saniona™

Alex. hypothalamic obesity survival

ANNUAL REPORT 2020

SANIONA AB (PUBL)

ABOUT SANIONA

2020 in Brief ... 3
Letter from the CEO ... 6
Strategy and Business Model ... 7
Pipeline ... 10
Science ... 20
Markets ... 24
People ... 26
Saniona Share ... 28
Five-Year Summary ... 30
Risk Factors ... 32

BOARD OF DIRECTORS REPORT

Board of Directors Report ... 34

FINANCIAL STATEMENTS

Group's Consolidated Financial Statements ... 42
Parent Company's Financial Statements ... 48
Notes to the Financial Statements ... 53
Board of Directors Declaration ... 92
Auditor's Report ... 93

CORPORATE GOVERNANCE REPORT

Corporate Governance Report ... 97
Board of Directors ... 107
Management ... 109
Auditor's Report on the Corporate Governance Statement ... 112

SANIONA AB - ANNUAL REPORT 2020

2020 IN BRIEF

ABOUT SANIONA

Saniona is a biopharmaceutical company focused on discovering, developing and delivering innovative treatments for rare disease patients around the world. The company's lead product candidate, Tesomet, is in mid-stage clinical trials for hypothalamic obesity and Prader-Willi syndrome, severe rare disorders characterized by uncontrollable hunger and intractable weight gain. Saniona's robust drug discovery engine has generated a library now consisting of more than 20,000 proprietary modulators of ion channels, a significantly untapped drug class that is scientifically validated. Lead candidate SAN711 is entering Phase 1 for rare neuropathic disorders, and SAN903 for rare inflammatory and fibrotic disorders is advancing through preclinical development. Led by an experienced scientific and operational team, Saniona has an established research organization in Copenhagen, Denmark and is building its corporate office in the Boston, Massachusetts area, U.S. The company's shares are listed on Nasdaq Stockholm Small Cap (OMX: SANION).

SIGNIFICANT EVENTS IN 2020

Appointed Rami Levin as President and Chief Executive Officer

Levin was tasked with raising the funding needed to advance Saniona's clinical development activities and build the company's presence and team in the U.S. These priorities are essential to enable Saniona's transition into a fully-integrated biopharmaceutical company with the ability to discover, develop and ultimately commercialize its own innovative rare disease treatments.

Raised USD $65 million

(Approximately SEK 567 million) through a direct issue of shares with a syndicate of U.S. and international institutional investors including RA Capital Management, Pontifax Venture Capital, New Leaf Venture Partners, multiple Swedish National Pension Funds, and others.

Recruited and hired an executive team

Consisting of a Chief Medical Officer, Chief Financial Officer, Chief Communications Officer, Chief Human Resources Officer, Chief Legal Officer and Chief Technical Operations Officer.

Achieved positive results from both the double-blind and open-label extension portions of the Phase 2 study of Tesomet in hypothalamic obesity (HO)

Patients treated with Tesomet for nearly one year (24 weeks in a double-blind trial followed by a 24-week open label extension) demonstrated statistically significant and clinically meaningful reductions in body weight and waist circumference, as well as improvements in glycemic control. Tesomet was well tolerated, and no clinically meaningful differences in heart rate or blood pressure were observed over the course of the 48-week trial.

Received feedback from the U.S. Food and Drug Administration (FDA) on the paths forward for Tesomet in Prader-Willi syndrome (PWS) and HO

In both indications, the FDA recommended that the clinical development program include a supportive Phase 2b study followed by a Phase 3 study. Saniona anticipates initiating both Phase 2b studies in the second half of 2021.

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL OVERVIEW 2020 (2019)

REVENUE
SEK 8.2M (SEK 7.2M)

OPERATING EXPENSES
SEK 167.6M (SEK 100.8M)

NET LOSS
SEK -73.4M (SEK -68.8M)

LOSS PER SHARE
SEK -1.79 (SEK -2.67)

DILUTED LOSS PER SHARE
SEK -1.79 (SEK -2.67)

CASH/CASH EQUIVALENTS
SEK 573.9M (SEK 40.2M)

SANIONA AB - ANNUAL REPORT 2020

LETTER FROM THE CEO

2020 was an unprecedented year on many fronts. First and foremost, the entire world spent much of the year battling the COVID-19 pandemic, which wreaked havoc on the healthcare system and families across the globe. I am incredibly proud of how the Saniona team adapted to efficiently continue our work under ever-changing public health guidelines across our global locations, prioritizing the safety of our employees and the patients and physicians who participate in our clinical studies. We were able to complete our Phase 2 clinical trial of Tesomet for hypothalamic obesity despite the pandemic, and we continued to have productive discussions with the FDA to align on plans for future clinical trials.

The past year has been unprecedented for Saniona as well. One of my first areas of focus after I joined the company as President and CEO in January was to define the business strategy moving forward. I knew that in order to optimize value, Saniona needed to become a fully-integrated biopharmaceutical company with the ability to discover, develop and commercialize our own innovative treatments for rare diseases. Thus, shifting our business model became one of my highest priorities. We needed to transition from focusing on external collaborations to the internal development of our own proprietary compounds. To execute on this strategy, we required a significant amount of funding to conduct mid-stage clinical trials of Tesomet for hypothalamic obesity (HO) and Prader-Willi syndrome (PWS), and it was critical that we increase our presence in the U.S. to facilitate our access to its established regulatory pathways, well-developed rare disease market, and extensive healthcare investor base.

I am proud to say that we achieved these goals in 2020. First, we raised USD $65 million (approximately SEK 567 million) through a direct issue of shares with syndicate of U.S. and international institutional investors including RA Capital Management, Pontifax Venture Capital, New Leaf Venture Partners, multiple Swedish National Pension Funds, and others. The majority of these investors have proven to be long-term, committed shareholders who continue to have confidence in Saniona's prospects. We are currently well-funded to execute on our current strategy into the second half of 2022. Second, we hired a very experienced U.S.-based executive team and several additional key positions to provide us with the clinical, financial, legal and other expertise we need to succeed.

In addition to these two key achievements, Saniona met several important milestones in 2020. We reported positive results from both the double-blind and the open label extension portions of the Phase 2 study of Tesomet in HO. We engaged with the FDA in multiple productive discussions clarifying our regulatory path forward in both HO and PWS. We aligned with the FDA on conducting Phase 2b trials of Tesomet in PWS and HO, and we started to prepare for our Phase 1 trial of SAN711 in rare neuropathic disorders; all three studies are expected to start this year. We also saw value realized in early 2021 from some of our out-licensing agreements, as evidenced by the USD $2.9 million (SEK 24.2 million) upfront payment we received due to Cadent Therapeutics' acquisition by Novartis, and the royalty we will begin to receive pending Medix's approval of tesofensine for chronic weight management in Mexico.

I said in an interview earlier this year that Saniona is currently in the strongest position the company has ever been in. We have a strong cash runway to last us into the second half of 2022, and we have the financial and operational support as well

as the necessary expertise to advance our strategic activities. We are poised to begin three new clinical trials, and our ion channel drug discovery engine continues to generate proprietary compounds to fill our pipeline. We also continue to assess our opportunity to access the U.S. capital market through a U.S. Nasdaq listing – and the interest from potential institutional investors on this front is encouraging.

Overall, I am incredibly proud of the progress Saniona has made in 2020, and I am excited about the potential I see ahead to achieve milestones and create value in 2021 and beyond. We appreciate the continued support from all our shareholders during the past year. We remain confident in the potential of Tesomet and our ion-channel discovery engine, and I look forward to providing continued updates in 2021 as we execute on our strategic initiatives and identify opportunities to increase value for patients and for shareholders.

Rami Levin, President & CEO Saniona

SANIONA AB - ANNUAL REPORT 2020

VISION & MISSION

OUR VISION

Improve the lives of rare disease patients around the world through scientific innovation.

OUR MISSION

We leverage our ion channel targeting expertise to discover, develop and deliver innovative rare disease treatments.

OUR CORE VALUES

Put People First

Treat all people with kindness, respect and equity. Support people on their journey and enable a sense of belonging.

Innovation With Impact

Push boundaries with courage.
Embrace empowerment.
And deliver excellence.

Integrity, Always

Maintain the highest ethical standards in all that we do as we deliver with urgency for patients in need.

7 SANIONA AB - ANNUAL REPORT 2020

OUR STRATEGY

Discovering, developing and delivering innovative rare disease treatments

Saniona's focus is on the discovery, development and delivery of proprietary product candidates for the treatment of rare diseases with high unmet medical need. We believe our research, clinical development, and commercial expertise, and our ability to leverage our ion channel research engine, will enable us to advance Tesomet and generate a robust pipeline of clinical candidates with preferred pharmacological properties that we believe will make a meaningful difference in the lives of patients.

We made the strategic decision to focus on rare diseases because of the tremendous unmet need: there are an estimated 7,000 rare diseases, and less than 10% have FDA-approved treatments. Additionally, clinical trials and regulatory reviews of medicines for rare diseases can potentially require less time and/or less financial investment than in more common disorders, and the commercial infrastructure required to serve rare patient populations is generally smaller, making rare diseases better aligned with Saniona's capabilities.

We made the decision to attract and recruit the expertise and build the capabilities to develop and eventually commercialize our proprietary molecules ourselves, rather than through partnerships, as we believe this strategy can provide the most long-term value to patients and shareholders. Ultimately, we intend to bring our

medicines to patients around the world. Strategically, we will start in the U.S., which has the most established regulatory pathways for rare diseases, the most developed rare disease market, and the most extensive healthcare investor base.

We believe our discovery, development and commercial expertise, as well as our ability to leverage our ion channel research engine, will enable us to advance Tesomet and generate a robust pipeline of clinical candidates with preferred pharmacological properties that we believe will make a meaningful difference in the lives of patients. In the long-term, Saniona has the potential to bring multiple rare disease products to patients in the U.S. and globally through our research and development, life cycle management and external business development opportunities, creating significant value for patients and shareholders.

| Saniona Investment Highlights | 1
Tesomet: positive Phase 2 data in two rare disorders

Hypothalamic obesity (HO)
Phase 2b study expected to begin H2 2021

Prader-Willi syndrome (PWS)
Phase 2b study expected to begin H2 2021 | 2
Proprietary ion-channel drug discovery engine driving pipeline

SAN711
For rare neuropathic disorders, entering Phase 1

SAN903
For rare inflammatory/fibrotic disorders, in preclinical

Library
20,000 proprietary ion channel modifiers | 3
Validation from multiple strategic partnerships

Tesofensine
for obesity

CAD-1883
for movement disorders

Novel target
for schizophrenia
Boehringer Ingelheim | 4
Well-funded to drive current operating plan into H2 2022

Raised USD 65 million
Directed issue of shares (Aug 2020)

Strong institutional support
RA Capital, Pontifax Venture Capital, New Leaf Venture Partners |
| --- | --- | --- | --- | --- |

8 SANIONA AB - ANNUAL REPORT 2020

OUR STRATEGY

SANIONA IS BUILDING TOMORROW'S RARE DISEASE COMPANY

Advance our clinical development programs:

Saniona's most advanced internal program is Tesomet. We intend to initiate Phase 2b trials of Tesomet in HO and PWS in the second half of 2021, which upon successful completion, would be followed by Phase 3 trials. Based on these studies, Saniona plans to file New Drug Applications in the U.S. and Europe within two to three years. Additionally, Saniona plans to initiate a first-in-human study of SAN711 for rare neuropathic disorders in the first half of 2021.

Build technical operations capabilities:

As Tesomet advances into mid-stage clinical trials, we have begun to build our technical operations capabilities to support this advancement. We have selected a contract manufacturer for Phase 2b and Phase 3 trials. We will continue to develop these capabilities to ensure timely product supply, in line with clinical development activities and timelines and potential commercialization.

Evaluate strategic external innovation opportunities:

We will assess potential business development opportunities, including mergers and acquisitions (M&A) and licensing opportunities, that complement our areas of expertise and allow us to expand our portfolio in rare diseases.

Identify novel preclinical programs to build our pipeline:

We will continue to progress SAN903 to Phase 1 studies, currently planned for H1 2022. We believe SAN903 may be applicable in treating rare inflammatory and fibrotic diseases. Additionally, we will leverage our proprietary, ion channel drug discovery engine to seek to qualify new programs and preclinical candidates.

Build commercial operations:

As we advance towards launch, Saniona will build an experienced commercial team, including, marketing, sales and market access, to prepare the market and the company for the launch of Tesomet.

Explore life cycle management:

We will explore and develop our treatments in new rare disease indications beyond the leading indications.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

PROPRIETARY PIPELINE

Saniona's wholly-owned pipeline consists of four programs in clinical and preclinical development and a portfolio of programs in discovery and lead optimization, each of which has well-established biology.

In planning
Ongoing
Completed

Product & Indication	Research	Preclinical	Phase 1	Phase 2a	Phase 2b	Phase 3	Registration
TESOMET
Prader-Wili syndrome
Hypothalamic obesity
SAN711
Rare neuropathic disorders
SAN903
Rare inflammatory disorders

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

TESOMET

Tesomet: a novel fixed-dose combination of a triple monoamine reuptake inhibitor and a beta blocker

Our most advanced proprietary clinical program is Tesomet for the treatment of hypothalamic obesity (HO) and Prader-Willi syndrome (PWS), severe rare disorders characterized by near total loss of appetite control, also called hyperphagia, intractable weight gain, and disturbances of metabolic functions.

Tesomet is an investigational first-in-class, once-daily oral fixed-dose combination therapy of tesofensine (a triple monoamine reuptake inhibitor) and metoprolol (a beta-1 selective blocker). Tesofensine is a novel, proprietary molecule developed in the labs of Saniona's founding scientists. It works in the brain to block reabsorption of three monoamine neurotransmitters: serotonin, noradrenaline and dopamine. Blocking reuptake increases the level of these neurotransmitters in the brain, which reduces cravings for food, reduces appetite, and increases metabolic fat burn.

Tesomet combines tesofensine with metoprolol, a generic medicine that is used to treat hypertension, angina pectoris and heart failure. The Tesomet combination has demonstrated a significantly improved cardiovascular safety profile compared to tesofensine alone.

Saniona has completed Phase 2 studies in HO and PWS and is preparing to initiate supportive Phase 2b studies in both indications in the second half of 2021.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

"Life with HO feels a bit like you're alone under a cloudy sky feeling very little hope but... you always keep your lifeline out as far as you can reaching for any possibilities."

Erin, whose son Jesse suffers from hypothalamic obesity

TESOMET IN HYPOTHALAMIC OBESITY (HO)

HO: excessive weight gain despite limited food intake

HO is a rare disorder caused by injury to the hypothalamus, a small nucleus in the brain that controls important biological functions including body temperature, hunger and body weight. At least half of HO patients sustain the disease following surgery to remove a rare, noncancerous tumor called a craniopharyngioma (CP). CP can occur at any age, but is most common in children and older adults, creating a burden for both patients and families. The prevalence of HO is estimated to be between 10,000 and 25,000 in the U.S. and between 16,000 and 40,000 in Europe.

HO is characterized by rapid, excessive and intractable weight gain that persists despite limited food intake. Patients may have hyperphagia, an uncontrollable hunger, and may display abnormal food seeking behaviors such as stealing food. Additional symptoms may include memory impairment, attention deficit, excessive daytime sleepiness and lethargy, issues with impulse control, depression, and suicide. HO patients are also at increased risk of developing obesity-related comorbid conditions such as type 2 diabetes, non-alcoholic fatty liver disease, hypertension, stroke, and congestive heart failure. Ultimately CP survivors with hypothalamic injury report at least three times higher 20-year mortality than CP survivors without hypothalamic injury.

There are no medications approved specifically for HO, and there is no cure for this disease. Many HO patients are treated with approaches used for general obesity such as surgery, medication and lifestyle counseling, but these are often ineffective.

Tesomet in HO: positive Phase 2 data, advancing into Phase 2b clinical trials

We evaluated Tesomet in a 24-week randomized, double-blind (DB), placebo-controlled Phase 2 study for HO followed by a 24-week open label extension (OLE). Patients treated with Tesomet for nearly one year (24 weeks DB + 24 weeks OLE) demonstrated statistically significant and clinically meaningful reductions in body weight and waist circumference, as well as improvements in glycemic control. Patients who received placebo in the DB portion of the study and were subsequently switched to Tesomet for the OLE also achieved reductions in body weight and waist circumference compared to baseline. Tesomet was well tolerated, and no clinically meaningful differences in heart rate or blood pressure were observed between Tesomet and placebo over the course of the trial.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

Saniona is preparing to initiate a Phase 2b study of Tesomet in HO in the second half of 2021. In October 2020, Saniona announced that the FDA had highlighted the potential for off-label use of Tesomet in the general obese population. As a result, Saniona submitted a response proposing a Risk Evaluation and Mitigation Strategy (REMS), which is often used to restrict commercial distribution to the appropriate patients suffering from an unmet medical need. Saniona also proposed including 24-hour ambulatory blood pressure monitoring (ABPM) and Holter (electrocardiogram) monitoring as part of the HO program. The agency generally agreed with these proposals.

Saniona expects to file an Investigational New Drug (IND) application and initiate its planned Phase 2b clinical trial in HO in the second half of this year. The trial will be a double-blind, randomized, placebo-controlled, multi-center trial. Patients will be randomized 1:1:1 to a high and low dose of Tesomet and placebo for 9 months during a double-blind period followed by a 6-month open-label extension of the highest tolerated dose. The primary endpoint will be change in body weight from baseline to week 36.

Saniona has already made significant progress on the preparations for this study including re-analyzing all existing data concerning

Tesomet in HO to meet FDA standards, submitting multiple letters and data packages to the FDA to enable ongoing discussions regarding the regulatory path, working to manufacture the Tesomet capsule that will be used in the clinical trial, selecting the Clinical Research Organization (CRO) that will partner with us to conduct the study, and working with them to assess and select the clinical trial sites. We have also initiated multiple partnerships with the HO advocacy community to increase awareness and education around HO as a rare disease and to better understand the patient journey and unmet need faced by patients and families.

Mean value curves on change in body weight (kg), LOCF

Change in HbA1c at 24 and 48 Weeks

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

An interview with Amy Wood, Executive Director of the Raymond A. Wood Foundation and mother of a hypothalamic obesity survivor

Amy Wood, Executive Director of the Raymond A. Wood Foundation

1. Can you please tell us a little about yourself and your background?

My name is Amy Wood and I am the executive director of the Raymond A. Wood Foundation. Professionally, my background is in digital marketing and website design and development. I have served as creative director on web development teams over the last 15 years mainly, but in 2015 I was handed a job I never applied for.

