DELIVERING ON OUR STRATEGY TOWARDS 2030

2022 marked the second year since launching the strategy, ‘Bringing discoveries to lives’. In a year characterised by a challenged world economy, the Foundation continued in the delivery of its broad value creation.

Our strategy towards 2030 is focused on five themes:

THE 2030 STRATEGY: ‘BRINGING DISCOVERIES TO LIVES’

The Lundbeck Foundation is an enterprise foundation and is engaged in a broad range of commercial and philanthropic activities. The activities differ widely but also support each other, thereby creating a clear path for the Foundation’s value creation.

The ambition for the Foundation’s value creation is summarised in the five themes on the previous page. While 2022 was a challenging year financially - for the Foundation and the global economy at large - it was also a year when many steps were taken to deliver on each of the themes.

THE FIVE THEMES TOP-TIER NEUROSCIENCE

The tremendous complexity of the brain makes it one of mankind’s most challenging scientific topics. Today, the world lacks basic knowledge about the brain, both with regard to the brain’s normal functioning and with regard to brain disorders. This creates an urgent need for new insights and knowledge, which can form the scientific basis for new and better treatments. An important ambition towards 2030 is to generate new knowledge that can lead to the better prevention, diagnosis and treatment of brain disorders. In 2022, 78% of the Foundation’s grants were awarded to neuroscience research, through a mix of strategic programmes, open calls and talent development activities, driving insights and knowledge for the benefit of patients, doctors and therapists, and further strengthening the neuroscience community in Denmark.

It is important for the Foundation to nurture the next generation of neuroscience talents. In 2022, Neuroscience Academy Denmark (NAD) was launched, and its first 16 PhD scholars commenced their studies in January 2023. NAD is funded by the Lundbeck Foundation and the purpose of the PhD programme is to offer a research environment with – for

Denmark – a unique focus on advanced courses and networking opportunities within neuroscience.

Resolving the most complex issues within neuroscience will require collaboration and interdisciplinary efforts. In 2022, the Lundbeck Foundation awarded DKK 174m via its LF Collaborative Projects grants, where research groups spanning multiple disciplines, universities and countries, work together to improve our understanding of the brain.

Also in 2022, the Lundbeck Foundation launched a new, open knowledge platform called Neurotorium. The platform develops and disseminates learning materials covering topics within psychiatry, neurology and neuroscience, and all new content development is curated and monitored by an international board consisting of renowned neurologists and psychiatrists from around the world.

The 2022 Brain Prize was awarded to three professors, Silvia Arber, Martyn Goulding and Ole Kiehn, for their revolutionary work on the neuronal cell types and circuits underlying movement. With almost double the number of nominations in 2022 compared to the previous year, the ceremony both celebrated the winners and the emerging importance and standing of neuroscience in the global scientific community.

Close Collaboration Between Research And Business

Healthcare innovation and commercial entrepreneurship are dependent on a constructive collaboration between the scientific research community and the commercial business world. This is seen in some of the world’s most innovative healthcare communities where talent makes the leap from science to business and back again. This journey is not easy to make in Denmark today, and an ambition for the Foundation is to strengthen the dialogue and collaboration between Denmark’s academic research institutions and the local commercial biotech and pharmaceutical communities, allowing scientific academic talent to explore, develop, innovate and, eventually, make the leap from science to business.

To be able to take a larger role in nurturing the Danish lifescience ecosystem, the Foundation merged its two existing venture capital investment teams into a single team: Lundbeckfonden BioCapital. The combined unit has an investment mandate of DKK 4bn and its focus for new investments will be on opportunities in Denmark in order to bring Danish discoveries to the lives of patients worldwide.

In 2022, the Foundation also awarded its first Frontier Grant. The grant targets scientific research talents with intriguing ideas and supports them in maturing their projects from ideas, to relevant investment cases, while also developing their own competencies in the intersection between research and business. The DKK 5m grant awarded in 2022, went to a project exploring a novel approach to treating Parkinson’s disease.

Innovation in neuroscience and other scientific disciplines requires diversity of thought and, in 2022, the Foundation also instituted the LF Scientific Enrichment Prize. This prize was awarded to Professor Anja Groth for her work to create a truly diverse research group – in terms of gender, nationality, and experience.

The Foundation also strengthened its focus on clinical research, a critical element in neuroscience as well as other healthcare areas by instituting a new grant targeting medical doctors who wish to retain an active research career while pursuing their clinical specialisation.

Leading Healthcare Companies

The engaged ownership of Danish healthcare companies is at the core of the Foundation’s value creation, and the subsidiaries create products and treatments that benefit patients all over the world, while also driving financial returns that enable new investments in science and business development.

