`
`Novartis Exhibit 2275.001
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Finance in brief
`
`Sales
`
`2014
`
`2014
`
`2014
`
`2015 l'"'i i. I
`I + 5.1
`2015 L:1 I Ii
`I +5.9
`2015 b:t-1
`I +5.3
`
`+4.5
`
`+6.4
`
`+4,9
`
`Key results
`
`Pharmaceuticals
`
`Diagnostics
`
`Group
`
`IFRS results
`Sales
`Operating profit
`Net income
`
`Net income attributable to Roche shareholders
`Diluted EPS (CHF)
`D ividend per share (CHF) 1i
`
`Core results
`Research and development
`Core operating profit
`Core EPS (CHF)
`
`Free cash flow
`Operating free cash flow
`Free cash flow
`
`Net debt
`
`Capitalisation
`
`- Debt
`
`- Equity
`
`1) Proposed by the Board of Directors.
`
`Core operating profit margin.
`
`I ...... ,,
`I
`
`I I
`
`I I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I I I=
`I I I
`I I= I
`
`43.0
`43.6
`
`18.0
`19.5
`
`36.4
`37.2
`
`2015
`(CHF m)
`
`2014
`(CHF m)
`
`(CHF)
`
`% change
`(CERJ
`
`2015
`
`% of sales
`2014
`
`48,1 45
`13,821
`9,056
`8,863
`10.28
`8,10
`
`9,332
`17,542
`13.49
`
`47,462
`14,090
`9,535
`9,332
`10.8 1
`8,00
`
`8,913
`17,636
`14.29
`
`+ 1
`- 2
`- 5
`- 5
`- 5
`+ 1
`
`+ 5
`-1
`- 6
`
`+5
`+5
`+4
`+ 4
`+7
`
`+5
`+5
`+4
`
`14,872
`3,352
`
`15,778
`5,322
`
`- 6
`- 37
`
`- 7
`- 4 1
`
`2015
`(CHF mJ
`(14,080)
`
`2014
`(CHF m)
`(14,011 )
`
`46,551
`23,251
`23,300
`
`47,272
`25,714
`21,558
`
`28.7
`18.8
`18,4
`
`19.4
`36.4
`
`30,9
`7.0
`
`(CHF)
`0
`
`- 2
`-1 0
`+8
`
`29.7
`20. 1
`19,7
`
`18.8
`37.2
`
`33,2
`11.2
`
`% change
`(CERJ
`
`- 1
`
`+3
`- 8
`+ 14
`
`CER (Constant Exchange Rates) : The percentage changes at Constant Exchange Rates are calculated using simulations by reconsolidating both the 2015 and 2014 results at constant
`exchange rates (the average rates for the year ended 31 December 2014).
`
`Core results and Core EPS (earnings per share): These exclude non-core items such as global restructuring plans and amortisation and impairment of goodwill and intangible assets.
`This allows a transparent assessment or both the actual results and the underlying performance of the business. A full income statement for the Group and the operating results or
`the Divisions are shown an both an IFRS and core basis. The core concept is fully described on pages 131- 134 and reconciliations between the IFRS and Core results are given there.
`
`On the cover
`By running the most stringent controls for our medicines we ensure that products which are provided to patients
`meet all the respective production criteria. Here, Stefan Kamber, an in- process-control expert at the Roche Solids
`Production unit in Basel, conducts one of the multiple checks of Cotellic, our new cancer medicine which was
`approved by the FDA and the European Commission in November 2015.
`
`https://www.roche.com/dam/jcr: 7 4af99eb-b51 a-4f13-88b2-aacaf9f53c0den/fb1 5e.pdf
`
`Novartis Exhibit 2275.002
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Finance - 2015 in brief
`
`Roche In 2015
`
`The Roche Group reported strong overall results in 2015, Sales grew by 5% at constant exchange rates (CER) while core earnings per share
`increased by 4%. Excluding the impact of the one- time income in 2014 from the divestment of the filgrastim franchise rights, underlying core
`earnings grew at 7%,
`
`Sales
`
`Group sales increased by 5% (CER) to CHF 48.1 billion (1% growth in CHF terms).
`Pharmaceuticals sales growth was 5% (CER) due to continued strong growth in the HER2 franchise and Avastin in the oncology portfolio.
`In immunology sales of Esbriet and Actemra/RoActemra increased. Sales of Pegasys decreased due to competition from a new generation
`of treatments and Valcyte/Cymevene and Xeloda decreased due to generic competit ion.
