4SC AG — Interim / Quarterly Report 2012

May 10, 2012

:: 4SC in Brief

:: 01 Product pipeline (as of: 2 May 2012)

product	indication	mode of action	Research	Preclinical	Phase I	Phase II	Phase III	market approval / market Launch	Partner
Autoimmun disease			Entrance
Vidofludimus 4SC-101	Inflammatory Bowel Disease (IBD)	Oral autoimmune modulator of the DHODH enzyme and the IL-17 cytokine	Component
Vidofludimus 4SC-101	Rheumatoid Arthritis (RA)	Oral autoimmune modulator of the DHODH enzyme and the IL-17 cytokine
Onkology			SHELTER
Resminostat 4SC-201	Hepatocellular Carcinoma (HCC )	Oral pan histone deacetylase (HDAC ) inhibitor	SAPHIRE
Resminostat 4SC-201	Hodgkin's Lymphoma (HL)	Oral pan HDAC inhibitor	SHORE
Resminostat 4SC-201	Colorectal Cancer (CRC	) Oral pan HDAC inhibitor	AS
4SC-202	Haematologic Tumours	Oral selective HDAC inhibitor with a strong anti-mitotic effect
4SC-203	Oncology	Multi-kinase inhibitor selective of FLT3 and VEGF	AEGIS
4SC-205	Solid Tumours	Oral Eg5 kinesin spindle protein inhibitor
4SC-207	Solid Tumours	Oral cell-cycle blocker
Resear ch Progra	mmes
Cancer stem cells	Oncology
Ion channel blockers	Autoimmun Disease
Cytokine modulation	Autoimmun Disease/ Oncology
				Completed clinical studies		Ongoing clinical studies		Further clinical studies planned

:: Milestones q1 2012

On the path to market maturity, we have achieved key milestones in the first quarter of 2012 and enhanced the intrinsic value of the Company. We have made sustainable progress in our clinical compound programmes and in our early-stage research activities.

: : Resminostat	4SC achieves primary efficacy endpoint ahead of schedule in the Phase II SHELTER trial in advanced hepatocellular carcinoma (HCC ). 4SC is now focusing efforts on a registration trial with resminostat in this indication.
: : Vidofludimus	4SC publishes new preclinical data that confirm the compound's unique anti-inflammatory mechanism of action. This impressively under pins the Company's objective of initiating a clinical Phase IIb study in the inflammatory bowel disease (IBD) indication.
	: : Milestone payment 4SC receives a milestone payment from an earlier research collaboration with the Japanese pharmaceutical company SKK, following the partner's achievement of an agreed milestone for a drug candidate originally identified with the help of 4SC.
	: : 4SC Discovery GmbH The subsidiary, which was formed to conduct and commercialise the Group's early-stage research and began operations in early 2012, launches an initial research collaboration with Henkel shortly after the end of the reporting period.

:: 02 Key financial figures

	Q1 2012	Q1 2011
	resp.	resp.
	31.03.2012	31.03.2011	Change in %
Key financial figures (in €000's)*
Revenue	365	0	n/a
Operating profit/loss	- 3,822	- 4,787	20
Profit/loss for the period	- 3,697	- 4,697	21
Equity	19,867	37,630	- 47
Equity ratio (in %)	71.5%	91.4%	- 19.9%P
Total assets	27,780	41,192	- 33
Cash flows from operating and investing activities	- 1,850	- 10,469	- 82
Cash flows from financing activities	0	11,034	- 100
Net change in cash and cash equivalents	- 1,850	565	227
Cash and cash equivalents	4,970	5,521	- 10
Cash balance/funds	11,970	24,592	- 51
Earnings per share (basic and diluted) (€)	- 0.09	- 0.12	25
Employees
Number of employees and Management Board members (at end of period)	90	94	- 4

* The figures for 2011 refer to the separate financial statements of 4SC AG whilst the figures for 2012 refer to the consolidated financial statements including 4SC Discovery GmbH. For more information, see page 8.

02 Letter to the Shareholders

05 INTERIM GROUP MANAGEMENT REPORT

• 05 Business Performance
• 08 Financial Performance, Cash Flows and Financial Position
• 10 Report on Risks and Opportunities
• 10 Events after the Reporting Period
• 10 Anticipated Developments
• 12 Interim consolidated Financial Statements
• 12 Consolidated statement of comprehensive income
• 13 Consolidated statement of financial position
• 15 Consolidated statement of cash flows
• 16 Consolidated statement of changes in equity
• 17 Selected consolidated Notes

4SC researches and develops innovative, orally administered small-molecule drugs for autoimmune diseases and cancer – indications with a high unmet medical need and excellent marketing potential. The well-balanced clinical pipeline and constant focus on new, intrinsically valuable research programmes enables the targeted development of the business. Thus the Company was able to achieve sustainable progress in the developent of its key compounds and is perfectly positioned for its next value-enhancing development steps. Together with its employees, partners and shareholders, 4SC works continuously towards its goals of relieving suffering and improving the quality of life for people with illnesses.

By people. with people. for people.

:: LETTER TO THE SHAREHOLDERS

Dear shareholders, dear friends and partners of 4SC,

We are full of confidence following the successful start to the 2012 financial year. The sails are set and we are on course to pursue the dynamic development of the 4SC Group. The successes reported in recent months indicate that we are on target with our balanced and innovative development portfolio.

One highlight came as early as January 2012 with the publication of the excellent Phase II trial data for our lead oncology compound resminostat in advanced hepatocellular carcinoma (HCC). The data from the SHELTER study impressively validate the growing applicability of the new epigenetic mechanism of action offered by resminostat. One particularly impressive aspect is the way resminostat catalyses tumour cell "sensitisation", an action we believe to be of extraordinary clinical relevance. The use of resminostat aims to extend the successful treatment of patients with a cancer drug to which they are no longer showing an adequate response. Patients with advanced liver cancer are one of the groups most in need of new treatment options. It is therefore very promising that in our study for two-thirds of patients with advanced HCC who no longer responded to sorafenib – the only compound previously approved for this condition – the supplementary administration of resminostat prevented the further disease progression for at least 12 weeks and for much longer in individual cases. Accordingly, we reached the primary efficacy endpoint of the SHELTER study ahead of schedule. The data were presented in January 2012 at the ASCO Gastrointestinal Cancer Symposium in San Francisco. This major success also had a correspondingly positive effect on 4SC's market capitalisation. We are confident that we will confirm these outstanding data over the course of the year when we present the final results from this study.

Based on these promising data, we are now holding talks with regulatory agencies and potential partners to prepare a registration trial in this indication. We are working towards market approval of resminostat for the treatment of HCC patients who no longer respond to therapy with sorafenib. So far, no drugs have been approved for this patient group. This is therefore an area of urgent medical need with excellent commercial potential. We are doing everything in our power to ensure that we will be able to initiate a registration trial together with a partner in the first six months of 2013.

