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The term refers to glycated haemoglobin, which develops when haemoglobin joins with glucose in the blood, becoming glycated' IgA: Immunoglobulin A (an anti- body.) Also referred to as IgA1 IgA Nephropathy (IgAN): a rare autoimmune kidney inflammatory disease, within the glomerulone- phritis class Ileum: the distal end of the small intestine, also called the bowel arm, is 2 4 meters long and connects to the colon Immunoglobulin: antibodies (proteins) used by the body's immune system to detect and identify foreign substances that can cause damage Incidence: number of new patients per year in a disease Immunosuppressive agents: a class of drugs that suppress, or reduce, the strength of the body's immune system Immunotherapy: Immunotherapy is the treatment of disease by acti- vating or suppressing the immune system Investigator-Led Study: Inves- tigator led studies are clinical studies initiated and managed by a non-pharmaceutical company researchers, like individual inves- tigators, institutions, collaborative study groups or cooperative groups IPF: Idiopathic pulmonary fibrosis (IPF) is a condition in which the lungs become scarred and breathing becomes increasingly difficult, the causes of which are unclear KDIGO: Kidney Disease: Improving Global Outcomes, a non-profit organization that develops global guidelines for treatment in kidney disease Monomeric: a monomeric molecule is one that is a single unit and can be bonded to other identical mole- cules to form a polymer NADPH Oxidase: NADPH oxidase (nicotinamide adenine dinucleotide phosphate oxidase,) also known as NOX enzymes, are membrane- bound enzyme complexes, which catalyse the production of reactive oxygen species Nephrologist: a physician special- ized in kidney disease Off-label prescription: prescription of an approved drug outside the approved indication On-label: prescription of an approved drug within the approved indication Open-label: An open-label trial is one in which information about which treatment is being admin- istered is not withheld from trial participants and researchers Orphan disease: a rare disease that falls within the criteria of orphan drug law Oxidative Stress: Oxidative stress is when there is an imbalance between the production and the accumulation of reactive oxygen species (ROS) in cells and tissues and the body' ability to detoxify these reactive products PBC: Primary biliary cholangitis, a rare autoimmune fatty liver disease Peyer's patches: lymph tissue of the ileum, the distal part of the small intestine, part of the body's immune system Prevalence: number of people in a population having a disease Proteinuria: a condition charac- terized by the presence of greater than normal amounts of protein in the urine; a measure of leakage in the kidney's filtration function Proof of Concept Trial: Proof of Concept Principle studies are an early stage of clinical drug develop- ment when a compound has shown potential in animal models and early safety testing, and often is the step between a Phase 1 and a dose ranging Phase 2 study RAS: Renin-angiotensin system, which regulates blood pressure and fluid in the body; a RAS blocker lowers blood pressure; RAS blockade is when a patient is on drugs that block RAS, which can be ACEIs and/or ARBs Randomised: A randomised trial is one in which participants are randomly assigned to 2 or more groups Reactive Oxygen Species: Reactive oxygen species are highly reactive chemical molecules formed through the electron acceptability of O Redox Homeostasis: Redox homeostasis is attained by the regulation of the formation and removal of reactive oxygen species (ROS) from the body system RRT: renal replacement therapy; a treatment for terminal kidney failure where the function of the diseased kidney is replaced by dial- ysis or kidney transplantation Transient Elastography: Transient elastography (FibroScan) is an ultra- sound exam that uses pulse-echo ultrasound acquisitions to measure liver stiffness in kilopascals (kPa,) which allows for a noninvasive assessment of liver stiffness UPCR: Urine protein creatinine ratio, a measure of leakage in the kidney's filtration function 98 99 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics AB Kungsbron 1, D5, SE-111 22 Stockholm, Sweden Phone: +46 (0)8 411 3005 Mail: info@calliditas.com Web: www.calliditas.com
Antibodies such as IgA have sugar chains attached to them. These sugar chains contain, among other things, galactose Glomerulus: An anatomical struc- ture of the kidney. Blood vessel bundles where the blood is filtered to urine Glomerulonephritis: an inflamma- tion of the glomeruli, the kidney's filtration function HbA1c: HbA1c is a term commonly used in relation to diabetes and is a measure of average blood sugar levels.
A measure of the kidney's ability to filter and purify the blood. When a kidney disease worsens, eGFR decreases EMA: European Medicines Agency ESRD: end-stage renal disease Enteric: relating to or occurring in the small intestine. The enteric coating on Nefecon refers to the fact that it is designed to dissolve in the ileum, which is in the distal part of the small intestine FDA: US Food and Drug Adminis- tration Galactose: a type of sugar that is similar to glucose.
It is used to calculate eGFR. High creatinine corresponds to low eGFR Dimeric: Also known as polymeric', a dimeric molecule is composed of two identical simpler molecules (monomers) DKD: Diabetic kidney disease (DKD,) also called diabetic nephro- pathy, is kidney disease that is due to Type 1 or Type 2 diabetes Double blind: A double-blind study is one in which neither the participants nor the experimenters know who is receiving a particular treatment eGFR: estimated glomerular filtra- tion rate.