My then 4-year-old son Alex was suddenly diagnosed with a craniopharyngioma brain tumor and literally our lives changed overnight. One morning, he woke up with his left eye crossed and the day unfolded into a true nightmare. He was rushed into emergency surgery at Johns Hopkins Hospital where they performed a craniotomy to resect the tumor from the middle of his brain. And while the tumor was fully removed, it has remained a big part of our daily lives, due to all of the long-term complications from tumor removal including complete loss of a functioning endocrine system and many subsequent complex medical conditions that can be life-threatening if not managed correctly. Alex was a completely neurotypical child prior to tumor treatment with no indication that anything was wrong. I still grieve the loss of that child to this day but am also grateful he is still with us and for the fighter he is. Alex, at his core, is full of empathy, compassion and love of family and friends - some days we see that clearly and other days, for reasons will still don't know, he is a totally different person.

In 2017, we started the Raymond A. Wood Foundation to provide hospital-grade handheld blood analyzers to pediatric patients that suffered from diabetes insipidus (DI) - which is the body's inability to maintain fluid balance. These devices allow us to measure blood sodium at home and manage fluid balance and adjust medications which can mitigate ER visits and hospital stays. When we discovered this device and got one to manage Alex's complicated DI, we were compelled to get them for others. They are expensive and not FDA-approved for home use which creates many barriers of access, but, to-date, RAWF has provided around 20 analyzers totaling over $350,000 in medical equipment. This one initiative has snowballed into a growing foundation that is covering a large body of work for a small team of dedicated individuals.

Craniopharyngioma and tumors that occupy the hypothalamic-pituitary axis are highly survivable but survival can come at a high price. The foundation has grown to serve this population of hypothalamic-pituitary brain tumor survivors by providing education, access to resources while working with the medical community to identify opportunities for better outcomes and management of care. RAWF is also currently working to develop a sodium meter that can be accessible to our patient population.

2. Tell us about your journey with hypothalamic obesity?

Within weeks of my son's tumor resection, while in recovery and rehabilitation, his weight steadily started to climb. He had entered the hospital at 40 pounds and left almost 20 pounds heavier with an average gain of a pound every two weeks. We also noticed a change in his appetite where he seemed constantly hungry and was eating far more than he ever did prior to surgery. When I began to research, I discovered hypothalamic obesity and it quickly became one of the conditions we were most concerned about. The sudden weight gain was making it difficult for him to move around and the doctors did not really have any advice as to how to manage it.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

Over the years, we have been able to keep his weight from moving into a dangerous BMI but not without a lot of restrictions. Recently, his excessive hunger or hyperphagia has increased which has resulted in a few instances where he has become aggressive with me. He is preoccupied with food which can get in the way of enjoying other activities and our lives are very structured around meal times. We lock our refrigerator and keep food out of his reach.

In theory, we are the lucky ones though as Alex's weight has been manageable. Many HO patients have not had success with slowing the weight gain with typical interventions of diet modifications and exercise.

3. What do you see as the greatest challenges facing the hypothalamic obesity community?

There are many challenges facing HO patients and their caregivers - one is that there is a lack of knowledge among the medical community of how to treat an HO patient due to the fact that the condition is so rare and the area of the brain affected is so complex. Secondly, there is no reliable treatment. There are many "band aids" in the form of food plans, off label medications and surgical approaches like bariatric surgery, but as of now, nothing really seems to work reliably from patient to patient. There is a spectrum in this condition and so many variables related to how the hypothalamus was impacted during

surgical treatment or radiation, which also presents challenges in managing the condition. There can be a big sense of frustration among people with HO and their caregivers with the medical community and treating doctors are frustrated in not being able to provide a viable treatment to help these patients.

4. What do you wish people knew about hypothalamic obesity?

I want people to take a moment to imagine being so starving, eating a meal and then still being starving with no relief. Imagine being so hungry that you would eat out of trash cans or steal. Imagine being a marathon runner, getting diagnosed with a brain tumor, surviving that tumor only to gain hundreds of pounds. Imagine being a 14-year-old figure skater and losing your life's dreams to this miserable disease. Imagine being a parent trying to calm a child who is crying in the middle of the night because he is so hungry. These are the stories of HO.

This is not just about the weight gain either, it is about the fact that these patients have many other challenging medical conditions to manage and with HO comes the possibility of type 2 diabetes, non alcoholic fatty liver disease, and heart conditions not to mention the social implications of morbid obesity.

It still to this day seems inconceivable to me that someone could survive a brain tumor and pay for it by being faced with this condition. It just seems beyond unfair.

5. Where can people get more information about hypothalamic obesity?

Last year, the Raymond A. Wood Foundation hosted the Pituitary Brain Tumor Virtual Family Conference in partnership with the Children's Hospital of Philadelphia Neuroendocrine Center where hypothalamic obesity was one of the main topics discussed. A 2021 conference is being planned for November with more presentations around HO. In addition, we host monthly webinars with many of the topics focused on HO. You can like the RAWF on Facebook for updates and events or subscribe to our YouTube channel for recorded presentations on HO. Visit our website www.rawoodfoundation.org to access our social media links. There is also an active Facebook group, Hypothalamic Obesity Nutrition (https://www.facebook.com/groups/778271832272417), which is a great source of support. Hungry for Solutions, by Marci Serota, RDN is a great guidebook for HO nutrition written by a mother of a craniopharyngioma survivor with HO who is also a registered dietician and was successful in using diet intervention to stabilize her son's weight gain (www.marciserota.com).

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

"PWS means I'm special and I have to eat healthy, I don't like being special."

John, living with PWS

TESOMET IN PRADER-WILLI SYNDROME (PWS)

PWS: a rare disease characterized by insatiable hunger

PWS is recognized as the most common genetic cause of life-threatening obesity, with an estimated number of patients between 11,000 and 34,000 in the U.S. and between 17,000 and 50,000 in Europe.

PWS results from a deletion or loss of function of a cluster of genes on chromosome 15, which leads to dysfunctional signaling in the brain's appetite/satiety center (hypothalamus). Many of those affected with PWS suffer from insatiable appetite (hyperphagia); abnormal growth and body composition; low muscle tone (hypotonia); and social, emotional, or cognitive deficits. Hyperphagia is reported by caregivers to be among the most worrisome aspects of PWS, as this insatiable hunger persists no matter how much the patients eat and often requires caregivers to install locks on refrigerators and cabinets where food is stored. Many of those affected with PWS become morbidly obese and suffer shortened life expectancy and significant mortality. Common causes of mortality in PWS include respiratory disease, cardiac disease, infection, choking, gastric rupture, and pulmonary embolism.

There are no medications approved specifically for the hyperphagia associated with PWS, and there is no cure for this disease.

Tesomet in PWS: positive Phase 2a data, advancing into Phase 2b clinical trials

We evaluated Tesomet in a randomized, double-blind, placebo-controlled Phase 2a trial in adults and adolescents with PWS. Adult patients receiving Tesomet achieved a statistically significant reduction in hyperphagia, as well as a clinically meaningful reduction in body weight at a dose of 0.5 mg per day. A study extension in an adolescent population showed that Tesomet appeared to be well tolerated at lower doses (0.125 mg/day and 0.25 mg/day) and suggested dose-dependent effects on weight and hyperphagia when the dose was increased to 0.25 mg/day.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

Saniona is currently preparing to initiate a Phase 2b study of Tesomet in PWS in the second half of 2021. We met with the FDA in May of 2020 to discuss our development plan for Tesomet in PWS. Feedback from the meeting confirmed that Tesomet may be advanced via the 505(b)2 regulatory pathway, and the agency indicated agreement with us on the design, proposed doses, and duration of our proposed Phase 2b clinical trial. The trial will be a randomized, placebo-controlled, double blind study of between 120 and 140 PWS patients. We plan to compare daily dosing with Tesomet at three dose levels (0.125, 0.25, and 0.375 mg/day) and a placebo arm for four months, followed by a nine-month open label extension at either 0.25 mg or 0.375 mg daily dosing. The primary endpoint of the trial will be reduction of hyperphagia, as measured by the HQCT score.

Since receiving the feedback from the FDA in May 2020, the Saniona team has re-analyzed all existing data concerning Tesomet in PWS to meet FDA standards, submitted an Investigational New Drug Filing (IND) to the FDA, and successfully opened this IND. We have simultaneously been working to manufacture the Tesomet capsule that will be used in the clinical trial. We have also contracted with the Clinical Research Organization (CRO) that is partnering with us on executing the clinical trial, and we are working with them to assess and select the clinical trial sites. We have also initiated multiple partnerships with the PWS advocacy community to provide education on the process and experience of participating in a clinical trial, and to provide education about our clinical trial within the community. In 2021, we received U.S. FDA Orphan Drug Designation for Tesomet in PWS.

ADULTS

Tesomet 0.5 mg resulted in clinically meaningful body weight reduction

ADOLESCENTS

Body weight declined in OLE2 despite expected growth of adolescents

Tesomet 0.5 mg resulted in significant and clinically meaningful hyperphagia reduction

Hyperphagia scores declined in both active and placebo groups; active remained low in OLEs

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

SAN711

SAN711: a novel first-in-class ion channel modulator for rare neuropathic disorders

SAN711 is a novel, first-in-class positive allosteric modulator of GABAA α3 receptors in development for rare neuropathic disorders. SAN711 has the potential to provide pain relief and other benefits in the central nervous system with fewer side effects than benzodiazepines (i.e. Valium), which affect all of the GABAA receptors indiscriminately.

Gamma-aminobutyric acid (GABA) is a neurotransmitter, or chemical messenger, that blocks signals between nerve cells in the brain. Blocking these signals can result in outcomes such as sedation, pain relief, itch relief or seizure inhibition, among others. To function, GABA binds to its receptors, including GABAA. Drugs called “positive allosteric modulators (PAMs)” bind to a different site on the GABAA receptor and increase the effect of GABA. Benzodiazepines (i.e. Valium) are PAMs that bind broadly to all subunits of GABAA – this causes sedation but can also lead to side effects including motoric instability, memory problems, abuse liability and physical dependence. Using Saniona’s ion channel drug discovery engine, SAN711 was designed to bind with high selectivity to the α3 subunit of the GABAA receptor, which in preclinical models showed efficacy with fewer side effects.

SAN711 is a new chemical entity covered by a patent application which is expected to provide composition-of-matter protection until 2038. SAN711 is expected to enter the clinic by H1 2021.

SANIONA AB - ANNUAL REPORT 2020

PIPELINE

SAN903

SAN903: a novel, potential first-in-class ion channel modulator for rare inflammatory and fibrotic diseases

SAN903 is a novel, potential first-in-class inhibitor of the calcium-activated potassium ion channel, KCa3.1. It is currently in preclinical development for the treatment of rare inflammatory and fibrotic disorders.

The calcium-activated potassium ion channel, KCa3.1, is important for activation of immune cells in the brain (microglia) and other tissues (T-cells, macrophages), and it is also involved in the abnormal production of connective tissue that can lead to fibrosis in chronic diseases. Saniona leveraged its ion channel drug discovery engine to precisely target KCa3.1.

SAN903 is a new chemical entity covered by a recently filed patent application which may provide composition-of-matter protection until 2039. We expect to begin clinical trials in the first half of 2022.

IMMUNE CELLS & FIBROBLASTS

SANIONA AB - ANNUAL REPORT 2020

SCIENCE

Saniona's preclinical pipeline is derived from our proprietary drug discovery engine, which combines our cumulative experience, expertise and proprietary resources and methods as a leader in the discovery of highly-specific ion channel modulators. Ion channels comprise a unique class of proteins that are central to the control of numerous physiological functions including the activity of muscles, nerves, immune cells and fibroblasts. They are a significantly untapped drug class that is scientifically validated. Saniona has generated a library now consisting of more than 20,000 proprietary ion channel modulators.

Ion channels: a validated drug class in an untapped market

Ion channels facilitate the movement of positive and negatively charged molecules across cellular membranes. Ion channels are responsible for electrical signaling and govern several vital physiological functions, including nerve signaling, muscle contractions, cell motility, hormone secretion, and genetic transcription. An estimated 18% of all small-molecule drugs act on ion channels, including notable therapeutics in the treatment of diabetes, hypertension, epilepsy, cardiac arrhythmia, and anxiety. In 2012, worldwide sales of ion channel-targeted drugs reached $12B. However, due to the complexity of ion channels and limitations in drug discovery technologies, only 20% of potential ion channel targets have commercially available therapeutics. We believe that ion channels are a significant untapped domain for future drug development.

The fundamental structure of ion channels makes them a difficult target for therapeutics. Unlike kinases, which share significant structural similarities enabling a streamlined structural-based drug design, ion channels are substantially more heterogeneous. They might be made of as few as two subunits or as many as five. Sometimes the subunits repeat but more often each one is different. Sometimes the channels are open, and sometimes they are closed or inactivated.

Saniona's world-class ion channel expertise

Robust domain expertise is required to design an ion channel modulator that impacts activity on a sub-type and state-specific level. The Saniona scientific team have been pioneers in ion channel pharmacology research for more than 20 years. Our proprietary ion channel drug discovery engine draws on our expertise in assay design, electrophysiological approaches, advanced imaging methodology, and various other proprietary techniques, databases and methods. Our wholly-owned proprietary ion channel modifier library now consists of more than 20,000 new chemical entities enriched for ion channel activity, and it is supplemented by a commercial collection of more than 100,000 compounds for screening purposes.

We have leveraged our proprietary drug discovery engine to generate a robust pipeline of novel, first-in-class, orally available, potent, highly selective, unique, and differentiated ion channel activators, inhibitors and modulators that may be capable of treating diseases in a wide range of organ systems and tissues. SAN711 and SAN903 are the most advanced compounds to emerge from this program, and we will leverage our technology to seek to qualify at least one new lead optimization program and one preclinical candidate each year.

SANIONA AB - ANNUAL REPORT 2020

SCIENCE

OUT-LICENSING AND PARTNERSHIPS

Saniona has out licensed and may continue to out license promising research discoveries that do not fit our strategic focus on rare diseases, and in exchange we may receive upfront fees, milestone payments, royalties and/or equity stakes. Some of our current out-licensed programs include:

Medix licensed the rights to develop and commercialize tesofensine in Mexico and Argentina for general obesity. A 2020 publication in The Lancet cited obesity as the leading public health concern in Mexico and found that only 23.5% of the adult population had a healthy weight. Medix saw the review of their application for approval delayed by the pandemic, but they cite evidence that reviews are now moving forward again, and continue to expect a decision in early 2021. An approval would generate a royalty on net product sales in Mexico and a milestone payment.

Cadent Therapeutics (now part of Novartis) previously acquired Ataxion, a spin-out established in 2013 by Saniona and Atlas Venture Inc. with the aim of developing Saniona's research on SK ion channels (small conductance, calcium-activated potassium ion channels) for movement disorders. The SK ion channel program produced CAD-1883, a first-in-class selective positive allosteric modulator of SK ion channels that Cadent has advanced into Phase 2 clinical trials. Novartis acquired Cadent for an upfront payment of $210 million, with up to $560 million in milestones, for a total of $770 million. This resulted in an upfront payment of approximately USD $2.9 million (SEK 24.2 million) to Saniona in February 2021, after the close of the reporting period, and may result in additional contingent consideration upon the achievement of future milestones. Separately, Saniona is entitled to receive royalties on any potential products developed and commercialized from the SK ion channel program that originated with Ataxion.

Boehringer Ingelheim is engaged in a research collaboration agreement with Saniona for development of a proprietary ion channel program for the treatment of schizophrenia. Saniona may receive up to €76.5 million in milestone payments as well as royalties on worldwide net sales of resulting products.

SANIONA AB - ANNUAL REPORT 2020

SCIENCE | DRUG DISCOVERY

How Saniona Discovers New Medicines for Rare Diseases

saniona

Saniona's Ion Channel Drug Discovery Engine

The process of discovering a new drug and conducting clinical trials to establish it is safe and effective may take several years and cost hundreds of millions of dollars.¹ Additionally, some medicines may fail along the way. In fact, it is estimated that in the discovery research process (before a medicine is ready to be tested in humans), it takes 5,000-10,000 compounds to get just five that will be worthy of advancing into the clinical development process.² This is why the Saniona scientific team's experience and history are so important. Our team have been pioneers in discovery research related to ion channels for more than 20 years. We have developed a proprietary ion channel drug discovery engine that has generated a library now consisting of more than 20,000 potential lead molecules targeting various ion channels. We are confident that some of them will become new medicines - and the time and money we have invested in their discovery gives us a tremendous advantage over many start-ups.

Fast Fact:

Ion channels are critical to many functions including the activity of muscles and nerves. They are used to move charged ions like potassium or chloride into or out of a cell. Ion channel modulation is a validated approach to treating disease and has been used in medicines for diabetes, hypertension, epilepsy and more.

Discovery Biology

This is where our drug discovery process begins. We start by identifying the disease we want to treat, and we begin to research the ion channel targets known to be associated with that disease.

Initial Biological Screening of Compound Library

Once we understand the ion channel targets we need to modulate, we set up cellular test systems that can be used to screen the compounds in our library against those targets. When a compound matches a target, it's called a "hit."

Fast Fact:

Our proprietary ion channel drug discovery engine draws on our expertise in assay design, electrophysiological approaches, advanced imaging methodology, and various other proprietary techniques, databases and methods.

Discovery Chemistry and In Vitro Pharmacology Aided by Artificial Intelligence (AI)

Based on hits identified from the compound library, we conduct an iterative medicinal chemistry process to optimize the chemical and biological properties of the hit compounds. This research is conducted in test tubes, in our labs. We also need to optimize properties related to drug absorption, distribution, excretion and metabolism - essentially, we are analyzing not only what the drug could do to your body but what your body does to the drug (i.e., how fast do you metabolize and break it down). With the aid of artificial intelligence, we often synthesize several hundreds of new chemical entities before the optimal compound is found in the repeating cycle of iterative processes.

In Vivo Pharmacology and Efficacy

At this stage, we study in more detail how the drug might effect the whole body and relevant tissues and organs within the body. We also analyze how the effect correlates to the amount of drug in blood samples to estimate and appropriate human dose, and how many times a day it might need to be taken.

