Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)

Transcription

1 Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ) Joint Lead Managers

2 Definitions Rights Issue means invitation to subscribe for shares with preferential right for existing shareholders in Biovitrum AB (publ). References to Biovitrum or the Company in this prospectus means Biovitrum AB (publ), reg. no , or, depending on the context, the group in which Biovitrum AB (publ) presently is a parent company. The Group means Biovitrum AB (publ) and its subsidiaries, unless something else is evident from the context. Joint Lead Managers means Carnegie Investment Bank AB, ABG Sundal Collier AB and Handelsbanken Capital Markets. Underwriters means Carnegie Investment Bank AB, ABG Sundal Collier ASA and Svenska Handelsbanken AB (publ). The reference to the Underwriting Agreement means the agreement by which the Underwriters have undertaken to, each of them and not jointly, to subscribe for their respective parts of New Shares specified in the Underwriting Agreement, which have not been subscribed for during the Subscription Period, see the section about Legal Questions and other information under heading Subscription commitment and Underwriting Agreement. In this prospectus Swedish Orphan means Swedish Orphan International Holding AB, reg. no , or, depending on the context, the group in which Swedish Orphan International Holding AB is the parent company. In this prospectus the Transaction means Biovitrums acquisition of Swedish Orphan. Issue in Kind means the issue of 58,336,606 common shares in Biovitrum, to certain shareholders in Swedish Orphan, as consideration for approximately 48 percent of the shares in Swedish Orphan which are subject to the Transaction. In this prospectus Swedish Orphan Biovitrum or the SO-Bi Group means the new group after the Transaction including Biovitrum and Swedish Orphan. Reference to Subscription Right means the right to subscribe for shares in the Company which the shareholders acquire, upon one Subscription Right for each common share or C-share (jointly a Share) is obtained. New Shares mean the new common shares which are issued in connection to the Rights Issue. Paid subscribed shares (BTA) means interim shares for the New Shares. References to Securities includes Subscription Rights, paid subscribed shares (BTA) and New Shares. Subscription Price means subscription price for the New Shares, which amounts to SEK 15 per share. Subscription Period means the period when the New Shares can be subscribed for. Record Date means the record date at Euroclear Sweden for allocation of Subscription Rights, which is decided to 9 December Euroclear Sweden means Euroclear Sweden AB. The Prospectus means this prospectus, which has been written by the board in Biovitrum due to the Rights Issue and the Transaction. The numbers in the Prospectus may have been rounded off. IMPORTANT INFORMATION TO INVESTORS This Prospectus has been approved and registered at the Swedish Financial Supervisory Authority in accordance with Chapter 2 paragraph 25 and 26 of the Swedish Financial Instruments Trading Act (1991:980) (Sw: lag (1991:980) om handel med finansiella instrument). The approval and registration does not constitute a guarantee from the Swedish Financial Supervisory Authority that the information in the Prospectus is accurate or complete. The Prospectus, the Rights Issue and the Transaction in accordance with the Prospectus is governed by Swedish law. Disputes arising out of the contents of this Prospectus and related legal matters must be settled exclusively by Swedish courts. This Prospectus has been prepared in both Swedish and English version. In the event that the versions do not conform the Swedish version shall take precedence. With the exception of certain customary restrictions relating to securities laws and regulations, this Prospectus will be available Biovitrum s website at Carnegie Investment Bank AB s website ABG Sundal Collier AB s website Handelsbanken Capital Markets website and the Swedish Financial Supervisory Authority website The distribution of this Prospectus and the Rights Issue may, in some jurisdictions, be unlawful and the Prospectus may not be used for the purposes of, or as a part of, an offer to any person or to request any person to offer in a jurisdiction where such an offer or request to offer is not allowed or would it be deemed unlawful to make such an offer or request to such offer. The Securities have not been and will not be registered in any state or other jurisdiction other than Sweden, Norway, Ireland and the UK and may not be offered, sold, pledged or transferred, directly or indirectly, within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the United States Securities Act of 1933 (the Securities Act ). The Rights Issue is not directed to shareholders domiciled in Australia, Canada, Hong Kong or Japan or in any other jurisdiction where participation would require additional prospectuses, registration or measures other than those pursuant to Swedish, Norwegian, Irish or UK law. Accordingly, the Prospectus may not be distributed in any country in which the distribution or the Rights Issue requires such measures or would conflict with regulations in such country. Acquisition of Securities in violation of the restrictions described above may be void. Persons into whose possession this Prospectus may come are required to inform themselves about and comply with such restrictions. Any failure to comply with such restrictions may result in a violation of applicable securities regulations. The Prospectus has been prepared by Biovitrum, based on its own information and information from other sources that Biovitrum considers to be reliable. No representation or warranty, expressed or implied, is made by the Joint Lead Managers as to the accuracy or completeness of any of the information set out in this Prospectus and nothing contained in this Prospectus is or shall be relied upon as a promise or representation, whether as to the past or the future, as the Joint Lead Managers have not made any independent verification of the information. When an investor makes an investment decision, he or she must rely on his or her own analysis of Biovitrum and the Rights Issue, including, but not limited to, facts and risks. Further, an investor may only rely on the information in