`Diagnostics sales showed growth of 6% (CER) with Professional Diagnostics being the major contributor.
`
`Operating results
`
`Core operating profit increased by 5% (CER) to CHF 17.5 billion (1% decline in CHF terms). Excluding the one- time income in 2014 from
`the divestment of the filgrastim franchise rights. underlying core operating profit grew at 7%.
`Research and development expenditure grew by 5% (CER) to CHF 9.3 billion on a core basis, with focus on the oncology, immunology
`and neuroscience therapeutic areas. Research and development costs were 19.4% of Group sales.
`IFRS operating results include non- core expenses of CHF 3.7 billion, The major factors are CHF 1.7 billion for the amortisation of intangible
`assets, and CHF 1.2 billion from global restructuring plans. notably the Pharmaceuticals Division's strategic realignment of its manufacturing
`network.
`
`Non-operating results
`
`Core net financial expenses increased by CHF 0.3 billion to CHF 1.4 billion, driven by lower income from divestments of equity securities.
`IFRS net financial expenses additionally includes a loss of CHF 0.4 billion from a major debt restructuring.
`
`Net income
`
`IFRS net Income increased by 4% at CER to CHF 9.1 billion (5% decline in CHF terms).
`Core earnings per share increased by 4% at CER (- 6% in CHF terms). Excluding the one- time income in 2014 from the divestment of
`the filgrastim franchise rights, underlying earnings per share grew at 7%.
`
`Cash flows
`
`Operating free cash flow was CHF 14,9 billion, a decrease of 7% at CER (- 6% in CHF terms). The growth in the operating profit was offset
`by higher capital investments and a lower increase in accounts payable.
`Free cash flow decreased by 41% at CER (- 37% in CHF terms) to CHF 3,4 billion, driven by the operating free cash flow decline and higher tax
`and dividend payments.
`Acquisillons, notably the majority stake in Foundation Medicine and the Ariosa and Kapa acquisitions in the Diagnostics sequencing business,
`utilised in total CHF 2.1 billion of cash.
`
`Financial position
`
`Net working capital decreased by 11% (CER). due to an increase in payables since the end of 2014.
`Net debt was stable at CHF 14,1 billion, as the free cash flow was largely absorbed by acquisitions. Net debt as a percentage of total assets
`was 19%.
`Credit ratings strong: Moody's at Al and Standard & Poor's at AA.
`
`Shareholder return
`
`Dividends. A proposal will be made to increase dividends by 1% to CHF 8.1 0 per share. This will represent the 29th consecutive year of dividend
`growth and will result in a pay- out ratio of 60.0%, subject to AGM approval.
`Total Shareholder Return (TSR) was 6% representing a combined performance of share and non-voting equity security.
`
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Novartis Exhibit 2275.003
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`
`https://www.roche.com/dam/jcr:74af99eb-b51a-4f13-88b2-aacaf9f53c0c/en/fb15e.pdf
`
`Novartis Exhibit 2275.004
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Financial Review I Roche Group
`
`Financial Review
`
`Roche Group results
`
`Sales in billions of CHF
`
`Core operating profit in billions of CHF
`
`1·
`
`"
`
`,.
`
`,.
`
`"
`
`2015
`2014
`2013
`
`'ll>CERgrowth
`
`50
`
`+5.1
`+ 4.9
`+6.2
`
`1 ·
`
`1 ·
`
`I ..
`
`I "
`
`Net income attributable to Roche shareholders in billionsofCHF
`
`Core EPS in CHF
`
`2015
`2014
`2013
`
`12
`
`8.9
`9.3
`11.2
`
`1·
`
`1 ·
`
`I "
`
`20
`
`16
`
`% of sales
`
`36.4
`37.2
`38.3
`
`13.49
`14.29
`14,27
`
`The Roche Group's results for 2015 showed sales growth and core operating profit growth of 5% at constant exchange rates (CER),
`Sales increased driven by the oncology and immunology portfolios. especially the medicines for HER2-positive breast cancer, and by
`the Professional Diagnostics business. Core EPS grew at a lower rate than sales due to the base effect of the one-time income in 2014
`from the divestment of the filgrastim franchise rights. Excluding this item, core operating profit and core EPS both grew ahead of sales
`at 7%. Operating free cash flow was CHF 14.9 billion or 30.9% of sales, a decrease of 7% at CER due to increased capital expenditure,
`investments in intangible assets as well as a higher increase in net working capital.