Preclinical Development

An optimized and selected compound undergoes a variety of tests related to toxicology (understanding potential side effects), formulation (deciding if it will be a tablet or a capsule or an injection, etc.) and scale-up (creating processes to make enough of the medicine to conduct clinical trials). We work with a network of partners to complete these steps.

Clinical Development

Only after all of these steps have been completed successfully is a compound ready for clinical trials, where it is evaluated in humans. To learn more about the clinical development process, please see our companion Drug Development infographic at www.saniona.com.

Tufts Center for the Study of Drug Development. Impact Report. Vol. 20, No. 3, Tufts University, 2018. May/June 2018.
Drug Discovery and Development. Britannica. https://www.britannica.com/technology/pharmaceutical-industry/Drug-discovery-and-development. Last accessed March 2021.

SANIONA AB - ANNUAL REPORT 2020

SCIENCE | DRUG DEVELOPMENT

How Saniona Brings New Therapies to the Rare Disease Community

Saniona's Commitment to Rare Diseases

There are more than 7,000 known rare diseases yet fewer than 10% have FDA-approved treatments. Moreover, 50% of rare diseases affect children, 30% of whom will die before the age of 5, it is because of the tremendous need for treatment options that Saniona decided to focus on discovering, developing and delivering innovative treatments to people with rare diseases around the world.

Bringing new therapies to the rare disease community can be a lengthy process that can take up to 15 years. 2.3 years longer than the average time required for all new therapies. But the FDA has created incentives to shorten this timeline.

Fast Fact:

The FDA may grant Orphan Drug Designation to therapies intended to treat rare diseases, conditions that affect less than 200,000 people. The European Medicines Agency (EMA) also grants orphan designation to therapies that treat diseases that affect fewer than 5 in 10,000 people across the European Union (EU). The designation qualifies the sponsor of the therapy for across development incentives, including tax credits and eliminations/reduction of FDA/EMA license application fees.

Discovery

Up to 10,000 compounds may be evaluated during the drug discovery process just to get five that may work to treat the disease and advance into the clinical development process.

Preclinical Development

Selected compounds undergo a variety of tests before being evaluated in humans, which include understanding the potential side effects and formulation (i.e., will be a tablet, capsule, injection, etc.).

IND/CTA Submission

A company submits an Investigational New Drug (IND) application to the FDA outlining preclinical trial results and clinical trial design intended to further test the efficacy and safety of the therapy. In the EU, a Clinical Trial Application (CTA) is submitted.

Fast Fact:

Companies can request expedited FDA and/or EMA review of new therapies through fast track and other programs.

U.S. Food & Drug Administration. Rare Diseases at FDA. https://www.fda.gov/publications/rare-diseases-fda. Last accessed February 2021.
Spotlight on Rare Disease. The Lancet. February 2019.
Tells Carrier for the Study of Drug Development. Impact Report. Vol. 20, No. 3, May/June 2018.
U.S. Food & Drug Administration. The Drug Development Process. https://www.fda.gov/publications/rare-drug-and-service-superscript/drug-development-process. Last accessed February 2021.
Drug Discovery and Development. Britannica. https://www.britannica.com/technology/pharmaceutical-industry/Obstacles-in-drug-development. Last accessed February 2021.
Clinical Leader. Rare Disease Patient Recruitment and Retention. https://www.clinicalleader.com/obstacles-in-disease-patient-recruitment-and-retention-20014/.+text=A/1/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004/2004. Last accessed February 2021.
European Medicines Agency. Committee for Orphan Medicinal Products (COMP). https://www.ema.europa.eu/medicinalmedics/committee-orphan-medicinal-products-comp#.+text=A/62594/62594/orphan%20/other%2020110%20200%20people%20access%20the%20EU.0team-for%20author%20designation%20above%20our%20plausel%20on%20the%20market. Last accessed February 2021.
European Medicines Agency. Human regulatory. https://www.ema.europa.eu/endhuman-regulatory/man-beting-authorisation/delivering-as-mantering-authorisation-step-step. Last accessed February 2021.

Clinical Trials

For a therapy to be approved, it generally must pass a three-phase clinical trial process. In some instances, phases of the trial may be combined (i.e., Phase 1 and Phase 2 trials combined, or Phase 2 and Phase 3 trials combined). The number of patients participating in a rare disease clinical trial will vary. Phase 1 typically involves a small number of patients (>10) while Phase 2 and 3 can range from 20 to 100 patients. For common diseases, Phase 3 trials can include 100s to 1000s of patients. Additionally, in many rare disease trials all participants will receive the experimental therapy as there is no approved therapy to compare to (this is known as a single-arm trial).

Phases:

This is the first study in humans to evaluate whether the therapy may be effective and identify potential side effects.
Several months.
Evaluate dosage and efficacy and continue to monitor for side effects.
Several months to two years.
Confirm that the therapy is safe, effective and beneficial.

Fast Fact:

Saniona is collaborating with patient advocacy organizations worldwide to ensure that insights from the rare disease community are incorporated into our clinical trial strategies.

Submission for Approval

A company submits a New Drug Application (NDA) to the FDA or Marketing Authorization Application (MAA) to the EMA, including all clinical research data, to request approval of the therapy.

Application Review

Timelines for approval will vary but are typically 8 to 10 months. In addition to reviewing all data, the agencies will agree to the product label, which outlines the basis for approval and how best to use the therapy. The facilities where the therapy will be manufactured will also be inspected.

Approval

Approval is granted by the FDA or European Commission if the therapy is determined effective and safe and if the benefits of the therapy outweigh the risks of the side effects. Some companies may be required to submit a Risk Evaluation and Mitigation Strategy (REMS) to provide additional reporting to ensure that the benefits of a treatment continue to outweigh the risk as a condition of approval.

Fast Fact:

Following approval, there is a highly coordinated process that involves collaboration with payers, policy makers, healthcare providers and others to get treatments to patients. Saniona is committed to helping ensure patients have access to our treatments.

Post-Approval

A company conducts post-marketing studies – also known as Phase 4 – to gain additional insights about the risk and benefits of the therapy. If important new information is uncovered, the drug label is updated.

www.saniona.com

23 SANIONA AB - ANNUAL REPORT 2020

OUR MARKETS

The orphan drug market continues to grow

Saniona made the strategic decision to focus on rare diseases because of the tremendous unmet need: there are an estimated 7,000 rare diseases, according to the National Organization for Rare Disorders (NORD), and less than 10% have FDA-approved treatments. Additionally, clinical trials and regulatory reviews of medicines for rare diseases can potentially require less time and/or less financial investment than in more common disorders, and the commercial infrastructure required to serve rare patient populations is generally smaller, making rare diseases better aligned with Saniona's capabilities.

Rare diseases are also sometimes called "orphan diseases." In the U.S., an orphan disease is defined as an indication that affects fewer than 200,000 Americans. In Europe, an orphan disease is defined as impacting fewer than 5 in 10,000 people across the European Union (EU). However, while each orphan disease is "rare" individually, together orphan diseases are estimated to affect more than 30 million Americans, and just as many in Europe. Both the U.S. and European regulators have created orphan designations to incentivize much needed drug development in this area. Receiving orphan designation qualifies a drugmaker for certain development benefits, including tax credits, elimination of certain license application fees, seven years of market exclusivity in the U.S. following approval, and ten years of market exclusivity in the EU following approval. Saniona has received an orphan drug designation for Tesomet in the treatment of PWS in the U.S. and is seeking orphan drug designation in HO.

Even though orphan diseases affect relatively fewer people than more common diseases, several biopharmaceutical companies have built successful, sustainable business by developing innovative medicines for orphan diseases. The pioneers in this space were Genzyme Corp., which was acquired by Sanofi in 2011 for USD $20 billion, and Sobi (a result of a merger between Swedish Orphan and Biovitrum), an international rare disease company with headquarters in Stockholm, Sweden. Other examples of companies focused on rare diseases include Alexion, argenx and BioMarin. Since the FDA's Orphan Drug Act went into effect in 1983, the agency has approved more than 600 orphan products. These numbers continue to rise: the FDA approved 31 products (58%) for rare diseases in 2020, up from a 5-year average of 46%. In the EU, 230 drugs have obtained marketing authorization since the year 2000, when the Orphan Medicinal Product Regulation was approved.

Significant unmet needs in HO and PWS

Saniona sees significant unmet needs in both HO and PWS, and we are optimistic that Tesomet may play an important role in addressing these needs.

HO is a rare disorder caused by injury to the hypothalamus, most commonly sustained during surgery to remove a rare, noncancerous tumor called a craniopharyngioma (CP). CP can occur at any age, but is most common in children and older adults, creating a burden for both patients and families.

The prevalence of HO is estimated to be between 10,000 and 25,000 in the U.S. and between 16,000 and 40,000 in Europe.

PWS is recognized as the most common genetic cause of life-threatening obesity, with an estimated number of patients between 11,000 and 34,000 in the U.S. and between 17,000 and 50,000 in Europe.

Beyond the significant unmet needs in HO and PWS that Tesomet may address, Saniona believes we have multiple opportunities to create long-term value with SAN711 and SAN903, as well as through additional compounds to advance from our library of ion channel modulators. In addition, we will pursue life cycle management, which means we will explore and develop our treatments in new rare disease indications beyond the leading indications. We also see the opportunity to create value through potential business development opportunities including mergers and acquisitions (M&A) and licensing opportunities that would complement our areas of expertise and allow us to expand our portfolio in rare diseases.

SANIONA AB - ANNUAL REPORT 2020

OUR MARKETS

BUILDING TOMORROW'S RARE DISEASE COMPANY

Tesomet is only the beginning...

Tesomet for HO and PWS
SAN711 for rare neuropathic disorders
SAN903 for rare inflammatory disorders
Library of 20,000 ion channel modifiers
Tesomet, SAN711, SAN903 LCM
Business Development

SANIONA AB - ANNUAL REPORT 2020

OUR PEOPLE AND CULTURE

At Saniona, we are a small team committed to making a big difference in the lives of patients and caregivers grappling with rare diseases.

We are driven by our core values. They serve as the strategic filter for our decisions, our policies, and our approach.

Put People First

Treat all people with kindness, respect and equity. Support people on their journey and enable a sense of belonging.

Innovation With Impact

Push boundaries with courage. Embrace empowerment. And deliver excellence.

Integrity, Always

Maintain the highest ethical standards in all that we do as we deliver with urgency for patients in need.

| ## 38

employees as of December 31, 2020 | ## 2 locations

our corporate office in the Boston area and our research facility in the Copenhagen area. | ## 34%

employees with M.D. or Ph.D. degrees | ## 74%

employees engaged in research and development activities | ## 50%

employees who identify as female |
| --- | --- | --- | --- | --- |

SANIONA AB - ANNUAL REPORT 2020

OUR PEOPLE AND CULTURE

Culture is important at Saniona

Maintaining a positive culture is essential in allowing us to recruit and retain the talent needed to grow our business. We have established a culture workstream and are forming a culture committee to further support these efforts.

We are committed to patients

We partner with multiple advocacy groups in the Prader-Willi syndrome and hypothalamic obesity therapeutic areas, and we are advocates for the rare disease community. We are proud members of the National Organization for Rare Disorders' Corporate Council, the Global Genes Corporate Alliance, and the EURORDIS Round Table of Companies.

We are committed to diversity

We firmly believe in an inclusive culture that embraces and celebrates all employees regardless of race, ethnicity, religion, age, gender identity, and disability. Fostering an environment built on diversity and inclusion enhances trust, collaboration, and innovation, which will ultimately allow us to better serve the rare disease community. We have established a diversity task force and we are developing diversity priorities and goals against which to track our progress.

> “Culture is the collection of business practices, processes, interactions and values that make up the work environment. It is the character and personality of the organization. It’s what makes our business unique and is the sum of its values, traditions, beliefs, interactions, behaviors, and attitudes.”
>
> Rami Levin, President and CEO of Saniona

PATIENTS AS PARTNERS

Our passion for helping patients is in our DNA. That is why one of the key pillars of Saniona is our Patient Advocacy team, whose goal is to ensure patient and family voices help shape us from the start. To improve the lives of rare disease patients around the world through scientific innovation, we listen to, learn from and partner with patients, caregivers and patient advocacy organizations in a way that is aligned with our core values:

Put people first

We will seek out and include the voice of patients and families in every step of the development process – from designing our trials to delivering our medicines. And we will do so globally and equitably.

Innovation with impact

We will engage creatively and collaboratively with patient advocacy groups on initiatives that are meaningful and impactful for patients and families, as well as for Saniona.

Integrity, always

We will work compliantly, ethically, and transparently while respecting the privacy, independence and autonomy of organizations, individuals, and families.

27 SANIONA AB - ANNUAL REPORT 2020

SANIONA SHARE

Saniona is listed at Nasdaq Stockholm main market. Saniona's share is traded under the ticker SANION and the ISIN code SE0005794617.

Share price performance and turnover

The market price of Saniona's share was SEK 20.60 at the end of 2020, representing a decrease of 19.8% from the end of 2019. The highest price paid during the year was SEK 44.50 on August 12, following the capital raise of USD $65 million, and the lowest price was SEK 15.00 on March 3, following the beginning of the COVID-19 outbreak. The average daily trading volume was 196,220 in 2020, compared to 76,122 in 2019, and the average daily trading value was SEK 4,427,624 in 2020, compared to SEK 1,845,151 in 2019. Market capitalization was 1,284 MSEK at the end of 2020, compared to 730 MSEK at the end of 2019.

SANIONA AB - ANNUAL REPORT 2020

SANIONA SHARE

Share Capital

On December 31, 2020, the number of shares outstanding was 62,372,831 (compared to 28,412,519 in 2019). All shares have equal entitlement to dividends and each share has equal voting rights. Each share has one vote at the Annual General Meeting. At year-end, the share capital was SEK 3,118,641 (1,420,625), equal to a par value per share of SEK 0.05.

In addition to shares, there are options entitling holders to subscription of shares outstanding in the company. Outstanding options are described in note 21.

Shareholders

On December 31, 2020, Saniona had 8,150 (6,108) shareholders, excluding holdings in life insurance and foreign custody account holders. The shareholders are presented as they are reported by Modular Finance AB, which compiles and processes data from various sources, including Euroclear, Morningstar and the Swedish Financial Supervisory Authority (Finansinspektionen). The list may not show shareholders whose shares have been registered in the name of a nominee, through trust of bank or similar.

LARGEST SHAREHOLDERS AS OF DECEMBER 31, 2020

Shareholder	Number of shares	Ownership and votes
RA Capital Management LP	11,608,906	18.6%
Pontifax Venture Capital	4,716,981	7.7%
Avanza Pension	2,512,350	4.0%
New Leaf Venture Partners	2,358,490	3.8%
Jørgen Drejer	2,354,711	3.8%
Fourth Swedish National Pension Fund	1,886,792	3.0%
Third Swedish National Pension Fund	1,886,792	3.0%
Thomas Feldthus	1,657,533	2.7%
Nordnet Pension Insurance	1,242,030	2.0%
Individual shareholder*	989,780	1.6%
Other shareholders (8,140)	31,158,466	49.8%
Total	62,372,831	100.0%

*Individual shareholder, name not disclosed

OWNERSHIP BY COUNTRY

SANIONA AB - ANNUAL REPORT 2020

FIVE-YEAR SUMMARY

Saniona has conducted a company-initiated restatement of prior period financial statements as part of its evaluation of a potential listing of its shares on the U.S. Nasdaq exchange. As a result of that initiative, certain of the amounts presented in the Financial review section for the year that ended December 31, 2019, have been restated. Refer to Note 28 to our Consolidated Financial Statements for details.

Income statement, KSEK	2020	2019 (Restated)	2018**	2017**	2016**
Revenue	8,198	7,201	54,884	20,692	74,921
Operating expenses	-167,573	-100,829	-109,089	-77,881	-70,764
Operating profit/loss *	-159,375	-93,628	-54,206	-57,189	4,156
Financial items, net	78,159	17,164	5,913	914	757
Profit/loss before tax	-81,216	-76,464	-48,292	-56,275	4,913
Tax on net profit	7,786	7,713	7,233	7,086	-2,696
Profit/loss for the year	-73,430	-68,751	-41,059	-49,190	2,217
Balance sheet, KSEK	2020	2019 (Restated)	2018**	2017**	2016**
---	---	---	---	---	---
Intangible and tangible assets	34,196	11,095	1,841	1,366	1,184
Financial assets	61,660	30,455	10,504	6,350	1,419
Other non-current assets	513	366	62	89	100
Current receivables	21,946	12,644	15,990	18,256	14,804
Cash and cash equivalent	573,866	40,248	54,678	22,313	53,261
Total assets	692,181	94,808	83,075	48,375	70,769
Equity	603,458	53,884	39,457	37,628	54,252
Non-current and current liabilities	88,723	40,924	43,617	10,747	16,517
Total equity and liabilities	692,181	94,808	83,075	48,375	70,769
Cash flow, KSEK	2020	2019 (Restated)	2018**	2017**	2016**
---	---	---	---	---	---
Cash flow from operating activities	-174,280	-98,591	-22,920	-57,339	7,953
Cash flow from investing activities	99,512	-749	914	-5,970	-816
Cash flow from financing activities	621,180	76,728	46,745	33,175	-403
Cash flow for the year	546,412	-22,621	24,738	-30,134	6,735

ALTERNATIVE PERFORMANCE MEASURES

Key figures, %		2020	2019 (Restated)	2018**	2017**	2016**
Operating margin	*	Negative	Negative	Negative	Negative	6%
Liquidity ratio	*	846%	136%	162%	377%	412%
Equity ratio	*	87%	57%	47%	78%	77%
Share data, SEK	2020	2019 (Restated)	2018**	2017**	2016**
---	---	---	---	---	---
Earnings per share	-1.79	-2.67	-1.84	-2.30	0.11
Diluted earnings per share	-1.79	-2.67	-1.84	-2.30	0.11
Equity per share	*	9.68	1.90	1.69	1.73
Dividend	0.00	0.00	0.00	0.00	0.02
Cash flow per share	*	13.79	-0.87	1.11	-1.41
Share data, #	2020	2019 (Restated)	2018**	2017**	2016**
---	---	---	---	---	---
Average shares outstanding	40,999,066	25,719,586	22,288,524	21,416,810	20,841,467
Diluted average shares outstanding	41,919,662	25,732,676	22,314,283	21,452,001	20,905,467
Shares outstanding at the end of the period	62,372,831	28,412,519	23,324,413	21,762,520	20,841,467

= Alternative performance measures
** The financial information for 2018, 2017 and 2016 have not been restated.