Corticosteroids are used systemi- cally for the treatment of inflamma- tory and immunological diseases, including IgA nephropathy, autoim- mune hepatitis and primary biliary cholangitis Creatinine: a chemical substance made by muscles. Measured in the blood circulation and produced in a relatively even amount. Eliminated through the kidneys. Too high a concentration in the blood is a measure of impaired kidney func- tion.
All people have some degree of autoimmunity, but when it gets too high it becomes harmful Budesonide: a potent glucocor- ticoid with rapid elimination that fits very well with local treatment where you want to minimize systemic side effects CAF: A cancer-associated fibroblast (CAF) is a key cell type within the tumor microenvironment. CAFs promote tumor growth via a variety of mechanisms, including initiating the remodelling of the extracellular matrix or secreting cytokines Corticosteroids: a class of steroid hormones and synthetic analogues.
A rise in ALP levels indicates impaired bile flow in the liver Angiotensin Receptor Blockers (ARBs): ARBs work by blocking the AT1 receptors that the hormone angiotensin II acts on, thereby limiting its action and lowering blood pressure Autoimmune disease: Disease that is manifested because of the immune system's harmful attack with autoantibodies on the body's own tissue.
Angiotensin II is activated by a molecule called Angiotensin Converting Enzyme (ACE,) which is blocked by ACE inhibitors Adaptive Design: An adaptive design trial is one in which the design allows for modifications to the trial and/or statistical proce- dures of the trial after its initiation without undermining its validity and integrity ALP: Alkaline phosphatase (ALP) is an enzyme which is used as a marker in PBC.
Brad H. Rovin Professor, Director of the Division of Nephrology and Vice Chairman of Medicine for Research at the Ohio State University Wexner Medical Center, Columbus, Ohio, US Daniel C. Cattran Professor of Medicine, University of Toronto; Senior Scien- tist, Toronto General Research Institute, Toronto, Ontario, Canada H rnan Trimarchi Professor of Medicine, Universidad Cat lica Argentina; Head, Nephrology Service, Hospital Brit nico; Head, Kidney transplant unit, Hospital Brit nico, Buenos Aires, Argentina Hong Zhang Professor of Medicine and Doctoral supervisor, Nephrology Division, Peking University First Hospital, Peking University Institute of Nephrology, Beijing, China Jonathan Barratt Professor, Department of Infection, Immunity and Inflam- mation, University of Leicester; Honorary Consultant Nephrologist in the John Walls Renal Unit, Leicester General Hospital, Leicester, UK J rgen Floege Professor, head of the Department of Renal and Hyper- tensive Diseases, Rheumatological and Immunological Diseases (Medicine II) at the Aachen University Hospital; Director of the Department of Nephrology and Clinical Immunology at the University of Aachen, Aachen, Germany Richard Lafayette Professor of Medicine (Nephrology), the Stanford University Medical Center; Director, the Stanford Glomerular Disease Center, Stanford, California, US Vladimir Tesar Professor, Head of the Department of Nephrology, 1st Faculty of Medicine, Charles University, Prague, Czech Republic Financial calendar Interim report for the period January 1 March 31, 2022 May 18, 2022 Annual General Meeting 2022 May 19, 2022 Interim report for the period January 1 June 30, 2022 August 19, 2022 Interim report for the period January 1 September 30, 2022 November 18, 2022 Year-end report for the period January 1 December 31, 2022 February 24, 2023 96 97 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 Glossary ACE inhibitors (ACEIs): Angiotensin Converting Enzyme inhibitors (ACEis) are a type of blood pressure medication that work by limiting the effects of the hormone angio- tensin II, which has a constricting effect on blood vessels and stim- ulates salt and water retention in the body and thus increases blood pressure.
Before joining the industry, Richard worked as a physician in several clinical positions with various patient populations, including patients with IgA nephropathy. Holding in the Company: Richard Philipson holds 185,000 options2. 94 95 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 1 Holding in Warrant program 2019/2022. 2 Holding in ESOP 2020. and/or ESOP 2021 Scientific Steering Committee Some of the most prominent IgA nephropathy specialists in the world serve as external advisors and members of the Company's advisory board.
Prior to joining Callid- itas, Richard worked as CMO with the UK-based biotech company Trizell where he led the Adstiladrin phase 3 clinical program and Biologics License Application in non-muscle invasive bladder cancer, submitted to the FDA in September 2019. Before Trizell, he worked for Takeda as an Executive Medical Director and spent 16 years at GlaxoSmithKline, where he held a number of senior positions, including Disease Area Head and Acting Chief Medical Officer for the Rare Diseases Unit.
Member of the Royal College of Physicians and Fellow of the Faculty of Pharmaceutical Medicine. Experience: Dr. Richard Philipson is a physician with 24 years of experience in the pharmaceutical industry from both large pharmaceutical companies and smaller biotechs. He has extensive expe- rience in rare diseases, having brought several products from early development to the market.
Katayoun began her career in the pharmaceutical industry at AstraZeneca and held several positions within both R&D and Operations. Holding in the Company: Katayoun Welin-Berger holds 11,000 shares through a related party, 65,000 warrants1 and 45,000 options2. Richard Philipson Chief Medical Officer Born 1964. Chief Medical Officer since 2020. Education: BSc in Biomedical Sciences at London University and MB MS, Middlesex Hospital Medical School.
