

2013

2012

2011

2010*

Income Statement Revenue

786

Gross profit/loss (-)

461

-25,566

-4,876

-1,516

-640

-407

-3,787

-468

-262

-178

-454

-22,151

-4,485

-1,333

-613

-586

Total assets

62,299

19,743

19,183

8,973

11,647

As a company with a high commercial focus, Serendex reached a significant milestone in 2014 as Molgradex® (GM-CSF) was released for named patient sales (NPS). The successful development of the NPS will continue in 2015 and underscores the demand for the Molgradex® product and its market potential.

Operating profit/loss (-)

Cash and cash equivalents

20,460

2,253

8,002

n/a

In addition to drug development progress, 2014 was a year in which fundamental changes to the Serendex business were undertaken. The competitive position was strengthened considerably in 2014 with new competencies joining the organization at all levels. As a progressive organization, the Serendex team is critically aware of the need to constantly adapt and align the organizational skills with the overall business goals of the company.

Equity

33,685

6,117

10,829

2,224

5,192

Investment in intangible assets

29,417

12,501

8,097

6,677

n/a

313

10.8

3.0

2.0

-1.47

-0.39

-0.12

-0.05

7.6

n/a

Net financials Net profit/loss (-) Balance Sheet

Investment in tangible assets Employees Number of full time employees year-end Per share ratios Earnings per share** Market price year-end (DKK)

* 2010 numbers are not adjusted according to IFRS. Additionally, the group cash flow statement for 2010 was not disclosed and hence, the numbers regarding the cash flow statement are not included. ** For comparison the number of shares in 2010 to 2013 is adjusted according to the share-split in April 2014 (1 to 10).

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

MANAGEMENT OVERVIEW

MARKET OVERVIEW GM-CSF Granulocyte-macrophage – colony-stimulating factor (GMCSF) is an endogenous growth factor that stimulates the proliferation and differentiation of hematopoetic cells (blood and immune cells), mainly granulocytic and monocytic cell lines, which serve as the body’s first line of defense against bacteria and virus. GM-CSF is produced both by immune cells and in epithelial cells (surface cells) in the lungs.

A GLOBAL ISSUE Lung diseases are amongst the most common medical conditions in the world. Tens of millions of people suffer from lung disease. Lung diseases lead to symptoms such as breathing difficulties and coughing during exercise or even at rest, and can severely influence the patients’ ability to carry out their daily activities which affect their overall quality of life. Many of the diseases are chronic, progressive in nature, and no known cures are available. Serious lung disease may be life threatening due to progressive respiratory failure or through complications related to severe infections. At Serendex we are focusing on the treatment of lung diseases and respiratory conditions within the therapeutic focus areas of pulmonary alveolar proteinosis (PAP), cystic fibrosis (CF) related lung infections, bronchiectasis (BE), acute respiratory distress syndrome (ARDS) and diffuse alveolar hemorrhage (DAH). All of these conditions are serious and have a high medical priority due to the lack of effective treatments or due to the invasiveness or risks associated with currently available therapies. All of these conditions are rare or ultra-rare, and orphan drug designations have been or will be obtained by the EMA and FDA. Still, the potential of Serendex’s therapeutic focus areas is providing treatment for more than half a million people annually in the EU and US.

GM-CSF IS ESSENTIAL FOR HEALTHY LUNGS GM-CSF is the lead candidate to fulfil Serendex’s strategic development program for treating severe lung diseases within our therapeutic focus areas. The rationale for using GM-CSF in these diseases is its function as an essential factor for a normal “positive” immune response in the lungs.

CLINICAL STUDY AT AARHUS UNIVERSITY HOSPITAL In these lung diseases a vicious cycle can occur due to airway damage and/or bacterial or viral infection. This triggers an inappropriate destructive immune response that in these diseases causes further airway or lung damage. The reason for this “negative” immune response is thought to be a dysregulated inflammatory response in lungs with a defective function of immune cells, which causes damage to the tissues but does not result in effective clearance of bacteria/viruses. The presence of GM-CSF in the lungs is critical for the immune protection system in the lungs to be effectively able to kill bacteria and viruses1. GM-CSF is also critical for the function of immune cells cleaning the lungs for unwanted cells and waste material in the part of the lungs that need to stay clear in order for an optimal uptake of oxygen in the blood.

As part of Serendex’s development program, a new clinical study with Molgradex®, which is inhalable GM-CSF will commence in 2015 at Aarhus University Hospital.

1 Trapnell et al, 2002, GM-CSF regulates pulmonary surfactant homeostasis and alveolar macrophage-mediated innate host defense

”PAP results in reduced lung capacity and a diminished ability for the body to deliver oxygen into the circulatory system. The typical symptoms of the illness are increasing breathing difficulty, coughing, drowsiness, weight loss and can lead to lung failure and death”, explains Elisabeth Bendstrup MD, who in conjunction with Ole Hilberg MD is responsible for the treatment of PAP patients at Aarhus University Hospital. ”The study is very relevant because it will allow us to see how patients with PAP respond to inhalation treatment over a six-month period using a special inhalation technology, eFlow®. If the results are positive, we expect to introduce the treatment with inhalation as our standard treatment method for PAP. It all depends on the results”, states Elisabeth Bendstrup MD. Aarhus University Hospital is participating in the clinical study along with six other centers of excellence in Europe and Japan. Serendex expects the clinical study to conclude in 2017.

WORKING TOGETHER WITH THE IMMUNE SYSTEM Treatment with inhalation of GM-CSF has the potential to positively improve the immune protection system by reducing the bacterial or viral load, increasing the cleaning capacity in the lungs, and diminishing overall tissue damage. In the field of clinical practice, Serendex is working to demonstrate that inhalation of GM-CSF as a facilitator of the “positive” immune response will modify the course of these severe lung diseases and reduce clinical exacerbations related to infections and progression of the disease. We work diligently in clinical development because when we succeed in our efforts we will be able to help patients around the world, who currently have very limited treatment options.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

”For years, doctors thought I had asthma, but it was not until I was 49 that I was diagnosed with PAP. I often had lung infections and for 2 ½ years I was under intensive treatment with penicillin. I was in a terrible physical and mental state with monthly hospital visits. The doctors then introduced me to treatment with GM-CSF and it was like being reborn. Today, I can take full deep breaths and people cannot see that I have PAP. There is no doubt that GM-CSF has improved my quality of life significantly”. Elisabeth Elsborg 58 years old PAP-patient

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

STRATEGY At Serendex, we have a mission to transform existing drugs into inhalable therapies for the treatment of severe lung diseases for which there are no available treatments today. We believe that patients suffering from severe lung diseases deserve better treatment. Our development strategy focuses on therapeutic areas in which the conditions are acute or chronic, and where there is a well-defined medical need. Serendex has a strong commercial focus, which means that our development strategy focuses on the development of GM-CSF and FVIIa to be used for inhalation for several different pulmonary indications. With a strategically focused product portfolio, we can achieve accelerated development and approval timelines and achieve a high level of commercial penetration into the market.

One of the cornerstones of our development strategy is exclusivity in the market place, which is key for the future commercial success of our products. We have obtained orphan drug designation (ODD) for many of our indications in both Europe and USA. The ODD provides marketing and sales exclusivity of seven years in the US and ten years in Europe from the time of marketing authorization. To further secure exclusivity for our future commercial products, we have obtained worldwide exclusive rights to a PARI Pharma eFlow® nebulizer system. The exclusivity of the device, combined with our intellectual property rights (IPR) and ODD ensure strong market protection for our products.

As we continue forward as a company, we aim to grow worldwide distribution of our products for inhalation based on an extensive outsourcing strategy and international strategic alliances. Succeeding with both our development strategy and our outsourcing strategy will enable us to reach the ambitious objective we have set for ourselves, which is to become a leading global pharmacompany in the treatment of life threatening lung diseases for the benefit of lung patients of all ages worldwide.

6.2 MILLION PEOPLE

WORLD HEALTH ORGANISATION (WHO) - Of the 10 leading causes of death in the world in 2012, over 1/5 of the deaths (21.5% or 6.2 milion people) is directly linked to lung diseases (lower respiratory diseases and COPD) For further information, please visit: http://www.who.int/mediacentre/factsheets/fs310/en/

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

PORTFOLIO & PIPELINE GM-CSF STUDIES

Serendex’s portfolio is focused on the development of GM-CSF for the indications PAP, ARDS, CF and BE, and Factor VIIa for DAH. Based on diligent analyses of market potential, clinical rationale, documentation level and development risk and costs, combined with input from clinicians within the pulmonary area and from potential strategic partners, we believe our pipeline holds significant promise for patients who currently have no other treatment options. With a global demand, we foresee a large market size of our commercial platform based on the combination of IP-rights, nebulizers with exclusivity and obtained orphan drug designations (ODD).

Serendex has initiated an inhalation toxicology program for GM-CSF. The initial results from these studies support the progression of the clinical development program for inhaled GMCSF as planned. A phase I study in healthy volunteers will be initiated in Q2 2015 and finalized by Q3 2015. Phase II and II/III clinical studies in patients with PAP, ARDS, CF and BE will follow, with initiation planned for Q4 2015 and expected timelines ranging from 3.5 to 6.5 years. Inhalation is the intended route of administration for all future Serendex indications with GM-CSF.

In 2014, Serendex entered a strategic longterm co-operation with PARI Pharma GmbH regarding a patent protected nebulizer that is used to inhale and dose GM-CSF. With this exclusive agreement, Serendex has secured a highly competitive platform for GM-CSF.

As GM-CSF, FVIIa will be subject to nebulizer tests, inhalation toxicology programs and a clinical phase I/IIa study for DAH in Europe, followed by clinical phase IIb/III trials for DAH in Europe and USA. The expected timeline for these studies is approximately 54 - 60 months.

FVIIa STUDIES

Indication

ODD

IPR

Patient pop.

Market size (DKK M)

Market potential

Peak sales (DKK M)

Time to market app.

GM-CSF

PAP

EU/US = Yes

3,400

80 %

2,720

3.5 Yrs.

GM-CSF

ARDS

Pending

400K

10,000

60 %

6,000

6.5 Yrs.

GM-CSF

US = Yes

Pending

63K

5,040

20 %

1,008

4.5 Yrs.

GM-CSF

Pending

400K

8,000

60 %

4,800

6.0 Yrs.

FVIIa

DAH

EU/US = Yes

Yes

60K

2,700

60 %

1,620

5.0 Yrs.

Serendex‘s potential development projects also include: • GM-CSF for ventilator-requiring lung infection (VAP) • Recombinant human activated protein C (APC) and recombinant human tissue factor pathway inhibitor (TFPI) for the treatment of acute respiratory distress syndrome (ARDS) and acute lung injury (ALI)

In January 2015 Serendex entered an exclusive agreement with CMC Biologics, Inc., on the active pharmaceutical ingredient (API) for Factor VIIa. Securing the API empowers our streamlined development program, which is expected to lead to a market approval for inhaled FVIIa within five years.

• Fosfomycin for the treatment of ventilator-requiring lung infection (VAP) or other lung infections with antibioticresistant organisms

The expected market size and peak sales are as follows: API

FUTURE PIPELINE

The development of these treatment opportunities are currently not included in our development strategy and hence, will be pursued at a later stage.

PRE-CLINICAL STUDIES

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Jul

Oct

‘16 ‘14

Jan

‘15

Apr

‘15

Jul

‘15

Oct

‘15

Jan

‘16

Apr

‘16

MTD inhalation study in cynomolgus monkeys •

Increasing doses of 20, 80 and 200 (500) mcg/kg/day

•

Continuous dosing (14 days) of 200 mcg/kg/day

•

i.v. dose (7 days) of 80 mcg/kg/day

6 weeks repeat dose inhalation toxicity in cynomolgus monkeys •

3 dose levels and placebo

26 weeks repeat dose inhalation toxicity in cynomolgus monkeys •

2 dose levels and placebo

•

premature termination in case of neutralising antibody development

13 weeks repeat does inhalation toxicity and fertility in cynomolgus monkeys

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

•

1 dose levels and placebo

•

premature termination in case of neutralising antibody development

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

PORTFOLIO & PIPELINE GM-CSF CLINICAL DEVELOPMENT PROGRAM

‘16

‘15 Phase I in healthy subjects (UK)

‘18

‘17

‘19

PAP 24-wk phase IIb/III placebo-controlled trial (EU)

‘16 ‘21

‘20

Exp. market approval

PAP 24-wk phase IIb/III placebo-controlled trial (JP)

Exp. market approval

PAP 24-wk phase IIb/III placebo-controlled trial (US)

Exp. market approval

ARDS phase IIb study (EU) - Proof of principle

ARDS phase III study (EU+US)

Cystic fibrosis phase IIa study (UK)

Cystic fibrosis phase IIb/III (EU+US)

Dose escalation / proof of principle

‘22

Exp. market approval

Bronchiectasis phase IIa study (UK+DK) Proof of principle Bronchiectasis phase IIb (EU) Proof of principle

Bronchiectasis phase III (EU+US)

Exp. market approval

FVIIa CLINICAL DEVELOPMENT PROGRAM

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‘15

‘17

‘18

‘19

‘16 ‘21

‘20

‘22

Signing API agreement Nebulizer test and toxicology program

Clinical trial phase I/II (EU)

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

Clinical trial phase II/III (EU+USA)

Exp. market approval EU + USA

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

PULMONARY ALVEOLAR PROTEINOSIS (GM-CSF) Market potential API: GM-CSF Indication: PAP ODD: US/EU= Yes IP Rights: No Population US/EU/JPY: 8K Treatment: Daily in 6 months Yearly treatment cost: DKK 425,000

DISEASE Pulmonary alveolar proteinosis (PAP) is a rare autoimmune disorder in which the patient develops autoantibodies against their own GM-CSF, which then cannot act as it should on its target cells. These include the alveolar macrophages in the lungs, whose function is to clear the alveoli (air sacs) and small airways of accumulated surfactant – a proteinaceous material of detergent properties that is essential for keeping the airways open. Surfactant proteins accumulate in the alveoli and block the transfer of oxygen from air to blood causing progressive breathing difficulties. The patient is commonly a man in early middle age who experiences increasing breathing difficulty, first with exertion, later at rest while developing a cough. There may be episodes of fever, chest pain, or coughing blood, especially if a secondary lung infection develops.

Market size (DKK M): 3,400

CURRENT TREATMENT Share of patients treated with GM-CSF: 80% Peak sales (DKK M): 2,720 Time to market (app.): 3.5 Yrs

‘15 Phase I in healthy subjects (UK)

The best available treatment today is periodic whole lung lavage (WLL), i.e. washing out the lungs under general anesthesia. This requires admission to intensive care, which is an invasive and inconvenient procedure that can only be conducted effectively and safely by highly experienced physicians at a few specialist sites. In many patients WLL only provide temporary symptomatic relief. The lungs may well clog up again and WLL will have to be repeated.