SANIONA AB - ANNUAL REPORT 2020

FIVE-YEAR SUMMARY

Saniona presents certain financial measures in the annual report that are not defined according to IFRS, so called alternative performance measures. These have been noted with an “*” in the table above. The company believes that these measures provide valuable supplementary information to investors and to Saniona's management as they enable the assessment of relevant performance trends. These financial measures should not be regarded as substitutes to measures defined by IFRS. As not all companies calculate financial measures in the same way, these may not be comparable to measures used by other companies.

The definition and relevance of key figures not calculated according to IFRS are listed in the table below.

Key figure	Definition	Relevance
Operating profit/loss	Profit/loss before financial items and tax.	The operating profit/loss is used to measure the profit/loss generated by the operating activities.
Operating margin	Operating profit/loss as a proportion of revenue.	The operating margin shows the proportion of revenue that remains as profit before financial items and taxes and has been included to give investors a better impression of the company's profitability.
Liquidity ratio	Current assets divided by current liabilities.	Liquidity ratio has been included to show the company's short-term payment ability.
Equity ratio	Shareholders' equity as a proportion of total assets.	The equity ratio shows the proportion of total assets covered by equity and provides an indication of the company's financial stability and its ability to survive long term.
Equity per share	Equity divided by the shares outstanding at the end of the period.	Equity per share has been included to provide investors with information about the equity reported in the balance sheet as represented by one share.
Cash flow per share	Cash flow for the period divided by the average shares outstanding for the period.	Cash flow per share has been included to provide investors with information about the cash flow represented by one share during the period.

DERIVATION OF ALTERNATIVE PERFORMANCE MEASURERS

	2020	2019 (Restated)	2018**	2017**	2016**
Operation profit/loss, KSEK	-159,375	-93,627	-54,206	-57,189	4,156
Revenue, KSEK	8,198	7,201	54,884	20,692	74,921
Operating margin, %	-1,944%	-1,300%	-99%	-276%	6%
Cash flow for the year, KSEK	565,422	-22,491	24,738	-30,134	6,735
Average number of shares outstanding	40,999,066	25,719,086	22,288,524	21,416,810	20,841,467
Cash flow per share, SEK	13.79	-0.87	1.11	-1.41	0.32
	2020	2019 (Restated)	2018**	2017**	2016**
---	---	---	---	---	---
Current assets, KSEK	595,812	52,892	70,668	40,569	68,066
Current liabilities, KSEK	70,416	38,777	43,617	10,747	16,517
Liquidity ratio, %	846%	136%	162%	377%	412%
Equity, KSEK	603,458	53,884	39,457	37,628	54,252
Total equity and liabilities, KSEK	692,181	94,808	83,075	48,375	70,769
Equity ratio, %	87%	57%	47%	78%	77%
Equity, KSEK	603,458	53,884	39,457	37,628	54,252
Shares outstanding at the end of the period	62,372,831	28,412,519	23,324,413	21,762,520	20,841,467
Equity per share, SEK	9.68	1.90	1.69	1.73	2.60

SANIONA AB - ANNUAL REPORT 2020

RISK FACTORS AND RISK MANAGEMENT

All business operations involve risk. Managed risk-taking is necessary to maintain operations. Risk may be due to events in the external environment and may affect a certain industry or market. Risk may also be company specific.

Saniona is exposed to various kinds of risks that may impact the Group's results and financial position. The risks can be divided into operational risks and financial risks. The main risks and uncertainties which Saniona is exposed to are related to drug development, the company's collaboration agreements, competition, technology development, patents, regulatory requirements, capital requirements and currencies.

The risks presented below could have a material negative impact on Saniona's operations, earnings and financial position.

Risk related to the company and industry (operational risks)

Risk related to COVID-19

An outbreak of an infectious disease, a pandemic or a similar public health threat, such as the outbreak of the novel coronavirus disease known as COVID-19, could adversely impact the company by causing operating, clinical trial and project development delays and disruptions, labor shortages, travel and shipping disruption and shutdowns (including as a result of government regulation and prevention measures). The Company may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results and the company's ability to raise capital.

To date, Saniona's clinical trials have not been significantly impacted by COVID-19. The hypothalamic obesity Phase 2 clinical trial was concluded in March 2020, and the open-label extension study was concluded in November 2020, despite the

COVID-19 pandemic. Medix submitted a new drug application to the Mexican food and drug administration in December 2019. Our partners at Medix saw the review of their application for approval of tesofensine in the treatment of general obesity in Mexico delayed by the pandemic, but they have indicated that application reviews are now moving forward again, and they expect a decision in early 2021.

Financing needs and capital

Saniona's research and development efforts require significant investments. Saniona is thus dependent on its ability to raise capital in the future to finance its planned activities. Any delays in clinical trials or product development, or prematurely interrupted collaborations with the company's partners, could negatively affect the cash flow. There is a risk that the company will be unable to raise additional capital, maintain or achieve additional partnerships or raise other financing. This may lead to a temporary halt or otherwise have impact on the clinical development activities or result in Saniona operating at a slower rate than desired, which may affect the company's operations.

Clinical studies

Saniona has three proprietary products in four different clinical programs. All the programs require continued clinical studies to prove acceptable safety and efficacy profiles before they can be commercialized in the market. If the studies will not demonstrate the required efficacy or safety, it may not be possible to reach commercialization. To perform clinical studies, Saniona is dependent on the participation of patients, and on external service providers who help manage and run the studies. In case the patient participation cannot be obtained, or in case our service providers do not perform, this can delay or impact the results in those trials.

Manufacturing and supply

We rely on third parties to provide all aspects of our preclinical and clinical drug substance and drug product manufacturing and supply. In addition, Saniona competes with other companies in securing manufacturing capacity at these third-party manufacturers. The loss of these manufacturers (or our inability to secure manufacturing capacity), their failure to supply us on a timely basis, or their failure to successfully carry out their contractual duties or comply with regulatory requirements or meet required formulation and product quality specifications, could cause disruptions in our supply chain and substantially delay our clinical development.

Legislation and regulatory approvals

To conduct preclinical and clinical studies and/or to market and sell pharmaceutical products, registration must take place with and approvals must be obtained from the relevant regulatory authorities in the respective market, such as FDA in the U.S. and EMA in EU. Future changes in applicable legislation may also lead to delays and increased costs. In case Saniona does not obtain required regulatory approvals for one or more of its products, the product cannot be commercialized, which might have material consequences for Saniona's business, earnings and financial position. Saniona and its partners will be obliged to meet certain regulatory requirements also after a product receives marketing authorization, including requirements for supervision of the marketing practices and safety reporting. In case Saniona does not meet the applicable regulatory requirements, the company may be subject to fines or even withdrawals of products.

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RISK FACTORS AND RISK MANAGEMENT

Key individuals and employees

Saniona's key individuals and employees have high competence and deep expertise within the company's field of business. In accordance with practice, key individuals and employees are employees at will. Despite certain notice requirements, in both the US and Denmark, key individuals can therefore terminate their employment with minimal notice, which means that Saniona may need to replace key individuals with short notice. If one or more key individuals or employees terminate their employment with the company or if the company fails to recruit new persons with relevant skills and expertise, this may delay or hinder the development of the company's programs.

Patents and other intellectual property rights

Patents and other intellectual property rights are key assets in Saniona's business, and the company's potential future success is dependent on the ability to obtain and maintain necessary patent protections for its assets, technology and production methods. Even if Saniona obtains such patent protection there is a risk that an approved patent will not provide sufficient commercial protection in the future, for example if competitors develop products or technologies that lead to Saniona's intellectual property rights being infringed. If Saniona is forced to defend future patent rights against a competitor, this might involve considerable costs to the company. Furthermore, in the industry in which Saniona operates, there is always the risk that the company may, or may be alleged to, infringe patents held by third parties. Other actors' patents may also limit the ability of one or more of the company's future partners to freely use the product or production method concerned. The risks associated

with patent protection infringements or allegations implies that the outcome of such disputes is difficult to predict. Negative outcomes of disputes relating to intellectual property rights may lead to loss of protection, prohibition to continue to use the right or obligation to pay damages. In addition, the costs of a dispute, even in case of a favorable outcome for Saniona, may be substantial.

Protection of trade secrets and know-how

Saniona is dependent on trade secrets and know-how which cannot be protected by registration in the same way as other intellectual property rights. Saniona uses confidentiality agreements to protect trade secrets and know-how but it is not possible to provide complete protection against unauthorized disclosure of information, which entails risks that competitors might obtain and benefit from the company's trade secrets and know-how developed by Saniona, which might hurt the company.

Out-licensing agreements

Historically, Saniona has chosen to enter into several strategic out-licensing agreements with several pharmaceutical companies. Some of these agreements helped fund some of Saniona's activities. In case any of the company's partners would choose to terminate the cooperation or if the clinical development is delayed or fails, these would have a financial impact on Saniona as development milestone payments would either be delayed or stopped. In such out-licensing agreements, Saniona is also entitled to royalty payments once the products are approved and commercialized. If such a product is not approved or commercialized, Saniona will not receive royalty payments.

Financial risks

Financial risks relate to a potential negative impact on the financial position resulting from changes in the financial risk factors.

Currency risk

Currency risk is the risk that the fair value of future cash flows may fluctuate because of changes in exchange rates. Exposure to currency risk is primarily sourced from payment flows in foreign currency and from the translation of balance sheet items in foreign currency, as well as upon the translation of foreign subsidiaries' income statements and balance sheets to the Group's reporting currency, which is SEK. The funding in August 2020 was in USD, to match future investments that primarily will be in USD.

Additional financial risks

The Board of Directors is ultimately responsible for the exposure, management and monitoring of the group's financial risks. The Board of Directors sets the framework that applies to the exposure, management and monitoring of the financial risks and this framework is evaluated and revised annually. The Board of Directors can decide on temporary departures from its predetermined framework. For a more detailed description see note 24.

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Board of Directors Report

34 SANIONA AB - ANNUAL REPORT 2020

BOARD OF DIRECTORS REPORT

The Board of Directors, and the President and Chief Executive Officer, of Saniona AB (publ), corporate identity number 556962-5345, hereby present the Annual Accounts and Consolidated accounts for the financial year January 1, 2020 – December 31, 2020.

The Group comprises the Parent Company Saniona AB and the subsidiaries Saniona A/S, which is located in Glostrup, Denmark, and Saniona Inc., which is located in Waltham, Massachusetts, U.S.

The Parent Company is a limited liability company registered and headquartered in the municipality of Malmö in the county of Skåne, Sweden. The address of the head office is Smedeland 26B, DK-2600 Glostrup, Denmark. Saniona is listed at Nasdaq Stockholm Small Cap.

Business Review 2020

2020 was a transformational year for Saniona. The Company transformed from a discovery research organization focused on external collaborations to a fully-integrated biopharmaceutical company with both the funding and the expertise to conduct late-stage clinical trials and advance its own innovative products toward registration.

That transformation began in January, when the board appointed Rami Levin as President and Chief Executive Officer. Levin refined the business strategy and quickly set out to execute against it. In August 2020 Saniona raised USD $65 million (approximately SEK 567 million) through a direct issue of shares with a syndicate of U.S. and international institutional investors including RA Capital Management, Pontifax Venture Capital, New Leaf Venture Partners, multiple Swedish National Pension Funds, and others. The company ended 2020 with SEK 573.9M in cash and equivalents – the strongest cash position in its history by far. This funding is expected to support Saniona's current plans into the second half of 2022.

During 2020, Saniona also continued to see clinical success with Tesomet, achieving positive results from both the double-blind and open-label extension portions of the Phase 2 study of Tesomet in hypothalamic obesity (HO). The Company also received feedback from the U.S. Food and Drug Administration (FDA) on the paths forward for Tesomet in Prader-Willi syndrome (PWS) and HO. In both indications, the FDA recommended that the clinical development program include a supportive Phase 2b study followed by a Phase 3 study.

Saniona initiated many preparations in 2020 for the Phase 2b studies. Part of this preparation included building the Company's presence in the U.S., which has the most established regulatory pathways for rare diseases, the most developed rare disease market, and the most extensive healthcare investor base. Levin built the company's U.S. presence and recruited and hired an experienced executive team consisting of a Chief Medical Officer, Chief Financial Officer, Chief Communications Officer, Chief Human Resources Officer, Chief Legal Officer and Chief Technical Operations Officer. These executive leaders further hired key positions to provide Saniona with the clinical development, financial, legal and other expertise needed. The building of the organization and preparations for clinical trials accounted for the majority of the increased expenses seen in 2020 over 2019. Operating losses were SEK 159.4M in 2020 versus SEK 93.6M in 2019.

The board is confident that Saniona now has the expertise and funding needed to execute on its plans to advance Tesomet into Phase 2b clinical trials for HO and PWS, as well as to begin advancing the Company's promising candidates from its ion channel discovery engine into the clinic.

Financial Review 2020

Revenue and results of operation

Saniona generated total revenues of 8.2 MSEK (7.2) for the full year of 2020. Revenues included amounts from providing research and development services of 6.2 MSEK (2.7 MSEK) and amounts related to out licensing of intellectual property of 2.0 MSEK (4.5 MSEK), all related to our out licensing and partnership agreements with Boehringer Ingelheim, Medix, and Cephagenix.

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The company recognized operating expenses of 167.6 MSEK (100.8), an increase of 67%. External expenses amounted to 97.1 MSEK (69.2), an increase of 42%. In 2020, external expenses comprised primarily of development costs of Tesomet, including costs for the preparation of our upcoming Phase 2b trials of Tesomet in PWS and HO, and costs for the preparation of our upcoming first-in-human study of SAN711. In 2019, external expenses comprised primarily of development costs of Tesomet followed by preclinical development costs of SAN711 and research and development costs of the SAN903 program. Personnel costs amounted to 62.4 MSEK (25.9), an increase of 140%. In 2020 the personnel costs have increased as a result of the hiring of the executive team and the clinical development team in the U.S. In addition, the option programs had a non-cash impact on personnel costs of SEK 12.1 million (1.5). The average exchange rate of SEK against DKK has been relatively stable between 2020 and 2019, resulting in no significant impact from foreign currency translation on operating expenses.

The operating loss for the full year of 2020 was 159.4 MSEK (93.6). Net financial items amounted to SEK 78.2 MSEK (17.2). The loss for the full year of 2020 was 73.4 MSEK (68.8). Saniona recognize a tax credit for the full year of 2020 of 7.8 MSEK (7.7) under the Danish R&D tax credit scheme.

Financial position

Total assets as of December 31, 2020, were 692.2 MSEK (94.8). Cash and cash equivalents amounted to 573.9 MSEK (40.2) as of December 31, 2020. The equity ratio was 87 (57) % as of December 31, 2020, and equity was 603.5 MSEK (53.9).

Cash flow

Operating cash flow for the full year of 2020 was an outflow of 174.3 MSEK (outflow 98.6). Consolidated cash flow for the full year of 2020 was inflow of 546.4 MSEK (outflow 22.6).

In 2020, the operating cash flow for the full year is explained by the operating loss. The total cash flow in 2020 is further explained by an inflow from investing activities from the sale of Scandion shares of 105 MSEK, an inflow from finance activities through the issue of loan notes to Formue Nord totaling 25 MSEK, the issue of shares to Formue Nord totaling 25 MSEK, the exercise of warrants of Series TO1 of 24 MSEK, TO2 of 33 MSEK, and the Private placement in August of approximately 567 MSEK (65 MUSD), before expenses.

In 2019, the operating cash flow for the full year is explained by the operating loss. The total cash flow in 2019 is further explained by an inflow from finance activities of 76.7 MSEK through a rights issue providing net proceeds of 52.7 MSEK and the issuance of convertible loan notes to Nice & Green totaling 24 MSEK. In 2019, the convertible loan notes of 24 MSEK together with the outstanding loan notes at year-end 2018 totaling 6 MSEK have been converted into equity and the net proceeds of 29 MSEK is recorded under new share issues after deduction of issuing expenses.

Parent Company

The majority of the Group's operations takes place in the operating subsidiaries Saniona A/S and Saniona Inc. The Parent Company, Saniona AB recognized revenues of 5.7 MSEK (1.4). Operating expenses amounted to 13.7 MSEK (11.7), an increase of 32%. The Parent Company recognized a profit on net financial items of 156.2 MSEK (7.3). The profit for the full year of 2020 was 148.2 MSEK as opposed to a loss of 3.2 KSEK in 2019.

Risk Management

All business operations involve risk. Managed risk-taking is necessary to maintain operations. Saniona is exposed to various kinds of risks that may impact the company's results and financial position. The main risks and uncertainties which Saniona is exposed to are related to drug development, the company's collaboration agreements, competition, technology development, patents, regulatory requirements, capital requirements and currencies. Risks may also relate to COVID-19, clinical trials, legislation and regulatory approvals, key employees, protection of trade secrets and know-how, and licensing agreements. Regarding additional financial risks, the Board of Directors is ultimately responsible for the exposure, management and monitoring of the group's financial risks. The Board of Directors sets the framework that applies to the exposure, management and monitoring of the financial risks and this framework is evaluated and revised annually. The Board of Directors can decide on temporary departures from its predetermined framework. For a more detailed description see note 24. These risks could have a material negative impact on Saniona's operations, earnings and financial position.

Organization

The average number of employees in the Group during the year amounted to 26.2 (22.4). As of December 31, 2020, the number of employees was 38 (24), of which 14 were based in the U.S. and 24 were based in Denmark, and 19 (13) are women and 19 (11) men. Of these employees, 4 (3) are part-time employees and 34 (21) are full-time employees, and a total of 28 (19) work in the company's research and development operations. 13 (11) of Saniona's employees hold PhDs, 10 (2) hold other university degrees, 8 (8) have laboratory training

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and the remaining 7 (3) have other degrees. In addition to its employees, Saniona has several consultants, who work with the Group on an ongoing basis.

Guidelines for Remuneration

At the annual general meeting held on May 6, 2020, the following guidelines for remuneration to senior executives were resolved. No changes are proposed for the 2021 annual general meeting.

Scope and applicability of the guidelines

These guidelines comprise the persons who are part of Saniona AB's ("Saniona") group management, currently the CEO, CFO and CSO. The guidelines also encompass any remuneration to members of the board of directors (e.g. consultancy fees), in addition to board remuneration.

These guidelines are applicable to remuneration agreed, and amendments to remuneration already agreed, after adoption of the guidelines by the Annual General Meeting 2020. These guidelines do not apply to any remuneration resolved by the general meeting, such as e.g. board remuneration and share-based incentive programs.