Katayoun Welin-Berger Vice President Operations Born 1968. VP Operations since 2020. Education: PhD in Pharmacy from Uppsala University, Sweden. Experience: Katayoun Welin-Berger has more than 28 years of commercial experience in the pharmaceutical and biologics industry. Before joining Calliditas, Katayoun worked as Vice President of Operations at BioGaia.
Andrew began his career in the pharmaceutical industry at Purdue Pharma and held several sales and marketing positions, including responsible for the company's brands and led a multi- functional team for a multi-billion pain medication franchise. Holding in the Company: Andrew Udell holds 26,000 share in the company, 20,000 warrants1 and 210,000 options2.
Andrew Udell President, North America Born 1970. Head of North America Commercial since 2019. Education: BSc from Lehigh University. MBA from the University of Connecticut. Experience: Andrew Udell has more than 20 years of commercial experience in the pharmaceutical industry. Before joining Calliditas, Andrew worked as Vice President of North America Commer- cial at NeuroDerm.
Experience: Frank Bringstrup has over 17 years of experience in the pharma- ceutical industry within regulatory affairs and health authority interactions. Prior to joining Calliditas, he worked in various positions at Novo Nordisk A/S. He started his professional career first as a clinic doctor and then Frederiksborg County Medical Advisor. Holding in the Company: Frank Bringstrup holds 6,000 share in the Company, 7,500 warrants1 and 45,000 options2.
Holdings in the Company: Fredrik Johansson holds 37,750 shares in the Company, 50,000 warrants1 and 180,000 options2. Frank Bringstrup Vice President Regulatory Affairs Born 1959. VP Regulatory Affairs since 2019. Education: Medical education from the University of Copenhagen. He has a diploma in Managing Medical Product Innovation (MMPI) from the Copen- hagen School of Economics, a diploma in business administration from Warwick University, and a post graduate specialist course in public health science from the National Board of Health, Denmark.
Experience: Fredrik Johansson has exten- sive experience in executive positions, primarily within telecom and software. Previously, he was CFO and COO at Birdstep Technology/ Techstep ASA, listed on the Oslo Stock Exchange, where he, among other things, was in charge of the acquisition and reversed listing of Teki Solutions. Previous CFO positions also include Phone Family, Teligent Telecom and Wayfinder Systems.
Member of the board of directors of Medcap AB (publ) and RAL Capital Ltd. Holdings in the Company: Ren e Aguiar-Lucander holds 593,000 shares in the Company, 195,000 warrants1 and 416,000 options2. Fredrik Johansson Chief Financial Officer Born 1977. CFO since 2017. Education: Studies in Business Law at J nk ping International Business School. Studies in Business and American law, Economics and Finance at Georgia State University, University of South Carolina and Lund University.
Prior to this, Ren e Aguiar-Lucander was the European Group Head and Managing Director at a global investment bank and has more than 12 years' experience in corporate finance. Prior to her career in investment banking, she was the Head of European Sales and Marketing in a company focused on the sale of software for financial services. Other current assignments: Chairman of the board of directors of Exenta Inc.
Experience: Before joining Calliditas, Ren e Aguiar-Lucander was a Partner and COO of Omega Fund Management, an international venture capital company focused on invest- ments within the life science sector. Before that, she served as a Partner in the venture capital group 3i Group plc in London, where she managed the publicly quoted assets and was co-head of the global healthcare and technology portfolio.
Independent in relation to the Company and its management and in relation to major shareholders. 92 93 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 Management team Renee Aguiar-Lucander Chief Executive Officer Born 1962. CEO since 2017. Education: BA in Finance from Stockholm School of Economics. MBA from INSEAD.
(formerly Lion Biotech- nologies, Inc.) and before that the Chief Business and Financial Officer and Senior Vice President of VirtualScopics, Inc. Molly has also advised start-up companies in Switzerland, and was a Manager in the audit division of PricewaterhouseCoopers LLP. Other current assignments: CFO of Phathom Pharmaceuticals, Inc Holdings in the Company: Molly Henderson holds 100 shares in the company and 4,327 share awards in board LTIP 2020 and 4,086 share awards in LTIP 2021.
Board member since 2020. Education: M.B.A. and B.S. degree from the State University of New York at Buffalo. Board Committees: Chairman of the Audit Committee. Experience: Molly Henderson has served as the CFO of several listed life science companies for over 17 years. Currently, she is the CFO of Phathom Pharmaceu- tical, Inc. She was previously the CFO of Urogen and Executive Vice President of Advaxis, Inc, the CFO of Iovance Biother- apeutics, Inc.
Other current assignments: Board member in Kura Oncology, Soligenix and TriSalus Life Sciences. Holdings in the Company: Diane Parks holds 8,449 share awards in board LTIP 2019, 4,327 share awards in board LTIP 2020 and 4,086 share awards in LTIP 2021. Independent in relation to the Company and its management and in relation to major shareholders. Molly Henderson Non-executive Director Born 1970.
Education: Master's degree from Kansas State University and an MBA from Georgia State University. Board Committees: Member of the Remu- neration Committee. Experience: Diane Parks is a senior executive with deep sales and marketing experience from the US, where she has held positions such as Head of US Commercial for Kite Pharma, VP of Sales for Amgen and Head of Global Marketing at Pharmacyclics.