‘16

WHY INHALED GM-CSF FOR PAP? Considering current treatment, there is an evident need for a more convenient medical treatment. This consists of giving nebulized Molgradex® by inhalation, thus replacing the inactivated GM-CSF in the lungs and restoring the cleaning activities of the alveolar macrophages, ultimately obtaining a dramatic improvement in respiratory function. The inhalation of GM-CSF is belived to reverse the root cause of PAP. The patient can administer the treatment at home thereby reducing the number of days spent in hospital. A number of investigator-initiated open-label clinical studies and case cohorts have been published documenting the efficacy and safety of inhaled GM-CSF. Currently no GM-CSF preparation for inhalation use is available; the GM-CSF preparation Leukine® from the US (Sanofi-Aventis) is only available as an intravenous or subcutaneous formulation for treating neutropenia in relation to cancer chemotherapy. The EMA and FDA have acknowledged the medical need for an inhalation preparation by issuing an orphan drug designation (ODD) for Molgradex®.

DEVELOPMENT PROGRAM After completion of the phase I study in healthy volunteers to further confirm safety in humans, the development will proceed directly to clinical phase IIb/III studies in Europe, USA and Japan, which are expected to last approximately 20-24 months.

‘17

PAP 24-wk phase IIb/III placebo-controlled trial (EU)

A European/Japanese study group has been set up to perform the necessary clinical trial. The involved physicians are leading experts in respiratory medicine and have not only contributed to the study and treatment of PAP, but also to the study of lung diseases in general. They will also have the opportunity to participate in other Serendex clinical programs. The study group includes leading international experts at clinical centers of excellence in the UK, Germany, Italy, Russia, Denmark, France and Japan. Registration on completion of phase IIb/ III studies Because of the orphan drug designation in both Europe and USA, scientific advice is available for making the phase IIb/III studies acceptable for drug registration purposes. Based on the feedback from EMA, an application for registration will be submitted directly after successful conclusion of this study.

Serendex expects an accelerated development process with a market authorization in 2018 for EU. The accelerated process is possible, as Serendex has planned for a combined phase IIb/III study. Combining the two phases is deemed possible as there is extensive clinical documentation supporting the fact that GM-CSF has a clinical effect on PAP patients of which there are relatively few. The strategy of submitting the marketing authorization application based on a single pivotal phase IIb/III study has been discussed with EMA in a protocol assistance/scientific advice procedure (please see scientific advice on page 17). Based on the scientific advice received from EMA 27 January 2015, Serendex will continue the toxicology program for GMCSF and progress into a phase I clinical trial for GM-CSF according to plan. This is set to form the basis for Serendex’s phase IIb/III trial for GM-CSF in PAP in Europe.

1 Luisetti M, Bruno P, Kadija Z, et al. Relationship between diffuse pulmonary fibrosis, alveolar proteinosis, and granulocyte-macrophage colony stimulating factor autoantibodies. Respir Care 2011 56:1608-1610. 2 Campo I, Mariani F, Rodi G, Paracchini E, Tsana E, Piloni D, Nobili I, Kadija Z, Corsico A, Cerveri I, Chalk C, Trapnell BC, Braschi A, Tinelli C, Luisetti M. Assessment and management of pulmonary alveolar proteinosis in a reference center. Orphanet J Rare Dis. 2013 Mar 13;8:40. doi: 10.1186/1750-1172-8-40. 3 Morgan C. The benefits of whole lung lavage in pulmonary alveolar proteinosis. Eur Respir J 2004 23:503-505 4 Griese M, Ripper J, Sibbersen A, et al. Longterm follow-up and treatment of congenital alveolar proteinosis. BMC Pediatr 2011 11:72. 5 Morgan CJ, Keir G. Treatment of patients with severe pulmonary alveolar proteinosis using inhaled GM-CSF. Unpublished article, 2009.. 6 Tazawa et al, 2010, Inhaled granulocyte/macrophage-colony stimulating factor as therapy for pulmonary alveolar proteinosis, Am J Respir Crit Care Med 7 Papiris et al, 2014, Long-term inhaled granulocyte macrophage-colony-stimulating factor in autoimmune pulmonary alveolar proteinosis: effectiveness, safety, and lowest effective dose, Clin Drug Investig

WHY GM-CSF FOR PAP IS A SERENDEX PRIORITY INDICATION The indication PAP has high priority to the Serendex management. This is based on a strong clinical demand for the treatment of PAP patients with GM-CSF and the available clinical evidence of efficacy and safety in this condition, combined with the highly competitive position of Serendex’s PAP pipeline that comprises an ODD, a nebulizer with exclusivity as well as an accelerated market approval.

‘18

‘19

‘20

‘16 ‘21

‘22

Exp. market approval

PAP 24-wk phase IIb/III placebo-controlled trial (JP)

Exp. market approval

PAP 24-wk phase IIb/III placebo-controlled trial (US)

Exp. market approval

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

ACCELERATED DEVELOPMENT PROCESS

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

SCIENTIFIC ADVICE MILESTONES ACHIEVED • ODD granted by EMA and FDA

COLLABORATION WITH HEALTH AUTHORITIES

• MTD (maximum tolerated dose) study successfully completed Q3 2014

Meetings with health authorities (HA) are an essential part of drug development.

• Global exclusive rights for nebulizer for GM-CSF CF obtained Q4 2014

Scientific advice / protocol assistance is when an agency gives advice to a company on the appropriate tests and studies in the development of a drug. This is designed to facilitate the development and availability of high quality, effective and acceptably safe medicines, for the benefit of patients.

• Scientific advice issued by EMA Q1 2015

MILESTONES GOING FORWARD • 6 weeks toxicology study expected finalized Q2 2015 • 26 weeks toxicology study expected finalized Q3 2015 • Phase I for PAP finalized Q3 2015 • Phase IIb/III for PAP commenced Q4 2015 (EU)

Mette Vinge Regulatory Affairs Manager

Companies can request scientific advice from the European Medicines Agency (EMA) at any stage of development of a drug.

• Phase IIb/III for PAP commenced 1H 2016 (JPY/US)

SERENDEX AND SCIENTIFIC ADVICE FROM EMA • Expected marketing authorization 1H 2018 (EU) • Expected marketing authorization 1H 2019 (JPY/US)

Obtaining scientific advice / protocol assistance from EMA is a very important regulatory milestone in Serendex’s pre-clinical and clinical development of molgramostim in pulmonary alveolar proteinosis (PAP). It helps us optimize our drug development plans and gives specific input to protocols and strategies. This significantly limits the risk of major objections regarding the design of the tests to be raised during evaluation of the marketing authorization application. Following the Agency’s advice increases the probability of a positive outcome. Interacting with the health authorities during development builds and maintains the relationship with our “key costumer” and establishes trust and early dialogue, which facilitates the anticipation of issues and joint solution of problems before they become serious.

POSITIVE RESPONSE FROM EMA ON SCIENTIFIC ADVICE On 27 January 2015 Serendex received positive scientific advice from the European Medicines Agency (EMA) on the pre-clinical and clinical development of GM-CSF (molgramostim), for the treatment of PAP. The scientific advice from EMA fully supports the current development plan for PAP containing one pivotal phase IIb/III trial with an estimated start in 2H 2015 and an estimated marketing authorization in 2018. The EMA scientific advice fully recognizes the high unmet medical need in this patient population, endorsing our aggressive development plan. Specifically, the scientific advice from EMA endorses Serendex’s pre-clinical program and consider it sufficient for the planned clinical trial and for a marketing authorization application (MAA). In addition, EMA has approved the concept of one pivotal trial in PAP and has endorsed the suggested study design.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY AND INDICATIONS

ACUTE RESPIRATORY DISTRESS SYNDROME (GM-CSF) Market potential API: GM-CSF Indication: Pneumoniainduced ARDS ODD: Application planned for EMA and FDA Q3 2015 IP Rights: Pending Population US/EU: 400,000 Treatment: Daily in 5 days Yearly treatment cost: DKK 25.000 Market size (DKK M): 10,000 Share of patients treated with GM-CSF: 60% Peak sales (DKK M): 6,000 Time to market (app.): 6.5 Yrs

CURRENT TREATMENT

Bacterial and viral pneumonia frequently result in acute lung injury, or its severe form, ARDS (acute respiratory distress syndrome). Apart from antibiotics and protective ventilation, no specific therapeutic options exist to treat this devastating disease, which has a mortality rate of 30-50%.

No specific treatment is available to arrest the pathological process in ARDS. Bacterial lung infections are treated with systemic antibiotics and occasionally also with inhaled antibiotics such as tobramycin. No treatment is specifically directed towards enhancing the pulmonary host defense against infections, including maintaining and enhancing the numbers and function of the alveolar macrophages or dendritic cells.

ARDS is characterized by inflammation of the lung parenchyma leading to impaired gas exchange and systemic release of inflammatory mediators, resulting in hypoxemia and often in multiple organ failure. A major pathological feature is diffuse alveolar damage, in which the alveolar walls are partially disrupted and swollen and the edema increases the diffusion distance of oxygen to the blood capillaries. The inflammation causes increased permeability so that plasma constituents can enter the alveoli and small airways; this leads to the deposition of fibrin, which blocks the alveoli and/or the small airways, and later to long-term obliteration by fibrosis. The airways hyper-oxygenation caused by the mechanical ventilation necessary to keep the patient alive in the immediate term impairs the functions of the alveolar macrophages, which have a vital role in lung tissue repair as well as in orchestration of the appropriate white cell responses to the disease. This and the other aspects of ARDS pathology weaken the pulmonary host defense to the infection. The typical patient is critically ill, admitted to intensive care with white opacities on chest x-ray, a deteriorating respiratory function and impaired oxygenation.

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‘15 Phase I in healthy subjects (UK)

DISEASE

WHY INHALED GM-CSF FOR ARDS? The need for more effective medical treatment of ARDS and ventilator-requiring lung infections may be met by giving nebulized Molgradex® as inhalation in addition to antibiotic treatment. GM-CSF is widely recognized to promote differentiation and mobilization of different immune cells such as neutrophils, tissue macrophages/dendritic cells or their circulating precursors. It is crucially involved in anti-microbial pulmonary host defense and ameliorates lung injury when applied systemically to influenza virusinfected mice by increasing the number and the activation state of alveolar macrophages. In addition to its effects on immune cells, GM-CSF was found to be crucial for alveolar epithelial repair following hyperoxic and inflammatory lung injury. Published data on six patients with pneumonia-induced ARDS receiving two doses of inhaled GM-CSF showed improved oxygenation, increased lung compliance and decreased morbidity scores.

‘17 ARDS phase IIb study (EU) - Proof of principle

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

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WHY GM-CSF FOR ARDS IS A SERENDEX PRIORITY INDICATION

Serendex has submitted application for IP rights, covering local use of GM-CSF for enhancing pulmonary host defense and for treating infectious pulmonary diseases, which covers the indication of ARDS. An orphan drug designation (ODD) in EU and US will be applied for the indication of pneumoniainduced ARDS.

Serendex has noted a strong clinical demand as there is currently no specific treatment available for this devastating condition. The use of GM-CSF has been suggested and tested in patients with ARDS and related conditions by independent clinical research groups based on the mechanism of action and preclinical models of ARDS and pneumonia. A successful development of the ARDS pipeline would expand the commercial platform of Serendex considerably as the portfolio would expand into larger patient populations.

DEVELOPMENT PROGRAM The development will proceed directly to a clinical phase IIb study in Europe, followed by clinical phase III studies in Europe and the USA. The expected time line until market approval is approximately 78 months.

1 Hamilton, 2008, Colony-stimulating factors in inflammation and autoimmunity. / Bogunovic et al, 2009, Origin of the Lamina Propria Dendritic Cell Network. 2 Unkel et al, 2012, Alveolar epithelial cells orchestrate DC function in murine viral pneumonia. / Ballinger et al, 2006, Role of GM-CSF during Gram-Negative lung infection with Pseudomonas aeruginosa./ LeVine et al, 1999, GM-CSF-deficient mice are susceptible to pulmonary group B streptococcal infection. / Steinwede et al, 2011, Local delivery of GMCSF protects mice from lethal pneumococcal pneumonia. 3 Huang et al, 2011, GM-CSF in the lung protects against lethal influenza infection. 4 Cakarova et al, 2009, Macrophage tumor necrosis factor-ą induces epithelial expression of GM-CSF. / Paine et al, 2012, A randomized trial of recombinant human GM-CSF for patients with acute lung injury. 5 Herold et al, 2014, Inhaled GM-CSF as treatment of pneumonia-associated ARDS.

MILESTONES ACHIEVED • MTD study successfully completed Q4 2014

MILESTONES GOING FORWARD • 6 weeks toxicology study commenced - expected finalized Q2 2015 • 26 weeks toxicology study expected finalized Q3 2015 • Submission of clinical trial application (CTA) for phase II trial on ARDS Q2 2015 • Start of phase IIb trial on ARDS Q3 2015 • ODD granted by EMA and FDA 1H 2016 • Phase III for ARDS finalized 1H 2020 • Expected marketing authorization 2H 2021

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OUR STRATEGY AND INDICATIONS

CYSTIC FIBROSIS (GM-CSF) Market potential

DISEASE

WHY INHALED GM-CSF FOR CF?

DEVELOPMENT PROGRAM

Population US/EU: 63K

CURRENT TREATMENT

There is an evident need for more effective medical treatment of CF lung infections. Inhaled GM-CSF is expected to reduce the use of long-term antibiotic treatment by a complementary effect or even replacement. GM-CSF acts in the lungs to shift the profile of the immune cells to subtypes that exert a more effective defense against infective microorganisms while reducing the tissue damage related to inflammation. By administering GM-CSF by inhalation an improved risk-benefit profile is expected as higher doses can be delivered locally with a low risk of side effects in other organs of the body. The FDA has acknowledged the medical need for an inhalation preparation for this indication by issuing an orphan drug designation (ODD) for Molgradex®. A similar orphan drug application was rejected by EMA in 2010 due to lack of a proof of concept study. A reapplication is planned for 2H 2016 when the scheduled phase IIa study has been finalized.

The phase I study planned in healthy volunteers in regards to GM-CSF (PAP) covers all Serendex GM-CSF indications. Hence, the development of CF will proceed directly to a clinical phase IIa study in Europe, followed by clinical phase IIb/III studies in EU/US. The expected time line to market: 48-54 months.

IP Rights: Pending

Cystic fibrosis (CF) is a genetically determined disease of autosomal recessive inheritance in which the patient is incapable of secreting free-running body secretions. The disease affects several parts of the body, in particular the lungs and the digestive system. The pulmonary symptoms are related to excessively thick mucus in the lungs, which results in grave cystic and fibrotic distortions of the airways and chronic infections which responds poorly to antibiotic treatment because the innate defenses of the airways are impaired by both anatomical and functional changes.