The guidelines' promotion of the company's business strategy, long-term interests and sustainability

Saniona is a rare disease biopharmaceutical company focused on research, development and commercialization of treatments for the central nervous system. In brief, Saniona's business strategy is to develop products internally with the aim of attaining market approval in the U.S. and Europe for certain orphan indications where the required investments are limited. For example, Saniona is currently developing Tesomet for

Prader-Willi syndrome and hypothalamic obesity in the U.S. and Europe. The required investments for developing Tesomet in these indications are comparatively small, while the required commercial infrastructure for servicing these patients in the U.S. and Europe is manageable. For more information about Saniona's business strategy, see the "About Us" section of this annual report.

A successful implementation of Saniona's business strategy and safeguarding of Saniona's long-term interests, including its sustainability, require that the company is able to recruit and retain highly competent senior executives with a capacity to achieve set goals. In order to achieve this, Saniona must offer a competitive total remuneration on market terms, which these guidelines enable.

Long-term share-based incentive programs have been established in Saniona. The share-based incentive programs have been approved by the general meeting and are therefore not covered by these guidelines.

Variable cash remuneration covered by these guidelines shall be based on criteria aimed at promoting the company's business strategy and long-term interests, including its sustainability.

Types of remuneration, etc.

The remuneration shall be on market terms and be competitive and may consist of the following components: fixed salary, variable cash remuneration, pension benefits and other benefits. For the individual senior executive, the level of remuneration shall be based on factors such as work duties, expertise, position, responsibilities and performances. Additionally, the general meeting may – irrespective of these guidelines – resolve on, e.g. share and share price-related remuneration.

For employments governed by rules other than Swedish, pension benefits and other benefits may be duly adjusted for compliance with mandatory rules or established local practice, considering, to the extent possible, the overall purpose of these guidelines.

Fixed salary

The CEO and other senior executives shall be offered a fixed annual cash salary. The fixed cash salary shall be determined per calendar year with salary revision on an annual basis.

Variable cash remuneration

In addition to fixed salary, the CEO and other senior executives may, according to separate agreements, receive variable cash remuneration. Variable cash remuneration covered by these guidelines is intended to promote Saniona's business strategy and long-term interests, including its sustainability.

The satisfaction of criteria for awarding variable cash remuneration shall be measured over a period of one year. Any variable cash remuneration may not exceed 50 percent of the fixed annual cash salary. Variable cash remuneration shall not qualify for pension benefits, save as required by mandatory collective bargaining agreements. The variable cash remuneration shall be linked to one or several predetermined and measurable criteria, which can be financial, such as completing a financing of a specified amount by a specified time, or non-financial, such as successful completion of a development activity such as a clinical trial by a specified date. Less than 80 percent of the variable cash remuneration shall depend on non-financial criteria. By linking the goals in a clear and measurable way to the remuneration of the senior executives to Saniona's financial and operational development, they contribute to the implementation of the company's business strategy, long-term interests and sustainability.

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To which extent the criteria for awarding variable cash remuneration has been satisfied shall be evaluated and determined when the measurement period has ended. The Remuneration Committee is responsible for the evaluation. For financial objectives, the evaluation shall be based on the latest financial information made public by the company. The board of directors shall have the possibility to, in whole or in part, reclaim variable cash remuneration paid on incorrect grounds.

Additional variable cash remuneration may be awarded in extraordinary circumstances, provided that such extraordinary arrangements are only made on an individual basis, either for the purpose of recruiting or retaining senior executives, or as remuneration for extraordinary performance beyond the individual's ordinary tasks. Such remuneration may not exceed an amount corresponding to 100 percent of the fixed annual cash salary and may not be paid more than once each year per individual. Any resolution on such remuneration shall be made by the board of directors based on a proposal from the Remuneration Committee.

Pension benefits

Pension benefits, including a US-based 401(k) Retirement Plan, shall be a defined contribution, insofar as the senior executive is not covered by a defined benefit pension under mandatory collective bargaining agreements. Pension premiums for defined contribution pensions may not exceed standard biotech industry practices in the geography where the benefits are implemented and may in no event amount to a total of more than 15 percent of the fixed annual cash salary.

Other benefits

Other benefits may include life insurance, medical insurance, dental insurance, vision insurance, flexible spending accounts (FSA), Health & Dependent Care, Life and AD&D Insurance, Short- and Long-Term Disability, Voluntary Supplemental Life Insurance, Employee Assistance Program (EAP) and a company car. Premiums and other costs relating to such benefits may not exceed standard biotech industry practices in the geography where the benefits are implemented and may in no event amount to a total of more than 20 percent of the fixed annual cash salary.

Termination of employment and severance payment

Senior executives shall be employed until further notice or for a specified period of time. Upon termination of an employment by Saniona, the notice period may not exceed 12 months. Fixed cash salary during the notice period and severance pay may not together exceed an amount corresponding to the fixed cash salary for 24 months. Upon termination by the senior executive, the notice period may not exceed six months, without any right to severance pay.

In addition to fixed cash salary during the period of notice and severance pay, additional remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for loss of income and shall only be paid in so far as the previously employed senior executive is not entitled to severance pay for the period for which the non-compete undertaking applies. The remuneration shall be based on the fixed cash salary at the time of termination of employment and amount to not more than 60 percent of the fixed cash salary at the time of termination of employment, save as otherwise provided by mandatory collective bargaining agreements, and shall be paid during the time as the non-compete undertaking applies, however not for more than 12 months following termination of employment.

Salary and employment conditions for employees

In the preparation of the board of directors' proposal for these remuneration guidelines, salary and employment conditions for employees of Saniona have been taken into consideration by including information on the employees' total income, the components of the remuneration and increase and growth rate over time, in the Remuneration Committee's and the board of directors' basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.

Consultancy fees to the members of the Board of Directors

To the extent a member of the board of directors renders services for the company, in addition to his or her assignment as a member of the board of directors, an additional consultancy fee on market terms may be paid to the member of the board of directors, or to a company controlled by such member of the board of directors, provided that such services contribute to the implementation of Saniona's business strategy and the safeguarding of Saniona's long-term interests, including its sustainability.

Preparation and decision-making progress

The board of directors has established a Remuneration Committee. The Remuneration Committee's duties include preparing the board of directors' resolution to propose guidelines for remuneration to senior executives. The board of directors shall prepare a proposal for new guidelines at least every fourth year and submit it to the general meeting.

The guidelines shall be in force until new guidelines have been adopted by the general meeting. The Remuneration Committee

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shall also monitor and evaluate programs for variable remuneration for the senior executives as well as the current remuneration structures and compensation levels in the company. The members of the Remuneration Committee are independent in relation to the company and its senior management. The CEO and other members of the senior management do not participate in the board of directors' processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.

Deviation from these guidelines

The board of directors may temporarily resolve to deviate from these guidelines, in whole or in part, if in a specific case there is special cause for the deviation and a deviation is necessary to serve the company's long-term interests, including its sustainability, or to ensure the company's financial viability. As set out above, the Remuneration Committee's tasks include preparing the board of directors' resolutions in remuneration-related matters, which include any resolutions to deviate from these guidelines.

During 2020, the company has complied with the applicable remuneration guidelines adopted by the general meeting. For the period up until the annual general meeting held on 6 May 2020, the remuneration guidelines adopted by the annual general meeting 2019 applied. In connection with the employment of the new CEO Rami Levin in January 2020, the board of directors deemed that special cause existed (that is, the ability to recruit a CEO with such experience and skills that can contribute to Saniona's continued development and growth) to deviate from the guidelines for remuneration to senior executives then in force. The deviations were that the new CEO was offered variable cash remuneration linked to corporate and individual

performance targets, severance payment, in addition to salary and other benefits during the notice period, pension benefits and other customary benefits. At the annual general meeting on 6 May 2020, new remuneration guidelines were adopted. No deviations from these guidelines have been made and no derogations from the procedure for implementation of the guidelines have been made. The auditor's report regarding the company's compliance with the guidelines is available on the company's website, www.saniona.com. No remuneration has been reclaimed. In addition to remuneration covered by the remuneration guidelines, the general meetings of the company have resolved to implement long-term share-related incentive plans.

Sustainability and Environment

Saniona does not have any actual industrial production, so its discharge into the air, soil and water is exceedingly limited. Saniona believes that it follows current environmental laws and regulations, and the Group endeavors to partner with manufacturers and other third parties who do as well.

Saniona conducts its research in Denmark in accordance with the permits issued for the company by the authorities. The company has, for example, permit for the handling of radioactive materials, permit for handling gene modified organisms and permit for conducting animal experiments. Saniona uses small quantities of radioactive trace elements in certain laboratory experiments. This radioactive material is stored and disposed of in compliance with the guidelines and instructions issued by the Danish National Institute of Radiation Hygiene. When new drugs are developed, regulatory authorities require that animal experiments are conducted. These experiments are necessary to evaluate the effect and mode of action of new drugs and

to maximize safety for participants in the clinical studies. At Saniona, all animal experiments are conducted with the approval of the Danish Animal Experiments Inspectorate and comply with all regulatory requirements regarding animal studies. Saniona considers the three R's guideline principles (i.e. Replace, Reduce and Refine) for the use of animals in research highly important and conducts studies according to those principles. External contract research organizations are carefully selected when safety experiments are to be made in animals before clinical studies are conducted with the company's drug candidates. Saniona only uses organizations with a good international reputation which comply with all European standards on animal welfare and receive relevant inspections by the authorities.

Saniona considers it highly important to maintain a good working environment and at any time wishes to meet regulatory requirements regarding the way the workplace is designed. This also includes the psychological and physical working environment, including exhaust and air change, ventilation, heating, furniture and in-house safety regulations in general. Saniona is screened from time to time by the Danish Working Environment Authority for compliance with the Danish Working Environment Act. In the Boston, Massachusetts area location, Saniona operates its facilities according to all applicable laws, rules and regulations. Saniona is continuing its efforts to improve the working environment through an active working environment organization based on workplace assessments (physical, chemical, biological, ergonomic, accident-related and psychological working environment conditions) as well as based on analyses of developments in the number of days lost due to sickness. Saniona believes that a good working environment is very important to employee wellbeing and thus also to our staff's ability to always perform at best for the company.

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BOARD OF DIRECTORS REPORT

Ownership structure share capital and voting rights

As of December 31, 2020, the company had 8,150 (6,108) shareholders excluding holdings in life insurance and foreign custody account holders. The largest shareholder is RA Capital with 18.6 percent (0) of the share capital and voting rights. The ten largest shareholders jointly accounted for 50.2 percent (38.6) of the share capital and voting rights.

Saniona's share capital totaled SEK 3,118,641 divided between 62,372,831 shares as of December 31, 2020. In 2019, Saniona's share capital totaled SEK 1,420,625 divided between 28,412,519 shares. All shares have a quotient value (i.e. par value) of SEK 0.05 and one vote and confer equal entitlement to the Company's assets and profits. Saniona's Articles of Association have no limitations regarding the number of votes each shareholder may cast at the Annual General Meeting.

Authorization for the Board of Directors regarding new issues

At the Annual General Meeting held on May 6, 2020, it was resolved, in accordance with the proposal from the board, to authorize the board, within the limits of the company's Articles of Association, at one or several occasions, during the time up until the next annual shareholders' meeting, with or without deviation from the shareholders' preferential rights, to resolve to issue new shares, warrants and/or convertibles. An issue should be able to be made with or without provisions regarding contribution in kind, set-off or other conditions. In case the authorization is used for an issue with deviation from the shareholders' preferential rights, the subscription price shall be on market terms (subject to customary new issue discount, as applicable). The purpose of the authorization is to be able to source working capital, to be able to execute and finance acquisitions of companies and assets as well as to enable new issues to industrial partners within the framework of partnerships and alliances.

Outlook

Saniona's mission is to leverage its ion channel targeting expertise to discover, develop and deliver innovative rare disease treatments. In 2020, the company's focus was on raising the capital and hiring the team needed to advance our clinical development programs. In 2021, the company's focus is anticipated to be on conducting Phase 2b clinical trials of Tesomet for PWS and HO, and on advancing candidates from its ion channel discovery engine into clinical trials.

Corporate Governance Report

For additional information, please see the Corporate Governance Report within this Annual Report.

Events after the balance sheet date

On January 25, 2021: Saniona received approximately USD $2.9 million (SEK 24.2 million) in an upfront payment resulting from the completed acquisition of Cadent Therapeutics by Novartis.
On February 22, 2021: Saniona postponed its 2020 year-end financial report due to the restatement and re-audit of prior period financial statements in line with U.S. PCAOB audit standards.
On March 3, 2021: Saniona received U.S. FDA Orphan Drug Designation for Tesomet in Prader-Willi syndrome.
On March 8, 2021: Saniona received feedback from the U.S. FDA providing a regulatory path forward for Tesomet in hypothalamic obesity.
On March 19, 2021: Saniona announced that Chairman J. Donald deBethizy and CEO Rami Levin, as well as additional members of the board and management, purchased Saniona shares in the open market.
On April 12, 2021: Saniona completed the sale of its shares in Scandion Oncology A/S
On April 14, 2021: Saniona announced that its research team will present preclinical data on SAN903 in a model of idiopathic pulmonary fibrosis at the American Society of Pharmacology and Experimental Therapeutics (ASPET) Annual Meeting
On April 19, 2021: Saniona announced partnership with the Foundation for Prader-Willi Research (FPWR) to increase awareness about Saniona's Phase 2b clinical trial of Tesomet for the treatment of Prader-Willi syndrome (PWS).
On April 22, 2021: Saniona announced the receipt of manufacturing feedback from the FDA that will delay the start of the Tesomet Phase 2b trials into the second half of 2021

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BOARD OF DIRECTORS REPORT

FINANCIAL CALENDAR

Interim Report Q1	May 26, 2021 at 8:00 CEST
Annual General Meeting	May 26, 2021
Interim Report Q2	August 26, 2021 at 8:00 CEST
Interim Report Q3	November 18, 2021 at 8:00 CET
Year-End Report 2021	February 24, 2022 at 8:00 CET

PROPOSED APPROPRIATION OF FUNDS

The following funds are at the disposal of the Annual General Meeting:

KSEK
Share premium reserve	808,607
Profit/loss carried forward	(7,804)
Profit/loss for the year	148,180
Total	948,983

The Board of Directors propose that the funds at their disposal, KSEK 948,983 be carried forward.

The results and position of the Group and the Parent Company in other respects are presented in the following income statements, balance sheets, cash flow statements and statements of equity with related notes and supplementary information, which form an integral part of this annual report. All amounts are stated in SEK 000s unless otherwise indicated.

SANIONA AB - ANNUAL REPORT 2020

Financial Statements

42 SANIONA AB - ANNUAL REPORT 2020

THE GROUP'S CONSOLIDATED FINANCIAL STATEMENTS

The Group's consolidated financial statements have been prepared based on the accounting policies described in Note 7 Significant accounting policies. Certain comparative amounts in the statement of comprehensive income and the statement of financial position have been restated, reclassified or re-presented, as a result of a correction of prior-period errors. These restatements have also resulted in changes to the statement of changes in equity and the statement of cash flows. Refer to Note 28 Restatements for details.

Consolidated statement of comprehensive income – Group

KSEK	2020		2019 (Restated)
	1-7
Revenue	8	8,198	7,201
Total operating income		8,198	7,201
Raw materials and consumables		-3,252	-3,517
Other external costs		-97,107	-69,174
Personnel costs	10	-62,417	-25,936
Depreciation and write-downs	15, 16	-4,797	-2,202
Total operating expenses		-167,573	-100,829
Operating profit/loss		-159,375	-93,628
Share of result of associates	12, 17	-433	-5,331
Financial income	12	312	674
Financial expenses	12	-18,655	-474
Net gains/losses on financial items	12	96,935	22,295
Total financial items		78,159	17,164
Profit/loss after financial items		-81,216	-76,464
Tax on net profit	13	7,786	7,713
Profit/loss for the year		-73,430	-68,751
Other comprehensive income for the period
Item that may be reclassified to profit and loss
Translation differences		-28,262	-699
Item that will not be reclassified to profit and loss
Equity instruments at FVOCI – net change fair value	17	68,466	-
Total other comprehensive income for the year, net after tax		40,204	-699
Total comprehensive income for the year		-33,226	-69,450
Earnings per share, SEK	14	-1.79	-2.67
Diluted earnings per share, SEK	14	-1.79	-2.67

The recognized loss and total comprehensive income for 2019 and 2020 are all attributable to the shareholders of the Parent Company, since there is no non-controlling interest in the subsidiaries of the Group.