Holdings in the Company: Lennart Hansson holds 12,000 shares in the company and 8,449 share awards in board LTIP 2019, 4,327 share awards in board LTIP 2020 and 4,086 share awards in LTIP 2021. Independent in relation to the Company and its management and in relation to major shareholders. Diane Parks Non-executive Director Born 1952. Board member since 2019.
Lennart was responsible for Industrifonden's life science operations between 2008 2016. He has worked on more than 30 company boards and is also the co-founder of two pharmaceutical development companies. Other current assignments: Chairman of the Board of Directors of Sixera Pharma AB, Ignitus AB and Cinclus Pharma Holding AB. Member of the Board of Directors of InDex Pharmaceuticals Holding AB (publ) and Medivir AB (publ).
Inde- pendent in relation to the Company and its management and in relation to major shareholders. Lennart Hansson Non-executive Director Born 1956. Board member since 2009. Education: PhD in Genetics from the University of Ume . Board Committees: Member of the Audit Committee and Remuneration Committe. Experience: Lennart Hansson has broad experience from leading positions within pharmaceutical development and busi- ness development in both biotech and pharma companies such as KabiGen AB, Symbicom AB, AstraZeneca, Biovitrum AB and as CEO of Arexis AB.
Other current assignments: Chairman of the board of directors of Santhera Pharmaceutical, ProCom Rx SA, Moleac Pte Lts and Noorik Biophar- maceuticals AG as well a member of the board of directors of Kuste Biopharma and Damian Pharma AG. Holdings in the Company: Elmar Schnee holds 10,000 shares in the company, 23,236 share awards in board LTIP 2019, 14,063 share awards in LTIP 2020 and 10,624 share awards in LTIP 2021.
Board Committees: Chairman of the Remuneration Committee. Experience: Elmar Schnee was previ- ously CEO of Merck Serono and was instrumental in the acquisition of Serono by Merck KGaA. He has also served as General Partner and member of the Exec- utive Board of Merck KGaA and has previ- ously held several senior global manage- ment positions with UCB and Sanofi.
Holdings in the Company: Hilde Furberg holds 44,750 shares in the company, 8,449 share awards in board LTIP 2019, 4,327 share awards in board LTIP 2020 and 4,086 share awards in LTIP 2021. Independent in relation to the Company and its manage- ment and in relation to major shareholders. Elmar Schnee Chairman Born 1959. Board member since 2019. Education: Master's degree in marketing and management from SIB.
Hilde has worked for companies such as Genzyme and Baxter, she was most recently SVP and General Manger/European Head of Rare Diseases at Sanofi Genzyme. In addition to working for Genzyme/Sanofi Genzyme, Hilde has since 2005 worked as non-executive director and Board member of Probi, Pronova, Clavis, Bergenbio and Algeta. Other current assignments: She is currently an industrial advisor to Investinor and Board member of PCI Biotech, OncoZenge, Herantis Pharma and Bio-Me.
Board member since 2014. Education: Master of Science in Engi- neering from Oslo University, Norway. Board Committees: Member of the Audit Committee. Experience: Hilde Furberg is an indepen- dent consultant and professional Board member. She has extensive experience in leadership from her 35 years in sales, marketing, strategy and management in Pharma/Biotech.
We believe that the examination has provided us with sufficient basis for our opinions. Opinions A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolidated accounts and are in accordance with the Annual Accounts Act. 90 91 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT CORPORATE GOVERNANCE REPORT Board of Directors Hilde Furberg Non-executive Director Born 1958.
The scope of the audit Our examination has been conducted in accordance with FAR's standard RevR 16 The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing stan- dards in Sweden.
Auditor's report on the corporate governance statement To the general meeting of the shareholders of Calliditas Therapeutics AB (Publ), corporate identity number 556659-9766 Stockholm, April 27, 2022 Ernst & Young AB Anna Svanberg Authorized Public Accountant Engagement and responsibility It is the Board of Directors who is responsible for the corporate governance statement for the year 2021 on pages 86-91 and that it has been prepared in accordance with the Annual Accounts Act.
Internal Audit The Board of Directors has assessed the need for an internal audit function and decided that such a function is not justified in Calliditas, taking into account the scope of operations and that the Board's monitoring of internal control is considered sufficient to ensure that internal control is effective. The Board of Directors reassess the requirement when changes take place that may give rise to a reassessment and at least once per year.
The Board of Directors has also adopted an information policy governing the compa- ny's disclosure of information. The company has also in 2021 initiated an implementation of an inter-control structure according to the Sarbanes-Oxely Act to meet the requirements for companies listed in the USA. In addition to the abovementioned internal control, there is also internal, business-specific control of data as regards research and development, as well as quality control including systematic surveillance and evaluation of the company's development and manufacturing operations.
The CEO also reports on these matters at each ordinary Board meeting. The compa- ny's compliance with relevant policy's and guidelines are assessed annually. The results from these assess- ments are compiled by the CFO in the company and then reported to the Board of Directors and the Audit Committee annually. Information and communication The company has information and communication chan- nels to promote the accuracy of the financial reporting and to facilitate reporting and feedback from operations to the Board of Directors and senior management, for example by making corporate governance documents such as internal policies, guidelines and instructions regarding the financial reporting available and known to the employees concerned.