In this context, we were delighted to receive the news that the Taiwanese Patent Office had granted us the key patent for resminostat. Patents are also due to be issued very soon now in South Korea, India and the Philippines. These patents bolster our market position in the Asia-Pacific region, which is very important commercially – especially for the development of

resminostat in the indication of liver cancer. We believe that the enhanced patent protection in these Asian growth markets, together with the existing patents in our core markets of Europe, the United States and Japan, will further advance the successful progress of these talks with potential partners. Our existing regional partnership for the development and commercialisation of resminostat in Japan with Yakult Honsha, the Japanese market leader for gastrointestinal cancer therapies, is a case in point here. Since Japan constitutes around 10% of the global oncology market, this partnership is an important validation of the overall commercial potential of resminostat.

Complementing the liver cancer indication, we are also developing resminostat in the indications of lymph node cancer (Hodgkin's lymphoma) and colorectal cancer. In the Phase II SAPHIRE trial in Hodgkin's lymphoma, which was completed in 2011, resminostat returned impressive data as a monotherapy for heavily pre-treated patients with advanced tumour disease and attained the primary efficacy endpoint. We expect to receive the first interim results from the ongoing Phase I/II SHORE trial in the colorectal cancer indication before the end of the year. We regard this as a further significant contribution to the successful implementation of our resminostat development strategy. We remain firmly convinced that resminostat is superbly positioned for capturing a market gap in the area of life-threatening cancer diseases. Thanks to its innovative, epigenetic mechanism of action, resminostat holds the key to new and effective treatment options for patients and physicians. In the medium term, we see great potential in working with strong partners to develop resminostat to successful market maturity for a whole series of tumour indications.

We were also able to publish further sets of impressive data for autoimmune diseases in the first quarter of 2012. In February 2012, we attended the ECCO IBD Conference in Barcelona, where we presented two posters with new preclinical data for our compound vidofludimus in models for inflammatory bowel disease (IBD). These once again demonstrated the broad potential of vidofludimus as an effective therapy for autoimmune diseases. They particularly confirmed the strong antiinflammatory activity that vidofludimus has already shown in our Phase IIa ENTRANCE study in patients with ulcerative colitis and Crohn's disease. These results further encouraged us in our efforts to conduct a clinical Phase IIb trial in IBD. We are currently talking to both regulatory agencies and potential partners about preparations for this trial. We intend to be able to start a study of this kind – ideally conducted with a partner – by the end of 2012 or in early 2013. As vidofludimus develops towards market maturity, we expect the drug to benefit patients with inflammatory bowel disease, a patient group currently generally reliant on cortisone preparations, a medication whose many side effects means patients require alternative therapy options to treat repeated disease flareups. With potential peak sales in the order of EUR 1 billion, we believe vidofl udimus has a chance to develop into a blockbuster in these indications – not least by exploiting the favourable competitive conditions in this segment.

We are working hard to develop innovative, targeted agents with a high therapeutic benefi t for the treatment of cancer and autoimmune diseases. This enables us to offer better therapy options for patients, as well as sustainable value for our shareholders, partners and employees. The longterm fi nancing of the Company and our ambitious projects as well as 4SC's histori cally strong focus on earlystage research play an important role in this context. These provide an enduring foundation for our company's longterm success.

In this context, we consolidated our entire earlystage research activities into a whollyowned subsidiary, 4SC Discovery GmbH, with effect from 1 January 2012. This lets us benefit from opportunities offered by the growing trend for pharmaceutical companies to outsource research services to specialised biotechnology companies. Here, our objective is to use a strong subsidiary to consolidate 4SC's many years of broadbased experience in earlystage compound research and apply this to drive the generation of additional revenue. This is our chosen strategy for ensuring we have a wide choice of financial options open to us while reducing the Company's dependency on capital market financing. By concentrating our resources on our core products of resminostat and vidofludimus, alongside our promising anticancer compound 4SC202 – whose ongoing Phase I trial we intend to conclude successfully in 2012 – we are continuing to develop our company's business along a focused and valueoriented trajectory. This year, we also intend to conclude an ongoing Phase I trial with 4SC205, a further attractive anticancer compound currently in clinical development.

We are particularly proud that our young subsidiary 4SC Discovery GmbH has entered into its fi rst research collaboration with a highprofi le partner, Henkel KGaA, just three months after commencing operations. Also, in April of this year, we were able to report 4SC Discovery GmbH's second success – a strategic marketing partnership with CRELUX GmbH. These partnerships are testament to the fact that we are pursuing an effective corporate strategy. They are making us more competitive and stronger for future research collaborations. This is also an appropriate juncture to mention our pleasure at receiving a milestone payment from the Japanese pharmaceutical company SKK in the fi rst quarter. This payment was triggered by a drug candidate passing an agreed milestone at SKK. We had previously identifi ed this candidate using our computeraided (in silico) screening technology during a research collaboration with SKK.

On 2 May 2012, our Supervisory Board Chairman, Dr Jörg Neermann, informed us of his plans to step down from 4SC's Supervisory Board effective 31 May 2012 for personal reasons after being a member of this board for over eleven years.

4sC-GroUP
4sC dIsCoVerY GMBh	4sC aG
Management: Dr Daniel Vitt Dr Stefan Strobl	Management Board: Dr Ulrich Dauer (Ceo) Dr Bernd hentsch (CDo) enno Spillner (CFo) Dr Daniel Vitt (CSo)
Strategy: :: Strengthening 4SC's business model through revenues from research services and cooperations :: Marketing of early stage research and discovery programmes :: Replenishing 4SC's clinical development pipeline	Strategy: :: Clinical development of attractive drugs for the treatment of cancer and autoimmune diseases on the path to market maturity :: Growth through partnerships – marketing the products :: Broad-based medicinal research expertise – strengthening 4SC's business model and enhancing its sustainability
drUG dIsCoVerY & CoLLaBoratIVe BUsINess seGMeNt	deVeLoPMeNt seGMeNt
researCh PreCLINICaL	CLINICaL deVeLoPMeNt

Dr Neermann closely monitored and played a key role in the development of the Company – not only as an investor in all of the company's rounds of venture capital financing, from the first financing in 1999 to the public listing in 2005, but also as a member and, since 2003, as Chairman of 4SC's Supervisory Board. On behalf of the entire 4SC Management Board and the entire company, I wish to thank Dr Neermann for his untiring dedication and magnificent contribution to 4SC's success and for his close and constructive collaboration as a friend of our company. We wish him all the best for the future, both professionally and privately. The Deputy Chairman of the Super visory Board, Dr Thomas Werner, will chair this board temporarily until a new Chairman has been elected.

The current year started off on a very eventful and successful note for us. We set the course for the 4SC Group's strong performance in the future by making forward-looking decisions and systematically implementing our corporate strategy. Our intention is to continue on this path with your support and further strengthen our successful business model. We are looking forward to the coming months with great excitement and confi dence.

We would like to extend warm thanks to you – our shareholders, employees, business partners and friends – for your trust, your loyalty and your commitment.