`
`Sales in the Pharmaceuticals Division rose by 5% to CHF 37.3 billion. This increase was driven by the oncology portfolio, especially by
`the HER2 franchise which grew by 19%. Avastin sales were 9% higher with increased use in recently launched indications, Sales in
`immunology grew by 24%, with Actemra/RoActemra and Xolair increasing by 23% and 25% respectively. There was a strong uptake for
`Esbriet following its US launch. Sales of Pegasys declined due to competition from a new generation of treatments and sales of Valcyte/
`Cymevene and Xeloda fell due to generic competition, Tamiflu sales fell due to a relatively mild influenza season. All regions showed
`growth in Pharmaceuticals sales, with the US being most significant. Diagnostics sales grew at 6% to CHF 10.8 billion, further securing
`the Division's leading market position. The major growth area was Professional Diagnostics, with sales increasing by 8% led by the
`immunodiagnostics business. Molecular Diagnostics and Tissue Diagnostics increased by 10% and 12% respectively while sales in
`Diabetes Care decreased by 3% due to the continued challenging market environment in the US.
`
`Core operating profit increased by 5% in the Pharmaceuticals Division and fell by 2% in the Diagnostics Division. In the Pharmaceuticals
`Division growth in the underlying business more than compensated for the base effect of the divestment income of CHF 428 million from
`the filgrastim franchise rights in 2014. Excluding this item, core operating profit in Pharmaceuticals increased by 8%, Manufacturing
`costs were higher due to capacity expansion and sourcing strategy in biologics. together with higher inventory write- offs. Marketing and
`distribution costs grew by 4% due to the launch and rollout of new products, notably the recently acquired product Esbriet. In research
`and development there were continued investments in oncology and the immunology, inflammation and respiratory therapeutic areas.
`In Diagnostics core operating profit was lower by 2% mainly due to the higher sales being more than offset by costs from the sequencing
`business and increased research and development costs in Professional Diagnostics. Diabetes Care performance was impacted by
`further price erosion in major markets such as the US.
`
`Operating free cash flow was CHF 14.9 billion, a decrease of 7% at CER and 6% in CHF terms. The continuous strong operating cash
`generation was offset by capital investments in manufacturing facilities and other site development projects, notably in Switzerland.
`the US and Germany, by an increased level of in-licensing activities and a lower increase in accounts payable. The free cash flow was
`CHF 3.4 billion with the decrease relative to 2014 mainly driven by the lower operating free cash flow, higher tax payments and higher
`annual dividend payments.
`
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Roche Finance Report 2015 I 3
`
`Novartis Exhibit 2275.005
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Roche Group I Financial Review
`
`IFRS net income grew by 4% at CER compared to the increase of 1% in core net income. In addition to the items described above
`in the core results. the 2014 IFRS results include a base effect from the impairment of goodwill and intangible assets in that year of
`CHF 1.6 billion, net of tax.
`
`In 2015 the Swiss franc appreciated against a number of currencies, in particular against the euro, the Japanese yen and against most
`Latin American and European currencies. These effects were partly offset by the stronger US dollar relative to the average rate in 2014.
`The overall impact is negative on the growth rates expressed in Swiss francs compared to constant exchange rates. with a 4 percentage
`point impact on sales. a 6 percentage point impact on core operating profit and a 10 percentage point impact on Core EPS. The currency
`translation sensitivity of the Group's results to movements in foreign currency exchange rates is included on page 26.