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Consolidated statement of financial position – Group

KSEK	Note	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
ASSETS	1-7
Intangible assets	15	6,072	7,682	7,568
Property and equipment	16	5,089	1,241	1,841
Right of use assets	16	23,035	2,172	-
Tangible assets		28,124	3,413	1,841
Investment in associated companies	17	-	5,395	6,332
Other financial assets	18	61,660	25,060	7,426
Financial assets		61,660	30,455	13,758
Other assets	19	513	299	1,161
Deferred tax	13	-	67	62
Non-current assets		96,369	41,916	24,390
Trade receivables		5,043	930	2,093
Current tax assets	13	7,421	7,682	7,568
Other assets	19	9,482	4,032	4,437
Current receivables		21,946	12,644	14,098
Cash and cash equivalent	20	573,866	40,248	54,678
Current assets		595,812	52,892	68,776
Total assets		692,181	94,808	93,166

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Consolidated statement of financial position – Group

(Continued)

KSEK	Note	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
EQUITY AND LIABILITIES	1-7
Share capital	21	3,119	1,421	1,166
Additional paid in capital		808,607	239,592	157,118
Reserves	21	36,908	-3,296	-2,597
Retained earnings including profit or loss for the period		-245,176	-183,833	-116,614
Equity		603,458	53,884	39,073
Other financial liabilities	22	16,228	1,420	-
Other liabilities	23	2,079	727	-
Non-current liabilities		18,307	2,147	-
Trade payables		18,875	34,849	15,972
Other financial liabilities	22	40,623	1,723	35,358
Other liabilities	23	10,918	2,205	2,763
Current liabilities		70,416	38,777	54,093
Total liabilities		88,723	40,924	54,093
Total equity and liabilities		692,181	94,808	93,166

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Consolidated statement of changes in equity - Group

	Share capital	Additional paid in capital	Translation reserves (Restated)	Fair value reserve (Restated)	Retained earnings (Restated)	Shareholders’ equity (Restated)
January 1, 2019 (previously reported)	1,166	157,118	-777	-	-118,051	39,456
Restatements	-	-	-1,820	-	1,437	-383
January 1, 2019 (restated)	1,166	157,118	-2,597	-	-116,614	39,073
Comprehensive income
Profit/loss for the year					-68,751	-68,751
Other comprehensive income:
Translation differences			-699			-699
Total comprehensive income			-699		-68,751	-69,450
Transactions with owners
Shares issued for cash	255	96,347				96,602
Expenses related to capital increase		-13,873				-13,873
Share-based compensation expenses					1,532	1,532
Total transactions with owners	255	82,474	-		1,532	84,261
December 31, 2019	1,421	239,592	-3,296	-	-183,833	53,884
January 1, 2020	1,421	239,592	-3,296	-	-183,833	53,884
Comprehensive income
Profit/loss for the year					-73,430	-73,430
Other comprehensive income:
Fair value reserve				68,466		68,466
Translation differences			-28,262			-28,262
Total comprehensive income			-28,262	68,466	-73,430	-33,226
Transactions with owners
Shares issued for cash	1,698	649,537				651,235
Expenses related to capital increase		-52,723				-52,723
Issuance of Investor Warrants		-27,799				-27,799
Share-based compensation expenses					12,087	12,087
Total transactions with owners	1,698	569,015			12,087	582,800
December 31, 2020	3,119	808,607	-31,558	68,466	-245,176	603,458

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Consolidated statement of cash flows - Group

KSEK	Note	2020	2019 (Restated)
Profit/loss before tax		-81,216	-76,464
Adjustments for non-cash transactions	20	-79,972	-11,253
Changes in working capital	20	-19,955	-18,778
Cash flow from operating activities before financial items		-181,143	-106,495
Interest income received		275	674
Interest expenses paid		-1,069	-483
Tax credit received	13	7,657	7,713
Cash flow from operating activities		-174,713	-98,591
Investing activities
Investment in tangible assets		-4,999	-3,488
Sale of financial assets		104,511	-
Repayment of financial assets		-	2,739
Cash flow from investing activities		99,512	-749
Financing activities
Convertible loan		-	24,000
Loan		25,000	-
New share issue, net of expenses		598,510	52,728
Payment of lease liabilities		-2,332
Cash flow from financing activities		621,180	76,728
Cash flow for the year		546,412	-22,612
Cash and cash equivalents at beginning of year		40,248	54,678
Exchange rate adjustments		-12,794	8,191
Cash and cash equivalents at end of year		573,866	40,248

SANIONA AB - ANNUAL REPORT 2020

PARENT COMPANY'S FINANCIAL STATEMENTS

The Parent Company's financial statements have been prepared based on the accounting policies described in Note 7 Significant accounting policies. Certain comparative amounts in the statement of comprehensive income and the statement of financial position have been restated, reclassified or re-presented, as a result of a correction of prior-period errors. These restatements have also resulted in changes to the statement of changes in equity and the statement of cash flows. Refer to Note 28 Restatements for details.

Statement of income – Parent Company

KSEK	Note	2020	2019 (Restated)
	1-7
Other operating income		5,721	1,352
Total operating income		5,721	1,352
Raw materials and consumables		-25	-13
Other external costs		-6,248	-6,416
Personnel costs	10	-7,424	-5,281
Total operating expenses		-13,697	-11,710
Operating profit/loss		-7,976	-10,358
Share of result of associates	12, 17	-433	-5,331
Financial income	12	41,334	8,656
Financial expenses	12	-16,214	-269
Net gains/losses on financial items	12	131,469	4,222
Total financial items		156,156	7,278
Profit/loss after financial items		148,180	-3,080
Tax on net profit	13	-	-
Profit/loss for the year		148,180	-3,080

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Statement of comprehensive income – Parent Company

KSEK	Note	2020	2019 (Restated)
	1-7
Profit/loss for the year		148,180	-3,080
Other comprehensive income for the period
Item that may be reclassified to profit and loss
Other comprehensive income for the year		-	-
Total other comprehensive income for the year, net after tax		0	0
Total comprehensive income for the year		148,180	-3,080

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Statement of financial position

– Parent Company

KSEK	Note	2020-12-31	2019-12-31 (Restated)
ASSETS	1-7
Investment in subsidiaries	25	929,244	205,533
Investment in associated companies	17	-	5,395
Other financial assets	18	1,746	-
Financial assets		930,990	210,928
Non-current assets		930,990	210,928
Receivables from group companies		5,721	-
Other assets	19	3,388	1,049
Current receivables		9,109	1,049
Cash and cash equivalent	20	45,733	9,899
Current assets		54,842	10,948
Total assets		985,832	221,877
EQUITY AND LIABILITIES
Restricted equity
Share capital	21	3,119	1,421
Unrestricted equity
Additional paid in capital	21	808,607	239,592
Retained earnings		-7,804	-16,801
Profit/loss for the period		148,180	-3,080
Equity		952,102	221,132
Trade payables		754	395
Other financial liabilities	22	32,861	-
Other liabilities	23	114	350
Current liabilities		33,729	745
Total liabilities		33,729	745
Total equity and liabilities		985,832	221,877

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Statement of changes in equity – Parent Company

	Share capital	Additional paid-in capital (Restated)	Retained earnings (Restated)	Shareholders’ equity (Restated)
	Restricted capital	Unrestricted capital
January 1, 2019	1,166	157,118	-18,332	139,952
Total comprehensive income			-3,080	-3,080
Transactions with owners
Shares issued for cash	255	96,347		96,602
Expenses related to capital increase		-13,874		-13,874
Share-based compensation expenses			1,531	1,531
December 31, 2019	1,421	239,592	-19,881	221,132
January 1, 2020	1,421	239,592	-19,881	221,132
Total comprehensive income			148,180	148,180
Transactions with owners
Shares issued for cash	1,698	649,537		651,235
Expenses related to capital increase		-52,723		-52,723
Issuance of Investor Warrants		-27,799		-27,799
Share-based compensation expenses			12,087	12,087
December 31, 2020	3,119	808,607	140,376	952,102

SANIONA AB - ANNUAL REPORT 2020

FINANCIAL STATEMENTS

Statement of cash flows – Parent Company

KSEK	Note	2020	2019 (Restated)
Profit/loss after financial items		148,180	-3,080
Adjustments for non-cash transactions	20	-102,767	4,049
Changes in working capital	20	-4,216	-80,964
Cash flow from operating activities before financial items		41,197	-79,995
Interest expenses paid		-9,674	-269
Cash flow from operating activities		31,523	-80,264
Investing activities
Sale of financial assets		104,511	-
Investment in financial assets	25	-723,710	-
Cash flow from investing activities		-619,199	-
Financing activities
Convertible loan		-	24,000
Loan		25,000	-
New share issue		598,510	52,728
Cash flow from financing activities		623,510	76,728
Cash flow for the period		35,834	-3,536
Cash and cash equivalents at beginning of period		9,899	13,435
Cash and cash equivalents at end of period		45,733	9,899

SANIONA AB - ANNUAL REPORT 2020

NOTES

NOTES TO THE CONSOLIDATED AND PARENT COMPANY'S FINANCIAL STATEMENTS

Note 1 General Information

Saniona AB (publ), (the 'Parent Company'), Corporate Registration Number 556962-5345, is a limited liability company registered in the municipality of Malmö in the county of Skåne, Sweden. These consolidated financial statements comprise the Parent Company and its subsidiaries (collectively the 'Group'). The Group is a biopharmaceutical company focused on discovering, developing, and delivering innovative treatments for rare disease patients around the world. The legal address of the head office and the research facility is Smedeland 26B, DK-2600 Glostrup, Denmark. The majority of Saniona's Executive team members are based in Saniona's United States offices, located at 500 Totten Pond Road, Waltham, MA 02451. The Parent Company is listed on Nasdaq Stockholm Small Cap, shares are traded under the ticker SANION and the ISIN code SE0005794617.

Note 2 Basis of accounting

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU') and therefore the consolidated financial statements comply with Article 4 of the EU IAS Regulation. The consolidated financial statements also comply fully with the Annual Accounts Act, the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups, and IFRS as issued by the International Accounting Standards Board ('IASB').

These consolidated financial statements were authorized for issue by the Parent Company's Board of Directors (the 'Board'), on April 29, 2021. The Annual Report 2020 for the Parent Company was approved for publication by decision of the Board on April 29, 2021. The Annual Report will be submitted to the Annual General Meeting ('AGM') for adoption on May 26, 2021.

The Board has, at the time of approving the consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, the Group continues to adopt the going concern basis of accounting in preparing the consolidated financial statements.

Details of the Group's significant accounting policies are included in Note 7 Significant accounting policies.

Note 3 Functional and presentation currency

The consolidated financial statements are presented in Swedish kronor ('SEK') which is also the functional currency of the Parent Company. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

Note 4 Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except in the case of certain financial assets and liabilities, which are measured at fair value at the end of each reporting period.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and measurements that have some similarities to fair value but are not fair value, such as value in use in IAS 36.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 5 Critical accounting judgments and key sources of estimation uncertainty

In preparing these consolidated financial statements, management has made judgements, assumptions, and estimates that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

A. Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is as follows:

Equity-accounted investees: Determination of whether the Group has significant influence over an investee (refer to Note 28);
Internal development costs: Determination of whether the criteria for capitalizing internal development costs are met (refer to Note 7);
Revenue recognition: Determination of the performance obligations in out-licensing or partnership agreements, and the nature of licenses (refer to Note 7);
Financing transactions: Determination of the nature of instruments (debt or equity) issued by the Group and the characteristics of the underlying transactions (refer to Note 22); and
Leases: Determination of whether it is reasonably certain that the Group will exercise extension options (refer to Note 16).

B. Assumptions and estimation uncertainties

Assumptions and estimation uncertainties on December 31, 2020 that have a significant risk of resulting in a material change to the carrying amounts of assets and liabilities in the next financial year is as follows:

Measurement of financial assets: Valuation methods and inputs used to estimate the fair value of an investment in a privately-held company (refer to Note 24);
Measurement of financial liabilities: Valuation methods and inputs used to estimate the fair value of certain financial liabilities (refer to Note 24);
Revenue recognition: Assumptions about the likelihood and constraint of future variable consideration from out-licensing or partnership agreements (refer to Note 7);
Share-based payments: Valuation method and inputs used to estimate the grant date fair value of equity-settled share-based payments (refer to Note 11);
Measurement of intangible assets: Estimates regarding the recoverable amount of intangible assets that are not yet available for use (refer to Note 15);
Accruals for research and/or development projects (e.g. pre-clinical and clinical trials): Estimates regarding the amount of costs that meet the criteria for the recognition of a liability or prepaid (refer to Note 7); and
Recognition of deferred tax assets: Availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilized (refer to Note 13).

Note 6 Adoption of new or revised standards

A. Financial reporting standards applied for the first time in 2020

The following amendments to financial reporting standards were applied for the first time in 2020. The amendments had no material impact on the Group's financial position or results of operations:

Amendments to standards / new standard		Mandatory application
Conceptual Framework	Amendments to References to the Conceptual Framework in IFRS Standards	January 1, 2020
IFRS 3	Amendments to IFRS 3: Business Combinations: Definition of a Business	January 1, 2020
IFRS 9, IAS 39, IFRS 7	Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (Phase 1)	January 1, 2020
IFRS 16	Amendments to IFRS 16: COVID-19-Related Rent Concessions	June 1, 2020
IAS 1, IAS 8	Amendments to IAS 1 and IAS 8: Definition of Material	January 1, 2020

SANIONA AB - ANNUAL REPORT 2020

NOTES

B. Published financial reporting standards that have not yet been applied

The IASB has issued the following amendments to standards and new standards. Their application was not yet mandatory for the 2020 fiscal year. In some cases, the European Union had not yet completed the endorsement process. Therefore, the following standards have not yet been applied by the Group:

Amendments to standards / new standard		Mandatory application	Anticipated effects	Endorsement by EU
IFRS 3	Amendments to IFRS 3: Business Combinations: Reference to the Conceptual Framework	January 1, 2022	No effects expected	No
IFRS 4	Amendments to IFRS 4: Insurance Contracts: Extension of the Temporary Exemption from Applying IFRS 9	January 1, 2021	No effects expected	Yes
IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16	Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform (Phase 2)	January 1, 2021	No material effects expected	Yes
IFRS 17	Insurance Contracts, including amendments to IFRS 17	January 1, 2023	No material effects expected	No
IAS 1	Amendments to IAS 1: Classification of Liabilities as Current or Non-current, including Deferral of Effective Date	January 1, 2023	No material effects expected	No
IAS 16	Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use	January 1, 2022	No material effects expected	No
IAS 37	Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts — Cost of Fulfilling a Contract	January 1, 2022	No material effects expected	No
	Annual Improvements to IFRS Standards 2018–2020 Cycle	January 1, 2022	No material effects expected	No
IAS 8	Amendments to IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates	January 1, 2023	No material effects expected	No
IFRS 16	Amendments to IFRS 16 Leases Covid-19-Related Rent Concessions beyond 30 June 2021 (issued on 31 March 2021)	April 1, 2021	No material effects expected	No
IAS 1 and IFRS Practice Statement 2	Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies	January 1, 2023	No material effects expected	No

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 7 Significant accounting policies

The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements. Certain comparative amounts in the statement of comprehensive income and the statement of financial position have been restated, reclassified or re-presented, as a result of a correction of prior-period errors (refer to Note 28 Restatements).

A. Basis of consolidation

i. Subsidiaries

The consolidated financial statements include the Parent Company and entities directly or indirectly controlled by the Parent Company ('subsidiaries'). 'Control' is achieved when the Parent Company is exposed to, or has rights to, variable returns from its involvement with an entity, and has the ability to affect those returns through its power over the entity.

ii. Investments in associates

An 'associate' is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. 'Significant influence' is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate is recognized initially in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Sales of shares by an associate to third parties in a public or private offering or another transaction result in a dilution of the Group's investment, the Group recognizes gains/losses from dilution through profit or loss.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate.

iii. Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with associates are eliminated against the investment to the extent of the Group's interest in the associate. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

B. Foreign currency translation

Transactions denominated in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rate at the dates of the respective transactions. Exchange differences arising between the exchange rate at the transaction date and the exchange rate at the date of actual payment are recognized in the income statement under financial income or financial expense.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognized in profit or loss and presented within total financial items.

However, foreign currency differences arising from the translation of an investment in equity instruments designated as at FVOCI are recognized in OCI.

The assets and liabilities of foreign operations with functional currencies other than SEK are translated into SEK at the exchange rates at the reporting date. Income and expenses of foreign operations items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in currency translation reserve.

For the consolidated cash flow statement, cash flows from foreign subsidiaries are translated at average exchange rates for the respective quarters as presented in the quarterly reports.

Foreign exchange adjustment of balances that are considered as part of the overall net investment in subsidiaries with functional

SANIONA AB - ANNUAL REPORT 2020

NOTES

currencies other than SEK are recognized in other comprehensive income and accumulated in currency translation reserve.

C. Segment reporting

Saniona is organized as a single business unit, focused on discovering, developing, and commercializing innovative treatments for rare disease patients. Consistent with its organizational structure, the Group's President and Chief Executive Officer, who is also the chief operating decision maker, views and manages the Group's operations and business as a single operating segment.

D. Revenue recognition

i. General

The Group generates revenue from out-licensing of intellectual property and from providing research and development services, either in combination with an out-licensing arrangement, or standalone.

For all contracts with customers, the Group (1) identifies the performance obligations in the contract, (2) determines the transaction price, (3) allocates the transaction price to the performance obligations in the contract, and (4) recognizes revenue when or as the Group satisfies a performance obligation.

ii. Out-licensing arrangements

For out-licensing arrangements that include promises in addition to the promised license, the Group determines if the license is 'distinct' by assessing whether the customer can benefit from the license on its own or together with other resources that are readily available, and whether the license is separately identifiable from other goods or services in the contract.

If the license is not distinct, then the Group recognizes revenue for the single performance obligation when or as the combined goods or services are transferred to the customer.

If the license is distinct, the Group determines the nature of the license. If the nature of the promise is to provide the customer with a right to access the Group's intellectual property ('IP') throughout the license period, then the Group recognizes revenue over time, because the customer simultaneously consumes and receives benefit from the Group's performance of providing access to its IP as that performance occurs. A promise to provide the customer with a right to use the Group's IP is satisfied at a point in time.

iii. Service revenue

Revenue from providing R&D services is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over the promised services to the customer,

E. Employee benefits

i. Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii. Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

iii. Share-based payments

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

F. Net income/expense from financial items

Financial items comprise interest realized and unrealized currency translation adjustments and fair value adjustments of securities. Financial income and financial expenses are recognized in the income statement with the amounts related to the financial year.

G. Income tax

i. General

Tax on income for the year, consisting of the year's current tax and deferred tax, is recognized in the income statement to the extent that it relates to the income or loss for the year and in other comprehensive income or equity to the extent that it relates thereto.

ii. Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Under the Danish 'Skattekreditordningen' (the 'Tax Credit Scheme'), loss-making companies can claim payment of the tax base of the portion of their loss which is attributable to certain research and development ('R&D') activities. Companies may obtain payment of the tax base of losses originating from R&D costs of up to DKK 25.0 million (approx. SEK 33.8 million). The net operating loss ('NOL') for the year for which the Group claims a payment is reduced by the amount of the tax base of the loss claimed. Payment typically occurs within 12 months after the reporting period. The Group accounts for the Tax Credit Scheme as a current tax.

iii. Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets are recognized for NOL carryforwards, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognize a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing

temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset only if certain criteria are met.

H. Property and equipment

Items of property and equipment are measured at cost less accumulated depreciation. Cost comprises acquisition price and costs directly related to acquisition until the time when the Group starts using the asset. The basis for depreciation is cost less estimated residual value after the end of useful life. Assets are depreciated under the straight-line method over the expected useful lives of the assets. The depreciation periods are as follows:

Machinery	5 years
IT equipment	3 years
Other fixtures and fittings, tools and equipment	2-3 years

Profits and losses arising from disposal of property and equipment are stated as the difference between the selling price less the selling costs and the carrying amount of the asset at the time of the disposal. Profits and losses are recognized in the income statement under research and development expenses and administrative expenses.

I. Leases

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its

SANIONA AB - ANNUAL REPORT 2020

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incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate on the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value items and short-term leases. The Group recognizes the lease payments associated

with these leases as an expense on a straight-line basis over the lease term.