In agreements with essential subcontractors, the company has secured the right to audit each respective subcontractors' fulfill- ment of relevant services, including quality aspects. Monitoring Compliance with, and effectiveness of, the internal controls are constantly monitored. The CEO ensures that the Board of Directors continuously receives reports on the development of the company's activities, including the development of the company's results and financial position, as well as information on important events, such as research results and important contracts.
The Board of Directors is responsible for the internal control and monitoring of the company's management. This is done through both internal and external control activities, and through examination and monitoring of the company's guidelines related to risk management. The effectiveness of the control activities are assessed annually and the results from these assessments are reported to the Board of Directors and the Audit Committee.
Calliditas' management shall annually perform a risk assessment of strategic, operational and financial risks and present the assessment to the Audit Committee and the Board of Directors. The CEO is responsible for the presentation. The management's risk assessment shall be reviewed on an annual basis by the CFO. Control activities Control activities limit the identified risks and ensure accurate and reliable financial reporting.
The responsibility for the internal, business-specific control in the daily operations lies with the CEO. Risk assessment Risk assessment includes identifying risks that may arise if the basic requirements for the financial reporting of the company are not met. Calliditas' management team has, in a specific risk register, identified and evaluated the risks that arise in the company's operations, and has assessed how these risks can be managed.
The responsi- bility for the ongoing work of the internal control over financial reporting has been delegated to the compa- ny's CEO. The CEO regularly reports to the Board of Directors in accordance with the established instruc- tions for the CEO and the instructions for financial reporting. The Board of Directors also receives reports from the company's auditor.
Furthermore, the Board of Directors has established an Audit Committee whose main task is to monitor the company's financial position, to monitor the effectiveness of the company's internal control, internal audit and risk management, to be informed about the audit of the annual report and consolidated financial statements, and to review and monitor the auditor's impartiality and independence.
These documents primarily comprise the rules of procedure for the Board of Directors, instruc- tions for the CEO, rules of procedure for the Audit Committee and instructions for financial reporting. The Board of Directors has also adopted a delegation of signatory authority and a treasury policy. The company also has a financial manual which contains principles, guidelines and process descriptions for accounting and financial reporting.
The internal control primarily consists of the following five components. Control environment The Board of Directors has the overall responsibility for the internal control in relation to financial reporting. In order to create and maintain a functioning control environment, the Board of Directors has adopted a number of policies and guidelines governing financial reporting.
The overall purpose of the internal control is to ensure that the company's operating strategies and targets are monitored and that the owners' investments are protected, to a reasonable degree. Furthermore, the internal control shall ensure that the external finan- cial reporting, with reasonable certainty, is reliable and prepared in accordance with generally accepted accounting practice, that applicable laws and regulations are followed, and that the requirements imposed on listed companies are complied with.
The Board of Directors shall, among other tasks, ensure that Calliditas has sufficient internal control and formalized routines to ensure that established principles for financial reporting and internal control are adhered to and that there are effective systems to monitor and control the company's operations and the risks associated with the company and its operations.
Internal Control and Risk Management The Board of Director's responsibility for the internal control is governed by the Swedish Companies Act, the Swedish Annual Reports Act which requires that information about the main features of Callid- itas' system for internal control and risk management related to financial reporting each year must be included in the corporate governance report and the Code.
Calliditas' management consists of six individuals and includes, in addition to the CEO, the Chief Financial Officer, Chief Medical Officer, Vice President Opera- tions, Vice President Regulatory Affairs, and President North America. For information about current senior executives at Calliditas, when these assumed their positions, and date of birth, education, experience, shareholding in the company and current and previous assignments, refer to pages 94-95 and the company's website, www.calliditas.se.
The Rules of Procedure for Decision-making for the Board and instructions for the CEO present which issues that the company's Board of Directors are to consider and decide and which are the respon- sibility of the CEO. The CEO is also responsible for preparing reports and required documentation for decision-making prior to board meetings and is the reporting person on the material at board meetings.
The Board of Directors continuously assesses 88 89 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT the work of the CEO by monitoring the performance of the operations compared with established targets and makes a formal assessment each year. CEO and Management Team The role of the CEO is subordinate to the Board of Directors, and his or her primary task is to attend to the company's daily management and operations in the company.
Evaluation of the Board and CEO Every year, the Board Chairman initiates an evaluation of the Board's work. The evaluation aims to gain an opinion of the views of Board members on how the work of the Board is progressing and what measures can be implemented to enhance the efficiency of the Board. The aim is also to gain an opinion of the type of issues the Board believes should be offered more space and areas where further expertise may be needed on the Board.
Share and share-price related incentive programs shall, if resolved on, be decided by the AGM. Pension shall, where possible, be premium-based. For the CEO and other members of executive management, the premium may, in situations where premium-based pension is applicable, amount to a maximum of 30 per cent of the fixed salary. Notwithstanding the above, the Board of Directors is entitled to offer other solutions which, in terms of cost, are equivalent to the above.
The fixed remuneration shall be reviewed annually. The executive management may be offered cash bonuses. Variable remuneration paid in cash may not exceed 60% of the annual fixed remuneration. Variable remunerations shall be connected to predeter- mined and measurable criteria, designed with the aim of promoting the company's long-term value creation.