`
`Income st atement
`
`IFRS results
`Sales
`Royalties and other operating income
`Cost of sales
`Marketing and distribution
`Research and development
`General and administration
`Operating profit
`
`Financing costs
`Other financial income (expense)
`Profit before taxes
`
`Income taxes
`Net income
`
`Attributable to
`- Roche shareholders
`- Non- controlling interests
`
`EPS - Basic (CH F)
`EPS - Diluted (CHF)
`
`Core results
`Sales
`Royalties and other operating income
`Cost of sales
`Marketing and distribution
`Research and development
`General and administration
`Operating profit
`
`Financing costs
`Other financial income (expense)
`Profit before taxes
`
`Income taxes
`Net Income
`
`Attributable to
`- Roche shareholders
`- Non- controlling interests
`
`Core EPS - Basic (CHF)
`Core EPS - Diluted (CHF)
`
`2015
`(CHFm)
`
`48. 145
`2,258
`(15,460)
`(8,814)
`(9,581)
`(2,727)
`13,821
`
`( 1,574)
`(260)
`11,987
`
`(2,931)
`9,066
`
`8,863
`193
`
`10.42
`10.28
`
`48.1 45
`2,258
`( 12.706)
`(8.610)
`(9,332)
`(2,213)
`17,5112
`
`( 1,1 40)
`(276)
`16,126
`
`(4,289)
`11,837
`
`11 .626
`211
`
`13.66
`13.49
`
`2014
`(CHF m)
`
`% change
`(CH FJ
`
`%change
`(CERJ
`
`47,462
`2,404
`( 13,38 1)
`(8,657)
`(9.895)
`(3,843)
`111,090
`
`(1 ,82 1)
`246
`12,515
`
`(2.980)
`9,535
`
`9,332
`203
`
`10.99
`10,81
`
`47.462
`2,404
`( 12,341)
`(8,436)
`(8,9 13)
`(2.540)
`17,636
`
`(1 .362)
`246
`16,520
`
`(3,987)
`12,!133
`
`12,329
`204
`
`14.53
`14.29
`
`+1
`- 6
`+16
`+2
`- 3
`- 29
`-2
`
`- 14
`
`-...
`
`- 2
`-5
`
`- 5
`- 5
`
`- 5
`- 5
`
`+1
`- 6
`+3
`+2
`+5
`- 13
`-1
`
`- 16
`-
`-2
`
`+8
`-6
`
`- 6
`+3
`
`- 6
`- 6
`
`+5
`-1 0
`+ 19
`+5
`- 3
`- 28
`+5
`
`-1 6
`-
`+3
`
`+1
`+II
`
`+4
`+4
`
`+7
`+7
`
`+5
`-1 0
`+7
`+5
`+5
`-1 2
`+5
`
`- 17
`-
`+3
`
`+9
`+1
`
`+ 1
`+ 12
`
`+3
`+ 4
`
`4 I Roche Finance Report 2015
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Novartis Exhibit 2275.006
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`
`https://www.roche.com/dam/jcr:74af99eb-b51a-4f13-88b2-aacaf9f53c0c/en/fb15e.pdf
`
`Novartis Exhibit 2275.007
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Roche Group I Financial Review
`
`Acquisitions
`
`During 2015 the Roche Group completed the acquisition of several companies, including some previously announced in 2014, The
`total cost of the acquired net assets was CHF 2.3 billion in cash and CHF 0.6 billion from the fair value of contingent consideration
`arrangements.
`
`On 7 April 2015 the Pharmaceuticals Division acquired a 61.3% controlling interest in Foundation Medicine ('FMI') for USD 1.0 billion.
`The transaction further advances FMl's market-leading position in molecular information and genomic analysis while providing the
`Group with a unique opportunity to optimise the identification and development of novel treatment options for cancer patients. The
`Pharmaceuticals Division also completed the acquisition of Trophos. In Diagnostics the Division acquired GeneWeave Biosciences in
`Molecular Diagnostics and, in the sequencing business, Ariosa Diagnostics, Signature Diagnostics, CAPP Medical and Kapa Biosystems.
`
`On 29 September 2014 the Pharmaceuticals Division acquired a 100% controlling interest in lnterMune for USD 8.8 billion. The acquisition
`added a new medicine for idiopathic pulmonary fibrosis, Esbriet, to the Roche portfolio, Non-core costs in 2015 relating to lnterMune
`included intangible asset amortisation of CHF 1.1 billion and an expense of CHF 552 million from the release of the inventory fair value
`adjustment. The Group issued USD 5.75 billion of debt in 2014 to finance the transaction.
`
`In the 2014 Annual Financial Statements the accounting for the lnterMune, Dutalys and Bina acquisitions was provisional based on
`preliminary information and valuations of the assets and liabilities. These valuations were finalised in 2015 and as a result the comparative
`balance sheet information at 31 December 2014 has been restated.
`
`Contingent consideration provisions have increased by CHF 677 million to CHF 1.5 billion in 201 5, mainly due to new provisions of
`CHF 567 million arising from the 20 15 acquisitions. In addition there was a net increase in provisions of CHF 192 million, which was
`recorded as a general and administration expense, mainly due to the progression of the lead product candidate from the Seragon
`acquisition. This was partially offset by payments of CHF 119 million, mainly related to the IQuum acquisition.