J. Intangible assets

i. Internal research and development

All internal research costs are expensed in profit or loss as incurred.

Internal development costs are capitalized only if they can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, internal development costs are expensed in profit or loss as incurred. As of December 31, 2020, no internal development costs incurred by the Group have met these recognition criteria.

ii. In-licensing and separately acquired intangible assets

Intangible assets, including patents and other intellectual property, that are licensed or acquired by the Group are initially measured at cost. Payments related to the achievement of development or regulatory milestones are capitalized when paid unless such payments relate to the execution of activities (cost accumulation approach). Intangible assets are amortized when they become available for use. Until then, intangible assets are tested for impairment at least annually, irrespective of whether any indication of impairment exists, or when an indication of impairment is identified.

K. Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any

such indication exists, then the asset's recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets ('cash-generating units, 'CGUs') or other CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

L. Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions, and highly liquid investments with maturities of three months or less when acquired.

M. Financial instruments

i. Recognition and initial measurement

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.

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A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

ii. Classification and subsequent measurement

Financial assets - General

On initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets - Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Financial assets - Subsequent measurement and gains and losses

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
Financial assets at amortized cost: These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

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iii. Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

iv. Impairment

The Group recognizes loss allowances for estimated credit losses ('ECLs') on financial assets measured at amortized cost. ECL for trade receivables are estimated based on a simplified approach which makes use of the Group's historical credit loss experience and more forward-looking information. The Group analyzes the credit risk related to its cash and cash equivalents. If it is determined that the credit risk is low, the Group estimates 12-month ECL. If the credit risk is not low, the Group estimates lifetime ECLs.

Recognized loss allowances for ECLs for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

N. Share capital

Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.

O. Fair value measurement

'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

P. Accounting policies for the Parent Company

The Parent Company applies the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2, Accounting for Legal Entities. The application of RFR 2 means that as far as possible, the Parent Company applies all IFRS as endorsed by the EU within the auspices of the Swedish Annual Accounts Act and the Swedish Pension Obligations Vesting Act and considering the relationship between accounting and taxation. The differences between the Parent Company's and the Group's accounting policies are reviewed below:

Classification and presentation: The Parent Company presents a separate Statement of Comprehensive Income, separately from the Income Statement.
Investments in subsidiaries, other financial assets and associated companies: Investments in subsidiaries and other financial assets are recognized at cost in the Parent Company's financial statements subject to potential impairment. Dividends are recognized in the income statement. Investments in associates is recognized in the balance sheet in accordance with the equity method and taken to the profit and loss statement as a financial income or expense.

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Note 8 Revenue

The Group generates revenue from out-licensing of intellectual property and from providing research and development services, either in combination with an out-licensing arrangement, or standalone. Revenue from standalone research and development services is recognized as costs are incurred. Research services that are bundled with a license and that relate to very early stage compounds are typically deemed to be highly specialized and proprietary, resulting in a conclusion that the research services and the license are not distinct. In such cases, the Group typically recognizes any upfront payments received over time. Future milestone or other event-based payments and royalties are deemed to be constrained and are generally not included in the transaction price. Revenue from receiving milestone or other event-based payments is recorded in full when received.

In 2020 and 2019, revenue for the Group by category was as follows:

KSEK	2020	2019 (Restated)
Out-licensing (other event-based payments)	1,971	920
Out-licensing (bundle, over time)	4,407	6,281
Research and development services (standalone)	1,820	-
Total	8,198	7,201

In 2020 and 2019, revenue for the Group by major customers was as follows:

KSEK	2020		2019 (Restated)
Customer #1	4,407	54%	6,281	87%
Customer #2	1,971	24%	920	13%
Customer #3	1,820	22%	-	-
Total	8,198	100%	7,201	100%

In 2020 and 2019, revenue for the Group by primary geographical market was as follows:

KSEK	Group
	2020	2019 (Restated)
Sweden	-	-
Other European countries	6,227	6,281
The Americas	1,971	920
Total	8,198	7,201

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Note 9 Auditors fees and remuneration

The auditor assignment relates to an audit of the financial statements and accounts as well as an audit of the administration of the Board of Directors and the Chief Executive Officer. Audit activities other than the audit assignment refer, for example, to comfort letters and the limited assurance reports. Tax services include tax consultancy services and other services primarily relate to consultancy services.

KSEK	Group		Parent Company
	2020	2019	2020	2019
Deloitte
Audit assignment	682	414	387	320
Audit activities other than audit assignment	427	263	228	131
Tax consultancy services	73	10	52	-
Other assignments	330	-	235	-
Total	1,512	687	902	451

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Note 10 Employee benefits

A. Number of employees, salaries, other remuneration and social security expenses

The average number of employees in the Group during the year amounted to 26.4 (22.4).

As of December 31, 2020, the number of employees including the CEO was 38 (24) of which 19 (13) were women and 19 (11) are men. Of these employees, 34 (19) were full-time employees 4 (3) were part-time employees, and a total of 28 (19) work in the Group's research and development operations. The level of education among the personnel is high, 13 employees (11) hold PhDs, 10 (2) have other university degrees, 8 (8) have laboratory training and 7 (3) have other degrees.

By December 31, 2020, the Group had an executive committee ('EXCOM') consisting of a Chief Executive Officer ('CEO'), Chief Medical Officer, Chief Scientific Officer ('CSO'), Chief Financial Officer ('CFO'), Chief Communications Officer, and Chief Human Resources Officer.

SALARIES AND REMUNERATION FOR THE YEAR 2020 GROUP AND PARENT COMPANY

KSEK	Board fee	Fixed salary	Variable salary	Pension costs	Share based payment	Social security expenses	Other staff expenses	Total
J. Donald deBethizy, Chairman	330	-	-	-	441	-	-	771
Claus Bræstrup, Board member***	-	-	-	-	-	-	-	-
Carl Johan Sundberg, Board member	220	-	-	-	94	59	-	373
Anna Ljung, Board member	220	-	-	-	94	59	-	373
Jørgen Drejer, Board member	-	-	-	-	65	-	-	65
Edward Saltzman, Board member	160	-	-	-	82		-	242
Total Board*	930	-	-	-	776	118	-	1,824
Rami Levin, CEO	-	4,624	2,312	99	5,445	463	-	12,943
Jørgen Drejer, CSO**	-	1,999	290	-	-	5	-	2,294
Other EXCOM***	-	6,397	2,960	230	4,172	1,115	-	14,874
Total EXCOM	-	13,020	5,562	329	9,617	1,583	-	30,111
Other Employees	-	24,700	1,324	1,570	1,694	1,164	30	30,482
Total	930	37,720	6,886	1,899	12,087	2,865	30	62,417

Parent company

The parent company accounts for 7.4 MSEK (5.3) in personnel expenses, which included salary of 0 MSEK (1.6), board fee of 930 KSEK (805), social expenses of 118 KSEK (114), warrants of 776 KSEK (1,065) and intercompany transaction of 5.6 MSEK (1.7).

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A. Number of employees, salaries, other remuneration and social security expenses

(Continued)

SALARIES AND REMUNERATION FOR THE YEAR 2019 GROUP AND PARENT COMPANY

KSEK	Board fee	Fixed salary	Variable salary	Pension costs	Share based payment (restated)	Social security expenses	Other staff expenses	Total
J. Donald deBethizy, Chairman	353	-	-	-	989	-	-	1,342
Claus Bræstrup, Board member***	-	-	-	-	-	-	-	-
Carl Johan Sundberg, Board member	173	-	-	-	36	55	-	264
Anna Ljung, Board member	186	-	-	-	36	59	-	281
Jørgen Drejer, Board member	-	-	-	-	-	-	-	-
Edward Saltzman, Board member	93	-	-	-	6	-	-	99
Total Board*	805	-	-	-	1,067	114	-	1,986
Jørgen Drejer, CEO**	-	1,618	-	-	-	5	15	1,638
Thomas Feldthus, CFO***	-	2,044	-	204	-	5	15	2,268
Palle Christophersen, CSO**	-	1,364	-	-	-	5	15	1,384
Total EXCOM	-	5,026	-	204	-	15	45	5,290
Other Employees	-	16,179	-	1,512	465	98	406	18,660
Total	805	21,205	-	1,716	1,532	227	451	25,936

The board fee relates to fee in the Parent Company.
On January 7, 2020, Saniona appointed Rami Levin as CEO. Jørgen Drejer, previous CEO, continued as CSO and Palle Christophersen stepped down from executive management as Senior Vice President Research.
On February 18, 2020, Saniona announced that Thomas Feldthus has resigned as CFO. From March 24 until September 15, 2020, Anita Milland, VP of Finance & Administration was appointed interim CFO & Head of IR. On September 15, 2020, Saniona announced that Jason Amello, was appointed CFO.
*On May 6, 2020 at the AGM Claus Bræstrup resigned as Board member.
*** The Company notes that the category "social security expenses" includes many sub-categories of Company funded expenses (for example, employer social security tax, state employer tax), which are not customarily included under US practices of calculating executive remuneration.

B. Defined contribution plans

The Group has a defined contribution retirement plan for its employees in Denmark and provides employer matching contributions to 401(k) plans for its employees in the United States. The total contributions to these defined contribution plans are shown as "Pension costs" in the tables above.

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Note 11 Share-based payments

A. Description of share-based payment arrangements

As of December 31, 2020, the Group had the following share-based payment arrangements (collectively the 'Option Programs'). All Option Programs are equity-settled.

2017: The 2017 Annual General Meeting voted in favor of establishing an employee incentive program involving the allotment of a maximum of 38,750 options free of charge to certain employees and others providing similar services of the Group (the 'Options Programme 2017/2022'). Allotment of 38,750 options took place in July 2017. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 41.13 corresponding to 100% of the average closing price of the Parent Company's share during the ten trading days after the annual meeting 2017. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 40.63 and 1.03, respectively. The options are subject to a service condition and vest gradually on a monthly basis over a total vesting period of 48 months. Holders can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, full-year report, for the first time after publication of the quarterly report for the first quarter of 2021 and last time after publication of the quarterly report for the third quarter of 2022.

2018.1: On January 19, 2018, the extraordinary shareholders' meeting voted in favor of establishing an incentive program involving the allotment of a maximum of 217,625 options free of charge to the chairman of the board of directors, J. Donald deBethizy (the 'Option Programme 2018/2024'). Allotment of 217,625 options took place in March 2018. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 33.60. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 33.20 and 1.03, respectively. 25% of the options vested on January 19, 2018, when the holder was elected as chairman of the Board of Directors. The remaining options are subject to a service condition and vest at a rate of 25% on each anniversary of the election as chairman of the Board of Directors over a period of 3 years. The holder can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, the year-end report, the first time after publication of the quarterly report for the first quarter of 2021 and last time after publication of the quarterly report for the first quarter of 2024. In order to enable the Parent Company's delivery of shares under the option program and to secure social security charges which may arise in connection with the option program, the extraordinary shareholders' meeting resolved to issue a maximum of 286,003 options to a wholly owned subsidiary in the Group.

2018.2: The 2018 Annual General Meeting voted in favor of establishing an employee incentive program involving the allotment of a maximum of 34,500 options free of charge to certain employees and others providing similar services of the Group (the 'Options Programme 2018/2023'). Allotment of 34,500 options took place in July 2018. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 30.08. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 29.71 and 1.03, respectively. The options are subject to a service condition and vest gradually on a monthly basis over a total vesting period of 48 months. Holders can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, the year-end report, the first time after publication of the quarterly report for the first quarter of 2022 and last time after publication of the quarterly report for the third quarter of 2023.

2018.3: The 2018 Annual General Meeting voted in favor of establishing an employee incentive program involving the allotment of a maximum of 8,000 options free of charge to certain members of the board of directors of the Group (the 'Options Program 2018/2022 for certain Board Members'). Allotment of 8,000 options took place in July 2018. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 30.08. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 29.71 and 1.03, respectively. The options are subject to a service condition, 1/3 of the options vest when the annual shareholders' meeting takes place in 2019, an additional 1/3 of the options vest when the annual shareholders' meeting takes place in 2020, and the last 1/3 of the options vest when the annual shareholders' meeting takes place in 2021. The holder can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, the year-end report, the first time after publication of the quarterly report for the first quarter of 2021 and last time after publication of the quarterly report for the first quarter of 2022. To enable the Parent Company's delivery of shares under the option program and to secure social security charges which may arise in connection with the option program, the extraordinary shareholders' meeting resolved to issue a maximum of 10,513 options to a wholly owned subsidiary in the Group.

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2019.1: The 2019 Annual General Meeting voted in favor of establishing an employee incentive program involving the allotment of a maximum of 34,500 options free of charge to certain employees and others providing similar services of the Group (the 'Options Program 2019/2024'). Allotment of 34,500 options took place in September 2019. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 17.86. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 17.83 and 1.01, respectively. The options are subject to a service condition and vest gradually on a monthly basis over a total vesting period of 48 months. Holders can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, full-year report, for the first time after publication of the quarterly report for the first quarter of 2023 and last time after publication of the quarterly report for the third quarter of 2024.

2019.2: The 2019 Annual General Meeting voted in favor of establishing an incentive program involving the allotment of a maximum of 12,000 options free of charge to certain members of the board of directors of the Group (the 'Options Program 2019/2023 for certain Board Members'). Allotment of 12,000 options took place in September 2019. Each option initially entitled the holder to acquire one new share in Saniona for a subscription price of SEK 17.86. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 17.83 and 1.01, respectively. The options are subject to a service condition, 1/3 of the options vest when the annual shareholders' meeting takes place in 2020, an additional 1/3 of the options vest when the annual shareholders' meeting takes place in 2021, and the last 1/3 of the options vest when the annual shareholders' meeting takes place in 2022. The holder can exercise vested options during 30 days from the day following the publication of the Group's quarterly reports, or in the case of full-year, the year-end report, for the first time after publication of the quarterly report for the first quarter of 2022 and last time after publication of the quarterly report for the first quarter of 2023. In order to enable the Parent Company's delivery of shares under the option program and to secure social security charges which may arise in connection with the option program, the extraordinary shareholders' meeting resolved to issue a maximum of 15,770 options to a wholly owned subsidiary in the Group.

2020:1 On February 7, 2020, the extraordinary shareholders' meeting voted in favor of establishing a option program for the CEO, Rami Levin (the 'Options Program 2020/2025'). The Options Program 2020/2025 comprises 710,313 options free of charge. Allotment took place on February 7, 2020. Each option initially entitled the holder a right to acquire one new share in Saniona for a subscription price of SEK 29.42. The subscription price and the number of shares that each option entitles to subscription of were subsequently recalculated as a result of rights issues and are now SEK 29.36 and 1.01, respectively. The options are subject to a service condition and vest at a rate of 25% on the dates falling 12, 24, 36 and 48 months after allotment. The holder can exercise vested options during 30 days from the day following after the announcement of the company's quarterly reports, or for full year, the year-end report, the first time after the announcement of the quarterly report for the fourth quarter of 2022 and the last time after the announcement of the quarterly report for the fourth quarter of 2025.

2020:2 On October 23, 2020, the extraordinary shareholders' meeting voted in favor of establishing an employee incentive program involving the allotment of a maximum of 7,976,690 options free of charge (the 'Options Program 2020'). A total of 5,923,348 options were allotted at various points in time in the fourth quarter of 2020. Each option entitles the holder a right to acquire one new share in Saniona for a subscription price equal to the closing price of our common stock on the day before the allotment. The options are subject to a service condition, 25% vest on the 12-month anniversary, and the remaining 75% vest gradually on a quarterly basis at a rate of 6.25% over the following 36 months, resulting in a total vesting period of 48 months. The holder can exercise vested options from the time of vesting until the date that falls 10 years after the allotment date. However, for a participant that ceases to be employed or in a service relationship in the Group, vested options have to be exercised within 90 days from the date when the participant ceased to be employed or in a service relationship in the Group (or, in the case such cessation is due to the participant's death or disability, 12 months from such date).

2020:3 On October 23, 2020, the extraordinary shareholders' meeting voted in favor of establishing an incentive program involving the allotment of a maximum of 308,000 options free of charge to all the members of the board of directors, excluding the chairman of the board of directors (the 'Board Options Program 2020'). Each participant was allotted 77,000 options. Allotment of 308,000 options took place on October 26, 2020. Each option entitles the holder a right to acquire one new share in Saniona for a subscription price of SEK 25.40. The options are subject to a service condition, 1/3 of the options vest on the date when the annual general meeting of 2021 is held, an additionally 1/3 vest on the date when the annual general meeting of 2022 is held, and the remaining 1/3 vest on the date when the annual general meeting of 2023 is held. The holder can exercise vested options during 30 days from the day following after the announcement of the company's quarterly reports, or for full year, the year-end report, the first time after the announcement of the quarterly report for the fourth quarter of 2023 and the last time after the announcement of the quarterly report for the fourth quarter of 2024.

SANIONA AB - ANNUAL REPORT 2020

NOTES

B. Measurement of fair values and compensation expense

Share-based compensation expenses for the years ended December 31, 2020 and 2019 totaled SEK 12.1 million and SEK 1.5 million, respectively. The fair value of the service that entitles an employee and board member to allotment of options under the Option Programs is recognized as a personnel cost with a corresponding increase in equity. Such compensation expenses represent the fair market values of options granted and do not represent actual cash expenditures.

The estimated life has been based on the average of the end of the vesting period and the contractual life of the respective instruments, absent sufficient Group-specific information about employees exercising options. Expected volatility has been based on an evaluation of the historical volatility of the Parent Company's share price, particularly over the historical period commensurate with the estimated life. The assumptions used for calculating our share-based compensation expense prior to the 2020:2 program have been revised, the effects of these revisions did not have a material effect on the consolidated financial statements. Refer to Note 28 Restatements.

The inputs used in the measurement of the fair values at grant date and the reconciliation of options outstanding are as follows.