API: GM-CSF Indication: CF ODD: US= Yes EU = reapplication 2016

Treatment: Daily in 6 weeks Yearly treatment cost: DKK 80,000 Market size (DKK M): 5,040

The best available treatment for CF lung infections is, in addition to physical therapies, prolonged and repeated courses of oral, systemic and inhaled antibiotics. Despite this and newer therapies that target the genetic defect directly, CF is still associated with reduced quality of life and premature death, mainly due to lung complications.

WHY IS GM-CSF FOR CF A SERENDEX PRIORITY INDICATION Serendex has noted a strong clinical demand, and GM-CSF has previously been used successfully on CF patients. A successful development of the CF pipeline would expand the commercial platform of Serendex considerably as the portfolio would expand into larger patient populations.

1. Heslet et al, 2012, The immunomodulatory effect of inhaled GM-CSF in CF. A new treatment paradigm. 2 Moser et al, 2005, Adjunctive treatment with GM-CSF of CF patients with severe Mycobacterium abscessus lung infection.

MILESTONES ACHIEVED • MTD study successfully completed Q4 2014 • Global exclusive rights for nebulizer for GM-CSF CF obtained Q4 2014

MILESTONES GOING FORWARD • 6 weeks toxicology study commenced – final report expected in Q2 2015 • 26 weeks toxicology study expected finalized Q3 2015 • Submission of CTA for phase IIa trial on CF Q3 2015

Share of patients treated with GM-CSF: 20%

• Start of phase IIa trial on CF Q4 2015

Peak sales (DKK M): 1,008

• Re-application for ODD in Europe 2H 2016

Time to market (app.): 4.5 Yrs

• Phase IIb/III for CF finalized 1H 2018 • Expected marketing authorization 2H 2019

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Dose escalation / proof of principle

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OUR STRATEGY AND INDICATIONS

BRONCHIECTASIS (GM-CSF) Market potential API: GM-CSF Indication: Non-CF BE ODD: US and EU= Pending IP Rights: Pending Population US/EU: 400K Treatment: Daily in 6 weeks Yearly treatment cost: DKK 20,000 Market size (DKK M): 8,000 Share of patients treated with GM-CSF: 60% Peak sales (DKK M): 4,800 Time to market (app.): 6.0 Yrs

DISEASE Bronchiectasis (BE) is a condition that has many and varied causes which all result in localized or widespread widening of the airways with coughing and profuse mucus production, recurrent and chronic lung infections and impaired respiratory function. BE is a typical consequence of cystic fibrosis (CF), and BE that is not caused by CF is classified separately. Underlying causes of non-CF BE include previous severe infections (e.g. pneumonia), connective tissue disease or immune-deficiency. In 30-50% of BE cases no underlying cause is known. A relationship with chronic obstructive pulmonary disease (COPD) has been suggested but there is no firm evidence that COPD causes bronchiectasis at the present time. Despite this, non-CF BE and CF-BE have many features in common, one being the chronic airway infections which respond poorly to antibiotic treatment because the innate defenses of the lungs are impaired by both anatomical and functional changes. The common symptoms of bronchiectasis are a persistent cough, typically producing massive amounts of mucus, shortness of breath, wheezing, coughing up blood or bloodstained mucus, chest pain and frequent lung infections. Many patients feel chronically tired and unwell.

CURRENT TREATMENT Oral, or in severe infections injectable antibiotics, are used to treat the associated lung infections. Symptomatic treatment includes mucus-thinning agents, expectorants and physical therapy to clear the airways. Longterm inhaled antibiotics to prevent worsening

due to lung infections are sometimes used, although the clinical evidence for this treatment strategy in BE is limited. No treatment is specifically directed towards enhancing the host defense against the lung infections or the destructive inflammatory response that causes the symptoms and morbidity of BE.

WHY INHALED GM-CSF FOR BE? There is an evident need for more effective medical treatment of lung infections in BE. Nebulized Molgradex® as inhalation for first line of defense may delay the need for the use of long-term antibiotic treatment and thus postpone the development of antibiotic resistance in pseudomonas aeruginosa, a major cause of chronic infection and morbidity in this disease. Increased eradication of pseudomonas aeruginosa in chronically infected patients result in improved quality of life. GM-CSF enhances the maturation and anti-bacterial activity of certain immune cells (neutrophils and macrophages), thus improving their immune competence towards infective microorganisms. GM-CSF may also reduce the number of mucosa cells shed from the small airways epithelium, thus limiting the sputum production and limit the tissue damage caused by destructive inflammation. GM-CSF is the critical link in the immune inflammatory cascade because it invokes and strengthens the host’s immune response. Due to the similarity of lung infections in BE with those in cystic fibrosis, inhaled GM-CSF may be indicated as a complement to antibiotic therapy in the treatment of BE as well.

By administering GM-CSF as inhalation an improved risk-benefit profile is expected as higher doses can be delivered locally with a low risk of side effects in other organs of the body. Orphan drug designation is pending with EMA and FDA for the specific diagnosis of non-CF bronchiectasis. However, BE as a concurrent finding in patients diagnosed with complication of COPD is not eligible for ODD.

WHY GM-CSF FOR BE IS A SERENDEX PRIORITY INDICATION

DEVELOPMENT PROGRAM

The management expects that Serendex’s BE pipeline is potentially highly competitive as it comprises pending IP-rights, a nebulizer with exclusivity and an expected ODD.

For the Management of Serendex the BE pipeline has high priority. This is due to a strong clinical and medical need and because Serendex believes the development project has an attractive economic risk/ reward profile.

The phase I study planned in healthy volunteers in regards to GM-CSF (PAP) covers all GM-CSF indications. Hence, the development of BE will proceed directly to a clinical phase IIa study in Europe, followed by clinical phase IIb studies in EU/US. The expected time line to market: 72 months.

1 Fuschillo et al, 2008, Mucosal inflammation in idiopathic bronchiectasis: cellular and molecular mechanisms. 2 Heslet et al, 2012, The immunomodulatory effect of inhaled GM-CSF in cystic fibrosis. A new treatment paradigm.

MILESTONES ACHIEVED • MTD study successfully completed Q3 2014 • Global exclusive rights for nebulizer for GM-CSF BE obtained Q4 2014

MILESTONES GOING FORWARD • 6 weeks toxicology study commenced - expected finalized Q2 2015 • 26 weeks toxicology study expected finalized Q3 2015 • Submission of (CTA) for phase IIa trial Q3 2015 • Start of phase IIa trials on BE Q4 2015 • ODD potentially granted by EMA & FDA 2H 2016 • Phase III for BE commenced 2H 2018 • Expected marketing authorization 1H 2021

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Bronchiectasis phase IIb (EU)

Bronchiectasis phase III (EU+US)

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Exp. market approval

OUR STRATEGY AND INDICATIONS

DIFFUSE ALVEOLAR HEMORRHAGE (FVIIa) Market potential

DISEASE DAH is persistent or recurrent pulmonary hemorrhage. Bleeding into the alveolar spaces characterizes the syndrome and is due to disruption of the alveolar-capillary basement membrane. There are numerous causes, including autoimmune diseases, hematopoietic stem cell transplantation (HSTC), lung cancer and acute respiratory distress syndrome (ARDS). If the bleeding is severe, death will follow in minutes or hours. In-hospital mortality ranges from 20% to 100%.

API: Factor VIIa Indication: DAH ODD: US/EU= Approved IP Rights: Yes Population US/EU: 60,000

Treatment cost: DKK 45,000

Another (numerically minor) cause, blast lung injury (BLI), is a sporadic, unpredictable event of special relevance to military and homeland security agencies, requiring an assessment that goes beyond the scope of the present clinical development.

Market size (DKK M): 2,700

CURRENT TREATMENT

Treatment: One time inhalation

Share of patients treated with FVIIa: 60% Peak sales (DKK M): 1,620 Time to market (app.): 5.0 Yrs

At present, there is no drug available aimed specifically at local hemostasis in the lung. The acute medical need is evident considering the elevated and often rapid mortality. Patients who survive DAH spontaneously are often hospitalized for longer periods of time in the intensive care unit, generating high treatment costs.

WHY NEBULIZED FACTOR VIIA FOR DAH? The need for more effective medical treatment of DAH will be met by giving nebulized FVIIa as inhalation. FVIIa is a naturally occurring protein in the human body and plays a vital part in the coagulation cascade. FVIIa is widely used as treatment of bleeding disorders as it activates the coagulation cascade which initiates the formation of a blood clot and can facilitate control of bleeding in situations where standard human blood product transfusions have failed. Inhalation of FVIIa directly into the lung is likely to stop the bleeding locally with a low risk of unwanted blood clotting elsewhere in the body. With systemic administration, efficacy in acute bleedings in the lungs has previously been demonstrated but with an unacceptable safety profile. By inhalation of FVIIa it is expected that the systemic exposure can be avoided or extensively decreased thereby improving the safety profile. A number of successful case reports have been published, where FVIIa administered into the lung resulted in sustained bleeding control and improved oxygen exchange into the blood. This took place without complications such as formation of blood clots in the circulation or acute respiratory distress syndrome (ARDS). Based on these reports inhaled FVIIa would appear to be a promising new therapy for the treatment of DAH.

DEVELOPMENT PROGRAM

WHY FACTOR VIIA FOR DAH IS A SERENDEX PRIORITY INDICATION

In January 2015 Serendex entered an exclusive agreement with CMC Biologics, Inc., on the API for FVIIa. Going forward FVIIa will be subject to nebulizer tests, an inhalation toxicity program, a clinical phase I/II study for DAH in Europe, followed by clinical phase II/III trials for DAH in Europe and USA. The expected timelines for these studies are approximately 54-60 months.

Serendex has previously communicated that the FVIIa pipeline would be developed via a partnership, with a shared ownership. However, Serendex now has access to improved clinical documentation and an exclusivity agreement on the relevant API, thus creating a highly attractive opportunity. Therefore, the management has decided that the development of the FVIIa pipeline should be conducted solely by Serendex.

Registration on completion of phase IIb studies Because of the orphan drug designation in both Europe and USA, scientific advice is available for making the phase II/III studies acceptable for drug registration purposes. Applications for registration will therefore be submitted directly after successful termination of the phase II/III studies.

1 Ioachimescu et al, 2008, Diffuse alveolar hemorrhage: diagnosing it and finding the cause. 2 Orphanet report series, Prevalence of rare diseases, November 2012, Volume 1. 3 Nichols et al, 2012, Causes of death of patients with lung cancer. 4 Tzouvelekis et al, 2012, Idiopathic pulmonary hemosiderosis in adults: a case report and review of the literature.

EXCLUSIVE ACCESS TO FVIIa PROVIDES NEW OPPORTUNITIES On 29 January 2015, Serendex entered into agreement with CMC Biologics A/S. The agreement secures the exclusive rights to a unique FVIIa, thus further strengthening the market position, allowing for initiation of the development process and thereby, if successful, significantly increasing the long term value of the company pipeline.

MILESTONES ACHIEVED • ODD granted by FDA and EMA 2005/2006 • Exclusive agreement on API finalized Q1 2015

MILESTONES GOING FORWARD • Nebulizer test and toxicology program completed Q4 2015 • Start of phase I/II trials 1H 2016 (EU)

EMA and FDA have acknowledged the high medical need for this life-threatening condition by issuing an orphan drug designation (ODD) for inhaled FVIIa for treatment of DAH.

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Clinical trial phase II/III (EU+USA)

Expected market approval (EU+USA)

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OUR STRATEGY AND INDICATIONS

NEBULIZER A STRONG PIPELINE NEEDS A NEBULIZER An important milestone for Serendex was achieved in 2014 when an exclusive license agreement was signed with German based PARI Pharma GmbH concerning the use of PARI’s patent protected eFlow® nebulizer. PARI Pharma develops and markets innovative nebulizers for pulmonary delivery of optimized doses of lung medication. PARI is well known and accepted in the pharmaceutical industry as supplier of nebulizers for patients of all ages that are in need of reliable and efficient aerosol therapy. PARI Pharma has developed a customized vibrating membrane nebulizer based on the eFlow® technology in order to secure an optimized pulmonary administration of Serendex‘s

BACKGROUND OF PARI PHARMA GM-CSF pipeline, which includes the treatment of pulmonary alveolar proteinosis (PAP), cystic fibrosis (CF) and bronchiectasis (BE). The agreement is a major milestone and allows Serendex to start planning phase I studies for PAP, CF and BE in Q1 2015. A market authorization for PAP is expected in 2018. The agreement with PARI Pharma also includes an option for Serendex to include the GM-CSF nebulizer for ARDS and VAP, thereby strengthening exclusivity in the development of the Serendex pipeline.

THE BENEFITS OF THE NEBULIZER • Efficient patented delivery of Molgradex® (GM-CSF) in the treatment of severe lung diseases • Short treatment times with high delivery efficiency to the lung alveoli • Quiet operation for discrete use whilst being light, compact and portable, which enables home patient use • Optimal small droplet size for delivery into the alveoli

With the nebulizer, Serendex has secured a device, which is required for product registration and the agreement strengthens market exclusivity of Molgradex® as well as securing long-term supply.

With more than 100 years of experience, PARI offers solutions for people suffering from respiratory diseases by manufacturing efficient, reliable inhalation devices. PARI’s nebulizers are widely recognized and were used in the following pivotal trials to prove safety and efficacy: • Pulmicort Respules® - AstraZeneca • Perforomist™, Accuneb®, and Duoneb® - Dey • Pulmozyme® - Genentech • TOBI® - Novartis • Xopenex® and Brovana® - Sunovion • Cayston® - Gilead

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR BUSINESS IN 2014 AND BEYOND

GREAT BEGINNINGS IN GIESSEN Respiratory infections and chronic obstructive pulmonary diseases (COPD) are currently ranked third by WHO on the top ten causes of death in the world following ischemic heart disease and stroke. Despite the high ranking there has been relatively little focus on the treatment of respiratory infections for decades, and according to the WHO lung diseases will become the world’s second greatest killer by 2020. Research shows that the mortality rate caused by COPD has almost doubled in the past thirty years, whilst the death rate of many other major diseases has been decreasing during the same period. It is therefore clear that new approaches are needed to treat lung patients who have few or no treatment options today. One of the countries who has increased its research efforts within the field of pulmonary diseases in the past decade is Germany. Today, one of the most advanced lung specialist centers in Europe is Universities of Giessen and Marburg Lung Center (UGMLC). The UGMLC is one of five dedicated lung specialist centers of excellence (DZL) in Germany and its intensive care unit (ICU) is the largest pulmonology ICU in Germany. State of the art research is being conducted alongside treatment of patients at the university hospital in facilities that are best in class. This enviable combination allows doctors and researchers at UGMLC to make steady progress in the treatment of pulmonary diseases.