Yours sincerely,

Dr Ulrich Dauer, CEO

:: INTERIM GROUP MANAGEMENT REPORT

1. Business Performance

1.1 Current developments in the Biotech Sector

Economic environment : : While the first quarter of 2012 was still dominated by the persistent sovereign debt crisis, growing optimism about the economy emerged in spite of this burden, born in part from an abating of the risk aversion among market participants and resulting in shares bouncing back on the equity markets. The decisions taken at the summit of EU heads of state and government concerning planned rescue and reform measures further stabilised the situation. This optimism was also mirrored in the increase in the ifo business climate index for the German economy.

Current sector developments : : The positive change in sentiment in the market was reflected in the stronger performance of key indices during the first quarter of 2012. The DAX posted gains of 14.34% in the first three months of the year. The German DAXsubsector Biotechnology index climbed 12.84%, the NASDAQ Biotech Index 16.84%. During this period, 4SC stock appreciated by an impressive 102.41%. The share price received a particularly strong boost from the publication on 19 January of the excellent data from the Phase II SHELTER study with resminostat in advanced liver cancer.

The mood in the biotechnology sector was further underpinned by 28 product approvals in the first quarter of 2012. Even the 46 clinical and regulatory setbacks at pharmaceutical and biotechnology companies failed to put a damper on the prevailing mood, which was positive once more. Since the boom in the entire biotechnology sector in summer 2009, investors did not begin to show enthusiasm for small cap companies in the industry again until the first quarter of 2012. Among these securities are the winners from the last quarter. The shares of smaller and medium-sized oncology companies that recently reported clinical successes were particularly sought-after on the capital markets. The first quarter of 2012 held rewards for investors who had invested especially in companies focusing on therapies for hepatitis C or oncology.

An encouraging signal in the oncology sector was sent by the FDA's approval of Genentech's Erivedge (vismodegib), a drug used to treat advanced basalioma (basal cell carcinoma). This approval gave rise to a milestone payment of \$10 million to Curis Inc., the company that develops Erivedge in conjunction with Genentech. In Germany, Apogenix GmbH concluded a €7.5 million round of financing in January 2012 for the further clinical development of APG101 in the glioblastoma multiforme (GBM) indication and other cancers. Encouraging Phase II study data for this compound in the GBM indication was then released in March 2012. Positive developments were also announced in the area of autoimmune diseases, the cooperation agreement between Galapagos NV and Abbott on the development and commercialisation of a JAK1 inhibitor in the rheumatoid arthritis indication reported in February deserving particular mention. The licensing deal between Lipid Therapeutics and Dr. Falk Pharma GmbH on the development of the compound LT-02 in the ulcerative colitis indication that was announced in March 2012 sent out a positive signal.

M&A activities were dominated by Amgen's takeover of German biotech company Micromet in March 2012. Seven biotechnology companies went public worldwide in the first quarter of 2012, four of these on NASDAQ, two on the EuroNext and one in China. One of these companies is Merrimack Pharmaceuticals, which develops compounds for the treatment of autoimmune diseases and cancer. Its IPO at the end of March generated new capital of around \$100 million. The companies that went public each raised between \$36 million and \$100 million, bringing the total issue proceeds to \$454.4 million. In follow-up financing, 34 listed companies raised around \$2 billion in total – the highest amount that biotechnology companies have raised in follow-up financing in a single quarter since the fourth quarter of 2009, when 26 companies raised \$2.4 billion.

1.2 4SC on the stock markets

The healthy conditions in the industry and the capital markets in the first quarter of 2012 lifted 4SC's share price by an impressive 102.41%.

4SC stock kicked off 2012 with great momentum. After opening the year at €1.28 on 2 January 2012, the share posted gains of around 15% in the first two weeks of Xetra trading in a rebound after sell-offs at the end of 2011, closing at €1.48 on 18 January 2012. Due to the release on 19 January 2012 of excellent clinical study data for resminostat in the liver cancer indication, the Company's share price skyrocketed and continued rising in the two weeks that followed. On 3 February 2012, 4SC shares were trading at €3.03, their highest point for the year to date. Despite profit-takings, the share price performance remained at a high level. 4SC AG's shares closed at €2.60 on 30 March 2012, putting the Company's market capitalisation at €109 million at the end of the quarter with 41,968,304 shares in circulation.

:: 03 Share Price in €, indexed on 4SC

In February 2012, 4SC received notification about a new major shareholder – Roland Oetker – with a voting share of 3.01%. As a result, the Company is now aware of five major shareholders that have exceeded the reportable threshold of 3%. The trading volume of 4SC shares also surged in the first quarter of 2012 to 5,472,221 shares traded across all German exchanges in the first three months of the year. This represents an average daily trading volume of 84,188 shares, up significantly from the 43,221 shares traded on average per day during the 2011 financial year. The average daily trading volume on XETRA also increased considerably from 26,307 in 2011 to 46,245 in the first three months of 2012. 250 DAXSUBSECTOR BIO Nasdaq Bio

:: 04 The 4SC share

	Q1 2012	Q1 2011
Number of shares issued (average, in 000's)	41,968	39,922
150 Free float (%)	26.4	26.0
3-month high (Xetra) (€)	3.03	4.89
3-month low (Xetra) (€)	1.28	3.20
100 Price at beginning of quarter/year (Xetra) (€)	1.28	4.10
Closing price at end of quarter (Xetra) (€)	2.60	3.47
Market capitalisation at end of quarter (€000's)	109,117	145,585
Average daily trading volume (Xetra, shares)	46,245	31,614

1.3 Business Review

1.3.1 Highlights

The 4SC Group (hereinafter also termed "4SC" or "the Company" or "the Group") has made an outstanding start to the 2012 financial year. Both segments of the Company achieved key milestones during the first quarter. The Development segment, which comprises the clinical and preclinical development work for drug candidates from the product pipeline as conducted by the Group's parent company 4SC AG, achieved decisive progress for its lead products. The Drug Discovery & Collaborative Business segment, which comprises the activities involved in the discovery, early-stage research and subsequent commercialisation of drug compounds by 4SC Discovery GmbH, also achieved impressive initial results.

In January, 4SC published data from the Phase II SHELTER trial with the anti-cancer drug resminostat for patients with advanced liver cancer (hepatocellular carcinoma, HCC). Figures published based on an advanced analysis of these data showed that the study's primary efficacy endpoint had been reached ahead of schedule. In February, 4SC published new preclinical data on vidofludimus – the Company's leading compound in the area of autoimmune diseases – confirming the substance's unique anti-inflammatory mechanism of action.

In March, the Company received a milestone payment from an earlier research collaboration, which had been concluded in the meantime, with the Japanese pharmaceutical company Sanwa Kagaku Kenkyusho Co., Ltd. (SKK) following SKK's achievement of an agreed milestone for a drug candidate originally identified with the help of 4SC. In early April, shortly after the end of the reporting period, 4SC Discovery GmbH began a research collaboration with Henkel KGaA, the German consumer goods group.