this Prospectus and any possible supplements to this Prospectus. No person has been authorized to provide any information or make any statements, other than those contained in this Prospectus, and should such information or statement still be furnished they are not considered to have been approved by Biovitrum. Neither the publication of this Prospectus nor any purchase or sale as a result of the Prospectus will, under any circumstances, imply that there have not been changes in Biovitrum s business since the date of this Prospectus, or that the information in this Prospectus is correct as for a period after the date of this Prospectus. As a condition to exercising Subscription Rights or subscribing for New Shares pursuant to the Rights Issue, each exercising holder or subscriber for New Shares will be deemed to have made or, in some cases, be required to make, certain representations and warranties that will be relied upon by Biovitrum, Joint Lead Managers and others. See Restrictions on sale and transfer of Securities. Biovitrum reserves the right, in its sole and absolute discretion, to reject any purchase of Securities that it or its agents believe may give rise to a breach or violation of any law, rule or regulation. In connection with the Rights Issue, Carnegie Investment Bank (or a representative or affiliate of Carnegie Investment Bank) (in such capacity, the Stabilization manager ) may effect transactions which stabilize or maintain the market price of the Shares, Subscription Rights, BTAs or New Shares at levels which might not otherwise prevail ( Stabilization Measures ). Such transactions may be effected on any of the exchanges where the shares are listed, in the over-the-counter market or otherwise. The Stabilization Manager is under no obligation to engage in any such stabilization measures, and such stabilization, if commenced, may be discontinued at any time without prior notice. Such stabilization measures may be carried out from the day of publication of the Prospectus, up to and including 30 days following the Subscription Period, which is expected to expire on 30 January The Stabilization manager may not stabilize (i) the Subscription Rights at a price exceeding SEK 14,67 per Subscription Right, equal to the theoretical value of a Subscription Right at the announcement of the Subscription Price or (ii) the Shares, BTAs or New Shares at a price exceeding SEK 29,67 per share, BTA or New Share, equal to the sum of the Subscription Price and the theoretical value of a Subscription Right at the announcement of the Subscription Price (SEK 15 plus SEK 14,67). For a more detailed description of the stabilization activities, see Legal issues and other information. Notice to investors in the US The Securities have not been registered and will not be registered under the Securities Act and neither under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, delivered or transferred, directly or indirectly, within the United States, except pursuant to an applicable exemption from the registration requirements of the Securities Act and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be no public offer of the Securities in the United States. A notification of subscription of Securities in contravention of the above may be deemed to be invalid. The Securities have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Securities or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense in the United States. The Securities are being offered and sold outside the United States in reliance on Regulation S under the Securities Act. Any offering of the Securities to be made in the United States will be made only to a limited number of existing shareholders who are reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act) pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering and who have executed and returned an investor letter to the Company. For a description of these and certain further restrictions on offers, sales and transfers of the Securities and the distribution of this Prospectus, see Restrictions on sale and transfer of securities headline United States. Until 40 days after the commencement of the Rights Issue, any offer or sale of Securities within the United States by any dealer (whether or not participating in the Rights Issue) may violate the registration requirements of the Securities Act. Notice to investors in the European Economic Area In relation to other Member States of the European Economic Area ( EEA ) other than Sweden, Norway, Ireland and the UK, which has implemented the Prospectus Directive (each, a Relevant Member State), an offer to the public of any Securities may only be made in that Relevant Member State except under an exemption under the Prospectus Directive. See Restrictions on sale and transfer of Securities. FORWARD LOOKING STATEMENTS AND MARKET DATA This Prospectus may contain forward-looking information. Such information is no guarantee of future outcomes and is associated with inevitable risks and incertainties. Forward looking information can be identified in that it does not exclusively refer to the past or current circumstances or in that it may contain words such as may, should, expected, believed, estimated, planned, prepared, calculated, is intended to, forecast, attempt, or should be able to, or their negatives or similar expressions and other variations of such words or comparable terminology. This forward looking information reflects the current expectations of Biovitrum s Board of Directors and management based on information available today and is based on a number of assumptions that are subject to risks and uncertainties which may be beyond the control of the management. Actual results may differ significantly from those expressed or assumed in this forward looking information. All forward looking information is based exclusively on the circumstances at the time it is provided, and Biovitrum and its Board are not responsible (and expressly disclaim any responsibility) other than as required under applicable rules for updating or changing such forward looking information, irrespective of whether new information, new circumstances or any other circumstances may emerge. All forward looking information that can be ascribed to Biovitrum or persons acting on Biovitrum s behalf is subject to the reservations that are in or referenced in this section. The prospectus contains historical market information and industry forecasts, including information concerning the size of markets in which Biovitrum operates. This information has been taken from a number of different outside sources and Biovitrum takes no responsibility for such information having been reproduced correctly. Although the Company regards these sources as reliable, no independent verification has been carried out and consequently it cannot be guaranteed that this information is accurate or complete. As far as Biovitrum is aware and can ensure by comparison with other information published by the third parties from which the information has been obtained, however, no information has been omitted in such a way as to render the information reproduced incorrect or misleading. II