`
`Further details are given in Notes 5, 20 and 29 to the Annual Financial Statements,
`
`Global restructuring plans
`
`During 2015 the Group continued with the implementation of several major global restructuring plans initiated in prior years, notably
`the programme in the Diagnostics Division's Diabetes Care business. On 12 November 2015 the Pharmaceuticals Division announced
`a strategic realignment of its manufacturing network, including exiting from four sites. Total costs in 2015 of CHF 1.2 billion were
`considerably higher than the 2014 costs of CHF 0.8 billion. This is due to the strategic realignment of the Pharmaceuticals Division's
`manufacturing network with costs of CHF 0.6 billion in 2015.
`
`Gl obal restructuring pl ans: costs incurred for 2015 in millions of CHF
`
`Diagnostics'' Site consolidation"
`
`Other plans''
`
`Global restructuring costs
`
`- Employee- related cost s
`
`- Si te closure costs
`
`- Other reorganisation expenses
`Total global restructuring costs
`
`Add itional costs
`
`-
`
`-
`
`Impairment of goodwill
`
`Impairment of int angible assets
`
`- Legal and environmental costs
`
`Total costs
`
`7 1
`
`22
`
`208
`301
`
`-
`-
`-
`
`301
`
`198
`317
`66
`581
`
`107
`
`688
`
`1)
`2)
`3)
`
`Includes the Diabetes Care 'Autonomy and Speed· restructuring plan.
`Includes the Pharmaceuticals Division strategic realignment of its manufacturing network.
`Includes plans for Pharmaceuticals Division research and development strategic realignment and field force reductions in Europe and Asia- Pacific.
`
`6 I Roche Finance Report 2015
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Total
`
`358
`34 1
`363
`1,062
`
`--
`
`107
`
`89
`2
`89
`180
`
`-
`-
`-
`
`180
`
`1,169
`
`Novartis Exhibit 2275.008
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Financial Review I Roche Group
`
`Diagnostics Division. On 26 September 2013 Roche Diabetes Care announced the 'Autonomy and Speed' initiative which will enable
`the business to focus on Diabetes Care's specific requirements. speed up processes and decision-making and drive efficiencies. In 2015
`costs of CHF 175 million were incurred, mainly for consultancy and IT-related costs as well as employee-related costs. Spending on other
`smaller plans within the Division was CHF 126 million and included costs related to certain IT projects and the restructuring of the former
`Applied Science business.
`
`Site consolidation. On 12 November 2015 the Pharmaceuticals Division announced a strategic realignment of its manufacturing network
`including exiting from the manufacturing sites at Clarecastle. Ireland; Leganes, Spain: Segrate. Italy; and Florence, US. Costs for this
`plan are expected to be in the order of CHF 1.6 billion. of which up to CHF 0.6 billion will be in cash. The plan is expected to run until
`2021 and approximately 1.200 positions will be affected. Costs from this plan in 2015 were CHF 602 million, of which CHF 182 million
`were non- cash write- downs and accelerated depreciation of property, plant and equipment. Additional costs were recorded in the
`Pharmaceuticals Division for the outsourcing of logistics at the Rosny site in France and the closure of the manufacturing site at Toluca,
`Mexico. The divestment plans for the Nutley site are on track.
`
`Other global restructuring plans. The major items were CHF 62 million from the Pharmaceuticals Division research and development
`strategic realignment and CHF 55 million from various initiatives to reduce the field force in the Europe and Asia-Pacific regions.
`
`Further details are given in Note 6 to the Annual Financial Statements.
`
`Impairment of goodwill and intangible assets
`
`There were only minor impairments in 2015. In the Pharmaceuticals Division impairment charges totalled CHF 69 million relating to
`decisions to stop development of various compounds and a collaboration project with different alliance partners. There were no
`impairments in the Diagnostics Division.
`
`Total impairment charges recorded against goodwill and intangible assets in 2014 were CHF 1.9 billion. The major part of this was in the
`Tissue Diagnostics business with impairment charges of CHF 552 million against goodwill and CHF 643 million against product intangible
`assets.
`
`Further details are given in Notes 8 and 9 to the Annual Financial Statements.
`
`Legal and environmental settlements
`
`The legal and environmental settlements include the provision of CHF 107 million for the remediation costs at the Clarecastle production
`site in Ireland following the strategic realignment of the Pharmaceuticals Division's manufacturing network. There were no other
`significant developments in 2015. Further details are given in Note 19 to the Annual Financial Statements.
`
`Major debt restructuring
`
`As a result of attractive financing conditions on capital markets the Group decided in September 2015 to restructure part of its debt.
`This consisted of the refinancing of USO 0.9 billion of notes with coupons of 5.25%- 7.00% originally due in 2019- 2039 and EUR 0.4 billion
`of notes with coupons of 6.50% originally due in 2021 with the issuance of USO 1.0 billion of notes due in 2025 with coupons of 3.00%.
`This major debt restructuring resulted in a loss of CHF 381 million. Further details are given in Note 20 to the Annual Financial
`Statements.
`
`Treasury and taxation
`
`Core financing costs were CHF 1.1 billion. a decrease of 17%, mainly due to losses on debt redemption and interest costs being lower
`than in 2014. Core other financial expenses were CHF 276 million, reflecting a net foreign exchange loss of CHF 386 million mainly arising
`from Venezuela and Argentina, partially offset by CHF 118 million of net income from equity securities. Core tax expenses increased by
`9% to CHF 4.3 billion and the Group's effective core tax rate increased to 26.6% compared to 24.1% in 2014. This was mainly due to the
`higher percentage of core profit contribution coming from tax jurisdictions with higher local tax rates than the average Group tax rate,
`notably in the US.
`
`https://www.roche.com/darn/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Roche Finance Report 2015 17
`
`Novartis Exhibit 2275.009
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Roche Group I Financial Review
`
`Net Income and earnings per share
`
`IFRS net income and diluted EPS both decreased by 5% in CHF terms. At CER the IFRS income increased by 4% and diluted EPS increased
`by 7%. Core net income increased by 1% and Core EPS increased by 4% at CER. The core basis excludes non- core items such as global
`restructuring costs, amortisation and impairment of goodwill and intangible assets, and alliance and business combination costs. Excluding
`the income in 2014 from the divestment of the filgrastim franchise rights of CHF 428 million and the related tax effects of CHF 93 million,
`underlying Core EPS grew at 7% at CER.
`
`Net income
`
`IFRS net income
`
`Reconciling items (net of tax)
`- Global restructuring
`-
`Intangible asset amortisation
`- Goodwill and intangible asset impairment
`- Alliances and business combinations
`- Legal and environmental settlements
`- Major debt restructuring
`- Pension plan settlements
`- Normalisation of tax benefits for equity compensation plans
`Core net income
`
`2015
`(CHFm)
`
`9,066
`
`868
`854
`49
`594
`142
`248
`(4)
`30
`11,837
`
`2014
`(CHF m)
`
`9,636
`
`416
`469
`1,580
`32
`190
`279
`
`32
`12,533
`
`% change
`(CHF)
`-s
`
`% change
`(CER)
`+4
`
`+ 109
`+82
`- 97
`Over +500
`- 25
`- 11
`-
`- 6
`-41
`
`+ 124
`+77
`- 97
`Over + 500
`- 19
`-1 6
`-
`-1 0
`+1
`
`Supplementary net income and EPS information is given on pages 131 to 134. This includes calculations of core EPS and reconciles
`the core results to the Group's published IFRS results.
`
`Financial position
`
`Financial position
`
`Pharmaceuticals
`Net working capital
`Long-term net operating assets
`Diagnostics
`Net working capital
`Long-term net oper ating assets
`Corporate
`Net working capital
`Long-term net operating assets
`Net operating assets
`
`Net debt
`Pensions
`Income taxes
`Other non- operating assets, net
`Total net assets
`
`20 15
`(CHF m)
`
`4,437
`26, 179
`
`2,533
`12,899
`
`(108)
`(258)
`45,682
`
`(I 4,080)
`(7,699)
`(523)
`(BO)
`23 ,300
`
`20 140
`(CHFm)
`
`5,888
`25,060
`
`2,742
`11 ,378
`
`(96)
`(4 18)
`
`( 14,0 11)
`(8,303)
`(47)
`(635)
`21,558
`
`% change
`(CHF)
`
`% change
`(CER)
`
`- 25
`+ 4
`
`- 8
`+ 13
`
`+ 13
`- 38
`+3
`
`0
`- 7
`Over + 500
`- 87
`+B
`
`-1 8
`+ 6
`
`+4
`+ 17
`
`+ 12
`- 31
`+6
`
`-1
`- 2
`
`-
`
`- 90
`+14
`
`1) As disclosed in Note 5 to the Annual Financial Statements. the balance sheet at 3 1 December 20 14 has been restated following the finalisation of the net assets acquired related
`to the lnterMune. Dutalys and Bina acquisitions in 2014. A reconciliation to the previously published balance sheet is provided in Note 5.