1.3.2 Current status of clinical and preclinical development (Development segment)

Autoimmune Diseases : : In the reporting quarter, the Company intensified the further development of vidofludimus in the inflammatory bowel disease (IBD) indication. Work focussed on preparing a Phase IIb study of the compound in IBD to be conducted in cooperation with a partner. After the successful completion of the scientific advice meetings with the drug authorities in Europe and the USA regarding the study design, activities will now focus on the talks with potential partners and further operational and regulatory preparations of the study. 100 150 200

In February, 4SC published new preclinical data on vidofludimus at the ECCO IBD Conference hosted by the European Crohn's and Colitis Organisation. This set of data was able to confirm the unique dual-action anti-inflammatory mechanism shown by the Company's lead compound for autoimmune diseases. The compound inhibits the proliferation of immune cells and triggers their apoptosis (programmed cell death). It also selectively blocks the expression of the proinflammatory cytokines interleukin 17A (IL-17A) and IL-17F. The Company was able to demonstrate this activity in multiple preclinical models, the results of which were presented at the ECCO IBD conference. As one example, 4SC showed that vidofludimus considerably improves bowel inflammation in an induced colitis animal model.

Oncology : : On 19 January 2012, 4SC announced efficacy data from the clinical Phase II SHELTER trial with its lead oncology compound, the anti-cancer drug resminostat. These results were met with great interest. The trial investigates resminostat as a second-line therapy for patients with advanced liver cancer (hepatocellular carcinoma, HCC). The patients enrolled in the study had exhibited tumour progression under first-line therapy with sorafenib (Nexavar®) prior to entering the study. The study investigated the efficacy and safety of resminostat both as a monotherapy and in combination with sorafenib for this difficult to treat patient group, for which no approved treatment option is currently available. According to the data presented at the ASCO Gastrointestinal Cancer Symposium in San Francisco, which were based on an advanced data set, the primary study endpoint of halting the further progression of the cancer in at least 20% of evaluable patients and for at least 12 weeks has been achieved ahead of schedule in both therapy arms. Resminostat combined with sorafenib was able to prevent further progression of the disease for 12 weeks in two-thirds of the patients evaluable at that time and considerably longer – well over a year – in individual cases. Accordingly, at the time of publication the progression-free survival rate (PFSR) after 12 weeks was 66.6% for the combination therapy group (monotherapy group: 33.3%). The combination therapy also revealed a median progression-free survival (PFS) of 4.6 months (140 days). PFS describes the period during which the progression of a disease can be halted. Resminostat has generally proven to be safe and well tolerated. At the time the data were published, the study was still providing treatment to several patients, for whom no post-12-week evaluation was available. The final data from the SHELTER study are scheduled to be presented at a scientific conference during 2012.

In March, the Company announced that it had extended patent protection for resminostat in several growth markets in Asia-Pacific. With the key patent for resminostat already granted in Taiwan (patent no. I353977), the patent authorities in South Korea, India and the Philippines recently indicated that the granting of the composition-of-matter patents for resminostat is now imminent in the respective countries. The patents in these four countries cover the composition of matter of resminostat itself, pharmaceutical compositions comprising resminostat, and its therapeutic use in cancer and other therapeutic areas. The Asia-Pacific markets are very important for the development and marketing of resminostat because hepatocellular carcinoma (HCC), a disease targeted by resminostat in clinical studies, is especially common in these regions.

Resminostat, in combination with the FOLFIRI chemotherapy, is currently also being tested in patients with K-ras-mutated colorectal carcinoma (CRC), a form of colon cancer, in the clinical Phase I/II SHORE study. The Phase II SAPHIRE trial, which tested resminostat as a monotherapy in patients with Hodgkin's lymphoma – a form of lymph node cancer – was concluded successfully in 2011. In this trial, resminostat achieved the primary efficacy endpoint while proving to be safe and well-tolerated. Alongside resminostat, two further compounds – 4SC-205 and 4SC-202 – are currently undergoing clinical Phase I trials with cancer patients.

1.3.3 Current status of research activities (Drug Discovery & Collaborative Business segment)

4SC Discovery GmbH, a wholly-owned subsidiary of 4SC AG that was established in December 2011, commenced operations in Planegg-Martinsried at the beginning of 2012. In a capital increase in return for contributions in kind, both tangible and intangible assets belonging to the research activities of 4SC AG were transferred to the subsidiary. Assets comprise all those projects and products including the related intellectual property (IP) rights, for which no early development candidate (EDC) has been defined yet as well as 4SC's proprietary technology platforms for modelling, screening and drug discovery. Overall, 28 employees moved from 4SC AG to 4SC Discovery GmbH as at 1 January 2012. The net result reported in 4SC AG's singleentity financial statements according to the German Commercial Code (HGB) for 2012 will probably include extraordinary income in the high single-digit million euro range, the exact amount of which has yet to be calculated. This extraordinary income will be derived from the disclosure of the hidden reserves in the measurement of the assets transferred to the subsidiary. In 4SC AG's HGB balance sheet for 2012, the loss carryforward will be correspondingly reduced and investments will increase.

4SC Discovery GmbH will not only handle the Company's early-stage research, but also market the latter more prominently to third parties. The additional revenue thereby gained is intended to further strengthen the Group's overall business model while also contributing to the Group's internal funding. The subsidiary intends to provide services for pharmaceutical and biopharmaceutical companies and enter into research collaborations with these companies in the fields of drug discovery and drug optimisation. In addition, the subsidiary will accelerate the further development of these compounds through the commercialisation of 4SC's own products in the research phase, for instance by entering into early-stage partnering deals with pharmaceutical companies. The new subsidiary will finally continue to engage in the discovery and research of novel compounds for the further enhancement of 4SC AG's own clinical development pipeline.

In March, 4SC received a milestone payment from an earlier research collaboration with the Japanese pharmaceutical company Sanwa Kagaku Kenkyusho Co., Ltd. (SKK), which had been concluded in the meantime. The payment was triggered by the SKK's achievement of an agreed milestone for a drug candidate that had been identified with the help of 4SC's proprietary computerised screening technology.

In April 2012, after the end of the reporting period and thus only about three months after commencing operations, 4SC Discovery GmbH entered into a research collaboration with Henkel KGaA, the German consumer goods group, and started a marketing partnership with the German biotechnology company Crelux GmbH (for more information, please refer to the "events after the reporting period" on page 10).

1.3.4 Staff

As at 31 March 2012, the 4SC Group had a total of 90 employees (31 December 2011: 96). On average, 91 employees worked for the 4SC Group in the first three months of the year (Q1 2011: 94), of whom 65 were employed in research and development and 26 in sales and administration (31 December 2011: 69 and 27, respectively). Of the total staff of 91, the Development segment accounted for 62 and the Drug Discovery & Collaborative Business segment for 29.

2. Financial Performance, Cash Flows and Financial Position

The 4SC Group, comprising 4SC AG and its wholly-owned subsidiary 4SC Discovery GmbH, reports consolidated figures for the first three months of the 2012 financial year. The comparative figures for the first quarter of 2011 refer to the separate financial statements of 4SC AG. However, the quarterly figures of 2012 and 2011 can be compared because the research activities were simply reclassified from 4SC AG to 4SC Discovery GmbH as at 1 January 2012.

From this quarter onwards, the 4SC Group is reporting in the following two operating segments: The Development segment comprises the development programmes for vidofludimus, resminostat, 4SC-202, 4SC-203, 4SC-205 and 4SC-207. The Drug Discovery & Collaborative Business segment comprises the activities involved in drug discovery and early-stage research plus subsequent commercialisation, and, in particular, service business related to drug discovery and optimisation.