3 DOCUMENTS INCORPORATED BY REFERENCE The following documents earlier publicized shall be incorporated through reference and constitute a part of the Prospectus: 1. Biovitrum s audited annual accounts for 2006, including the auditor s report. 2. Biovitrum s audited annual accounts for 2007, including the auditor s report 3. Biovitrum s audited annual accounts for 2008, including the auditor s report 4. Biovitrum s interim report for January September Swedish Orphan s audited annual accounts for 2006/2007, including the auditor s report. 6. Swedish Orphan s audited annual accounts for 2007/2008, including the auditor s report. 7. Swedish Orphan s audited annual accounts for 2008/2009, including the auditor s report. 8. Swedish Orphan s interim report for May July 2009/2010. SUMMARY OF TERMS AND CONDITIONS Rights Issue For each share in Biovitrum held as of December 9, 2009, two (2) Subscription Rights will be received. Subscription price SEK IMPORTANT DATES Record date December 9, 2009 Subscription period December 11 December 30, 2009 Subscription rights trading period December 11 December 23, 2009 OTHER INFORMATION: Marketplace NASDAQ OMX Stockholm Ticker Shares and New Shares BVT Subscription rights BVT TR BTA BVT BTA ISIN codes Shares and New Shares SE Subscription rights SE BTA SE FINANCIAL CALENDAR Year-end release February 18, 2010 Annual Report 2009 April 14, 2010 Interim Report January March 2010 April 27, 2010 Contents 2 Summary 8 Risk factors 20 Background and rationale 22 Invitation to subscribe for shares in Biovitrum AB (publ) 23 Terms, conditions and instructions 27 What to do 28 CEO s statement 30 Biovitrum s acquisition of Swedish Orphan 32 Fairness Opinion 34 Market overview 42 Swedish Orphan Biovitrum (SO-Bi Group) 45 Pro forma financial statements 49 Auditor s report on the pro forma financial statements 50 Description of Biovitrum 69 Financial overview Biovitrum 80 Share capital and ownership structure 84 Board of Directors, senior management and auditor 88 Corporate governance 93 Articles of Association 95 Legal issues and other information 100 Tax considerations in Sweden 103 Description of Swedish Orphan 121 Financial overview Swedish Orphan 129 Restrictions on sale and transfer of securities 133 Glossary 137 Addresses 1

4 Summary This summary does not claim to be a complete description but should be seen as an introduction to the Prospectus. Any decision based on this Prospectus should be based on an assessment of the content of the entire Prospectus. Investors who take legal action on the basis of the information in this Prospectus may be forced to cover the translation costs for the Prospectus. A person may be made responsible for information that is included in or omitted from the summary only if the summary is misleading or inaccurate in relation to the information in the other parts of the Prospectus. The Transaction In 2007 Biovitrum decided on a new growth-oriented strategy and to focus on the attractive market for specialty pharmaceuticals and rare diseases. In 2008, research and development was downsized for the purpose of maximizing the value of the Company s future products, and the focus of the development portfolio was aimed at advancing six niche specialty pharmaceutical projects in clinical phases. In 2008, Biovitrum acquired two approved protein drugs and the rights to another approved protein drug from Amgen, which expanded the product portfolio and diversified the Company s revenue stream. The commercial possibilities in the form of increased revenues from the acquired products and future sales income from the products in the development portfolio put focus on Biovitrum s effort to expand its own sales and marketing organizations in Europe and North America. Over the years, Biovitrum has followed the impressive development of Swedish Orphan s orphan and niche specialty pharmaceutical franchise as well as the wellmanaged and profitable operations. During Biovitrum s transformation it has become apparent that the two companies share similar business philosophies while having highly complementary organizations and capabilities. Swedish Orphan has a strong track record and a proven model for in-licensing, distribution and marketing of orphan and niche specialty pharmaceuticals. Swedish Orphan has an established commercial presence in all of Europe while Biovitrum has a commercial presence in the Nordic region and an emerging presence in Europe, North America, Australia and New Zealand. With around 50 products, Swedish Orphan adds regulatory expertise within orphan drugs and specialty pharmaceuticals as well as an established organizational customer support structure. Biovitrum has a strong portfolio of proprietary products in late-stage development. Swedish Orphan s capability to bring niche specialty products to the market will significantly increase the SO-Bi Group s value of this product portfolio. Biovitrum has expertise in developing processes for, as well as large scale production of, biological pharmaceuticals. This expertise will be used for the manufacturing of Swedish Orphan s proprietary product Multiferon. Swedish Orphan has many years of experience of successful in-licensing of late-stage products and corporate acquisitions as a complementary engine to Biovitrum s late-stage development pipeline of proprietary products. Additionally, the increased size, strong commercial track record and large product portfolio of the SO-Bi Group are expected to enhance and expand the combined group s ability to continue collaborations with existing