”When it came to our attention that our organizations shared a common interest in the pulmonary system and innovative treatment of patients with granulocyte macrophage-colony stimulating factor (GM-CSF), we reached out to each other. We believe innovation is the key to our future, but innovation without patient focus has no value. Serendex shares the same ideology and we have confidence in GM-CSF as a future treatment option for lung diseases such as acute respiratory distress syndrome (ARDS). It was therefore only natural that we partnered up with Serendex to explore this further together.” Dr. Susanne Herold, a leading scientist in Professor Jürgen Lohmeyer’s team at UGMLC, has already achieved strong results from early studies with GM-CSF. “In our research we found very convincing effects of GM-CSF in mice models of severe viral and bacterial pneumonia. We also studied the effect of GM-CSF in a small group of patients with ARDS and found a profound effect in both oxygenation but also cell markers of improved immunity in the lung. Working together with Serendex on GM-CSF will allow us to explore even further and help patients who are in need.” A formal sponsor agreement between UGMLC and Serendex was signed in early 2015. The partnership has been formed to initially conduct a phase IIb study intending to investigate the efficacy of inhaled GM-CSF in patients with pneumonia-associated ARDS.

”Our team of clinical experts and doctors has clinical and research expertise in a broad range of respiratory infections and chronic THE NEED FOR CHANGE IN obstructive pulmonary diseases. This gives TREATMENT OF SEVERE LUNG us the unique ability to perform cutting edge DISEASES research where we translate pre-clinical re- “The phase IIb study will provide us with data sults into development of novel and innovative for further clinical development program treatment for patients in areas with high un- to obtain regulatory approval of GM-CSF met medical needs” explains Professor Jürgen for the treatment of ARDS. The end goal of Lohmeyer, head of UGMLC’s Department of obtaining a regulatory approval is key for all Infectious Diseases, who is one of the leading of us, as mortality in infectious respiratory experts within pulmonary diseases in Europe. diseases has not changed since the introduction of penicillin more than 70 years A PERFECT MATCH ago. There continues to be huge problems In early 2014, the initial contact between worldwide with antimicrobial resistance, UGMLC and Serendex was established, and which leaves a strong, unmet medical need as Professor Jürgen Lohmeyer explains, it of therapy adjunctive to antibiotics, and was a perfect match from the beginning. finally there is no specific pharmacological

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

treatment for severe pneumonia. We are therefore excited to be part of this critical study,” says Dr. Susanne Herold.

“As we continue to develop our GM-CSF, a partnership with UGMLC was befitting as it provides both parties with teams brimming of expertise, which together can conduct a UGMLC and Serendex will perform the study phase II study for GM-CSF. It is a clear testain UGMLC’s lung center in Giessen. UGMLC ment to our development strategy and our has prepared the protocol and will be coordi- belief in GM-CSF across our portfolio, that nating the involvement of selected DZL lung Professor Jürgen Lohmeyer and his team has centers in the performance of the phase IIb chosen to partner up with us on this phase study. The study is planned to commence in II study,” concludes Kim Arvid Nielsen, CEO Q3 2015 and UGMLC is set to appoint three of Serendex. qualified members from DZL to participate in Serendex’s GM-CSF scientific board.

ARDS ARDS is a devastating syndrome with a mortality of 30-50%. ARDS patients are severely sick, and those who survive suffer frequently from lifelong disabilities like compromised lung function, neurological symptoms and organ failure due to lack of oxygen while hospitalized. Moreover, ARDS has a high impact on hospital economy, since patients have to stay weeks to months in the ICU.

PROFESSOR JÜRGEN LOHMEYER ”Private/Public Partnerships (PPP) such as the one we have entered into with Serendex is a great opportunity for the medical and research community to join hands with commercial partners and together develop treatment for respiratory infections and chronic obstructive pulmonary diseases.” ”We receive numerous requests from companies to conduct studies, however, Serendex stood out given their development strategy and the conduct in which they do their business.” ”In our research center, we always choose commercial partnerships where we believe that there is the highest possibility to achieve clinical results as fast as possible for the benefit of the patients. Serendex fulfilled all criteria.”

Susanne Herold Ph.D. Dr. Med.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

Jürgen Lohmeyer Professor

OUR BUSINESS IN 2014 AND BEYOND

KEY ACHIEVEMENTS IN 2014 In 2014, Serendex reached several significant milestones. The pipeline was developed and the resources were focused on establishing the GM-CSF pre-clinical platform for pulmonary alveolar proteinosis (PAP), acute respiratory distress syndrome (ARDS), cystic fibrosis (CF) and bronchiectasis (BE). The organization was strengthened and new ownership structure was established, ensuring a continued focus on fully exploring the development strategy.

SIGNIFICANT PROGRESS IN OUR DRUG DEVELOPMENT The development of GM-CSF for pulmonary alveolar proteinosis (PAP) made great progress in 2014 and an important milestone for Molgradex® was attained when we received a positive preliminary report from our maximum tolerated dose (MTD) toxicology study for inhalation administration for a number of pulmonary indications, including PAP. The study successfully demonstrated that inhalation of GM-CSF was well tolerated at doses far exceeding the anticipated clinical dosage. Following the positive report, the planned program of GLP-compliant pivotal toxicity studies was initiated. Serendex also entered into an exclusive license agreement with PARI Pharma GmbH concerning the use of PARI’s patent protected nebulizer. The nebulizer will be customized uniquely for Serendex for pulmonary administration of GM-CSF for the treatment of PAP, CF and BE worldwide. The strategic cooperation with PARI Pharma secures Serendex a high level of competitiveness as the nebulizer will shorten treatment times with its high delivery efficiency of Molgradex® to the lung alveoli. In 2014, the named patient sales program (NPS) generated its first sale of Molgradex® related to PAP. The start of the NPS program underscores the demand for Molgradex® and its potential. Serendex has initially deployed the NPS program in Europe in accordance with relevant legislation, successively making Molgradex® widely accessible for patients in European countries.

FVIIa is another important product in Serendex’s pipeline. In 2014, strong indications showed that we could secure an active pharmaceutical ingredient (API). An exclusivity agreement on the API was signed in beginning of 2015 – please read more under post reporting events. The agreement is a great leap forward, as FVIIa is a very complex biological compound and there are limited sources to this compound around the world. This will allow us to escalate and accelerate our development program for FVIIa for inhalation to treat life threatening lung bleedings, a condition for which there is no known treatment today. We expect that this could lead to a market approval for our new program for FVIIa within five years.

SHAPING THE FUTURE ORGANISATION In order to ensure a successful execution of the Serendex development strategy, we conducted fundamental changes to our organization in 2014. To drive our future financial expansion and pursue our drug development strategy we made strategic appointments in key roles (CFO, CMO and CBO) in the first half of 2014. As we progress and mature as a business, it is critical that we continue to align our organizational setup. Our initial public offering (IPO) on the Oslo Stock Exchange/Axess in July 2014 raised DKK 57 million and strengthened Serendex’s capital position. As part of the IPO process, the Board of Directors was strengthened to reflect the development of Serendex. The new Board of Directors has significant pharmaceutical experience and strong business acumen, which strengthens the experienced Executive Management team to secure the development of Serendex’s pipeline.

POST REPORTING EVENTS In January 2015, Serendex received positive scientific advice from EMA on the pre-clinical and clinical development of GM-CSF, molgramostim, for the treatment of pulmonary alveolar proteinosis (PAP). The EMA scientific advice fully recognizes the high unmet medical need in this patient population, endorsing the aggressive development plan well as Serendex’s pre-clinical program and consider it sufficient for the planned clinical trial and for a marketing authorization application. In addition, EMA has approved the concept of one pivotal trial in PAP and has endorsed the suggested study design. The scientific advice from EMA fully supports the current development plan for PAP containing one pivotal phase II/III trial with an estimated start in H2 2015 and an estimated marketing authorization in 1H 2018. Serendex also started 2015 by signing an exclusivity agreement on FVIIa with CMC Biologics, which secures Serendex access to a unique form of FVIIa. The agreement provides Serendex with exclusive rights for the development and commercialization of FVIIa for pulmonary administration. The therapeutic focus will be on acute bleeding in the lungs (diffuse alveolar hemorrhage) and if successful Serendex might be able to offer breakthrough therapy in this indication. CMC Biologics will develop, manufacture and supply FVIIa bulk drug substance for acute pulmonary administration for pre-clinical and clinical studies as well as for commercialization on behalf of Serendex Pharmaceuticals. The agreement could lead to a market approval for FVIIa within five years.

The working capital raised in the stock listing makes it possible for Serendex to pursue its drug development strategy until the second half of 2015. Given the positive progress in the clinical development and the achievement of key milestones in 2014, Serendex will continue to diversify the investor base and we will seek additional funding to fully explore the potential of our development strategy and significantly enhance the value of our product portfolio in 2015.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR BUSINESS IN 2014 AND BEYOND

OUTLOOK FOR 2015 In 2015, Serendex will continue the implementation of the development strategy and increase the efforts in building a global latestage drug development company with an ambition to help as many patients as possible.

MAJOR PROGRESS IN OUR DRUG DEVELOPMENT The significant pre-clinical platform and toxicology program for GM-CSF, which we established in 2014, will progress into a phase I clinical study in 2015. This is set to form the basis for our phase II/III clinical trials for GMCSF in PAP in Europe and Japan. Accordingly, we will then initiate phase II clinical trials in ARDS, CF and BE. As we expand, we will continue to seek guidance and collaborations with leading clinical experts within the respiratory field to provide input to our development programs. Based on the recently signed contract with CMC Biologics securing exclusive rights to the active pharmaceutical ingredient (API) for FVIIa, we will initiate the toxicology studies for FVIIa in 2015.

INVESTING TO GROW

CHIEF BUSINESS OFFICER, FINN EGGERT SØRENSEN:

In 2015, Serendex will continue to actively pursue international strategic partner alliances with regional and global pharmaceutical companies for registration and marketing of our products. Serendex expects to derive future income from a combination of fixed payments and ongoing royalty income from partner sales of Serendex-licensed products.

What opportunities and challenges do you see commercially in 2015? In 2015, one of our key commercial agendas is to strengthen the awareness of the “New Serendex” in the pharmaceutical and biotech community. We began this journey in 2014 and in 2015 we will continue to spread our wings and grow our network of biotech and pharmaceutical companies. Lastly, we will continue the dialogue with potential partners who aspire to join our efforts in developing novel therapies for life-threatening lung diseases with the aim to add value to our pipeline and our company.

We achieved significant progress in 2014 and as we grow and continue to explore our drug development strategy, we will seek further funding as we move forward. We expect a broadened and diversified ownership structure in 2015, from which we will develop and consolidate our business and increase the global recognition of Serendex within our field of expertise. In 2014, we expanded our organization significantly, enabling us to cope with the future development program. Hence, we only expect minor increase in the organization and associated costs in 2015. In regards to the development costs, we expect to continue the investment level from 2H 2014, as we will complete the toxicology studies and commence the clinical trials within GM-CSF. Thus, with the current cash situation and our intension to execute the development strategy, we will seek further funding as we move forward. We expect a broadened and diversified ownership structure in 2015, from which we will develop and consolidate our business and increase the global recognition of Serendex within our field of expertise. Please see note 1 on page 50 for a further elaboration on our cash situation and derived initiatives.

Finn Eggert Sørensen Chief Business Officer

CHIEF MEDICAL OFFICER, CECILIA GANSLANDT: What are the major milestones in the Serendex pipeline in 2015? We have an extensive development program planned for 2015 with a number of critical milestones. Firstly, we will complete the toxicology program for GM-CSF and progress into a phase I clinical study. This data will form the basis for starting the phase II/III clinical trial for GM-CSF in PAP in Europe and Japan, as well as initiating phase II clinical trials in ARDS, CF and BE. Additionally, we will initiate and complete the toxicology studies for FVIIa during 2015, enabling us to move this project into the clinical phase.

Cecilia Ganslandt Chief Medical Officer

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

What are the key goals for you in 2015? Our key goals in 2015 include designing intelligent non-clinical and clinical development programs for our pipeline projects that combine high scientific value with regulatory utility. This will support the progression of the pipeline towards novel therapies addressing unmet medical needs becoming available for severely affected patients in the near future. The major step on this journey to be achieved in 2015 is the progression of GM-CSF into clinical trials that enroll and treat patients suffering from serious pulmonary diseases. We will also continue the work of establishing and maintaining a global network of leading clinical experts within the respiratory field to provide input to our development programs as well as help us to create awareness in the scientific community around the potential of GM-CSF for use in serious respiratory conditions.

RISK FACTOR The development of drugs is always associated with uncertainty and risk. The Serendex portfolio is in different development stages and therefore high-risk. Accordingly, the perspectives in this outlook statement regarding the future of Serendex’s commercial prospects is forward looking and actual results could be materially different from those expressed or implied by such forward-looking statements because of various risk factors. The Outlook statement involves analysis and is subject to significant business, economic and competitive uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Serendex. Given these uncertainties, you are cautioned to not place undue reliance on such forward-looking statements.

What are the key goals for you in 2015? The single most important goal for Business Development in 2015 is to establish our first strategic collaboration with a pharmaceutical or biotech company with an emphasis on co-development, licensing and commercialization.

CHIEF FINANCIAL OFFICER, SØREN BECH JUSTESEN: How do you see developments in the financial markets impact Serendex in 2015? At Serendex, it is key to acquire new capital in 2015. With continuing low interest rates and rising stock prices in our part of the world, we are confident that we will be able to attract additional capital in the current environment. Søren Bech Justesen Chief Financial Officer

What are the key goals for you in 2015? The major financial goal in 2015 is to acquire the needed funding and to continue to fully explore the opportunities of the Serendex development strategy.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR BUSINESS IN 2014 AND BEYOND

FINANCIAL REVIEW The Annual Report 2014 includes the consolidated financial statements of Serendex Pharmaceuticals A/S, comprising the parent company and the two wholly owned subsidiaries; Drugrecure ApS and Pharmaorigin ApS. In 2014, Serendex accelerated drug development significantly compared to 2013 and previous years. The financial review below reflects this significant change.

LIQUIDITY AND CAPITAL RESOURCES As of 31 December 2014, cash and cash equivalents totaled DKK 20.5 million (DKK 2.3 million in 2013). On 11 July 2014, Serendex was listed on the Oslo Stock Exchange/Axess. Serendex issued 3,620,000 new shares during the course of listing, providing Serendex with a net proceeds of DKK 57.0 million. The total number of shares after the listing amount to 15,055,150. The classification of costs (Income Statement vs. Equity) associated with the initial public offering (IPO) is in accordance with IAS32.

INCOME STATEMENT Revenue In 2014, Serendex’s revenue totaled DKK 0.8 million (DKK 0.1 million in 2013) and consisted of sales related to the active pharmaceutical ingredient (API) and from Serendex’s named patient sales (NPS) of the lead product Molgradex®. Serendex’s NPS relates to the treatment of pulmonary alveolar proteinosis (PAP) and totaled DKK 0.6 million in 2014. The initiation of NPS emphasizes the unmet medical need within this therapeutic area and we will initially deploy the NPS in Europe in accordance with relevant legislation, thus successively make Molgradex® widely accessible for patients in European countries. Costs, net financials, tax and profit In 2014, consolidated costs totaled DKK 25.6 million (2013: DKK 4.9 million) of which DKK 4.6 million relates to the IPO process.

Raw materials and consumables amounted to DKK 0.7 million in 2014 (0.1 in 2013) due to increased revenue and the utilization of Molgradex® for pre-clinical toxicology activities for GM-CSF. External expenses increased from DKK 2.5 million in 2013 to DKK 11.8 million in 2014. This increase is partly driven by the costs associated with the IPO and partly by increased use of external services driven by the increased business activity. Staff expenses increased from DKK 2.5 million in 2013 to DKK 13.6 million in 2014 due to the strengthening of Serendex’s management and organization to cope with the increased business activities. Net financials in 2014 amounted to DKK -3.8 million compared to DKK -0.5 million in 2013. The increase in financial expenses is partly due to interest payments on debt and partly due to an unrealized loss on exchange rates caused by unfavorable developments in the Norwegian Krone in Q4 2014. For 2014, a tax income of DKK 7.2 million (2013: DKK 0.9 million) has been noted in the income statement as a consequence of the net loss of DKK 29.4 million before tax and adjustment to deferred tax. In 2014, Serendex reached a net loss after tax of DKK -22.2 million compared to a net loss of DKK –4.5 million in 2013. Allocation of loss It is proposed that this year’s consolidated loss of DKK -22.2 million is transferred to retained earnings.

BALANCE SHEET Development in assets Serendex’s total assets as of 31 December 2014 were DKK 62.3 million of which the total intangible assets amounted to DKK 29.4 million. Total assets have increased by DKK 42.6 million compared to 31 December 2013. This is primarily due to a significant increase in cash (share premium) of DKK 18.2 million and secondly, by the increase in intangible assets of DKK 16.9 million. The increase in the intangible assets reflects

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

the accelerated activity level related to the drug development of GM-CSF for multiple treatment areas as well as preparation for phase I on GM-CSF. In general, only external development costs directly attributable to the Company’s development of new products are capitalized as intangible assets. I.e., only external clinical activities from which the Company expects a future economic benefit, have been classified as investments. All other development costs are recognized as costs in the profit and loss accounts. Development in Equity and liabilities As of 31 December, the liabilities amounted to DKK 28.6 million and total equity was DKK 33.7 million including the deduction of IPO transaction costs of DKK 7.5 million.

CASH FLOW In 2014, the cash flow from operating activities totaled DKK –27.3 million, compared to DKK –5.1 million in 2013, and cash flow from investing activities reached DKK –17.4 million, compared to DKK –4.5 million in 2013, due to accelerated activity level.

Total cash flow in 2014 reached DKK +18.2 million compared to DKK –5.7 million in 2013. Total cash at the end of 2014 amounts to DKK 20.5 million compared to DKK 2.3 million at year-end 2013.

Q4 2014 PERFORMANCE In Q4 2014 Serendex conducted the preclinical activities as planned and overall, Management finds the results for Q4 2014 satisfactory and in accordance with expectations. Please find below a brief overview of the financial performance in Q4 2014 compared to Q4 2013. Significant events occurred after the end of the financial year As of February 2015, Serendex has established an undrawn committed credit facility in the amount of DKK 30 million provided by Sorana A/S, which provides Serendex with a satisfactory cash situation for 2015. No other significant events have occurred subsequent to the balance sheet date that are considered to have a material influence in the evaluation of the annual report.

All amounts are in DKK thousand

KEY FIGURES Q4/2014

Group Q4 2014 (3 months)

Revenue

Q4 2013 (3 months )

0.6

–

Operating profit/loss (EBIT)

-7.3

-0.5

Net profit/loss

-8.0

-0.1

Total assets

62.3

19.7

33.7

6.1

-18.2

0.8

Equity Net cash flow

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY & INDICATIONS

CORPORATE GOVERNANCE RECOMMENDATIONS Serendex’s corporate governance guidelines provide the overall direction for Serendex’s Board of Directors and Executive Management. The guidelines are intended to ensure an efficient and adequate management of Serendex within the framework defined by applicable legislation, rules, and recommendations for a listed Danish company on the Oslo Stock Exchange/Axess and by Serendex’s Articles of Association and Corporate Strategy. In a limited number of areas Serendex has decided not to comply with the corporate governance recommendations issued by the Danish Committee on Corporate Governance and the guidelines provided by the Norwegian Code of Practice for Corporate Governance. Serendex has chosen to adhere to the Norwegian code in matters where the Norwegian code has a higher standard than the Danish code. Examples of recommendations that Serendex does not comply with are the adaptation of a Corporate Social Responsibility (CSR) policy and the establishment of a Nomination and a Remuneration Committee. Serendex considers that the limited size and/or complexity of its business does not warrant full compliance. Serendex bases its business development on combining financial performance with socially responsible behavior and environmental awareness. Serendex complies with applicable legislation, local as well as international. In the conduct of business, Serendex aims to maintain high ethical standards and strives to conduct its activities with integrity and responsibility. Serendex does not generate higher levels of direct pollution or emissions than the norm in the pharmaceutical industry. In terms of gender equality there is currently no representation of women in the Executive Management team. However, women comprise 50% of the Board of Directors.

GOVERNANCE Serendex has based its governance structure on a two-tier system where the Board

of Directors and the Executive Management have distinct roles. The Executive Management undertakes the operational management of the company, whereas the Board of Directors governs the Executive Management and defines overall strategies and goals in tandem with the Executive Management. In order to ensure an efficient, appropriate and viable management of Serendex, the Board of Directors outlines guidelines for the Executive Management. The guidelines are based on Serendex’s mission, vision and targets, as well as relevant legislation. They form the basis for daily management and activities and are to be used and adhered to when defining further policies and procedures. The Executive Management is responsible for risk management with respect to financial performance and drug development. The Board of Directors receives monthly reports on the financial status, drug development status and development in strategic risks. Further, the Company approves and presents quarterly reports to the market in accordance with relevant legislation. The responsibility for quality assurance of the financial reports lies with the CFO. The Group has, under careful consideration of its limited size, set up procedures to secure the best possible segregation of duties. Further, Serendex has adopted an Audit Committee. The Audit Committee shall amongst other tasks, assist the Board of Directors with preparing the review of financial reporting processes; review of systems of internal controls including risk management, and the on-going dialogue with the external auditor. As provided in the company’s articles of association, Serendex’s Board of Directors consists of between four and seven members elected by the company’s shareholders. The Board currently consists of six members and are elected each year at the annual general meeting of the company for the period until the next annual general meeting. The directors are eligible for re-election.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

Until 1 April 2019, the Board of Directors are authorized, without preferential rights for the existing shareholders of the Company, to increase the share capital one time our more with up to a total nominal amount of DKK 500,000 by cash payment. As of 31.12.2014 the Board has partly exercised the authorization by increasing the share capital by a nominal value of DKK 362,000 in connection with the initial public offering (IPO). Additionally, the Board of Directors are authorized until 22 April 2019 to issue warrants giving the right to subscribe up to 260,000 shares of DKK 0.1 by cash payment. As of 31.12.2014 no warrants have been issued.

RISK OVERVIEW Please see note 19 on page 55 for Serendex’s risks.

GROUP STRUCTURE Serendex Pharmaceuticals A/S fully owns two subsidiaries; all of the three companies have their business addresses in Hørsholm, Denmark. Serendex has also registered an entity in Norway (Enhetsregisteret, NUF 913 821 629). This is currently a non-active registration, which followed the listing on Oslo Stock Exchange/Axess.

As provided in the company’s articles of association, the general meeting of the company is the supreme authority in all company matters. As of 31.12.2014 members of the Executive Management can terminate their service contracts giving six months’ notice and the company can terminate the service contracts giving six months’ notice. Termination of other employee contracts is accordance to the Danish Salaried Employees act (on Danish ‘Funktionærloven’). There are no changes to notice in case of very material changes to the company’s ownership.

Serendex’s corporate governance guidelines for the financial year 2014 are available on the website under Investor Relations at:

www.‌serendex.com

Serendex Pharmaceuticals A/S

100%

Drugrecure ApS

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

100%

Pharmaorigin ApS

OUR STRATEGY & INDICATIONS

INVESTOR INFORMATION FINANCIAL CALENDAR 02.03.2015 02.03.2015 24.03.2015 11.05.2015 24.08.2015 09.11.2015 29.02.2016

Annual Report 2014 Investor TC at 14 pm. (UTC+1) Annual General Meeting Q1 2015 Q2 2015 Q3 2015 Annual Report 2015

GENERAL MEETING The annual general meeting will be held on 24 March 2015 at 11.00 to 14.00 (UTC+1). The meeting will take place at the offices of Bech-Bruun Lawfirm at Langelinie Allé 35, 2100 Copenhagen.

INVESTOR TC The Annual Report for 2014 will be presented at a telephone conference Monday 2 March 2015 at 14:00 Copenhagen time (UTC+1). The telephone conference will be conducted in English and participants from Serendex are CEO Kim Arvid Nielsen and CFO Søren Bech Justesen. Audience members should use the following dial-in numbers to join the conference: 70 25 23 00 Audience DK - CPH Local 70 25 67 00 Audience DK - CPH Local +44 208 817 9311 Audience Int. Number Audience Passcode: 9421 9384# Copy and paste the following URL into your web browser for a current list of available local and international free phone numbers: http://www.yourconferencecentre.com/r. aspx?p=11&a=DFFImapaEAWkep

SHARE INFORMATION Market Isin Code Ticker Symbol Issued shares Nominal share value

Oslo Axcess DK0060563427 SENDEX 15,055,150 DKK 0.1

Serendex was listed on the Oslo Stock Exchange/Axess on July 11, 2014.

As of 28 February 2015, the company has one major shareholder owning more than 5% of the share capital. The holding comprise shares controlled directly or indirectly by board member Lorentz Jørgensen (between 50%-60%). On our company website, a list of the top 20 shareholders (based on nominee accounts) is available. The list is updated on a monthly basis. For a complete overview of the management’s ownership of shares in Serendex Pharmaceuticals A/S, see note 23. As of 31 December 2014 the share price of the company decreased by approximately 48% since the listing. This reflects the general development of the health care index of Oslo Axess which has decreased by 43% in 2014. Additionally it is worth noting that the development of the Olso Axess index as a whole decreased by 31% in 2014.

DIVIDENDS Serendex will not pay out dividends for the financial year 2014. The payment of dividends must be made with consideration of the Company’s equity that serves as a basis for the continued development of our drug pipeline.

POLICY REGARDING TREASURY SHARES AND MARKET MAKING Serendex Pharmaceuticals A/S has entered into a market making agreement with Norne Securities AS. The purpose of the agreement is to ensure the liquidity of the shares of the company. As of 31 December 2014, Serendex holds no own treasury shares.

INVESTOR RELATIONS, COMMUNICATIONS AND CONTACT Serendex seeks to ensure an efficient and fair pricing of the share by having an open dialogue and providing clear, timely and balanced communication.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

We seek to have an open dialogue with the capital market, the press, shareholders and other relevant stakeholders. Therefore, as part of the IR communication Serendex updates its homepage with shareholder information, external analysis of the share price, distributes company announcements to subscribers of the company newsletter and holds an investor conference call after the publication of financial results.

For more information, please contact: Kim Arvid Nielsen, CEO kan@‌serendex‌.‌com Mobile: +45 21 43 10 17 Søren Bech Justesen, CFO sbj@serendex.com Mobile: +45 29 11 00 25 General inquiries may be directed to ir@serendex.com

PUBLISHED COMPANY ANNOUNCEMENTS Date 04.02.2015 30.01.2015 30.01.2015 28.01.2015 15.12. 2014 10.12.2014 14 .11 . 2014 10.11 . 2014 09.11.2014 13.10.2014 28.08.2014 19.08.2014 13.08.2014 15.07.2014 11.07. 2014 03.07.2014 02.07.2014 27.06.2014 26.06.2014 20.06.2014 06.06.2014 06.06.2014

Announcement Primary insider notification Serendex Pharmaceuticals A/S - Major shareholding notification from Serendex’ major shareholders Serendex Pharmaceuticals and CMC Biologics enter exclusive agreement on Factor VIIa Serendex receives positive scientific advice from EMA Financial calendar Serendex registers first sale of Molgradex® Serendex successfully completes key non-clinical toxicology study for inhaled GM-CSF Q3 2014 results Serendex signs exclusive licence agreement with PARI Pharma GmbH Updated Financial Calendar 2014 Primary insider notification Serendex’s first half 2014 results Serendex Pharmaceuticals A/S - Financial Calendar 2014 Market making agreement Serendex Pharmaceuticals (SENDEX) successfully listed in Oslo Serendex Pharmaceuticals A/S - Primary insider notification IPO book building successfully completed Approved Supplemental Prospectus Serendex Pharmaceuticals A/S enters an Underwriting Agreement Extension of Application Period Serendex Pharmaceuticals A/S launches Initial Public Offering Approved prospectus

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

OUR STRATEGY & INDICATIONS

MANAGEMENT’S STATEMENT

GLOSSARY

The Board of Directors and Executive Management have reviewed and approved the annual report of Serendex Pharmaceuticals A/S for the financial year 1 January to 31 December 2014. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and the financial statements of the parent company have been prepared in accordance with the Danish Financial Statements Act.

API Active pharmaceutical ingredient

GLP Good laboratory practice

ARDS Acute respiratory distress syndrome

GM-CSF Granulocyte macrophage colony stimulating factor

In addition, the annual report has been prepared in accordance with Danish and Norwegian disclosure requirements for listed companies. We consider the accounting policies to be appropriate and the overall presentation in the annual report to be adequate. Therefore, in our opinion the annual report gives a true and fair view of the Group’s and parent’s assets and liabilities and financial position as at 31 December 2014 and of the results of operations and cash flows for the period 1 January to 31 December 2014. We recommend the annual report for adoption at the annual general meeting.