2.1 Financial Performance

Revenue : : The Group's revenue rose to €365 thousand in the first quarter of 2012 from €0 thousand in the prior-year period. This increase is principally attributable to the successive deferral of income from the deferred income item for resminostat (partnership with Yakult Honsha) from the previous year as well as to a milestone payment made in March under a previously concluded research cooperation agreement with Sanwa Kagaku Kenkyusho Co. Ltd. (SKK). The Development segment contributed €223 thousand to total revenue, while the Discovery & Collaborative Business segment generated revenue of €142 thousand in its first quarter of operations.

Further information regarding segment results can be found in the consolidated notes.

Operating expenses : : Operating expenses, comprising the cost of sales, distribution costs, research and development costs and administration costs, stood at €4,188 thousand in 2012, a decrease of 13% on the prior-year figure of €4,788 thousand. The Development segment accounted for €3,137 thousand and the Discovery & Collaborative Business segment for €1,051 thousand of these expenses.

Development costs caused by the ongoing clinical studies continued to make up a large part of operating expenses. As a result of the successful completion of several studies, research and development costs fell by 21% year on year to €2,919 thousand (previous year: €3,679 thousand).

The cost of sales of €37 thousand (previous year: € 0 thousand) reflect the commencement of research collaborations. The increase of €60 thousand in administrative costs from €965 thousand to €1,025 thousand is mainly attributable to legal and consulting costs as well as to higher costs for investor relations activities.

Distribution costs, which consist of the costs incurred by the Business Development and PR/Marketing units, increased by €63 thousand to €207 thousand during the same period. This increase was essentially due to the rise in legal and consulting costs incurred in connection with Yakult Honsha.

Operating profit/loss : : The Company's loss from operating activities decreased on the back of the situation described above. The operating loss posted for the first three months of 2012 amounted to €3,822 thousand, down from €4,787 thousand in the first quarter of 2011.

Net finance income/loss : : Net finance income rose from €78 thousand in the third quarter of 2011 to €135 thousand in the reporting quarter. 4SC's investment income from its equity interest in quattro research GmbH amounted to €93 thousand (previous year: €31 thousand) and is presented as profit from investments accounted for using the equity method. At €44 thousand in the first quarter of 2012 (previous year: €57 thousand), finance income also had a positive effect. The decline is due to a lower investment volume. Exchange rate differences impacted finance costs by €2 thousand in the reporting quarter (previous year: €10 thousand).

Taxes : : The 4SC Group reported income tax expense of €10 thousand for the first quarter (previous year: income of €12 thousand), which is attributable to non-deductible withholding tax in connection with a milestone payment received during the reporting period.

Profit/Loss for the period : : The loss for the period decreased 21% year on year, from €4,697 thousand in the previous year to €3,697 thousand in the reporting quarter.

Earnings per share : : Primarily on account of the lower loss for the period, the loss per share decreased by €0.03 to €0.09 compared with the first three months of 2011 (€0.12).

Further information regarding segment results can be found in the consolidated notes.

2.2 Financial Position

Non-current assets : : Non-current assets fell by €220 thousand from €15,086 thousand at the end of the 2011 financial year to €14,866 thousand as at 31 March 2012. Intangible assets remained the largest item of non-current assets at €13,345 thousand (31 December 2011: €13,574 thousand), followed by property, plant and equipment at €991 thousand (31 December 2011: €1,065 thousand) and financial assets at €357 thousand (31 December 2011: €264 thousand).

Current assets : : Current assets fell from €16,752 thousand as at 31 December 2011 to €12,914 thousand. Funds (comprising cash and cash equivalents and other financial assets) remained the largest item of current assets in the statement of financial position at €11,970 thousand, down from €15,820 thousand at the end of the 2011 financial year.

Equity : : The decline in equity from €23,533 thousand as at 31 December 2011 to €19,867 thousand as at 31 March 2012 was influenced primarily by the loss for the period of €3,697 thousand, lifting the accumulated deficit accordingly, from €95,518 thousand to €99,215 thousand.

The equity ratio declined by 2.4 percentage points, from 73.9% as at 31 December 2011 to 71.5% at the reporting date.

Current and non-current liabilities : : Non-current liabilities decreased from €4,782 thousand at the end of 2011 to €4,653 thousand as at 31 March 2012. These mainly comprised the deferred income in connection with the Yakult Honsha partnership. Current liabilities also decreased, from €3,523 thousand at the end of 2011 to €3,260 thousand at the close of the reporting period. These mainly consisted of other liabilities of €2,581 thousand (previous year: €2,744 thousand), which predominantly comprised unbilled external services as well as the current portion of the deferred income of €894 thousand, also in connection with Yakult Honsha.

Total assets/Total equity and liabilities : : Total assets/total equity and liabilities amounted to €27,780 thousand as at 31 March 2012, down 13% on the end-of-year figure of €31,838 thousand. This decrease is primarily attributable to the loss for the period.

2.3 Cash flows

Cash flows from operating activities : : The cash outflow from operating activities in the first quarter of 2012 was €3,838 thousand, compared with €4,011 thousand in the prior-year period. The change compared with the net loss for the period of €3,697 thousand is attributable to adjustments for non-cash items in the statement of comprehensive income (principally straight-line depreciation and amortisation plus stock options) and also to changes in items in the statement of financial position that had a negative effect on cash flows, especially the reduction in deferred income recognised for the up-front payment received from Yakult Honsha.

Cash flows from investing activities : : The cash inflows from investing activities in the reporting period amounted to €1,988 thousand, compared with outflows of €6,458 thousand as at 31 March 2011. The Company invested €2 thousand (previous year: €3 thousand) in intangible assets and €10 thousand (previous year: €30 thousand) in property, plant and equipment in the first quarter. The acquisition of financial investments in the amount of €2,000 thousand (previous year: €9,500 thousand) with a simultaneous cash inflow from the sale of financial investments of €4,000 thousand (previous year: €3,075 thousand) resulted in net cash inflows of €2,000 thousand (previous year: outflows of €6,425 thousand).

Cash flows from financing activities : : No cash flows from financing activities were generated in the reporting period. In contrast, the prior-year period was dominated by the capital increase executed on 24 February 2011, which netted €11,034 thousand.

Cash balance/funds : : Cash and cash equivalents amounted to €4,970 thousand at the end of the reporting period. Additional funds in the amount of €7,000 thousand were invested in short-term fixed and variable-interest securities and fixedterm deposits. As at 31 March 2012, the Company had cash and available-for-sale securities totalling €11,970 thousand, compared with €15,820 thousand at the end of 2011. This represents an average monthly funding requirement of €1,283 thousand in the first quarter of 2012.