partners and to establish new partnerships with other pharmaceutical companies, in order to access additional product opportunities. Ever since the change of strategy in 2007, the Board of Directors and the management of Biovitrum have been evaluating several acquisitions or merger candidates, and have identified Swedish Orphan as a highly complementary business. During 2008 Biovitrum initiated contact with the management of Swedish Orphan. In April 2009 the owners of Swedish Orphan commenced the evaluation of strategic alternatives and, following a competitive sale process, Swedish Orphan and Biovitrum agreed that the two companies would merge, forming Swedish Orphan Biovitrum. On November 5, 2009, Biovitrum announced that the Company had entered into an agreement under which Biovitrum will acquire all shares and warrants in Swedish Orphan. The total consideration will amount to SEK 3,656 million, corresponding to an enterprise value of approximately SEK 3,500 million (based on an estimated net cash position in Swedish Orphan of approximately SEK 150 million), and an earn-out payment of up to SEK 425 million. Any earn-out payment is expected to be paid in cash and is expected to be fully financed by internally generated funds. Approximately 48 percent of the acquisition will be paid for in newly issued common Biovitrum shares 1) and approximately 52 percent will be in cash. The cash portion will be financed by expanded bank financing of SEK 800 million and a fully underwritten Rights Issue of approximately SEK 1,500 million. 1) Under the agreement to acquire Swedish Orphan, Investor Growth Capital could receive some or all of its payment in convertible participating certificates instead of common shares, in the event that approval from relevant competition authorities were not granted by February 22, Since all relevant competition approvals have been obtained at the date of the Prospectus, it is no longer relevant for Biovitrum to issue convertible participating certificates. 2 Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)

5 Summary On November 4, 2009 the Board of Directors of Biovitrum decided to implement a Rights Issue contingent upon approval by the extraordinary general meeting. Hans Glemstedt and Peter Sellei, both members of the Board of Directors of Biovitrum and representatives of Investor AB, have not participated in any board meetings where the Transaction was discussed due to conflict of interest. Biovitrum has solicited a valuation opinion from an independent expert (Fairness Opinion) relating to the Transaction and the consideration paid, see the section Fairness Opinion. Rights Issue in summary For the purpose of financing the implementation of the Transaction, Biovitrum s Board decided on November 4, 2009, contingent upon approval from an extraordinary general meeting, to increase the Company s share capital through a new issue of shares with preferential rights for the existing shareholders. An extraordinary general meeting of Biovitrum s shareholders on December 4, 2009 approved the Board s decision. The issue decision means that shareholders who, as of the Record Date, December 9, 2009, are registered as shareholders in Biovitrum will be entitled to subscribe for two (2) New Shares for every existing share. If fully subscribed, 100,792,632 New Shares will be issued and the Rights Issue will raise the Company s share capital by a maximum of SEK 55,304,601 from the current 27,935,200 to SEK 83,239,801. The Subscription Price has been set at SEK per New Share, which means that the Rights Issue, if fully subscribed, will raise around SEK 1,512 million for the Company before issue costs are deducted. Shares may be subscribed for with immediate cash payment from December 11 to December 30, Biovitrum s largest shareholder, Investor AB, supports the Rights Issue and has undertaken, subject to certain conditions, to subscribe and pay for New Shares for its pro rata share of the Rights Issue, which represents about 23 percent of the issue sum. In addition, three institutional investors 1) have entered into underwriting undertakings, subject to certain conditions, to subscribe and pay for New Shares in the Rights Issue for a total amount equivalent to around 27 percent of the issue sum. The remainder of the Rights Issue, contingent upon certain conditions being met, is guaranteed by Underwriters, The Rights Issue is therefore fully guaranteed. Biovitrum in brief Biovitrum is a Swedish pharmaceutical company that develops, manufactures, distributes and sells specialty pharmaceuticals internationally within five specialist areas: blood disorders, rheumatic joint diseases, supportive cancer care, hormonal disorders and fat malabsorption. Biovitrum s portfolio of marketed products within the above-mentioned specialist areas consists of the following: ReFacto AF /Xyntha (ReFacto ), BeneFIX, Novastan, Kineret, Kepivance, Stemgen, Aloxi and Mimpara. Biovitrum s research and development activity focuses on new drugs in areas where Biovitrum has identified a high unmet medical need and which the Company believes have attractive commercial potential. At present Biovitrum has six projects in clinical development and one project in preclinical development. Biovitrum s head office is located in Solna, Stockholm. The Company has additional offices in Sweden, Norway, Denmark and Finland. The Company also works with distributors in Australia and New Zealand and has numerous agreements with distributors and wholesalers in Europe. In the United States Biovitrum has a partnership agreement with CSO Innovex for all sales in the North American market. The Company has also signed a distributor agreement with Pharmalink for sales in Australia and New Zealand. The Company s products are manufactured at the production facility in Kungsholmen, Stockholm and at facilities belonging to Biovitrum s partners. Biovitrum s total revenues during the January September 2009 period amounted to SEK million with an operating loss of SEK 35.2 million. Europe is the Company s primary market with 76 percent of revenues, followed by North America with 20 percent of revenues for the January September 2009 period. Biovitrum s revenues are derived from product sales, manufacturing and contract development, royalties and co-promotion revenues. During the January September 2009 period, revenues from product sales accounted for 44 percent, manufacturing and contract development for 32 percent, royalties for 14 percent and co-promotion revenues for 10 percent of the total revenues. As of September 30, 2009 the Company had 409 employees of which 378 were in Sweden, 25 in the UK and 6 in Norway, Denmark and Finland. In November 2009 Biovitrum sold Cambridge Biotechnology Ltd. and as of November 30, 2009 the number of employees was 385 employees of which 379 were in Sweden and 6 in Norway, Denmark and Finland. Biovitrum s common shares have been listed on NASDAQ OMX Stockholm since September 15, 2006 under the ticker BVT. 1) Volati Ltd., Ponderus Invest AB and Case Investment AB. Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ) 3

6 Summary Financial overview Biovitrum The summarized financial information below refers to the financial years and is taken from Biovitrum s revised consolidated financial statements which were prepared in accordance with IFRS. The information on the first nine months of 2008 and 2009 is taken from Biovitrum s Interim Report and was prepared in accordance with IFRS and reviewed by the Company s auditors. The summarized consolidated financial statements below should be read in combination with Biovitrum s revised consolidated financial statements and accompanying notes for and Biovitrum s Interim Report for the first nine months of 2008 and 2009, which are referenced in this Prospectus. Financial effects of the acquisition of Swedish Orphan are excluded from all financial information in this section. Consolidated pro forma financial statements for Swedish Orphan Biovitrum for the January September 2009 period can be found in the section entitled Pro forma financial statements. For more information, see the section Financial overview Biovitrum. Income statement 9 months Full year Amounts in SEK million Jan Sep 2009 Jan Sep Total revenues , , ,201.1 Cost of goods and services sold Gross profit Operating profit/loss before restructuring costs and other non-recurring costs Operating profit/loss ) ) Financial income Financial expense Net financial items Profit before tax Income tax Profit/loss for the year ) Including restructuring costs amounting to SEK million. 2) Including restructuring costs amounting to SEK million and non-recurring costs pertaining to product acquisitions amounting to SEK 80.2 million. Balance sheet September 30 December 31 Amounts in SEK million ASSETS Fixed assets 1, , Current assets 1, , , ,300.0 (whereof cash and cash equivalents) (189.4) (254.4) (254.2) (365.8) (376.6) TOTAL ASSETS 2, , , , ,077.7 EQUITY AND LIABILITIES Shareholders equity 1, , , , ,381.8 Long-term liabilities Current liabilities TOTAL EQUITY AND LIABILITIES 2, , , , , Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)

7 Summary Cash flow statement 1) 9 months Full year Amounts in SEK million Jan Sep 2009 Jan Sep Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period ,058.6 Translation difference in cash flow Cash and cash equivalents at end of period 2) ) Cash and cash equivalents does not include short-term investments amounting to SEK million as of September 30, 2009, and SEK million as of December 31, 2008, respectively. Swedish Orphan in brief Swedish Orphan is a leading European specialty pharmaceutical company engaged in marketing, sales and distribution of orphan drugs and niche specialty pharmaceuticals. Swedish Orphan is also engaged in the late-stage development of these products on the European market. The product portfolio includes key proprietary products, Orfadin, and Multiferon, as well as around 50 contracted products (some of which are only made available on a named-patient basis). In Europe the products are made available through the company s own sales and marketing organization. In the rest of the world, Swedish Orphan s products are distributed through selected distributors. The market for orphan drugs and niche specialty pharmaceuticals differs significantly from the traditional pharmaceutical market due to the specialist nature of the products and the fact that the diseases treated only affect small patient groups who are only treated by a small number of specialists. Pharmaceutical companies active in the orphan drug and niche specialty markets therefore require extensive research expertise, highly scientifically skilled and well educated personnel, as well as a strong local presence and knowledge of key local issues, including regulation, distribution, marketing and pricing and reimbursement of these products. Today there are approximately 7,000 rare diseases known, of which only around 400 can be treated. The number of patients waiting for treatment therefore continues to be high. Swedish Orphan s vision is to be the leading company within the area of orphan drugs. Swedish Orphan s revenues are derived from sales of proprietary products, in-licensed products and distributorship products. The company s total revenues during the period from May 2008 April 2009 amounted to SEK 694 million with an operating profit of SEK 201 million. Sales of proprietary products during this period represented 39 percent, in-licensed products represented 10 percent and distributorship products represented 51 percent of revenues. Europe constitutes the company s largest market with 88 percent of the revenues during the period from May 2008 April 2009, followed by North and South America with 7 percent of the revenues. Risk factors Biovitrum s operations are associated with risks related to, inter alia, the sales of ReFacto and ReFacto AF /Xyntha, the sales of Kineret and Kepivance, increased globalization of operations, future profit trend, production facilities, extensive quality requirements and controls, manufacture of pharmaceutical ingredients, risks inherent in pharmaceutical development and the commercialization of products, safety and efficacy criteria in conjunction with project development, clinical trials, that successes in early clinical trials are not necessarily indicative of the results in later clinical trial, commercial success and market acceptance for Biovitrum s products, cooperation with external parties, applications for authorization for licensed-in or acquired candidate drugs, strengthening of the product portfolio, need for additional financing, that conflicts may arise between Biovitrum and its cooperation partners, competition, parallel imports and pirated products, dependence on key personnel, acquisitions, product liability, handling of environmentally harmful materials, exchange rate 1) For more details on the Group s cash flow statement, see section Financial overview Biovitrum, heading Consolidated cash flow statement for core business. Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ) 5

8 Summary fluctuations, complex regulatory requirements for Biovitrum s business, that the industry in which Biovitrum operates is to an increasing extent affected by price pressure, that the Company s IT system could suffer a crash, collapse or breach of security, tax disputes and other tax risks, biotechnology, patent risks and intellectual property rights, infringement of the intellectual property rights of others, technology licenses, and trade secrets and knowhow. The SO-Bi-Group will, in addition to the Biovitrum related risks and uncertainties, also be exposed to the risks which Swedish Orphan s operations bring into the SO-Bi-Group. Swedish Orphan s operations are associated with risks related to, inter alia, the sales of Orfadin, that a majority of Swedish Orphan s net sales are obtained from contracted products and there is no guarantee that present agreements for these products can be maintained, that Swedish Orphan relies on certain partners for a considerable part of its net sales, that it cannot be guaranteed that Multiferon will be a commercial success or will be authorized for its intended purpose in all Swedish Orphan s markets, patent protection for Orfadin and Multiferon, and tax risks and risks relating to social security contribution and other taxes in relation to Swedish Orphan s incentive program. The Transaction is associated with risks related to, inter alia, integration of Biovitrum s and Swedish Orphan s operations, the valuation of Swedish Orphan, that the Transaction is conditional upon sufficient financing being obtained and shareholders with significant influence. The Biovitrum share and the Rights Issue are associated with risks related to, inter alia, the share price, sale of shares and limited liquidity, future dividends, that the subscription and guarantee commitments relating to the Rights Issue are not secured and the terms of the underwriting agreement and the subscription commitment. The risks above are only a summary of the risks described in the Risk Factors section. Schedule Subscription Period for the Rights Issue December 9 December 11 December 23 December 30 January 7 January Record date for participation in the Rights Issue. Shareholders Trading of Subscription Rights registered as shareholders in Biovitrum on this day will receive Subscription Rights for participation in the Rights Issue Results of the Rights Issue are announced Expected date for completion of the acquisition of Swedish Orphan 6 Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)

9 Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ) 7

10 Risk factors Investment in shares always entails a risk and Biovitrum is no exception in this respect. Potential investors should give careful consideration to all the information provided in the Prospectus and in particular assess the specific factors mentioned below which describe certain risks inherent in investment in the New Shares. Each and every one of the risks below and other risks and uncertainties mentioned in the Prospectus could have a material negative effect on Biovitrum s business, results, financial position and outlook, or result in a reduction in the value of the Company s shares, which could lead to investors losing all or part of their invested capital. An investor in the New Shares should be aware that the risks and uncertainties below associated with Biovitrum and its operations will continue to be relevant after the completion of the Transaction, and that these risks could have a material negative effect also on the SO-Bi-Group s business, results and financial position. The SO-Bi-Group will, in addition to the Biovitrum related risks and uncertainties, also be exposed to risks and uncertainties which Swedish Orphan s operations bring into the SO-Bi-Group. The risks associated with Swedish Orphan and its operations which are considered to have a material negative effect on the SO-Bi-Group s business, results and financial position are listed below under the heading Risks related to Swedish Orphan s operations. The risks and uncertainties described below are not stated in order of significance and do not represent the only risks and uncertainties faced by Biovitrum and, after the completion of the Transaction, Swedish Orphan Biovitrum. Further risks and uncertainties of which the Company is currently not aware or currently perceive as being insignificant could also develop into significant factors that affect Biovitrum and, after the completion of the Transaction, Swedish Orphan Biovitrum. Risks related to the Biovitrum s operations Sales of ReFacto and ReFacto AF /Xyntha Sales of ReFacto and ReFacto AF /Xyntha account for a significant proportion of Biovitrum s revenue. Under the Company s agreement with Wyeth which expires on December 31, 2015 Biovitrum receives income both for contract development and manufacture of the pharmaceutical ingredients ReFacto and ReFacto AF /Xyntha and for co-promotion from sales of ReFacto and ReFacto AF /Xyntha in the Nordic region, as well as royalties from Wyeth s global sales of ReFacto and ReFacto AF /Xyntha. 1) For 2008 the Company s revenues attributable to ReFacto and ReFacto AF /Xyntha amounted to SEK million, compared with total revenues of SEK 1,140.6 million. In the first nine months of 2009 Biovitrum s revenues attributable to ReFacto and ReFacto AF /Xyntha amounted to SEK million, compared with total revenues of SEK million. Any material decrease in the revenues that the Company receives from ReFacto and ReFacto AF /Xyntha, whether due to reduced demand, increased competition, a deterioration in Biovitrum s capacity to manufacture the necessary quantities of pharmaceutical ingredient or to successfully market ReFacto and ReFacto AF /Xyntha, changes in the Company s agreement with Wyeth or for other reasons such as changed rules on government medicine subsidies for preventive treatments or a reduction in the spread of hemophilia, could have a material negative effect on Biovitrum s business, results and financial position. However, the Company s dependence on ReFacto and ReFacto AF /Xyntha has reduced somewhat as a result of the acquisition of the drugs Kepivance and Stemgen and the exclusive license for Kineret. Sales of Kineret and Kepivance Sales of Kineret and Kepivance account for a significant proportion of Biovitrum s revenue. In the first nine months of 2009 Biovitrum s revenues attributable to product sales of Kineret and Kepivance amounted to SEK million, compared with total revenues of SEK million. Any material decrease in the revenues that the Company receives from Kineret and Kepivance, whether due to reduced demand, increased competition, a deterioration in Biovitrum s capacity to provide the necessary quantities of pharmaceutical ingredient or to successfully market Kineret and Kepivance or for other reasons such as changed rules on state medicine subsidies or stock shortages, could have a material negative effect on Biovitrum s business, results and financial position. Increased globalization of operations Biovitrum s acquisition in 2008 from Amgen of the drugs Kepivance and Stemgen as well as an exclusive license for Kineret expanded Biovitrum s business considerably, and the Company is now active on three continents. In 2008 the Company built up an organization and structure for distribution and commercial operations in Europe, North America, Australia and New Zealand. International expansion is associated with uncertainty 1) Pfizer has acquired Wyeth during Wyeth s rights and obligations under the co-promotion agreement was transferred to Pfizer AB on December 1, Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)

11 Risk factors and makes great demands of organization and resources. The costs of establishing local distribution and sales channels are significant. Should it prove that the Company does not have an adequate organization or sufficient resources for its increased globalization, or that the costs associated with the globalization exceed the Company s estimates, this could have a material negative effect on Biovitrum s business, results and financial position. Increased globalization may also result in the Company carrying on business in countries that typically have longer payment periods than its home market. Increased delays in payment could therefore also be a consequence of increased globalization and could have a material negative effect on Biovitrum s business, results and financial position. Moreover, increased globalization has made the Company more dependent on contract partners for distribution, sales and manufacture. If such agreements are not renewed on similar terms or are terminated prematurely, this could have a material negative effect on Biovitrum s business, results and financial position. Future profit trend Biovitrum posted a loss for fiscal year 2008 and could post losses again in the future. Biovitrum receives significant revenues from Wyeth for ReFacto and ReFacto AF /Xyntha and from sales of Kineret and Kepivance as well as from co-promotion or exclusive distribution agreements for the Nordic market. Although the Company expects to continue to receive such revenues in the future, there are no guarantees that the revenues will be sufficient to make Biovitrum profitable in view of the Company s research and development costs, and other costs. If these revenues cease or are reduced, this could have a material negative effect on Biovitrum s business, results and financial position. Production facilities Biovitrum is dependent on the production facility in Stockholm for the manufacture of ReFacto and ReFacto AF /Xyntha being maintained and offering a high level of availability. During 2008 the Company s revenues from Wyeth for the manufacture of ReFacto and ReFacto AF /Xyntha amounted to SEK million. In the first nine months of 2009 the equivalent remuneration was SEK million. If the facility or the equipment were seriously damaged, destroyed or if the facility had to be closed for some reason or if the Company were unable to replace or repair damaged equipment quickly and cost-effectively, Biovitrum could lose revenue as a result of reduced production capacity, which could have a material negative effect on Biovitrum s business, results and financial position. Although the Company has insurance for damage to property and loss of production for an amount deemed sufficient by the Company, it is not certain that the Company could recoup these amounts in full or that amounts recouped would be sufficient to compensate for the losses suffered and lost revenue. Extensive quality requirements and controls Biovitrum manufactures recombinant protein pharmaceuticals. In addition, the Company cooperates with pharmaceutical companies and companies in the biotech sector as regards the manufacture of pharmaceuticals developed by Biovitrum. The manufacture of recombinant protein pharmaceuticals requires precise and high quality manufacturing processes and controls, which means that the Company must ensure that all manufacturing processes and methods and all equipment meet the requirements in force in respect of what is known as Good Manufacturing Practice (GMP requirements). Moreover, Biovitrum must perform extensive audits of its distributors, contract laboratories and suppliers that are covered by these requirements. GMP requirements control all aspects of the manufacture of pharmaceuticals, including quality control and quality assurance, manufacturing processes and procedures as well as documentation. The meeting of these standards demands that Biovitrum and its distributors, contract laboratories and suppliers achieve and maintain high quality manufacturing processes and controls that are sufficient to guarantee that the products meet current specifications and other requirements. Biovitrum s production facilities may be inspected at any time by the authorities and by the Company s customers. Should such an inspection reveal deficiencies, Biovitrum could be forced to take measures, to stop production or to close the facility, which would disrupt manufacturing processes and have a negative impact on revenues. Should any of the Company s cooperation partners fail to meet the standards/quality requirements in force, the Company could not license in pharmaceutical projects or other products from that partner. Moreover, failure by Biovitrum or its subcontractors to achieve and maintain manufacturing standards that meet GMP requirements could result in manufacturing defects, which might lead to patients being injured or dying or in products being recalled, in delays or shortcomings in product tests or deliveries, or in high costs or other problems, all of which could have a material negative effect on Biovitrum s business, results and financial position. Manufacture of pharmaceutical ingredients Some of Biovitrum s candidate drugs in preclinical or clinical phases are based on recombinant technologies. The manufacture of proteins for use in pharmaceuticals in accordance with current regulations is complex, time-consuming and expensive. 