The remuneration to the executive management may consist of fixed remuneration, variable remuneration, share and share-price related incentive programs, pension and other benefits. If local conditions justify variations in the remuneration princi- ples, such variations may occur. The fixed remuneration shall reflect the individual's responsibility and experi- ence level.
Remuneration of the CEO and Executive Management 2021 Calliditas shall offer remuneration in accordance with market practice to enable the recruitment and reten- tion of qualified executive management. Remuner- ations within Calliditas shall be based on principles of performance, competitiveness and fairness. The executive management refer to the CEO and other members of the executive management, as well as board members.
The Remuneration Committee shall prepare matters concerning remuner- ation principles, remuneration and other employment terms for the CEO and the executive management. The Committee held three meetings in 2021. At these meetings, the Committee discussed the current compensation system in the company, including a proposal for remuneration of the CEO and senior executives and the direction and terms of the incentive program that was approved for implementation by the Annual General Meeting on May 27, 2021.
The Committee held five meetings in 2021. The company's auditors took part in four of the meetings, where discussions included the auditors' planning of the audit, their observations and examination of the company and the company's financial statements. Remuneration Committee Calliditas has a Remuneration Committee consisting of three members: Elmar Schnee (Chairman), Lennart Hansson and Diane Parks.
Board Committees Audit Committee Calliditas has an Audit Committee consisting of three members: Molly Henderson (Chairman), Lennart Hansson and Hilde Furberg. The Audit Committee shall, without it affecting the responsibilities and tasks of the Board of Directors, monitor the company's finan- cial reporting, monitor the efficiency of the company's internal controls, internal auditing and risk manage- ment, keep informed of the auditing of the annual report and the consolidated accounts, review and monitor the impartiality and independence of the audi- tors and pay close attention to whether the auditors are providing other services besides audit services for the company, and assist in the preparation of proposals for the AGM's decision on election of auditors.
In addition to the fee proposed above for ordinary board work, it is proposed that a board member who is resident in the USA shall receive an extra fee of SEK 140,000 and that a board member who is resident in Europe but outside the Nordic region shall receive an extra fee of SEK 50,000. For more information regarding remuneration of Board members, refer to Note 9 Employees and Personnel Costs.
The Annual General Meeting on May 27, 2021 resolved that fees to the Board for the period up to the end of the next Annual General Meeting shall be as follows: Board fees shall be SEK 850,000 to the Chairman of the Board and SEK 300,000 to each of the other members not employed in the Group, SEK 150,000 SEK 50,000 to the Chairman of the Audit Committee and SEK 75,000 to other members of the Audit Committee who are not employees of the Group, and SEK 50,000 to the Chairman of the Remuneration Committee and SEK 25,000 to other members of the Remuneration Committee who are not employees of the Group.
Calliditas' CEO participates in Board meetings, as does the company's CFO and General Counsel, who was secretary at the meetings. Other employees from Calliditas have reported on particular issues at the meetings. The extraordinary meetings were a result of the company's work with acquisition and capital raise. Board Remuneration Fees to members elected by the Annual General Meeting are decided by the Annual General Meeting.
Work of the Board in 2021 During 2021, the Board of Directors held a total of 16 CORPORATE GOVERNANCE REPORT Board members' independence, attendance and remuneration in 2021 Independent in relation to Attendance Name Position Board member since The company and manage- ment Major share- holders Board meet- ings Audit Committee meetings Remuneration Committee meetings Total remuneration, SEK in thousand Elmar Schnee Board Chairman 2019 Yes Yes 16/16 - 3/3 1,363 Lennart Hansson Board Member 2009 Yes Yes 15/16 5/5 3/3 522 Hilde Furberg Board Member 2014 Yes Yes 15/16 5/5 - 499 Diane Parks Board Member 2019 Yes Yes 16/16 - 3/3 584 Molly Henderson Board Member 2020 Yes Yes 14/16 5/5 - 664 meetings, of which 6 were ordinary and 10 extraor- dinary meetings.
Board Independence The company satisfies the requirements of the Code as most of the Board members elected by the AGM are inde- pendent of the company and management, and that at least two of these are independent in relation to major share- holders. The table on page XX presents the independence of members at the date on which this report was published.
In addition to these meetings, additional Board meetings can be convened to handle issues which cannot be postponed until the next ordi- nary board meeting. In addition to the Board meetings, the Chairman of the Board of Directors and the CEO continuously discuss the management of the company. Currently, the company's Board of Directors consists of five ordinary members elected by the AGM.
Among other things, the rules of procedure govern the practice of the Board of Directors, functions and the division of work between Board members and the CEO. At the inaugural board meeting, the Board of Directors also adopts instructions for the CEO, including instructions for financial reporting. The Board of Directors meets according to an annual predetermined schedule.
According to the Code, the Chairman of the Board of Directors is to be elected by the AGM and have a special responsibility for leading the work of the Board of Directors and for ensuring that the work of the Board of Directors is efficiently organized. The Board of Directors applies written rules of proce- dure, which are revised annually and adopted by the inaugural board meeting every year.
The Board of Directors is also responsible for ensuring that annual reports and interim reports are prepared in a timely manner. Moreover, the Board of Directors appoints the CEO. Members of the Board of Directors are normally appointed by the AGM for the period until the end of the next AGM. According to Calliditas' Articles of Asso- ciation, the members of the Board of Directors elected by the AGM shall be not less than three and not more than ten members with no deputy members of the Board of Directors.