3. Report on Risks and Opportunities

Please see pages 62 to 69 of the annual report as at 31 December 2011 for a detailed description of the risks and opportunities arising from the Company's business activities as well as of its IT-based risk management and controlling system. Since then no major changes have occurred with respect to the situation in terms of risks and opportunities and no major changes are expected to occur during the remainder of 2012. The start of operations of 4SC Discovery GmbH has not significantly changed the Group's general exposure to risk. On the other hand, opportunities for additional revenue and early product partnerships have increased as a result of the active marketing of this segment. The occurrence of any one of the risks described in the annual report – alone or in conjunction with each other – could have a negative impact on the financial position, cash flows and financial performance of 4SC.

4. EVENTS AFTER THE REPORTING PERIOD

Shortly after the end of the reporting period on 1 April 2012 – and only three months after commencing operations – the subsidiary 4SC Discovery GmbH entered into a research collaboration focused on compound screening with Henkel KGaA, the Düsseldorf-based German consumer goods group. The aim of the partnership is to identify new laundry detergent ingredients. This collaboration marks the first time that 4SC Discovery GmbH will apply its computerised screening method – successfully deployed for several years to identify new drugs for the pharmaceuticals sector – to the development of new compounds for laundry detergents.

On 18 April 2012, also following the close of the reporting period, 4SC Discovery GmbH started a strategic marketing partnership with Crelux GmbH. Based in Planegg-Martinsried, this biotechnology company specialises in protein manufacture and crystallisation. Both partners will bundle their complementary core competencies to establish a shared platform entitled i2c (idea to candidate). These shared service offerings can now be used to offer customers from the pharmaceutical and biotech sectors services that cover the complete drug discovery value chain – from the initial project idea to the preclinical development candidate.

On 2 May 2012, Dr Jörg Neermann informed the Company that he would be resigning his position as Chairman and member of the 4SC AG Supervisory Board with effect from 31 May 2012. A Supervisory Board member for over 11 years, Dr Neermann has made the decision to resign his post for personal reasons. The Deputy Chairman of the Supervisory Board, Dr Thomas Werner, will assume the role of Supervisory Board Chairman on an interim basis until elections have been held to fill the position of Chairman.

5. Anticipated Developments

Forecast for the sector : : The buoyant mood currently evident in the biotech sector primarily stems from the anticipation of over 60 pending results from clinical Phase III trials and registration-relevant decisions on the part of drug authorities, all of which are expected in the second quarter of 2012. According to industry experts, investors – who have previously showed restraint towards small cap shares – continue to view many of these companies as undervalued. The positive sentiment currently enjoyed by the biotechnology sector in the capital markets could be endangered by a worsening of the European sovereign debt crisis or by escalations in geopolitical conflicts, such as those involving the Middle East, for example.

Forecast for the Company : : 4SC is awaiting data from multiple clinical studies during the course of 2012. Preparations for advanced clinical trials are also ongoing, in order to achieve – ideally in collaboration with a partner – decisive progress for the two lead products of resminostat and vidofludimus along the path to market maturity.

In 2011, on the basis of the results of multiple Phase II trials in a variety of autoimmune diseases, the 4SC AG Management Board made the decision to pursue clinical development of the vidofludimus compound in the indication of inflammatory bowel disease (IBD). The Company is currently preparing a Phase IIb trial in IBD. Depending on the successful conclusion of negotiations with potential partners and further preparatory work required for the trial, this study is scheduled to be initiated with a partner by the end of this year or in early 2013.

For resminostat, final study data will now be analysed following publication in January 2012 of the excellent data from the Phase II SHELTER trial in the liver cancer indication. In January, the primary efficacy endpoint had been reached ahead of schedule as a result of an advanced analysis of the data. The final data from this trial are scheduled to be presented at a scientific conference during the course of the year. In the indication of advanced liver cancer (HCC), 4SC is now focusing efforts on securing a pivotal study, ideally together with a partner. The 4SC AG Management Board estimates that a study of this kind could commence in the first half of 2013, if negotiations with authorities and potential partners are brought to a successful conclusion. For the ongoing Phase I/II SHORE trial, which investigates resminostat in colorectal cancer, 4SC expects to receive initial interim results – especially for safety and tolerability – during the year. Complementing the positive data from the finalised Phase II SAPHIRE trial with resminostat in Hodgkin's lymphoma, the Company expects the above study to considerably enhance the base of clinical data available for its lead oncology compound before the end of the current financial year.

With 4SC-202 and 4SC-205, two further anti-cancer drug candidates are currently being investigated in clinical Phase I trials. 4SC will be publishing the results from the AEGIS study with 4SC-205 in patients with solid tumours or lymphomas in the course of 2012. 4SC-205 is an oral inhibitor of the human kinesin spindle protein Eg5, which is of crucial importance for mitosis (cell division) and is therefore expected to play a key role in the growth of tumour cells. Depending on the speed at which the remaining patients can be recruited as required for the trial, the Company also expects to be able to present results in 2012 from the Phase I TOPAS study with 4SC-202 in patients with advanced hematological tumours. 4SC-202 is an orally administered selective class I deacetylase (DAC) inhibitor with a triple, epigenetically regulated anti-tumour mechanism of action. One of 4SC-202's mechanisms is to inhibit the Wnt signalling pathway, a cell signal transmission pathway involved in tumour pathogenesis and growth.

4SC aims to secure further licensing deals with companies from the pharma and biotech sectors, especially to ensure the targeted development of its lead compounds vidofludimus and resminostat towards market maturity, and – for instance by means of upfront payments, milestone payments and royalties – to secure cash inflow and participate in the substances' successful future development. The Company has every confidence that it will successfully conclude its negotiations with potential partners, given the positive study results delivered by both compounds – resminostat in liver cancer and Hodgkin's lymphoma and vidofludimus in IBD – and the impending key value-creating development steps, such as the Phase IIb trial with vidofludimus in IBD and a registration trial with resminostat in HCC.

In order to optimally leverage the sustainable revenue potential of its strong research, 4SC Discovery GmbH is focusing its efforts on securing further service provision agreements and research collaborations with companies in the pharmaceuticals and biotech sectors. 4SC Discovery GmbH will also utilise early-stage partnering deals with pharmaceutical firms to drive the acceleration and commercial development of its research programmes. Finally, 4SC Discovery GmbH also aims to provide the Group with promising compound candidates for use in further clinical development work.

4SC had funds of €11,970 thousand at the end of the first quarter of 2012. These existing funds in connection with the current forecast of further expense and revenue planning will ensure the Company's financing beyond the first quarter of 2013. This forecast is based on the assumption that the monthly operating cash burn rate in 2012 will be approximately € 1.2 million in 2012 and that the Company's research and development programmes will run according to plan. Under the Company's current plans for 2012 and 2013, research and development costs will be slightly lower than in 2011, due, among other things, to the lower number of ongoing clinical trials. Should it prove impossible to generate sufficient additional cash flows with the planned operating measures, for example in the form of cooperation deals or partnerships, or if the conditions on the capital markets are attractive, additional capital requirements would need to be or could be met by raising further equity and/ or borrowings to ensure the Company's continued existence in the short and long term. At the same time, the Company anticipates that it will generate initial revenue from early research collaborations and service agreements in 2012 due to the fact that 4SC Discovery GmbH has commenced operations.