Since 2010, the Foundation’s ownership portfolio has comprised of Lundbeck, ALK and Falck, with the Foundation as the majority owner. In 2022, the Foundation took a new step when it acquired a 30% stake in the Danish medtech company Ferrosan Medical Devices (FeMD). The ownership marks a major milestone towards the ambition of being a significant and long-term owner of five-to-eight Danish healthcare companies. This will also include companies where the Foundation holds a minority ownership stake, as in the case of FeMD.

established as a long-term owner across the entire spectrum of the healthcare industry, spanning services (Falck), pharmaceuticals (Lundbeck and ALK), and now medtech (FeMD). With the acquisition formally closing in December 2022, the Foundation now looks forward to engaging with FeMD to drive its future growth journey.

The Foundation has a clear ambition to grow and develop its subsidiaries on a global scale, and to help them become leaders within their industrial segments, bringing innovations, products and treatments to patients. Lundbeck, ALK and Falck each made progress on their strategy executions. Lundbeck delivered solid financial results and remains focused on bolstering its R&D pipeline, and now has an even stronger financial capacity to pursue this goal due to the implementation of the A/B share-class structure in 2022. ALK delivered another year of greater than 10% revenue growth, while solidifying its return to profitability, and is now well positioned to pursue the strategic ambition of becoming a broad-based allergy company. For Falck, 2022 marked the end of the extensive COVID-19 testing activities of 2020, 2021 and early 2022. In 2022, Falck started an investment programme with the ambition of becoming a global provider of integrated healthcare services.

Attractive Financial Returns

FeMD specialises in the development and manufacture of products for the treatment of acute bleeding during surgery, as well as biopsy units for the diagnosis of breast cancer. With this addition to the portfolio, the Foundation is now

The investment activities of the Foundation are split into three categories: Lundbeckfonden Strategic Investments (Lundbeck, ALK, Falck and FeMD), Lundbeckfonden Invest (financial investments), and Lundbeckfonden BioCapital (early-stage biotech investments). The ambition towards 2030 is to deliver annual financial returns which are above those of its market peers, doubling the Foundation’s net wealth by 2030, and growing the minimum philanthropic grants to DKK 1bn annually in 2030, while safeguarding long-term financial robustness.

2022 was a challenging year for the global economy, and for the Foundation’s investment activities – a stark contrast to the record year of 2021.

The Foundation’s total wealth decreased to DKK 52bn, however, the long-term robustness of the Foundation’s portfolio remained solid, as companies in Strategic Investments and BioCapital executed their respective strategies as planned, and Invest performed above relative benchmarks. The Foundation awarded philanthropic grants totalling DKK 550m, which was well above the minimum commitment of DKK 500m.

Active Public Voice

As an enterprise foundation in Denmark with considerable assets under its management, the Foundation has obligations and a responsibility for the broader development of Denmark as an international science hub for the healthcare community. The Foundation pursues three strategic agendas: the importance of brain health, Denmark as science hub in healthcare, and enterprise foundations as a responsible and sustainable business ownership model.

A credible and legitimate active public voice requires a sound, fact-based approach based on knowledge and insight. In 2022, the Foundation published its second ‘signature project’ to explore the significance of companies with enterprise foundation ownership.

The 2022 ‘signature project’ was a study, carried out by the Danish independent think tank, Kraka, in collaboration with researchers from Copenhagen Business School. The study explored the unique features of companies with long-term owners, such as family ownerships, cooperatives and foundations, and found a number of particular features among foundation-owned companies in Denmark. According to the study, companies with foundation ownership are more innovative, as they take out more patents than companies with other ownership structures; they are more socially engaged, as they invest more in people and culture; and they have better results in employee satisfaction and work environment analyses. They are also more diverse in terms of the percentage of international employees in their organisations.

The importance of brain health is an agenda that is key to many organisations. This includes the Danish patient organisations within brain diseases. In 2022, the Foundation initiated a round-table discussion with the relevant patient organisations, who came together and shared perspectives and explored common ground regarding the brain agenda.

During the year, the Foundation continued its work to bring new insights and knowledge regarding the brain to a broader audience. Sleep was a key theme for the Foundation’s external communication activities as it forms a critical component in a healthy life. Through a range of articles, interviews with prominent sleep scientists, social media activities and in- person events, the Foundation shared knowledge and insights regarding the path to better sleep.

2022 also marked the 10-year anniversary of the ‘PhD Cup’, which the Foundation has supported from its outset, as it gives young scientists the opportunity to share their research on national TV and get relevant training in science communication.

The Foundation also supported various independent media initiatives, disseminating new scientific knowledge. These events and activities are important platforms for the further development of young scientists in healthcare, and for disseminating scientific knowledge to a broader audience, making them integral to the further development of a strong healthcare community in Denmark.