`
`8 I Roche Finance Report 20 15
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Novartis Exhibit 2275.0010
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Financial Review I Roche Group
`
`Compared to the start of 2015 the Swiss franc appreciated against most currencies. notably the euro and the Brazilian real. which resulted
`overall in a negative translation impact on balance sheet positions. The US dollar ended the year at the same rate against the Swiss franc
`as at the beginning of the year and therefore had litUe translation impact on balance sheet positions. The exchange rates used are given on
`page 26.
`
`In the Pharmaceuticals Division net working capital decreased by 18% at CER due to an increase in other payables since the end of 2014
`due to the exercise of a purchase option for offices in South San Francisco. In addition trade receivables decreased, mainly in the US,
`as a consequence of lower Tamiflu sales at the end of 2015 and good collections. Inventory levels rose by 2% due to the expansion of
`production capacities including deliveries from external manufacturing partners and also due to higher sales volumes in both new and
`established products. Long-term net operating assets increased as a result of the goodwill and intangible assets from the Foundation
`Medicine and Trophos acquisitions and higher capital expenditure as well as for the purchase option exercise for offices in South
`San Francisco. In Diagnostics the increase in net working capital of 4% was a result of the strong sales performance in 2015 as well
`as challenging political and economic situations which resulted in an increase of 9% in inventories and 9% in account receivables.
`Long-term net operating assets increased due to the intangible assets and goodwill from the various acquisitions in 2015,
`
`Net debt was stable at CHF 14.1 billion as the free cash flow was larg ely absorbed by acquisitions. The net pension liability decreased
`by CHF 0,6 billion with the main driver being the translation of the euro-denominated unfunded plans in Germany into Swiss francs on
`consolidation. The net tax liabilities increased mainly due to the deferred tax effects from the acquisition accounting.
`
`Free cash flow
`
`Free cash flow
`
`Pharmaceuticals
`Diagnostics
`Corporate
`Operating free cash flow
`Treasury activities
`Taxes paid
`Dividends paid
`Free cash flow
`
`2015
`[CHFm)
`
`14.482
`963
`(573)
`14,872
`(870)
`(3,696)
`(6,954)
`3,352
`
`201 4
`(CHFm)
`
`14,82 1
`1,4 17
`(460)
`15,778
`(756)
`(2,982)
`(6,718)
`5,322
`
`%change
`(CHF)
`
`- 2
`- 32
`+25
`-6
`+ 15
`+24
`+4
`-37
`
`% change
`(CER)
`- 5
`-1 2
`+24
`
`+1 3
`+25
`+4
`-41
`
`The Group's operating free cash flow for 2015 was CHF 14.9 billion, a decrease of 7% at CER and 6% in CHF terms, The operating cash
`generation was absorbed by higher investments in property, plant and equipment for site infrastructure and office development projects
`and expansion of manufacturing facilities and by the increased in-licensing arrangements in the Pharmaceuticals Division. The free cash
`flow of CHF 3.4 billion decreased significantly compared to 2014, due to the relatively lower operating free cash flow, higher tax payments
`and the increase in the annual dividend.
`
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Roche Finance Report 2015 I 9
`
`Novartis Exhibit 2275.0011
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Roche Group I Financial Review
`
`Pharmaceuticals Division operating results
`
`Pharmaceuticals Division operating results
`
`IFRS results
`Sales
`Royalties and other operating income
`Cost of sales
`Marketing and distribution
`Research and development
`General and administration
`Operating profit
`- margin,% of sales
`
`Core results "
`Sales
`Royalties and other operating income
`Cost of sales
`Marketing and distribution
`Research and development
`General and administration
`Core operating profit
`- margin,% of sales
`
`Financial position
`Net working capital
`Long-term net operating assets
`Net operating assets
`
`Free cash flow
`Operating free cash flow
`- margin. % of sales
`
`1) See pages 131- 134 for definition of Core results and Core EPS.
`
`Sales overview
`
`Pharmaceuticals Division - Sal es by therapeutic area
`
`Therapeutic area
`Oncology
`Immunology
`Infectious diseases
`Ophthalmology
`Neuroscience
`Other therapeutic areas
`Total sales
`
`20 15
`(CHFm)
`
`37,331
`2, 11 9
`( 10,249)
`(6. 154)
`(8,367)
`( 1,677)
`13,003
`34.8
`
`37,331
`2,119
`(7,900)
`(6,066)
`(8. 134)
`( 1,295)
`16,055
`43.0
`
`4.437
`26,179
`30,616
`
`14.482
`38.8
`
`2014
`(CHF m)
`
`36,696
`2,273
`(B,0 13)
`(6,1 30)
`(8,380)
`(2,142)
`14,304
`39.0
`
`36.696
`2,273
`(7,551)
`(5,974)
`(7,876)
`(1 ,567)
`16,001
`43,6
`
`5,888
`25,060
`30,948
`
`14,821
`40.4
`
`% change
`(CHF)
`
`% change
`(CER)
`
`+2
`- 7
`+28
`0
`0
`- 22
`..g
`
`- 4.2
`
`+2
`- 7
`+5
`+2
`+3
`- 17
`0
`- 0.6
`
`- 25
`+4
`-1
`
`- 2
`- 1.6
`
`+5
`- 11
`+29
`+3
`0
`- 21
`-3
`- 3.1
`
`+5
`- 11
`+7
`+4
`+4
`-1 7
`+5
`+0.2
`
`- 18
`+6
`+1
`
`- 5
`- 4. 1
`
`2015
`(CHF m)
`23,661
`6,228
`2,05 1
`1,520
`648
`3,223
`37,331
`
`20 14
`(CHF m)
`22.797
`5,087
`3,1 94
`1,701
`726
`3,191
`36,696
`
`% change
`(CER)
`+8
`+ 24
`- 34
`-1 5
`-1
`+4
`+5
`
`% of sales
`(2015)
`63
`17
`5
`4
`2
`9
`100
`
`% of sales
`(201 4)
`62
`14
`9
`5
`2
`8
`100
`
`Pharmaceuticals Division sales increased by 5% at CER. with strong growth in oncology and immunology products. Sales growth was
`primarily driven by the following products: Herceptin, Avastin, Perjeta, Esbriet. MabThera/Rituxan. Actemra/RoActemra and Kadcyla.
`These products together contributed CHF 3.2 billion at CER to sales growth.
`
`The growth of 19% in the HER2 franchise resulted from increased demand for Perjeta and Herceptin in combination therapy and
`continued uptake of Kadcyla. Avastin sales grew in all regions driven by increased use in recently launched indications, MabThera/
`Rituxan sales also increased, notably in the US. Sales in immunology increased due to demand for Esbriet. following its US launch in
`late 20 14, due to the growth of Actemra/RoActemra in all regions in its subcutaneous formulation and Xolair. which grew by 25% due
`to increasing uptake for the recently launched indication chronic idiopathic urticaria.
`
`10 I Roche Finance Report 20 15
`https://www.roche.com/dam/jcr: 7 4af99eb-b51a-4f13-88b2-aacaf9f53c0den/fb15e.pdf
`
`Novartis Exhibit 2275.0012
`Regeneron v. Novartis, IPR2021-00816
`
`
`
`Sales of Pegasys declined due to competition from a new generation of treatments and sales of Valcyte/Cymevene and Xeloda fell due
`to generic competition. Tamiflu sales were lower due to a relatively mild influenza season in late 2015 compared to the severe season in
`late 2014, while sales of Lucentis declined due to strong competition,
`
`Financial Review I Roche Group
`
`20 15
`(CHF m)
`
`2014
`(CHF m)
`
`% change
`(CER)
`
`%of sales
`(20 15)
`
`% of sales
`(20 14)
`
`Product sales
`
`Pharmaceuticals Division - Sales
`
`Oncology
`Avastin
`Herceptin
`MabThera/Rituxan 'l
`Perjeta
`Tarceva
`Kadcyla
`Xeloda
`Zelboraf
`Others
`Total Oncology
`
`Immunology
`Actemra/RoActemra
`MabThera/Rituxan 1i
`Xolair
`CellCept
`Pulmozyme
`Esbriet
`Ot hers
`Total Immunology
`
`Infectious diseases
`Tamiflu
`Pegasys
`Valcyte/Cymevene
`Rocephin
`Others
`Total Infectious diseases
`
`Ophthalmology
`Lucentis
`Total Ophthalmology
`
`Neuroscience
`Madopar
`Others
`Total Neuroscience
`
`Other therapeuti c areas
`Activase/TNKase
`M ircera
`NeoRecormon/Epogin
`Nutropin
`Others
`Total other therapeutic areas
`
`6,684
`6,538
`5,640
`1,445
`1,181
`