The statements on the Company's organisation and fundamental strategy, as well as opportunities and risks as described on pages 40 and 62 to 69 of the 2011 annual report are still applicable.

Planegg-Martinsried, 2 May 2012

Dr Ulrich Dauer, CEO Dr Bernd Hentsch, CDO Dipl.-Kfm. Enno Spillner, CFO Dr Daniel Vitt, CSO

:: INTERIM CONSOLIDATED FINANCIAL STATEMENTS

:: Consolidated statement of comprehensive income

for the period from 1 January to 31 March 2012 (unaudited)

in €000's	Q1 2012	Q1 2011
Revenue	365	0
Cost of sales	- 37	0
Gross profit	328	0
Distribution costs	- 207	- 144
Research and development costs	- 2,919	- 3,679
Administrative costs	- 1,025	- 965
Other income	1	1
Operating profit/loss	- 3,822	- 4,787
Net finance income/loss
Share in the profit of equity-accounted investees	93	31
Finance income	44	57
Finance costs	- 2	- 10
Net finance income/loss	135	78
Ear nings before taxes	- 3,687	- 4,709
Income tax	- 10	12
Profit/loss for the period = Consolidated comprehensiv e income/loss	- 3,697	- 4,697
Earnings per share (basic and diluted; in €)	- 0.09	- 0.12

:: Consolidated statement of financial position – ASSETS

for the period ended 31 March 2012 (unaudited)

in €000's	31.03.2012	31.12.2011
ASSET S
Non-curr ent ass ets
Intangible assets	13,345	13,574
Property, plant and equipment	991	1,065
Investments accounted for using the equity method	214	121
Other investments	143	143
Other assets	173	183
Total Non-curr ent ass ets	14,866	15,086
curr ent ass ets
Inventories	25	25
Trade accounts receivable	113	115
Receivables from investees	0	2
Other financial assets	7,000	9,000
Cash and cash equivalents	4,970	6,820
Current tax assets	98	69
Other assets	708	721
Total Curr ent ass ets	12,914	16,752
Total ass ets	27,780	31,838

:: Consolidated Statement of financial position – EQUITY AND LIABILITIES

in €000's 31.03.2012 31.12.2011 EQUITY AND LIABILITIES Equity Subscribed capital 41,968 41,968 Share premium 75,451 75,451 Reserves 1,663 1,632 Accumulated deficit - 99,215 - 95,518 Total Equity 19,867 23,533 Non-current liabilities Other liabilities 407 313 Deferred income 4,246 4,469 Total non-current liabilities 4,653 4,782 Current liabilities Trade accounts payable 634 705 Accounts payable to associates 0 29 Provisions 45 45 Other liabilities 1,687 1,850 Deferred income 894 894 Total Current liabilities 3,260 3,523 Total equity and liabilities 27,780 31,838

for the period ended 31 March 2012 (unaudited)

:: Consolidated Statement of cash flows

for the period from 1 January to 31 March 2012 (unaudited)

in €000's	Q1 2012	Q1 2011
Cash flows from operating activities
Earnings before tax	- 3,687	- 4,709
Adjustment for statement of comprehensive income items
Depreciation and amortisation	314	334
Net finance income/loss	- 135	- 78
Stock options	31	83
Other non-cash items	- 42	33
Changes in statement of financial position items
Inventories	0	- 1
Trade accounts receivable	3	281
Current tax assets	- 29	- 6
Other assets	- 2	- 20
Trade accounts payable	- 71	30
Accounts payable to associates	- 29	- 29
Deferred income	- 223	0
Other liabilities	- 44	52
Interest received	77	20
Interest paid	- 1	- 1
Income taxes paid
Cash flows from operating activities	- 3,838	- 4,011
Cash flows from investing activities
Purchase of intangible assets	- 2	- 3
Purchase of property, plant and equipment	- 10	- 30
Purchase of financial investments	- 2,000	- 9,500
Sale of financial investments	4,000	3,075
Cash flows from investing activities	1,988	- 6,458
Cash flows from Financing activities
Payments to subscribed capital	0	3.452
Payments to share premium	0	7.582
Cash flows from Financing activities	0	11,034
Net Cha nge in cash and cash equival ents	- 1,850	565
+ Cash and cash equivalents at the beginning of the period	6,820	4,956
= Cash and cash equival ents at the end of the period	4,970	5,521

:: consolidated Statement of Changes in equity

for the period from 1 January to 31 March 2012 (unaudited)

				Reserves
	Subscribed	Share	Reserves for	Retained	Revaluation	Accumulated
in €000's	capital	premium	stock options	earnings	surplus	deficit	Total
Bala nce on 01.01.2011	38,503	67,836	1,251	67	0	- 76,447	31,210
Options issued (ESOP 2006 /2007)			1				1
Options issued (ESOP 2006 /2008)			2				2
Options issued (ESOP 2009 /2009)			79				79
Options issued (ESOP 2009 /2010)			1				1
Capital increase 24.02.2011	3,452	7,582					11,034
Comprehensive income/loss 01.01.-31.03.2011						- 4,697	- 4,697
Profit/loss for the period 01.01.-31.03.2011						- 4,697	- 4,697
Bala nce on 31.03.2011	41,955	75,418	1,334	67	0	- 81,144	37,630
Bala nce on 01.01.2012	41,968	75,451	1,565	67	0	- 95,518	23,533
Options issued (ESOP 2006 /2007)			0				0
Options issued (ESOP 2006 /2008)			1				1
Options issued (ESOP 2009 /2009)			28				28
Options issued (ESOP 2009 /2010)			1				1
Options issued (ESOP 2009 /2011)			1				1
Comprehensive income/loss 01.01-31.03.2012						- 3,697	- 3,697
Profit/loss for the period 01.01.-31.03.2012						- 3,697	- 3,697
Bala nce on 31.03.2012	41,968	75,451	1,596	67	0	- 99,215	19,867

:: Selected consolidated Notes

to the consolidated interim report as at 31 March 2012 (unaudited)

1. Summary of significant Accounting policies

1.1 Basis of preparation

These interim consolidated financial statements were created in accordance with the accounting principles of the International Financial Reporting Standard (IFRS) – as adopted by the EU – in consideration of IAS 34 (interim financial reporting) in accordance with the requirements of the International Accounting Standards Board (IASB). The recommendations of the Standing Interpretations Committee (SIC) and the International Financial Reporting Interpretations Committee (IFRIC) have been taken into account. New standards issued by the IASB and adopted by the European Commission are applied without exception starting in the financial year in which their application becomes mandatory.

These interim consolidated financial statements as at 31 March 2012 comprise 4SC AG, based in Planegg-Martinsried, and 4SC Discovery GmbH, Planegg-Martinsried, together referred to as the "Group", and also take account of the following companies:

Company/Domicile	Measured as	Measured acc. to
quattro research GmbH,	Associate
Planegg-Martinsried		IAS 28
Nexigen GmbH, Bonn	Equity investment	IAS 39
Quiescence Technologies LLC .,
Melbourne, Florida, USA	Equity investment	IAS 39

The Management Board approved the consolidated interim report for release on 2 May 2012. The discussion of the interim report by the Supervisory Board or Audit Committee and the Management Board in line with the German Corporate Governance Code (as amended on 27 May 2010) was held via teleconference on 27 April 2012.