BE Bronchiectasis BLI Blast lung injury CF Cystic fibrosis

SERENDEX PHARMACEUTICALS A/S, CBO Chief business officer

Hørsholm 2 March 2015

CEO Cheif executive officer

EXECUTIVE MANAGEMENT

CFO Chief financial officer Kim Arvid Nielsen (CEO)

Søren Bech Justesen (CFO)

CMO Contract manufacturing organization CMO Chief medical officer

BOARD OF DIRECTORS

COPD Chronic obstructive pulmonary disease CTA Clinical trial application

Karin Verland (Chairman)

Helena Nordin Rudberg

DAH Diffuse alveolar hemorrhage DZL Lung centers of excellence in Germany

Lorenz J. Thorndahl Jørgensen

Poul Tørring

EMA European Medicine Agency FDA Food and Drug Administration

Christian Vinding Thomsen

Tone Bjørnov

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

FVIIa Factor VIIa

HA Health authorities HSTC hematopoietic stem cell transplantation ICU Intensive care unit IPO Initial public offering IPR Intellectual property rights MAA Marketing authorization application MTD Maximum tolerated dose study NPS Named patient sale ODD Orphan drug designation PAP Pulmonary alveolar proteinosis PPP Private, public partnership UGMLC Universities of Giessen and Marburg Lung Center WHO World Health Organization WWL Whole lung lavage

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

FINANCIAL STATEMENT

THE INDEPENDENT AUDITOR’S STATEMENT Til ledelsen i Serendex Pharmaceuticals A/S

Selskabets ledelse har ansvaret for specifikationshæftet. Vores ansvar er på grundlag af vores review at udtrykke en konklusion om specifikationshæftet.

Et review af specifikationshæftet omfatter forespørgsler til primært personer med ansvar for økonomi og regnskabsaflæggelse, samt udførelse af analytiske handlinger og andre reviewhandlinger. Omfanget af et review er betydeligt mindre end en revision udført i overensstemmelse med internationale standarder om revision og yderligere krav ifølge dansk revisorlovgivning og giver derfor ikke sikkerhed for, at vi bliver bekendt med alle betydelige forhold, som kunne afdækkes ved en revision. Et review kan således ikke sikre, at alle nødvendige reguleringer er foretaget ved opgørelsen af den skattepligtige indkomst, ligesom det ikke er muligt at afgøre, om skattemyndighederne vil anlægge en anden vurdering af de udøvede skøn. Vi har ikke udført revision og udtrykker derfor ingen revisionskonklusion om specifikationshæftet.

DET UDFØRTE REVIEW

KONKLUSION

Vi har udført vores review i overensstemmelse med ISRE 2410 DK, som finder anvendelse ved review af andre historiske finansielle oplysninger udført af selskabets uafhængige revisor og yderligere krav ifølge dansk revisorlovgivning.

Ved det udførte review er vi ikke blevet bekendt med forhold, der giver os anledning til at konkludere, at specifikationshæftet ikke i al væsentlighed er udarbejdet i overensstemmelse med god regnskabsskik og gældende skattelovgivning.

Vi har udført review af de specifikationshæftet omfattende de regnskabsmæssige specifikationer samt bilag til selvangivelsen for Serendex Pharmaceuticals A/S for regnskabsåret 1 January 2014 - 31 Dec 2014. Specifikationshæftet indeholder uddybende information i forhold til årsregnskabet for Serendex Pharmaceuticals A/S for regnskabsåret 1 January 2014 - 31 Dec 2014, som vi har revideret og forsynet med revisionspåtegning uden forbehold men med en supplerende oplysning omkring likviditet og kapitalbehov.

U E B

D E T A PD

København, den 29 april 2014

Grant Thornton Statsautoriseret Revisionspartnerselskab

Ulrik Bloch-Sørensen Statsautoriseret revisor

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GROUP ANNUAL ACCOUNTS 2014

INCOME STATEMENT FOR THE PERIOD 1 JANUARY 2014 - 31 DECEMBER 2014 (DKK THOUSAND) Notes Net revenue Other operating income Costs of goods sold Gross profit

Staff expenses

Raw materials and consumables used External expenses Operating profit/loss (-)

Net financials

Profit/loss (-) before tax

Tax expenses

Net profit/loss (-)

2014

2013

786

111

-326

461

111

-13,590

-2,469

-687

-17

-11,750

-2,501

-25,566

-4,876

-3,787

-468

-29,353

-5,344

7,202

859

-22,151

-4,485

STATEMENT OF COMPREHENSIVE INCOME FOR THE GROUP (DKK THOUSAND) Notes

2014

2013

-22,151

-4,485

-226

-22,151

-4,711

Total comprehensive income per share*

-1.47

-0.41*

Diluted total comprehensive income per share*

-1.47

-0.41*

Net profit/loss (-) Other comprehensive income Total comprehensive income

*For comparision the ratios for 2013 are adjusted according to the share-split in April 2014 (1 to 10)

44 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 45

GROUP ANNUAL ACCOUNTS

BALANCE SHEET BALANCE SHEET AT 31 DECEMBER 2014 (DKK THOUSAND) ASSETS

EQUITY AND LIABILITIES Notes

2014

2013

Notes

NON-CURRENT ASSETS Intangible assets Development projects

Share capital 11

29,417

Retained earnings

12,501

Total equity

Tangible assets Plant and equipment

278

2,516

1,564

Financial assets Long-termed deferred tax

194

134

32,406

14,290

Long-termed loans from shareholders and management

Other non-current liabilities Total non-current liabilities

CURRENT ASSETS

Current liabilities

Inventories

Trade payables 15

1,249

1,299

Trade receivables

619

6,250

1,250

Prepayments

750

Other receivables

566

651

8,185

1,901

20,460

2,253

Total current assets

29,893

5,453

Total assets

62,299

19,743

Total receivables Cash and cash equivalents

Short-termed loans from shareholders and management

1,144 4,974

33,685

6,117

23,464

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

23,464

386

2,605

10,025

4,763

933

5,149

13,563

Total liabilities

28,614

13,625

Total equity and liabilities

62,299

19,743

Other current liabilities

Receivables

Short-term deferred tax

1,506 32,179

Non-current liabilities

Total non-current assets

Inventories

2013

LIABILITIES

Non-current receivables Deposits

2014

EQUITY

Total current liabilities

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GROUP ANNUAL ACCOUNTS

CASH FLOW STATEMENT

CHANGES IN EQUITY

FOR THE PERIOD 1 JANUARY 2014 - 31 DECEMBER 2014 (DKK THOUSAND)

DKK THOUSAND

Notes Total comprehensive income

2014

2013

-22,151

-4,485

Adjustments

-3,064

-367

Change in working capital

450

-497

Cash flow from operating activities before net financials

-24,765

-5,348

Currency gain/loss

-1,315

Interest paid

-2,472

-468

-28,552

-5,816

1,250

684

-27,302

-5,133

Cash flow from ordinay activities Tax reimbursement

Cash flow from operating activities

Acquisition of intangible assets

-16,916

-4,405

Acquisition of tangible assets

-313

-87

-194

-17,422

-4,492

Paid deposits Cash flow from investment activities

Share capital

Retained earnings

Total

1,144

9,685

10,829

Profit/loss (-)

-4,485

Other comprehensive income

-226

-226*

Total comprehensive income

-4,711

Balance at 31 December 2013

1,144

4,974

6,117

Balance at 1 January 2014

1,144

4,974

6,117

Profit/loss (-)

-22,151

Other comprehensive income

-22,151

Balance at 1 January 2013

Total comprehensive income

Share capital increase Share premium by IPO

362

56,647

226

-7,517

1,506

32,179

33,685

Adjustment to previous years Loans received from shareholders and management

13,439

4,257

-155

362

Share premium by IPO

56,647

Expenses for IPO

-7,517

-226

62,931

3,876

Repayment of loans to shareholders and management Share capital increase

Cash flow from financial activities

IPO Transactions costs

Balance at 31 December 2014

The share capital comprises of 15,055,150 shares, each with a nominal value of DKK 0.10. No shares hold particular rights. *DKK -226 is due to an adjustment from 2013

Cash flow in total Cash and cash equivalents at the beginning of the year Cash and cash equivalents end of period

18,207

-5,749

2,253

8,002

20,460

2,253

Serendex has an undrawn committed credit facility in the amount of DKK 30 million.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

1. CAPITAL RESOURCES Serendex intends to license its products to pharmaceutical companies and thereby derive income from a combination of fixed payments and ongoing royalty income. Until Serendex has established such a license agreement, Serendex will be a capital-consuming company due to investments in drug development and in further strengthening of the pipeline. Therefore, it is vital that the company always has sufficient financial resources. Serendex has a satisfactory cash situation for 2015 to finalize the pre-clinical development program for GM-CSF and initiate the phase II/III on PAP (pulmonary alveolar proteinosis). Hence, the annual report for 2014 has been prepared for on-going business. In order to pursue the development strategy as outlaid in the Management Report, Serendex is dependent on acquiring additional capital in 2015. A financial adviser has been retained to explore the potential for a capital increase in 2015. In case the capital increase does not develop as planned, Serendex will seek alternative financing opportunities, e.g. through early-stage partnerships. Additionally, Serendex can decrease the development costs appropriately and secure sufficient capital resources to complete the full operation for 2015.

3. SEGMENT DATA As of 31.12.2014 Serendex has only one segment according to IFRS. The goods sold can be categorized as follows: 2014

2013

Revenue from sales of active pharmaceutical ingredient (API)

377

Revenue from named patient sales (NPS)

410

786

Total segmented revenue

The entire revenue is based on major customers (>10% of the total revenue). The revenue is globally allocated as 52% in Germany and 48% in Denmark. All tangible and intangible assets are located in Denmark.

4. STAFF EXPENSES STAFF

2014

2013

Salaries and bonus

6,123

1,284

834

7,036

1,359

MANAGEMENT

2014

2013

Fees to Board of Directors

1,050

Salary, cash bonus, etc. to Executive Management

5,245

1,110

259

6,554

1,110

13,590

2,469

7.5

2.0

10.8

3.0

Pension costs or other social security costs

2. ESTIMATES AND JUDGEMENTS The preparation of the consolidated financial statements requires the making of estimates and judgments that affect the reporting of assets, liabilities and expenses. The estimates and judgments are reviewed on an ongoing basis. Estimates and judgments are based on historical results and on various other assumptions, which Serendex believes to be reasonable under the circumstances. However, the actual results may differ significantly from the estimates. We believe that the accounting policies relating to development costs and deferred tax involve estimates or judgments by management that could materially affect the reported financial position and results. Development costs Serendex is confident it will obtain approval of its pipeline products, as the products are based on an existing approved drug, and hold the evidence to support this. Further, Serendex has obtained scientific advice from EMA stating that only one pivotal study for PAP within GM-CSF will be necessary, if certain circumstances are followed. This study is planned to commence in Q4 2015. Additionally, Serendex is confident, that it will require the necessary resources to either sell or complete the development. Thus, management judge that the technical feasibility criterion in IAS 38.57 is met. The carrying amount of capitalized research and development costs is DKK 29.4 million for the group (2013: DKK 12.5 million). Deferred tax Deferred tax assets are recognized when it is likely that there will be sufficient future taxable income to utilize the unutilized tax losses. Management judge that it is more than likely that one or more of the drugs under development will be successful and hence, it is appropriate to capitalize the tax asset. The carrying amount of deferred tax assets is DKK 8.7 million (2013: DKK 2.8 million).

Other staff costs

Pension contributions to Executive Management

Total Staff expenses Average number of full time employees (FTEs) FTEs Year-end

Remuneration to Executive Management is based on a fixed salary and pension as well as a potential cash bonus and other allowances. The significant increase in total staff expenses is due to the increased number of employees change in Executive Management and in the remuneration of the Board. Please see note 23 for further information of other positions held by members of the Board and Executive Management.

5. FUNCTIONAL COSTS 2014 326

Sales and distribution costs

512

597

12,437

1,922

13,275

2,518

13,590

2,469

Administrative expenses and other external service costs Total non-staff expenses Staff expenses

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

2013

Cost of goods sold*

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

Total costs

26,864

4,987

*The amount related to adjustment of inventory (up/down) is DKK 0 in 2014 (DKK 0 in 2013).

It is proposed that the year’s consolidated loss of DKK 22.2 million is transferred to retained earnings.

6. FEE TO STATUTORY AUDITORS

11. DEVELOPMENT PROJECTS 2014

2013

150

100

Statutory audit Other assurance engagements Tax advisory services

142

100

292

200

Other services

2014

2013

Costs at the beginning of the year

13,271

8,866

Acquisitions

16,916

4,405

30,186

13,271

769

29,417

12,501

Costs end of period Depreciation and write-down at the beginning of the year Depreciation and write-down in period Depreciation and write-down end of period

7. FINANCIAL EXPENSES (NET)

Book value end of period 2014

2013

-2,478

468

-1,333

-3,787

468

Interest income Interest expenses Foreign exchange (net) - realized Foreign exchange (net) - unrealized

8. TAX EXPENSES

Development costs, which do not fulfill the requirements for recognition in the balance sheet are expensed immediately in the income statement under external costs. The carrying amount of development costs recognized in the income statement in 2014 is DKK 4.2 million for the group (2013: 0.7 million)

12. TANGIBLE ASSETS 2014

2013

Calculated income tax for the period

Corporate tax reduction from 25% to 22%

317

-7,202

-1,176

Total tax expense 2014

-7,202

-859

Effective tax rate

24,5%

16.1%

Change in deferred tax

All capitalized development costs are related to development work progress.

Tax on other comprehensive income for the year

2014

2013

Costs at the beginning of the year

117

Acquisition in period

313

-117

313

117

Disposals in period Costs end of period Depreciation and write-down at the beginning of the year Reversed depreciation on disposals Depreciation and write-down in period Depreciation and write-down end of period Book value end of period

9. EARNINGS PER SHARE (EPS) Net profit/(loss) Average number of outstanding shares (in thousands)* Earnings per share (EPS)*

-27

278

The tangible assets primarily consists of leasehold improvements related to Slotsmarken 17. 2014

2013

-22,151

-4,485

15,055,150

11,435,150

-1.47

-0.39

* For comparison the number of shares in 2013 is adjusted according to the share-split in April 2014 (1 to 10)

13. DEPOSITS 2014

2013

134

Disposals during the period

-134

Additions during the period

194

Deposit at the beginning of the year

10. ALLOCATION OF LOSS

52 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 53

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

Deposit end of period

194

134

14. DEFERRED TAX ASSETS

17. PLEDGED ASSETS AND SECURITIES 2014

2013

Deferred tax at the beginning of the year

2,814

2,639

Deferred tax net change

7,202

1,176

Adjustment to previous years Tax reimbursement Deferred tax asset end of period

As of February 2015, Serendex has an undrawn committed credit facility in the amount of DKK 30 million provided by Sorana A/S, which provides Serendex with a satisfactory cash situation for 2015.

-317

-1,250

-684

8,766

2,814

-6,339

-3,118

In security for a debt to management, the parent company Serendex has pledged investments in the subsidiaries of DKK 1.7 million.

18. CONTRACTUAL OBLIGATIONS AND PENDING LITIGATIONS Obligations on rental properties As of 31.12.2014 Serendex has commitments of DKK 1.9 million until 2019.

The deferred tax assets concerns: Intangible assets Tangible assets

15,090

5,926

8,766

2,814

Non-current assets

2,516

1,564

Current assets

6,250

1,250

8,766

2,814

Loss carried forward

The deferred tax assets are distributed as follows:

Due to the tax credit reimbursement installment by the Danish government, Serendex Group expects the full tax to asset to be reimbursed in the following year.

15. INVENTORY 2014

2013

Raw materials and consumables

283

882

Work in progress

714

417

Manufactured goods and goods for resale

251

1,248

1,299

Total Inventories calculated at net realizable value

16. LONG-TERMED LOANS FROM SHAREHOLDERS AND MANAGEMENT Debt

Interest Rate

13,440

12%

Loan “Sorana A/S” EUR 675,000

5,024

12%

Loan “Sorana A/S” DKK 5.0 million

5,000

Loan “Sorana A/S” DKK 12.0 million

23,464

Pending litigations As of 31.12.2014 Serendex has made an external legal assessment of alleged claims against the company. None has been seen as having any material impact and hence, no provisions has been made.

19. RISK OVERVIEW Serendex is exposed to uncertainties and risk factors, which may affect some or all of the company’s activities. Development risks Drug development involves considerable risks. The average development period is typically more than 10 years, costs are high and the probability of reaching the market is relatively low. However, the foundation of Serendex’s business model is to produce and develop well-known biological products, which have previously been used systemically, into unique products for inhalation. Hence, the repositioning approach reduces pre-clinical and clinical risks, development costs, as well as the overall time to market. That said, Serendex is still exposed to development risks and the following factors are assessed regularly for all development programs: • The occurrence of unexpected and adverse side effects developed by inhalation or inducting the drug candidate into the lungs; this risk is highest in the early phases of development (preclinical and phase I) and confidence increases as the total number of patients who have been exposed to the product increases • The scientific rationale may be based on preclinical models and literature data. The early exploratory patient studies will provide an indication as to whether or not this rationale can be applied to the human setting • The complexity of clinical development, access to patients, and the speed of which an indication of a clinical effect can be established may affect the timelines of the planned clinical phase II/III development • Regulatory assessment of the drug candidate’s efficacy, safety profile and probability of final approval is not completed until phase III data are available

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 55

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

Loan, non-current

Commercial risks The flowing factors are assessed in connection with the initiation of a drug development program and are evaluated in connection with reassessing the pipeline: • Degree and scope of patent protection • Market size (prevalence and expected growth in patients) • Competitive situation (existing treatment as well as new drugs under development with the same scientific rationale) • Development time and associated costs • Interest from potential partners • Market access Contractual risks Serendex’s business model is founded upon an extensive outsourcing strategy and international strategic alliances. Thus it is essential to secure that vendor contracts or other agreements do not impose abnormal obligations on Serendex, nor are drafted in an unbalanced manner with regards to the protection of Serendex’s business. Therefore, before entering any agreements, partners are thoroughly evaluated with regards to financial solidity, delivery quality, timeliness as well as overall reliability. Employee risks Serendex is well aware that employees are an important asset. As Serendex’s business model is founded upon an extensive outsourcing strategy, having the right competencies with the adequate experience is vital. Therefore, it is important that Serendex continue to attract, retain and develop skilled employees. Failure to do so will negatively impact the Company’s continued development. Financial risks Serendex is primarily exposed to interest risks in connection with surplus liquidity and interestbearing liabilities as the non-current loans are stablished at a fixed interest rate. Interest is added to surplus liquidity in accordance with the development of the day-to-day interest in Danske Bank between 0-1%. Further, Serendex is primarily exposed to exchange rate risks in the countries where Serendex has its main activities. I.e. the risks relate to the rise/fall in the British pound, American dollar and the Norwegian krone. As of 31 December 2014, an unrealized currency loss of DKK 1.3 million was recognized as a financial expense, which primarily was related to the decrease in the Norwegian krone compared to the Danish krone. At the end of 2014 a total increase in Norwegian kroner vs. Danish kroner of 10 % will result in a decrease in operating profit of DKK 1.8 million (2013: DKK 0 million). A total increase in British pound vs. Danish kroner of 10 % will result in a decrease in operating profit of DKK 0.2 million (2013: DKK 0 million) and a total increase in American dollar vs. Danish kroner of 10 % will result in a decrease in operating profit of DKK 0.7 million (2013: DKK 0 million). It is group policy not to actively conduct speculation in financial risks and it is management’s strategy to seek to offset exchange-rate risks by matching revenue and costs in the same currencies.

56 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

Lease liability Trade payables

31-12-2014

0-1 year

1-5 years

23,464

1,900

475

1,425

386

4,763

30,513

5,624

24,889

20,460

30,000

Receivables, non-current

2,710

Receivables

8,185

Other items

31,355

40,895

-842

-35,271

24.889

Other current liabilities Total liabilities Cash

Financial assets Liquidity risk

Capital resources Serendex intends to license its products to pharmaceutical companies and thereby derive income from a combination of fixed payments and ongoing royalty income. Until Serendex has established such a license agreement, Serendex will be a capital-consuming company due to investments in drug development and in further strengthening of the pipeline. Therefore, it is vital that the company always has sufficient financial resources. The Board of Directors receives reports on a monthly basis, which include information dealing with the amount and scope of Serendex’s financial resources. Moreover, at each board meeting, the financial resources are assessed in regards to the potential of procuring necessary capital. Serendex intends to license its products to pharmaceutical companies and thereby derive income from a combination of fixed payments and ongoing royalty income. Until Serendex has established such a license agreement, Serendex will be a capital-consuming company due to investments in drug development and in further strengthening of the pipeline. Therefore, it is vital that the company always has sufficient financial resources. Serendex has a satisfactory cash situation for 2015 to finalize the pre-clinical development program for GM-CSF and initiate the phase II/III on PAP (pulmonary alveolar proteinosis). Hence, the annual report for 2014 has been prepared for on-going business. In order to pursue the development strategy as outlaid in the Management Report, Serendex is dependent on acquiring additional capital in 2015. A financial adviser has been retained to explore the potential for a capital increase in 2015. In case the capital increase does not develop as planned, Serendex will seek alternative financing opportunities, e.g. through early-stage partnerships. Additionally, Serendex can decrease the development costs appropriately and secure sufficient capital resources to complete the full operation for 2015. Securing the company’s operation and assets Serendex has taken out insurance to cover both any losses due to claims in connection with clinical studies and the named patient sales program as well as the loss of assets due to fire, water damage, theft, and so forth. All insurance related issues are handled by an external insurance broker who reports yearly as to whether the company’s insurance cover is sufficient and reasonable.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 57

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

20. RELATED-PARTY TRANSACTIONS Related parties comprise the company’s Executive Management and Board of Directors. All transactions between the related parties are based on the principle of “arm’s length”. In 2014 Serendex had the following related party transactions:

Lorentz Johannes Thorndahl Jørgensen

Other positions:

Board member since 2013 Member of audit committee

Sorana A/S (board member), LJ investering ApS (board member), Investeringsselskabet Fir A/S International (board member), Fagus A/S (board member), Scanpol International ApS (board member), Triton Hotel A/S (board member), Musholmfonden (board member), Sorø Kunstmuseum (board member).

• Legal services from MAQS Law Firm and Bech-Bruun Law Firm. Partner Christian Vinding Thomsen serves as board member in the Company. • Payments of interest to Sorana A/S, which is owned by board member Lorentz Jørgensen. • Please see note 3 for information on remuneration paid to the members of the Executive Management and the Board of Directors. • As of 28.02.2014 board member Lorentz Jørgensen and his related parties holds 53.0% of the total shares. No other shareholders hold more than 5% of the shares.

21. STATEMENT OF CASH FLOW – ADJUSTMENTS 2014

2013

3,787

468

Amortisation and depreciation current year

151

Amortisation and depreciation previous year

-27

Adjustment in accounts payable from previous year

-86

Adjustment in tangible assets

313

-7,202

-859

-3,064

-367

Financial income and expenses

Tax for the year Total adjustments

22. STATEMENT OF CASH FLOW – CHANGE IN WORKING CAPITAL 2014 Net change in receivables Net change in inventory Net change in long term debt Net change in current debt Total change in working capital

Tone Bjørnov

Other positions:

Board member since 2014 Chairman of audit committee

ABG Sundal Collier ASA (board member), AGA Sundal Collier Norge ASA (board member), Aqua Bio Technology ASA (board member), BB Finans ASA (board member), Bank 1 Oslo Akershus AS (board member), Storyline Studios AS (board member).

As of 31.12.2014 Tone Bjørnov and her related parties hold 11,100 Serendex shares. Poul Tørring

Other positions:

Board member since 2013 Member of audit committee

Fagus A/S (board member), Aquamind A/S (chairman), (and PLT-Byg ApS (chairman), Danish Oysters (chairman).

As of 31.12.2014 Poul Tørring and his related parties hold 203,690 Serendex shares.

2013

-1,150

-367

-1,299

-63

1,612

1,170

450

-497

Helena Nordin Rudberg

Other positions:

Board member since 2014

Craneridge Pharma Consulting AB (CEO and chairman), Reyholmia AB (Member of the Board) and Swedish Investment Development Organization AB (Member of the Board).

23. BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

As of 31.12.2014 Helena Nordin Rudberg and her related parties do not hold any Serendex shares.

BOARD OF DIRECTORS

Christian Vinding Thomsen

Other positions:

Board member since 2013

Bech-Bruun Law firm (partner), KT Stålindustri A/S (chairman), RAC Denmark A/S (AVIS & Budget) (board member) and Mark & Gerstenberg A/S (board member).

Karin Verland

Other positions:

Chairman Board member since 2014

Nygart Privathospital A/S (chairman), N2MO (board member) and Justitia (board member).

As of 31.12.2014 Karin Verland and her related parties hold 11,100 Serendex shares.

As of 31.12.2014 Lorentz Jørgensen and his related parties hold 7,973,180 Serendex shares.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

As of 31.12.2014 Christian Vinding Thomsen and his related parties do not hold any Serendex shares.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

EXECUTIVE MANAGEMENT Kim Arvid Nielsen CEO and member of Executive Management since 2013 As of 31.12.2014 Kim Arvid Nielsen and his related parties hold 114,746 Serendex shares.

BASIS OF CONSOLIDATION The consolidated financial statements are prepared by adding the audited financial statements of the parent company and the individual subsidiaries, all of which are prepared in accordance with the group’s accounting policies. The following companies are consolidated: • Serendex Pharmaceuticals A/S

Søren Bech Justesen

• Drugrecure ApS

CFO and member of Executive Management since 2014

• Pharmaorigin ApS

As of 31.12.2014 Søren Bech Justesen and his related parties hold 13,880 Serendex shares.

24. SIGNIFICANT EVENTS OCCURRING AFTER THE END OF THE FINANCIAL YEAR As of February 2014, Serendex has established an undrawn committed credit facility in the amount of DKK 30 million provided by Sorana A/S, which provides Serendex with a satisfactory cash situation for 2015. No other significant events have occurred subsequent to the balance sheet date that are considered to have a material influence in the evaluation of the annual report.

25. ACCOUNTING POLICIES Accounting policies applied in the preparation of the consolidated financial statements are set out below. The accounting policies are unchanged compared to 2013.

RECOGNITION AND MEASUREMENT IN GENERAL The net revenue is recognized in the profit and loss account if delivery and risk transfer to the buyer have taken place before the end of the year, and if the income can be determined reliably and is expected to be received. The net revenue is recognized exclusive of VAT and taxes and with the deduction of any discounts granted in connection with the sale. Recognition of value adjustments of assets and liabilities are recognized in the profit and loss account upon financial assessment. All costs – including depreciation, amortization, write-down, provisions, and reversals, which are due to changes in estimated amounts previously recognized in the profit and loss account – are recognized in the profit and loss account. Assets are recognized in the balance sheet when the company is liable to achieve future, financial benefits and the value of the asset can be measured reliably.

NEW STANDARDS AND INTERPRETATIONS In 2014, Serendex has adopted all new and revised standards and interpretations relevant for Serendex that are applicable for accounting periods beginning 1 January 2014. Serendex assessed that revised standards and interpretations did not have a material impact on Serendex, or they were not relevant. Amended and new standards that have been published and defined as mandatory for accounting periods beginning 1 January 2015 or later have not yet been implemented.

Liabilities are recognized in the balance sheet when the company is liable to lose future, financial benefits and the value of the liability can be measured reliably.

TRANSLATION OF FOREIGN CURRENCY Operational transactions in foreign currency are translated by using the exchange rate at cost basis upon bank transaction. Differences in the rate of exchange arising between the rate at the date of transaction and the rate at the date of payment are recognized in the profit and loss account as an item under net financials.

BASIS OF PREPARATION The Annual Report has been prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU and in accordance with The Danish Financial Statements Act for annual reports of listed companies (accounting class D). The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Serendex Pharmaceuticals A/S Group’s accounting policies. The areas involving a higher degree of judgment or complexity, and areas where assumptions and estimates are significant to the consolidated financial statements are disclosed.

Debtors, creditors, and other monetary items in foreign currency – not settled at the date of the balance sheet – are translated by using the period closing rate held by The Danish Central Bank. The difference between the closing rate and the rate at the time of establishment of the receivable or the payable is recognized in the profit and loss account under financial income and financial costs. Fixed assets and other non-monetary assets acquired in foreign currency and which are not considered to be investment assets purchased in foreign currencies are measured at the exchange rate on the transaction date.

Serendex has a satisfactory cash situation for 2015. Thus, the annual report for 2014 has been prepared for on-going business. The consolidated financial statements are presented in DKK, reflecting the company’s functional currency.

60 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 61

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

INCOME STATEMENT Net revenue As of 31.12.2014 Serendex has only one segment according to IFRS. Revenue represents amounts receivable for products or services delivered in the normal course of business of the company. Revenue is reduced for estimated customer returns and other similar allowances whenever applicable based on historical data and expectations of future sales. Revenue is recognized upon invoiced sale and when risks and rewards of ownership is transferred to the customer. The risks and rewards of ownership are generally transferred at the time the product is shipped and delivered to the customer. Revenue is recognized in the profit and loss account when management has established that all aforementioned conditions for revenue recognition have been met.

Tax Tax comprises the current tax for the year and the changes in deferred tax. Tax costs are recognized in the profit and loss account with the amounts concerning the fiscal year with the share referring to entries in the equity subsequently deferred tax asset.

BALANCE SHEET ITEMS Intangible assets Intangible fixed assets comprise development projects, patents, and licenses. Development costs comprise costs directly and indirectly attributable to development of new products from which the Company expects a future economic benefit. All other development costs are recognized as costs in the profit and loss accounts.

Other operating income and costs comprise accounting items of secondary nature in proportion to the principal activities of the enterprise.

Capitalized development costs are measured at cost with deduction of accrued amortizations or at the recoverable value, if this is lower.

Up-front payments that are attributable to subsequent research and development activities are recognized as deferred revenue and will subsequently be recognized as revenue over the expected contract period. Non-refundable up-front payments and milestone payments that are not attributable to subsequent research and/or development activities or other delivery obligations are recognized as revenue when the contracts are signed or when the milestone criteria are met respectively.

The carrying amounts of intangible assets carried at cost or amortized cost are tested annually to determine whether there are indications of any impairment in excess of that expressed in normal amortization. If that is the case, the asset is written down to the recoverable amount, which is the higher value of the net sales price and the capitalized value. Impairment losses on intangible assets are recognized under the same line item as amortization of the assets.

Cost of goods sold The cost of goods sold comprises costs paid for manufacturing in order to generate net revenue for the year including depreciation, amortization and write-downs of inventory. Staff expenses Staff expenses comprise total remuneration to Serendex employees including fees to Board of Directors. Raw materials and consumables used Raw materials and consumables used comprise handling charges, distributions costs and costs paid for manufacturing samples and references. External expenses External expenses compromise all external costs including development costs, which are not directly attributable to the Company’s development of new products (capitalized costs). External expenses includes depreciation and write-downs. The classification of costs (income statement vs. equity), associated with the initial public offering (IPO) is in accordance with IAS32. I.e. costs directly attributable to issuing new shares are deducted from equity and costs related to the stock market listing, or otherwise not incremental and directly attributable to issuing new shares, are recognized as an external expense in the income statement.

For development projects in progress, the recoverable amount is assessed annually, regardless of whether any indications of impairment have been found. After completion of the development work, capitalized development costs are amortized on a straight line basis over the estimated financial useful life. Profit and loss from the realization of development projects, patents, and licenses are measured as the difference between the sales price with deduction of sales costs and the book value at the time of the sale. Tangible assets Tangible assets are measured at cost with deduction of accrued depreciation and write-down. The basis of depreciation is costs with deduction of expected residual value after the end of the useful life of the asset. The cost comprises the acquisition cost and costs directly attached to the acquisition until the time when the asset is ready for use. Depreciation takes place on a straight line basis and based on an evaluation of the expected useful life: • Office equipment and fittings: 3 years

NET FINANCIALS

• IT and software licenses: 2 years

Net financials include interest income, interest expenses on loans, and realized and unrealized exchange rate gains and losses. Net financials are recognized in the profit and loss account with the amounts concerning the financial year.

• Leasehold improvements: 10 years Minor assets with an expected useful life of less than 1 year and/or of a cost less than EUR 2,000 (app. DKK 15,000) are recognized as costs in the profit and loss account in the year of acquisition.

62 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 63

GROUP ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

Profit or loss deriving from the sales of tangible fixed assets is measured as the difference between the sales price reduced by the selling costs and the book value at the time of the sale. Profit or loss is recognized in the profit and loss account under depreciation.

Trade receivables Trade receivables are recognized at amortized cost less potential losses on doubtful debts. Write-downs are based on individual assessments of each debtor.

Writedown of assets The book values of intangible as well as tangible fixed assets are subject to annual write-down assessment in order to disclose any indications of impairment beyond those expressed by amortization and depreciation respectively.

Other receivables, prepayments and accrued expenses Deposits comprise rental deposits paid to real estate agencies.

If indications of impairment are disclosed, impairment tests are carried out for each individual asset or group of assets respectively. Write-down takes place to the recoverable amount, if this value is lower than the book value. The recoverable value is equal to the value of the net selling price or the value in use, whichever is higher. The value in use is determined as the present value of the expected net income deriving from the use of the asset or the group of assets. Any loss based on the write-down test is recognized in the profit and loss account under depreciation. Inventories Inventories are measured at cost on basis of measured average prices. In case the net realizable value is lower than the cost, write-down takes place at this lower value. The inventory includes: • Acquisition of pharmaceutical ingredients, which include the cost for raw materials and the initial processing

Prepaid expenses paid in advance but which has not yet been incurred are recognized under assets. Accrued expenses recognized under assets comprise incurred costs concerning the next financial year. Cash and cash equivalents Cash and cash equivalents includes cash in Danske Bank. Non-current liabilities Non-current liabilities comprise long term loans to management and corresponds to the outstanding debt of the loan. Current liabilities Current liabilities are measured at amortized costs, which usually corresponds to the nominal value.

CASH FLOW STATEMENT The cash flow statement shows the cash flow of the company for the year, divided in cash flows deriving from

• The cost for manufactured goods and works in progress • Operating activities The net realizable value for inventories is recognized as the market price with the deduction of completion costs and selling costs, and it is determined by taking negotiability, obsolescence, and the development of the expected market price into consideration. All logistic costs related to the inventories are recognized in the profit and loss account. Deferred tax Long-term deferred tax (+12 months) and current tax (less than 12 months) are recognized in the balance sheet at the amount calculated on the basis of the expected taxable income for the year adjusted for tax on previous years, taxable income and prepaid taxes. Tax receivable and tax liabilities are set off to the extent that legal right of set-off exists and if the items are expected to be settled net or simultaneously. Deferred tax is measured on the basis of all temporary differences in assets and liabilities with a balance sheet focus. Deferred tax is measured based on the tax rules and tax rates applying under the legislation on the balance sheet date and prevailing when the deferred tax is expected to be released as current tax. In the period 2014 to 2016, the corporate tax rate will be reduced gradually from 25% to 22%, which will affect the deferred tax liabilities and deferred tax assets. Unless a recognition with a different tax rate than 22% will result in a significant material deviation in the estimated deferred tax liability or tax asset, deferred tax liabilities and assets are recognized by 22%.

64 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

• Capitalized activities • Financing activities • Changes in the liabilities • Available funds at the beginning and the end of the year respectively Cash flow from operating activities Cash flow from operating activities is calculated as the profit and loss results for the year adjusted for non-cash operating items, the change in the working capital, and corporate tax paid/received. Cash flow from capitalized activities Cash flow from investment activities comprises development costs directly attributable to the Company’s research and development of new products and payments in connection with the acquisition tangible assets. Cash flow from financing activities Cash flow from financing activities comprises changes in the size or the composition of the share capital and the costs in this connection. Furthermore, these activities comprise borrowings, instalments on interest bearing debt, and payment of dividend to the shareholders.

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 65

PARENT ANNUAL ACCOUNTS

INCOME STATEMENT

2014 FOR THE PERIOD 1 JANUARY 2014 - 31 DECEMBER 2014 (DKK THOUSAND) 2014

2013

Net revenue

Notes

Other operating income

Cost of goods sold

-13,590

-835

Gross profit

Staff expenses

Raw materials and consumables used External expenses Operating profit/loss (-)

Net financials

Profit/loss (-) before tax

Tax expenses

Net profit/loss (-)

-5,006

-782

-18,596

-1,617

-1,906

163

-20,501

-1,454

4,792

272

-15,709

-1,182

STATEMENT OF COMPREHENSIVE INCOME FOR THE PARENT (DKK THOUSAND) Notes Net profit/loss (-) Other comprehensive income Total comprehensive income

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

2014

2013

-15,709

-1,182

-15,709

-1,182

PARENT ANNUAL ACCOUNTS

BALANCE SHEET BALANCE SHEET AT 31 DECEMBER 2014 (DKK THOUSAND) ASSETS

EQUITY AND LIABILITIES Notes

2014

2013

NON-CURRENT ASSETS Tangible assets Plant and equipment

Share capital 4

278

Retained earnings Total equity

Financial assets Investment in subsidiaries Capital subsidy - subsidiaries Long-termed deferred tax

Notes

Total financial assets

1,715

25,000

365

26,715

2,080

Non-current receivables 194

134

27,188

2,304

Long-termed loans from shareholders and management

Short-termed loans from shareholders and management

Intercompany receivables

17,387

16,892

5,182

254

357

523

Total receivables

22,926

17,669

Cash and cash equivalents

20,271

2,178

Total current assets

43,197

19,847

Total assets

70,385

22,151

Short-term deferred tax Other receivables

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

7,722

42,875

8,866

23,464

182

2,315

10,275

3,863

633

Total current liabilities

4,045

13,223

Total liabilities

27,510

13,286

Total equity and liabilities

70,385

22,151

Other current liabilities

Receivables

1,144

Current Liabilities Trade payables

CURRENT ASSETS

1,506 41,369

Non-Current Liabilities

Total non-current liabilities 5

Total non-current assets

2013

LIABILITIES

Other non-current liabilities Deposits

2014

EQUITY

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

PARENT ANNUAL ACCOUNTS

CHANGES IN EQUITY

NOTES All amounts are in DKK thousand

1. STAFF EXPENSES

All amounts are in DKK thousand Balance at 1 January 2013

Share capital

Retained earnings

Total

1,144

9,130

10,274

Profit/loss (-)

-1,182

Other comprehensive income

-226

Total comprehensive income

-1,182

Balance at 31 December 2013

1,144

7,722

8,866

STAFF

2014

2013

Salaries and bonus

6,123

131

834

7,036

153 2013

Pension costs or other social security costs Other staff costs

MANAGEMENT

2014

Fees to Board of Directors

1,050

Salary, cash bonus, etc. to Executive Management

5,245

682

259

6,554

682

13,590

835

7.5

2.0

10.8

3.0

Pension contributions to Executive Management

Total Staff expenses Balance at 1 January 2014

1,144

7,722

8,866

Profit/loss (-)

-15,709

Other comprehensive income

-15,709

Average number of full time employees (FTE) FTEs Year-end

Total comprehensive income

Share capital increase Share premium by IPO

362

56,647

226

-7,517

1,506

41,369

42,875

Adjustment to previous years IPO Transactions costs

Balance at 31 December 2014

The share capital comprises of 15,055,150 shares, each with a nominal value of DKK 0.10. No shares hold particular rights.

Remuneration to Executive Management is based on a fixed salary and pension as well as a potential cash bonus and other allowances. The significant increase in total staff expenses is due to the increased number of employees, change in Executive Management and in the remuneration of the Board.

2. FINANCIAL EXPENSES (NET) 2014 Interest income Interest expenses Foreign exchange (net) - realized Foreign exchange (net) - unrealized

2013

-584

468

-1,333

-1,906

468

2014

2013

3. TAX EXPENSES Calculated income tax for the period

Corporate tax reduction from 25% to 22%

Tax reimbursed in 2014

229

Change in deferred tax

4,563

-320

4,792

-272

Total tax expense 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

PARENT ANNUAL ACCOUNTS

NOTES

All amounts are in DKK thousand

7. LOANS FROM SHAREHOLDERS AND MANAGEMENT

4. TANGIBLE ASSETS

Long-termed loans from shareholders and management 2014

2013

Costs at the beginning of the year

117

Acquisition in period

313

-117

313

117

Disposals in period Costs end of period

Depreciation and writedown at the beginning of the year Reversed depreciation on disposals

-27

278

2014

2013

134

Disposals during the period

-134

Additions during the period

194

134

Depreciation and writedown in period Depreciation and write-down end of period Book value end of period

5. DEPOSITS Deposit at the beginning of the year

Deposit end of period

Debt

Interest Rate

13,440

12%

Loan “Sorana A/S” EUR 675,000

5,024

12%

Loan “Sorana A/S” DKK 5.0 million

5,000

Loan “Sorana A/S” DKK 12.0 million

23,464

It is agreed with Sorana A/S, that the repayment of loans is postponed until 2018, where Serendex is expected to reach its first milestone payment. Alternatively, Sorana A/S can convert the loans to shares in connection with a capital increase in 2015. As of February 2015, Serendex has an undrawn committed credit facility in the amount of DKK 30 million provided by Sorana A/S, which provides Serendex with a satisfactory cash situation for 2015.

8. PLEDGED ASSETS AND SECURITIES In security for a debt to management, the parent company Serendex has pledged investments in the subsidiaries of DKK 1.7 million.

9. CONTRACTUAL OBLIGATIONS AND PENDING LITIGATIONS Obligations on rental properties As of 31.12.2014 Serendex has commitments of DKK 1.9 million until 2019.

6. DEFERRED TAX ASSETS Deferred tax at the beginning of the year Deferred tax net change Adjustment to previous years Tax reimbursement Deferred tax asset end of period

2014

2013

619

399

5,813

320

-48

-1,250

-52

5,182

619

Tangible assets Loss carried forward

10. RISK OVERVIEW Please see note 19 in group annual accounts.

The deferred tax assets concerns: Intangible assets

5,167

619

11. AUDIT FEE

5,182

619

Please see note 6 in group annual report

12. SIGNIFICANT EVENTS OCCURRING AFTER THE END OF THE FINANCIAL YEAR

The deferred tax assets are distributed as follows: Non-current assets Current assets

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

365

5,182

254

5,182

619

As of February 2014, Serendex has established an undrawn committed credit facility in the amount of DKK 30 million provided by Sorana A/S, which provides Serendex with a satisfactory cash situation for 2015. No other significant events have occurred subsequent to the balance sheet date that are considered to have a material influence in the evaluation of the annual report. SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

PARENT ANNUAL ACCOUNTS

NOTES All amounts are in DKK thousand

12. ACCOUNTING POLICIES BASIS OF PREPARATION The annual report has been prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU and in accordance with The Danish Financial Statements Act for the annual reports of listed companies (accounting class D). The accounting policies of the parent company are the same as those of the Serendex Group, however, with the addition of the policies described below. The group’s accounting policies are described on pages 60 of the annual report. The consolidated financial statements are presented in DKK thousand, reflecting the company’s functional currency.

ESTIMATES AND JUDGMENTS Deferred tax assets are recognized when it is likely that there will be sufficient future taxable income to utilize the unutilized tax losses. Management judge that it is more than likely that one or more of the drugs under development will be successful and hence, it is appropriate to capitalize the tax asset. The carrying amount of deferred tax assets is DKK 5.2 million (2013: DKK 0.6 million).

SUPPLEMENTARY ACCOUNTING POLICIES FOR THE PARENT COMPANY Investment in subsidiaries includes invested capital in Drugrecure ApS and Pharmaorigin ApS. Invested capital is measured at cost price or lower recoverable amount.

STATEMENT OF CASH FLOWS In accordance with IFRS, a separate statement of cash flows has not been prepared for the parent company as it is included in the group.

74 GM-CSF 2014

SERENDEX PHARMACEUTICALS ANNUAL REPORT 2014

GM-CSF 2014 75

Slotsmarken 17, 2. tv. DK-2970 Hørsholm Denmark Email: info@serendex.com Tel: +45 7930 1414 Web: www.serendex.com