For information about remuneration of the auditor, refer to Note 6 Auditors' Fee. Board of Directors The Board of Directors is the second highest deci- sion-making body of the company after the AGM. According to the Swedish Companies Act, the Board of Directors is responsible for the organization of Callid- itas and the management of the company's affairs, which means that the Board of Directors is responsible for, among other things, setting targets and strategies, securing routines and systems for evaluation of set targets, continuously assessing the financial condition and profits as well as evaluating the operating manage- ment.
The Auditor-in-Charge is Anna Svan- berg. The auditor examines the Parent Company's and the Group's accounts and administration on behalf of the AGM. The external audit of the Parent Company's and the Group's accounts and the Board's and CEO's administration is conducted using generally accepted auditing standards in Sweden. The company entrusted the auditor to review one interim reports in 2021, which satisfies the requirements of the Code.
Shareholders may submit proposals to the Nomination Committee in accor- dance with what has been published on the company's website, www.calliditas.se, prior to the AGM. Auditor In accordance with the Articles of Association, Callid- itas must appoint a registered firm of accountants as external auditor. The 2021 AGM elected the registered firm of accountants Ernst & Young AB as auditor, up to the 2022 AGM.
Changes to the composition of the Nomination Committee shall be announced immediately. The term of the office for the Nomination Committee ends when the next Nomination Committee has been appointed. The Nomination Committee shall carry out its duties as set out in the Code. The Nomination Committee will be constituted and will meet in advance of the 2022 AGM and its proposals will be presented in the convening notice of the AGM 86 87 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 and on Calliditas' website.
Should a member resign from the Nomi- nation Committee before his or her work is completed, the shareholder who has appointed such member shall appoint a new member, unless that shareholder is no longer one of the three largest shareholders, in which case the largest shareholder in turn shall appoint the substitute member. A shareholder who has appointed a representative to the Nomination Committee shall have the right to discharge such representative and appoint a new representative.
Unless there are specific reasons otherwise, the already established composition of the Nomination Committee shall, however, remain unchanged in case such change in the ownership is only marginal or occurs during the three-month period prior to the AGM. Where a shareholder has become one of the three largest shareholders due to a material change in the ownership at a point in time falling later than three months before the AGM, such a shareholder shall however in any event have the right to take part of the work of the Nomination Committee and participate at its meetings.
The Board of Directors shall convene the Nomination Committee. The member representing the largest shareholder shall be appointed Chairman of the Nomination Committee, unless the Nomination Committee unanimously appoints someone else. Should a shareholder having appointed a representative to the Nomination Committee no longer be among the three largest shareholders at a point in time falling three months before the AGM at the latest, the representa- tive appointed by such shareholder shall resign and the shareholder who is then among the three largest share- holders shall have the right to appoint one representative to the Nomination Committee.
The Nomination Committee in 2022 consists of: - Patrik Swobocki, appointed by Stiftelsen Industri- fonden - Per Sj gemark, appointed by Handelsbanken Fonder - Karl Tobieson, appointed by Linc AB (Chairman) - Elmar Schnee, Chairman of the Board. Should any of the three largest shareholders renounce its right to appoint one representative to the Nomination Committee, such right shall transfer to the shareholder who then in turn, after these three, is the largest share- holder in Calliditas.
In addition, at least one member of the Nomination Committee shall be independent in relation to the largest shareholder in terms of voting rights or group of shareholders who cooperate in terms of the company's management. At the Extraordinary General Meeting held on September 14, 2017, it was resolved that the Nomi- nation Committee shall be composed of the Chairman of the Board of Directors together with one represen- tative of each of the three largest shareholders, based on ownership in Calliditas as of the end of the third quarter of the fiscal year.
Nomination Committee Companies applying the Code shall have a Nomination Committee. According to the Code, the AGM shall appoint the members of the Nomination Committee or resolve on procedures for appointing the members. The Nomination Committee shall, pursuant to the Code, consist of at least three members of which a majority shall be independent in relation to Calliditas and the Group Management.
Shareholders whose shares are registered in the name of a nominee through a bank or a securities institution must temporarily register their shares in their own names to be entitled to participate in the meeting. Such registration, which may be temporary (so-called voting rights registration), must be duly effected in the share register maintained by Euroclear Sweden AB on Friday 13 May 2022, and the shareholders must there- fore advise their nominees well in advance of this date.
The minutes from the AGM will be made available at www.calliditas.se. Participation at the Annual General Meeting Shareholders who wish to participate, through advance voting, in the meeting must: - be recorded in the share register maintained by Euroclear Sweden AB relating to the circumstances on Wednesday 11 May 2022, and - give notice of participation by casting their advance votes in accordance with the instructions under the heading Advance voting below, so that the advance voting form is received by Euroclear Sweden AB no later than on Wednesday 18 May 2022.
Notice of the AGM shall be published in the Swedish Official Gazette and on the company's website, within such time as set forth in the Swedish Companies Act (2005:551). It shall be announced in Svenska Dagbladet that a notice has been issued. Annual General Meeting 2022 Calliditas' 2022 AGM will be held on Thursday, May 19, 2022. With reference to the Swedish Act (2022:121) on temporary exceptions to facilitate the execution of general meetings in companies and other associations, the Board of Directors has decided that the annual general meeting will be conducted by advance voting only, without physical presence of shareholders, proxies and third parties.