1.2 General disclosures

With the exception of the reporting on operating segments, the accounting policies applied and estimates made correspond to those used for the financial statements for the year ending 31 December 2011.

From 1 January 2012 onwards, 4SC is reporting different operating segments in its financial report. An operating segment is a component of an entity (the Group) that engages in business activities, generates both revenue and income and incurs expenses. Its operating performance is regularly reviewed by the entity's Managing Directors or Executive Management Board. Financial information is available for each individual operating segment by definition.

The Group's management structure and structure of its intragroup reporting form the basis for segmentation. Segment result and segment assets contain components that may be directly attributable to a single segment or allocated to all segments on a reasonable basis.

2. Segment Reporting

The 4SC Group consists of the following two operating segments:

• : : 1.) Development
• : : 2.) Discovery & Collaborative Business

Each individual operating segment, along with its core business and core projects, is set out below.

• : : 1.) The Development segment comprises the clinical and preclinical development work for drug candidates from the Group's product pipeline and is primarily conducted by the Group's parent company 4SC AG. It currently comprises the development programmes for vidofludimus, resminostat, 4SC-202, 4SC-203, 4SC-205 and 4SC-207.
• : : 2.) The Drug Discovery & Collaborative segment comprises the activities collectively handled by 4SC Discovery GmbH, namely drug discovery and early-stage research plus subsequent commercialisation, in particular through services offered in relation to drug discovery and optimisation.

There was no intersegment revenue. The segment results in thousands of euros were as follows:

	Development Q1 2012	Discovery & Collaborative Business Q1 2012
Segment results
Revenue (total)	223	141
External revenue	223	141
Intersegment revenue	0	0
Segment result before taxes	- 2,850	- 837

4. Notes to the cash balance

In addition to cash and cash equivalents, 4SC has liquid funds that are predominantly invested for better return in fixed deposits, borrower's note loans, fixed-interest bonds and money market funds. Taken together, these items comprise the cash balance/funds:

in €000's	31.03.2012	31.12.2011	31.03.2011
Cash and cash equivalents at the end of the period	4,970	6,820	5,521
Other financial assets	7,000	9,000	19,071
Cash bala nce/funds	11,970	15,820	24,592

3. Earnings per share

The basic earnings per share are calculated in accordance with IAS 33.9 ff. by dividing the profit/loss for the period attributable to the shareholders (numerator) by the average weighted number of shares outstanding in the reporting period (denominator).

	Q1 2012	Q1 2011
Based on profit/loss for the period (in €000's)	- 3,697	- 4,697
Based on average number of shares (in thsd.)	41,968	39,922
Ear nings per shar e (basic and diluted, in €)	- 0.09	- 0.12

Given 4SC's loss, the options issued are not dilutive. As a result, the diluted and basic earnings per share are identical.

5. Shareholdings and directors' dealings

In the first quarter of 2012 no reportable transactions pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) were made with shares or options by members of the Management Board or Supervisory Board.

The following overviews show the shares and stock options held by members of the Management Board and Supervisory Board as at the 31 March 2012 reporting date as well as changes in these holdings compared to the start of the year.

Number of shares	Shares 01.01.2012	Purchase	Sale	Shares 31.03.2012
Ma nag ement Board
Dr Ulrich Dauer	437,439	0	0	437,439
Dr Daniel Vitt	416,803	0	0	416,803
Dr Bernd Hentsch	0	0	0	0
Dipl.-Kfm. Enno Spillner	70,000	0	0	70,000
Shar es held by the Ma nag ement Board	924,242	0	0	924,242
Supervis ory Board
Dr Jörg Neermann	100,000	0	0	100,000
Dr Manfred Rüdiger	20,000	0	0	20,000
Dr Clemens Doppler	14,875	0	0	14,875
Dr Thomas W erner	5,000	0	0	5,000
Shar es held by the Supervis ory Board	139,875	0	0	139,875

	Options 01.01.2012	Additions	Expired	Exercised	Options 31.03.2012	Maximum number of shares
Number of stock options
Ma nag ement Board
Dr Ulrich Dauer	147,400	0	0	0	147,400	145,000
Dr Daniel Vitt	147,400	0	0	0	147,400	145,000
Dr Bernd Hentsch	152,720	0	0	0	152,720	152,720
Dipl.-Kfm. Enno Spillner	249,600	0	0	0	249,600	236,400
Options held by the
Ma nag ement Board	697,120	0	0	0	697,120	679,120

6. Related party transactions

In the reporting period there were no changes regarding transactions with related parties compared to the transactions reported in the annual financial statements as at 31 December 2011.

7. Events after the reporting period

In April 2012, 4SC Discovery GmbH began a research collaboration with Henkel KGaA, the German consumer goods group. 4SC Discovery GmbH also entered into a marketing partnership with the German biotechnology company Crelux GmbH in April.

On 2 May 2012, Dr Jörg Neermann informed the Company that he would be resigning his position as Chairman and member of the 4SC AG Supervisory Board with effect from 31 May 2012. A Supervisory Board member for over 11 years, Dr Neermann has made the decision to resign his post for personal reasons. The Deputy Chairman of the Supervisory Board, Dr Thomas Werner, will assume the role of Supervisory Board Chairman on an interim basis until elections have been held to fill the position of Chairman.

For more information regarding further events after the reporting period, please see section 4 of the interim group management report, "Events after the reporting period". They have no direct, significant effect on 4SC's financial performance, cash flows and financial position.

:: General/Publishing INFORMATION

Editor

:: 4SC AG :: Am Klopferspitz 19a, 82152 Planegg-Martinsried, Germany

date of Publication

:: 10 May 2012

Management Board

• :: Dr Ulrich Dauer, Chief Executive Officer
• :: Dr Bernd Hentsch, Chief Development Officer
• :: Dipl.-Kfm. Enno Spillner, Chief Financial Officer
• :: Dr Daniel Vitt, Chief Science Officer

Investor ReLations & Corporate Communications

• :: Jochen Orlowski, Bettina von Klitzing-Stückle
• public@4SC.com T +49 (0)89 70 07 63 0

The 4SC-share

• :: WKN 575381
• :: ISIN DE0005753818
• :: Share price symbol VSC

Conception/Design

:: PETRANIX Corporate & Financial Communications AG :: Adliswil-Zürich, Switzerland

:: Financial Calendar

29 March 2012

:: Annual Report 2011

10 May 2012

:: Q1 Report 2012

6 August 2012

:: Annual General Shareholders' Meeting 2012

9 August 2012

:: Half-year Report 2012

8 November 2012

:: Q3 Report 2012

21-23 November 2012

:: Analyst Conference – German Equity Forum Frankfurt, Germany

On the path to market maturity

By people. with people. for people.

:: 4SC AG : : Am Klopferspitz 19a, 82152 Planegg-Martinsried, Germany T +49 (0) 89 70 07 63 0, F +49 (0) 89 70 07 63 29

:: www.4sc.com