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12 Risk factors The Company could face problems relating to inter alia production yield, quality control and guarantees, availability of qualified personnel, supply of raw materials, adequate training of existing personnel, the business not being run in accordance with the Company s established routines or in accordance with the FDA s or other applicable regulations, production costs and the development of advanced production technology and process control. If the Company would fail to operate its production facilities in an efficient manner, not obtain regulatory permits, not be able to produce sufficient volumes in time or in any other way run into any of the problems mentioned in the preceding paragraph, this could obstruct or lead to delays in the launch of the Company s candidate drugs, which could have a material negative effect on Biovitrum s business, results and financial position. Risks inherent in pharmaceutical development and the commercialization of products Developing a new drug up to and including its launch is both a capital-intensive and a risky process. The probability of getting to market increases as the project moves forward in the development chain, while the costs increase at a growing pace in the later clinical phases of development. If Biovitrum cannot develop its existing or future project portfolio to later development phases, if developed candidate drugs cannot be manufactured at reasonable cost, if any of the development programs were to be delayed or if Biovitrum were unable to successfully commercialize any candidate drugs this could have a material negative effect on Biovitrum s business, results and financial position. Safety and efficacy criteria in conjunction with project development Before the launch of any of Biovitrum s candidate drugs is initiated the Company and its cooperation partners must show that the candidate drug meets the stringent standards for safety and efficacy expected by the authorities in the countries in which Biovitrum plans to market the drug. Biovitrum has not yet received such authorization from the FDA, EMEA or any other authority for any of the candidate drugs in the product portfolio. The process of obtaining authorization generally requires extensive preclinical and clinical data, is very expensive and takes many years. The FDA, EMEA and other authorities may delay, restrict or refuse authorization for a number of reasons, including that the candidate drug is perhaps not safe or effective, that the manufacturing processes or facilities that the Company has chosen perhaps do not meet requirements in force or that changes in the authorities authorization policies or the introduction of new rules may require additional work to be carried out. Even if the Company s candidate drugs meet the requirements of safety and efficacy in clinical trials, the authorities may take a different view to Biovitrum as regards the interpretation of data from preclinical studies and clinical trials and therefore refuse authorization. No guarantees can be given that Biovitrum will be granted marketing authorization for any of its existing or future candidate drugs. If Biovitrum does not succeed in obtaining marketing authorization for its existing or future candidate drugs, they will not be able to be marketed and sold. Authorities may also authorize a candidate drug for fewer indications than applied for or make the authorization conditional upon the performance of aftermarket studies. Delayed or limited permits, or failure to obtain permits, may prevent Biovitrum from achieving sufficient revenues from these candidate drugs and have a material negative effect on Biovitrum s business, results and financial position. Clinical trials Biovitrum currently has six projects in clinical development and one project in preclinical development. Before the Company can be authorized to launch any of its candidate drugs it must be shown that they are safe and effective through sufficient wellcontrolled preclinical studies and clinical trials. The number of preclinical studies and clinical trials that will be required varies depending on the candidate drug, indications, preclinical and clinical results and the rules that apply to the specific candidate drug. The Company cannot predict with certainty when clinical trials in progress will be concluded, if they ever are, or when planned clinical trials will be initiated or concluded. Preclinical and clinical development is a long drawn-out and expensive process that is affected by many factors including those that are beyond the Company s control, such as slower patient recruitment than expected and scheduling difficulties relating to staff and the clinical institutions that are to take part in the clinical trials. It is also difficult to predict exactly the costs associated with clinical trials, and the actual costs of implementing a clinical trial may exceed the budgeted costs. As a consequence, the results of and the total costs of Biovitrum s preclinical and clinical development projects are in themselves uncertain. During clinical development it may emerge that the candidate drugs are not sufficiently effective or they may prove to have undesirable or unintended side effects, toxicities or other properties that may disrupt, delay or stop clinical development and prevent or limit the commercial application of the candidate drugs. Such results could lead to the Company, its cooperation partners or the competent authorities for clinical trials suspending or cancelling clinical trials at any time. 10 Invitation to subscribe for and admission to trading of shares in Biovitrum AB (publ)