Shareholders may attend the shareholders' meetings in person or by proxy and may be accom- panied by a maximum of two assistants. Typically, it is possible for a shareholder to register for the AGM in several different ways as indicated in the notice of the meeting. A shareholder may vote for all company shares owned or represented by the shareholder.
In view of company's financial position and negative earnings, the Board of Directors does not intend to propose any dividend before the company generates long-term sustainable profits and posi- tive cash flow. Dividends shall, as far as a dividend is proposed, be balanced with regard to the business risk. Annual General Meeting Right to participate in the Annual General Meeting Shareholders who wish to participate in the Annual General Meeting (AGM) must be included in the share- holders' register maintained by Euroclear Sweden on the day falling six banking days prior to the meeting, and notify the company of their participation no later than on the date stipulated in the notice convening the meeting.
Dividend Policy The company has so far not paid out any dividend. Any future dividend and the size thereof, will be deter- mined based on long-term growth, earnings trends and capital requirements of Calliditas. It is the view of the Board of Directors that Calliditas should prioritize progression of the development program, and until the future revenues substantially exceeds the cost of the development programs, financial resources should mainly be used to finance Calliditas' development programs.
At the end of 2021, the total number of shares and voting rights amounted to 52,341,584, distributed between 19,972 share- holders. The ten largest shareholders held 59.07% of shares outstanding and other shareholders 40.93%. As of December 31, 2021, three shareholders owned shares that each represented 10% or more of the total number of shares and voting rights in the company: BVF Partners LP 12.7%, Stiftelsen Industrifonden, 11.0% and Linc AB 10.5%.
The company is classified as a Foreign Private Issuer (FPI) in accordance with the regulations estab- lished by the US Securities and Exchange Commission (SEC) and therefore follows market practice in the domestic market, ie Swedish corporate governance. Examples of Important Rules and Regulations Important internal rules and regulations - Articles of Association - Rules of procedure of the Board of Directors and Committees - Directives for the CEO - Policy documents Important external rules and regulations - Swedish Companies Act - Swedish and international accounting legislation - Nasdaq Stockholm's Rule Book for Issuers - Nasdaq U.S Rule Book for Issuers - Swedish Code of Corporate Governance - Sarbanes-Oxley Act Shareholders Calliditas' shares were admitted to trading on Nasdaq Stockholm, Mid Cap, in June 2018 and on Nasdag Global Select, in June 5, 2020.
The company need not comply with all of the rules of the Code as the Code itself offers an opportu- nity to deviate from the rules, on the condition that any such deviation, and the chosen alternative solution, is described and the reasons explained in the Corporate Governance Report (according to the comply or explain principle). However, the company has not deviated from any of the rules established in the Code during the year.
Good corporate governance is an essential part of efforts to generate value for Calliditas' share- holders. Corporate governance in Calliditas is based on Swedish law, Nasdaq Stockholm's Rule Book for Issuers and internal rules and regulations. The company also applies the Swedish Code of Corporate Governance (the Code ). The Code applies to all Swedish compa- nies whose shares are listed on a regulated market in Sweden.
The company's share was listed on June 29, 2018 on Nasdaq Stockholm and on June 5, 2020 on Nasdaq Global Select US and is traded under the ticker CALTX and CALT, respectively. This report pertains to the financial year of 2021 and has been examined by the company's auditors. Background Corporate governance refers to the systems through which shareholders, directly or indirectly, control the company.
Furthermore, the procedures also include an assess- ment of whether the Esef report has been marked with iXBRL which enables a fair and complete machine-read- able version of the consolidated statement of financial performance, financial position, changes in equity and cash flow. Ernst & Young AB, Hamngatan 26, 111 47 Stockholm, was appointed auditor of Calliditas Therapeutics AB by the general meeting of the shareholders on the 27 May 2021 and has been the company's auditor since the 15 April 2004. 84 85 Calliditas Therapeutics | Annual Report 2021 Calliditas Therapeutics | Annual Report 2021 AUDITOR'S REPORT Corporate Governance Report Introduction Calliditas Therapeutics AB (publ), Calliditas is a Swedish public limited liability company with its regis- tered office in Stockholm.
The examination also includes an evaluation of the appropriateness and reasonableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a technical validation of the Esef report, i.e. if the file containing the Esef report meets the technical specification set out in the Commission's Delegated Regulation (EU) 2019/815 and a reconciliation of the Esef report with the audited annual accounts and consolidated accounts.
In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the prepara- tion of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effectiveness of those internal controls.
The examination involves obtaining evidence, through various procedures, that the Esef report has been prepared in a format that enables uniform electronic reporting of the annual and consolidated accounts. The procedures selected depend on the auditor's judg- ment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error.
The audit firm applies ISQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and other Assurance and Related Services Engagements and accordingly maintains a comprehensive system of quality control, including documented policies and procedures regarding compliance with professional ethical requirements, professional standards and legal and regulatory requirements.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss we exam- ined whether the proposal is in accordance with the Companies Act. misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Esef report.
This means that we focus the examination on such actions, areas and relation- ships that are material for the operations and where deviations and violations would have particular impor- tance for the company's situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability.