Oxurion NV — Audit Report / Information 2019

Apr 3, 2020

Phone: +32 (0)2 778 01 00 Fax: +32 (0)2 771 56 56 www.bdo.be

The Corporate Village Da Vincilaan 9, Box E.6 Elsinore Building B-1930 Zaventem

OXURION NV

Statutory auditor's report to the general meeting for the year ended 31 December 2019 (Consolidated financial statements)

The Corporate Village Da Vincilaan 9, Box E.6 Elsinore Building B-1930 Zaventem

STATUTORY AUDITOR'S REPORT TO THE GENERAL MEETING OF OXURION NV FOR THE YEAR ENDED 31 DECEMBER 2019 (CONSOLIDATED FINANCIAL STATEMENTS)

In the context of the statutory audit of the consolidated financial statements of Oxurion NV ('the Company') and its subsidiaries (together referred to as 'the Group'), we hereby present our statutory auditor's report. It includes our report on the audit of the consolidated financial statements and the other legal and regulatory requirements. This report is an integrated whole and is indivisible.

We have been appointed as statutory auditor by the general meeting of 7 May 2019, following the proposal formulated by the board of directors issued upon recommendation of the Audit Committee. Our statutory auditor's mandate expires on the date of the General Meeting deliberating on the financial statements closed on 31 December 2021. We have performed the statutory audit of the consolidated financial statements of the company Oxurion NV for ten consecutive years.

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Unqualified opinion

We have performed the statutory audit of the Group's consolidated financial statements, which comprise the consolidated statement of financial position as at 31 December 2019, and the consolidated statement of profit or loss and other comprehensive income , the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated statement of financial position total of 65.030 (000) EUR and for which consolidated income statement and other comprehensive income shows a loss for the year of 52.103 (000) EUR.

In our opinion, the consolidated financial statements give a true and fair view of the Group's net equity and financial position as at 31 December 2019, as well as of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.

Basis for unqualified opinion

We conducted our audit in accordance with International Standards on Auditing (ISA) as applicable in Belgium. Our responsibilities under those standards are further described in the 'Statutory auditor's responsibilities for the audit of the consolidated financial statements' section in this report. We have complied with all the ethical requirements that are relevant to the audit of consolidated financial statements in Belgium, including those concerning independence.

BDO Bedrijfsrevisoren CVBA / BTW BE 0431.088.289 / RPR Brussel BDO Réviseurs d'Entreprises SCRL / TVA BE 0431.088.289 / RPM Bruxelles

We have obtained from the administrative body and company officials the explanations and information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

• Accounting treatment of revenue streams subsequent to regaining the global rights to its product JETREA (ocriplasmin)

Discussion of the matter

Subsequent to an agreement made in 2017 with Alcon/Novartis to regain the global rights to its product JETREA (ocriplasmin), Oxurion has entered into commercial, services and distribution agreements to provide support to Oxurion regarding the sale and distribution of products outside the US.

These agreements and the accounting treatment was significant to our audit procedures, because these are significant revenue streams for the company.

Procedures performed

Our audit procedures included, amongst others:

• We have analyzed the agreements, assisted by experts in IFRS at our firm, to create an understanding of the impact on the financial statements and its disclosures.
• We have reviewed the accounting treatment as presented by the management, and in particular the revenues recognized in line with the accounting and valuation rules as adopted by the Company in accordance with IFRS.
• We assessed the adequacy of the Company's disclosures in Note 5.6.1 of the Consolidated Financial Statements.

• Impairment of assets

Discussion of the matter

The intangible fixed assets include capitalized development costs relating to JETREA®. These fixed assets are amortized over their estimated economical lifetime, and an additional impairment was recorded in 2016. The company tested these assets for impairment, in accordance with IAS 36. This impairment test resulted in the need for a full impairment, since the carrying value did materially deviate from the fair value, as described in Note 5.7.3 of the Consolidated Financial Statements.

The valuation of these intangible assets is significant to our audit because of the potential impact on the financial statements and the fact that the impairment test contains key judgmental areas that are affected by assumptions.

Procedures performed

Our audit procedures included, among others:

• We have analyzed and reviewed the Company's impairment model including the significant underlying assumptions described in Note 5.7.3 and checked whether an adequate valuation model was applied.
• We have assessed whether the cash generating unit was defined in accordance with IFRS.
• We consulted with a valuation expert in our firm to assess the methodology and discount rate as applied in the model.
• We reviewed the sensitivity analysis prepared by management to understand the effect of changing assumptions.
• We considered all available information provided to us by the Company to assess potential additional impairment triggers.
• We reviewed the completeness and adequacy disclosures in Note 5.7.3 of the Company's Financial Statements.

• Financial Funding

Discussion of the matter

As described in the management report section 3.6.3 and 3.6.5, the Company has disclosed that based on its current scope of activities, the Company estimates that its treasury position as of December, 31 2019 is sufficient to cover its cash requirements until mid-2021, so that there is no going concern issue as of today, even taking into account the possible effects of Covid-19.

Given the high cash burn ratio that is inherent to the sector the Company is operating in, we consider financial funding a key audit matter requiring high auditors' attention.

Procedures performed

Our audit procedures included, among others, the following:

• We obtained the business plan and the cash forecast for the year 2020 and 2021 and reviewed it for reasonableness;
• We challenged the assumptions underlying this budget and cash forecast, especially with respect to the expected level of operating expenses;
• We challenged management assessment of going concern with regards to Covid-19 effects on the Company business.

Responsibilities of the administrative body for the drafting of the consolidated financial statements

The administrative body is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory provisions applicable in Belgium, and for such internal control as the administrative body determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the consolidated financial statements, the administrative body is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related

to going concern and using the going concern basis of accounting unless the administrative body either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Statutory auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a statutory auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

When executing our audit, we respect the legal, regulatory and normative framework applicable for the audit of the consolidated financial statements in Belgium. However, a statutory audit does not guarantee the future viability of the Group, neither the efficiency and effectiveness of the management of the Group by the administrative body.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control; Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the administrative body;
• Conclude on the appropriateness of the administrative body's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;
• Evaluate the overall presentation, structure and content of the consolidated financial statements and whether the consolidated financial

statements represent the underlying transactions and events in a manner that achieves fair presentation;

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the management, the supervision and the performance of the Group audit. We assume full responsibility for the auditor's opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control identified during the audit.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year, and are therefore the key audit matters. We describe these matters in our statutory auditor's report, unless law or regulation precludes public disclosure about the matter.

OTHER LEGAL AND REGULATORY REQUIREMENTS

Responsibilities of the administrative body

The administrative body is responsible for the preparation and the contents of the management report on the consolidated financial statements and for the other information included in the annual report on the consolidated financial statements.

Responsibilities of the statutory auditor

In the context of our mandate and in accordance with the Belgian standard (version revised in 2020) which is complementary to the International Standards on Auditing (ISA) as applicable in Belgium, it is our responsibility to verify, in all material aspects, the management report on the consolidated financial statements and the other information included in the management report on the consolidated financial statements, as well as to report on this element these elements.

Aspects relating to the management report on the consolidated financial statements and to the other information included in the annual report on the consolidated financial statements

In our opinion, after having performed specific procedures in relation to the management report, this report is consistent with the consolidated financial statements for the same financial year, and it is prepared in accordance with article 3:32 of the Code of companies and associations.

In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge we have obtained during the audit, whether the management report on the consolidated financial statements contains any material misstatements, i.e. any information which is inadequately disclosed or otherwise misleading. Based on the procedures we have performed, there are no material misstatements we have to report to you.

In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge we

have obtained during the audit, whether the management report on the consolidated financial statements and the other information included in the annual report on the consolidated financial statements, namely:

• Chapter 3.1 Key Figures
• Chapter 3.2 Activities of Oxurion
• Chapter 3.3 Comments to Consolidated Financial Statements
• Chapter 3.5 Description of the Principal Characteristics of the Company's Risks

contain a material misstatement, i.e. information which is inadequately disclosed or otherwise misleading. Based on the procedures we have performed, there are no material misstatements we have to report to you.

Statement concerning independence

• Our audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated financial statements and our audit firm remained independent of the Group during the terms of our mandate.

• The fees related to additional services which are compatible with the statutory audit as referred to in article 3:65 of the Code of companies and associations were duly itemised and valued in the notes to the consolidated financial statements.

Other statements

• This report is in compliance with the contents of our additional report to the Audit Committee as referred to in article 11 of regulation (EU) No 537/2014.

Zaventem, 3 April 2020

BDO Réviseurs d'Entreprises SCRL Statutory auditor Represented by Gert Claes