DECEMBER 31, 2020

Incentive program	2017	2018:1	2018:2	2018:3	2019:1	2019:2	2020:1	2020:2	2020:3	Total
Options outstanding at January 1	38,292	286,003	32,792	10,513	34,500	15,770	-	-	-	417,870
Granted during the year	-	-	-	-	-	-	710,313	5,923,348	308,000	6,941,661
Forfeited during the year	-	-	-	-	-	-	-	-7,700	-	-7,700
Options outstanding at December 31	38,292	286,003	32,792	10,513	34,500	15,770	710,313	5,915,648	308,000	7,351,831
Options exercisable at December 31	-	-	-	-	-	-	-	-	-	-
Maximum number of shares to be issued	39,440	294,583	33,775	10,828	34,845	15,927	717,416	5,915,648	308,000	7,370,462
Grant Date Fair Value* (SEK)	27.94	12.06	17.38	12.89	7.23	6.00	12.26	13.13	7.98
Share Price at Grant Date* (SEK)	49.60	26.95	33.85	33.85	17.76	17.76	28.10	23.50	23.55
Exercise Price* (SEK)	40.63	33.20	29.71	29.71	17.83	17.83	29.36	24.12	25.40
Expected volatility*	73.41%	69.24%	67.77%	53.67%	57.29%	53.67%	58.66%	63.64%	57.00%
Estimated life*	3.75 years	3.88 years	3.73 years	2.80 years	3.67 years	2.8 years	4.2 years	6.11 years	2.8 years
Expected dividends*	0	0	0	0	0	0	0	0	0
Risk-free rate*	-0.2602%	-0.1092%	-0.2773%	-0.4218%	-0.6903%	-0.6709%	-0.2280%	-0.2772%	-0.3602%
Remaining contractual life*	2.00 years	3.50 years	2.96 years	1.48 years	4.00 years	2.75 years	5.00 years	9.83 years	3.92 years

Weighted average

SANIONA AB - ANNUAL REPORT 2020

NOTES

DECEMBER 31, 2019 (RESTATED)

Incentive program	2015	2017	2018:1	2018:2	2018:3	2019:1	2019:2
Options outstanding at January 1	64,000	38,292	286,003	32,792	10,513	-	-
Granted during the year	-	-	-	-	-	34,500	15,770
Exercised during the year	-3,998	-	-	-	-	-	-
Forfeited/expired during the year	-60,002	-	-	-	-	-	-
Options outstanding at December 31	-	38,292	286,003	32,792	10,513	34,500	15,770
Options exercisable at December 31	-	-	-	-	-
Grant Date Fair Value* (SEK)		27.94	12.06	17.38	12.89	7.23	6.00
Share Price at Grant Date* (SEK)		49.60	26.95	33.85	33.85	17.76	17.76
Exercise Price* (SEK)		41.13	33.60	30.08	30.08	17.86	17.86
Expected volatility*		73.41%	69.24%	67.77%	53.67%	57.29%	53.67%
Estimated life*		3.75 years	3.88 years	3.73 years	2.80 years	3.67 years	2.8 years
Expected dividends*		0	0	0	0	0	0
Risk-free rate*		-0.2602%	-0.1092%	-0.2773%	-0.4218%	-0.6903%	-0.6709%
Remaining contractual life		3.00 years	4.50 years	3.96 years	2.48 years	5.00 years	3.75 years

Weighted average
The weighted average share price at the date of exercise for options exercised during 2019 was SEK 28.67 per share.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 12 Financial items

KSEK	Note	Group		Parent Company
		2020	2019	2020	2019
Share of results of associate	17	-433	-5,331	-433	-937
Interest income		312	674	41,334	8,656
Financial income		312	674	41,334	8,656
Interest expense on lease liabilities		-734	-138	-	-
Other interest expense		-10,616	-83	-10,333	-142
Net foreign exchange gains (losses)		-7,305	-253	-5,881	-127
Financial expenses		-18,655	-474	-16,214	-269
Gain from dilution related to an equity-accounted investee	17	-	4,395	-	4,395
Gain recognized upon loss of significant influence over an equity-accounted investee	17	53,325	-	53,325	-
Gain on sale of shares held as an investment in equity instruments – publicly-traded		-	-	44,512	-
Gain from change in fair value for an investment in equity instruments – publicly-traded		-	-	3,440	-173
Gain from change in fair value for Warrants	24	30,192	-	30,192	-
Gain from change in fair value for investment in equity instruments - privately-held	24	13,418	17,900	-	-
Net gain/loss from financial items		96,935	22,295	131,469	4,222

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 13 Income Tax

A. Tax for the year

KSEK	Group		Parent Company
	2020	2019	2020	2019
Current tax income	7,853	7,707	-	-
Deferred tax income (expense)	-67	6	-	-
Net tax income	7,786	7,713	-	-

Income tax in Sweden is calculated at 21.4% (21.4%), in the United States at 21.0%, and in Denmark at 22% (22%) of taxable profit or loss for the year.

Current tax income for the years 2020 and 2019 relates to the Tax Credit Scheme in Denmark.

B. Reconciliation of effective Tax

A reconciliation of recognized profit and the tax expense for the year is presented below.

KSEK	Group		Parent Company
	2020	2019	2020	2019
Recognized profit/loss before tax	-81,216	-76,464	148,180	-3,080
Tax according to the applicable tax rate	17,380	16,363	-31,711	659
Tax effect of tax-exempt income (Cadent FV)	2,871	3,830	-	-
Tax effect of tax-exempt income (TOx Warrants)	6,462	-	6,462
Tax effect of tax-exempt income (Scandion)	11,411		20,384
Tax effect of non-deductible expenses	-	-27
Tax effect on deductible costs in relation to share issues taken to equity	11,283	2,969	11,283	2,969
Current year losses for which no deferred tax asset is recognized	-41,554	-15,428	-6,418	-3,628
Derecognition of previously recognized deferred tax assets	-67	6	-	-
Net tax income	7,786	7,713	-	-
Effective tax rate	-9.6%	-10.1%	0.0%	0.0%

C. Tax loss carried forward

The Parent Company and its subsidiaries have generated unutilized net operating loss ('NOL') carryforwards. However, the company management cannot assess when it will be possible to utilize the tax loss carry forwards. All entities within the Group have a history of recent losses. Accordingly, deferred tax assets attributable to NOL carryforwards have been recognized only to the extent that they can be offset against deferred tax liabilities in the same jurisdiction. There is no time limit for the use of the NOL carryforwards in all jurisdictions in which the Group operates.

KSEK	Group		Parent Company
	2020	2019	2020	2019
Loss carried forward January 1 for which no deferred tax assets were recognized	141,313	68,060	45,131	29,242
Loss carried forward for which no deferred tax assets were recognized	151,451	73,253	-980	15,889
Loss carried forward December 31 for which no deferred tax assets were recognized	292,764	141,313	44,151	45,131

The Group has an accumulated unrecognized deferred tax asset of 63.6 MSEK (14.8). Deferred tax assets are not recognized since the tax assets are currently not deemed to meet the criteria for recognition as management is not able to provide any convincing positive evidence that deferred tax assets should be recognized.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 14 Earnings per share

KSEK	Group
	2020	2019 (Restated)
Net profit	-73,430	-68,751
Average number of outstanding shares (in thousands)	40,999	25,720
Earnings per share for the year (SEK)	-1.79	-2.67
Diluted earnings per share for the year (SEK)	-1.79	-2.67

Earnings per share after dilution is the same as before dilution in 2020 and 2019, since the result is negative in 2020 and 2019. This is because dilution effect is only recognized when a potential conversion to ordinary shares would mean that earnings per share will be lower.

Note 15 Intangible assets

A. Reconciliation of carrying amount

The carrying amount of intangible assets reconciles as follows:

KSEK	Group*
	2020	2019 (Restated)
Cost on January 1	7,682	7,568
Additions	-	-
Impairment loss	-1,392	-
Foreign exchange adjustment	-218	114
Cost on December 31	6,072	7,682

No intangible assets in the Parent Company

B. Impairment

Saniona purchased certain intellectual property from NeuroSearch A/S ("NeuroSearch") between 2012 and 2017. Saniona had determined that the total cost of these assets (SEK 7.1 million) should be allocated to two development-stage compounds, tesofensine and NS2359, which are not yet available for use. During the third quarter of 2020, our collaboration partner University of Pennsylvania terminated their clinical development program for NS2359. With this, the Group has determined that the probability-adjusted expected cash flows from the asset are zero as of December 31, 2020. As a result, we recorded an impairment charge for the entire recorded value of the NS2359 compound of SEK 1.4 million in 2020, which is included in Depreciation and write-downs in the statement of comprehensive income.

The remaining carrying amount of SEK 6.1 million relates to Tesofensine. We have estimated the recoverable amount of this asset based on the present value of the future cash flows expected to be derived from this asset, assuming a product launch in 2025 with a probability of 50%, and a discount rate of 12%. The recoverable amount of the Tesofensine asset was estimated to be higher than its carrying amount and no impairment was required. A (possible) delay of product launch by a year would not result in an impairment.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 16 Tangible assets

A. Property and equipment

The carrying amount of property and equipment reconciles as follows:

KSEK	2020				2019
	Leasehold improvements	Plant, machinery and other fixture	IT equipment	Total	Leasehold improvements	Plant, machinery and other fixture	IT equipment	Total
Cost on January 1	350	4,546	922	5,818	344	4,479	881	5,704
Additions	3,058	663	1,189	4,910	-	-	52	52
Disposals	-348	-1,365	-39	-1,752	-	-	-25	-25
Foreign exchange adjustment	-86	-164	-95	-345	6	67	14	87
Cost on December 31	2,974	3,680	1,977	8,631	350	4,546	922	5,818
Depreciation on January 1	350	3,541	684	4,575	310	3,052	501	3,863
Depreciation	142	450	249	841	34	508	199	741
Disposals	-348	-1,365	-28	-1,741	-	-	-25	-25
Foreign exchange adjustment	-6	-96	-31	-133	6	-17	9	-2
Depreciation on December 31	138	2,530	874	3,542	350	3,543	684	4,577
Carrying amount December 31	2,836	1,150	1,103	5,089	-	1,005	238	1,241

No property and equipment in the Parent Company

SANIONA AB - ANNUAL REPORT 2020

NOTES

B. Leases

The Group leases office and laboratory space, and items of equipment, for which it recognizes right-of-use assets and lease liabilities.

The Group also leases certain other equipment under short-term and/or leases of low-value items. Group has elected not to recognize right-of-use assets and lease liabilities for these leases. For 2020 and 2019, the amount of expense recognize for such assets was immaterial.

i. Right-of-use assets

The carrying amount of right-of-use assets reconciles as follows:

KSEK	Group*
	Rent facility	2020 Equipment	Total	Rent facility	2019 Equipment	Total
Cost on January 1	-	2,228	2,228	4,233	-	4,233
Additions	18,065	5,520	23,585	-	2,292	2,292
Disposals	-	-	-	-4,233	-	-4,233
Exchange rate adjustments	-63	-201	-264	-	-64	-64
Cost on December 31	18,002	7,547	25,549	-	2,228	2,228
Depreciations on January 1	-	56	56	4,233	-	4,233
Depreciation	2,155	317	2,472	-	56	56
Disposals	-	-	-	-4,233	-	-4,233
Exchange rate adjustments	-	-14	-14	-	-	-
Depreciations on December 31	2,155	359	2,514	-	56	56
Carrying amount December 31	15,847	7,188	23,035	-	2,172	2,172

No right of use assets in the Parent Company

ii. Extension options

The Group's property leases may be entered into for either an indefinite period of time, or they may contain extension options exercisable before the end of the non-cancellable contract period. Any extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options or, for leases with an indefinite term, to what extent it is reasonably certain that the Group will continue a lease for more than just the minimum term. The Group reassesses whether it is reasonably certain to exercise the options or for how long we believe that we will continue a lease if there is a significant event or significant changes in circumstances within its control.

The Group has estimated that the potential future lease payments, should the Group continue to occupy leased property for 2 years longer than currently expected, would result in an increase in lease liability of SEK 3.2 million.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 17 Equity-accounted investees

The Group holds an investment in Scandion Oncology A/S ('Scandion'), a publicly-traded company based in Copenhagen, Denmark. Through March 31, 2020, we had accounted for our investment in Scandion under the equity method of accounting, as the criteria for significant influence were met. Effective March 31, 2020, we lost significant influence over Scandion, after that, we accounted for our investment in Scandion as a financial asset (investment in equity instruments – publicly-traded) in the Group and the Parent Company. We recorded a gain of SEK 53.3 million as a result of this change. Throughout 2020, the Group has reduced its holdings of Scandion stock by selling shares.

For the years 2020 and 2019, the Group recognized losses based on its share of Scandion's losses of SEK 0.4 million and SEK 5.3 million, respectively. In 2019, the Group recognized a gain from dilution resulting from a rights issue by Scandion of SEK 4.4 million, which is included in Net gains/losses on financial items.

In 2020, the Group also recognized other comprehensive income resulting from an increase of Scandion's share price between March 31, 2020 and December 31, 2020 of SEK 68.5 million. Of that, SEK 65.0 million are gains that were realized upon sale of Scandion shares. The remaining SEK 3.5 million are unrealized. In the Parent Company Scandion is from 31 March 2020 accounted for as financial assets recognized at cost subject to potential impairment.

Refer to Note 28 Restatements for further details.

Note 18 Other financial assets

A. Composition

Other financial assets were comprised of the following:

KSEK	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
Investment in equity instruments - privately-held	37,319	25,060	7,426
Investment in equity instruments - publicly traded	22,241	-	-
Long-term deposits for property lease agreements	2,100	-	-
Total non-current other financial assets	61,660	25,060	7,426

B. Investment in equity instruments - privately-held

Saniona A/S, a wholly-owned subsidiary of the Parent Company, owns approximately 3% of the share capital of Cadent Therapeutics, Inc. ('Cadent'), a private company based in Cambridge, MA, United States.

C. Investment in equity instruments – publicly traded

The asset as of December 31, 2020 represents the fair value of the Group's investment in Scandion. Through March 31, 2020, this investment was recorded as an equity-accounted investee, refer to Note 17 Equity-accounted investees.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 19 Other assets

Other assets were comprised of the following:

GROUP

KSEK	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
Prepayments	513	-	-
Other	-	299	1,161
Total non-current other assets	513	299	1,161
VAT reimbursement	3,735	1,310	2,241
Prepaid expenditures	5,526	1,523	1,675
Other	221	1,199	521
Total current other assets	9,482	4,032	4,437

The increase in prepaid expenditures in 2020 relates predominantly to the Group's preclinical research activities and planned clinical development activities, and our continued assessment of our opportunity to access the U.S. capital market through a U.S. Nasdaq listing.

PARENT

KSEK	2020-12-31	2019-12-31 (Restated)
VAT reimbursement	397	254
Prepaid expenditures	2,991	763
Other	-	32
Total current other assets	3 388	1,049

Note 20 Cash and cash equivalents

A. Composition of cash and cash equivalents

The Group's cash and cash equivalents as of December 31, 2020, December 31, 2019, and January 1, 2019 were comprised of bank deposits only.

B. Adjustments for non-cash transactions and changes in working capital

KSEK	Group		Parent Company
	2020	2019	2020	2019
Adjustments for non-cash transactions:
Share of result of associates	433	-5,331	433	937
Depreciation	4,797	2,202	-	-
Warrants	12,087	1,523	775	1,065
Other financial income and expenses	-96,935	-17,900	-94,837	269
Other provisions	354	8 253	-9,138	1,778
Total adjustments for non-cash transactions	-79,972	-11,253	-102,767	4,049
Changes in working capital:
Increase (-)/Decrease (+) in operating receivables	-34,907	-7,895	-8,060	-81,093
Increase (-)/Decrease (+) in operating liabilities	14,952	-10,883	3,844	129
Total changes in working capital	-19,955	-18,778	-4,216	-80,964

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 21 Share capital and reserves

A. Share capital

	Number of shares	Par value SEK	Share capital SEK
January 1, 2019	23,324,413	0.05	1,166,284
Shares issued for cash	5,088,106	0.05	254,341
December 31, 2019	28,412,519	0.05	1,420,625
January 1, 2020	28,412,519	0.05	1,420,625
Shares issued for cash	33,960,312	0.05	1,698,017
December 31, 2020	62,372,831	0.05	3,118,642

All shares are in the same class and rank equally with regard to the Parent Company's residual assets. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Parent Company.

i. Formue Nord Private Placement

On January 10, 2020, the Parent Company completed a private placement of SEK 25.0 million at SEK 25.00 per share to two external investors (Formue Nord Markedsneutral A/S and Formue Nord Fokus A/S, collectively 'Formue Nord', the 'Formue Nord Private Placement'). Through the Formue Nord Private Placement, the Parent Company's share capital increased by SEK 50,000 and the number of shares increased by 1,000,000.

ii. Unit Rights Issue 2020

The extraordinary shareholders' meeting on February 7, 2020, approved the board of director's decision to carry out a directed issue of unit rights (the 'Unit Rights Issue 2020') as follows:

Issuance of 465,518 unit rights to Formue Nord in connection with the Formue Nord Private Placement and the Formue Nord Loan (refer to Note 22 Other financial liabilities), consisting of 1,396,554 warrants of the series TO1, TO2 and TO3 (the 'Lender Warrants'); and
Issuance of 1,014,224 unit rights to all existing shareholders on a pro-rata basis, consisting of a total of 3,042,672 warrants of the same series (the 'Investor Warrants').

The Parent Company did not receive any proceeds from the issuance of the Lender Warrants and the Investor Warrants. Upon initial recognition, the fair value of the Lender Warrants (SEK 7.2 million) was recorded as transaction cost for the Formue Nord Loan, and the fair value of the Investor Warrants (SEK 27.8 million) was recorded as a reduction of additional paid in capital and a corresponding financial liability.

The unit rights and their respective successor instruments started to be traded on Nasdaq Stockholm on February 17, 2020.

In May 2020, a total of 970,797 series TO1 warrants were exercised, the remaining TO1 warrants were forfeited. As a result of the exercise, the Parent Company received net proceeds of SEK 24.1 million, resulting in an increase of share capital by SEK 48,539.85. The difference between the net proceeds and the increase in share capital (SEK 24.1 million) was recorded as an increase in additional paid in capital.

In September 2020, a total of 1,329,141 series TO2 warrants were exercised, the remaining TO2 warrants were forfeited. As a result of the exercise, the Parent Company received net proceeds of SEK 33.1 million, resulting in an increase of share capital by SEK 66,457.05. The difference between the net proceeds and the increase in share capital (SEK 33.1 million) was recorded as an increase in additional paid in capital.

iii. Directed issue

In August, Saniona received the gross proceeds of USD 65 million (approximately SEK 567 million) from a directed issue of 30,660,374 shares at a subscription price of USD 2.12 per share (SEK 18.50) with a syndicate of U.S. and international institutional investors and sector specialists, led by RA Capital Management.

B. Nature and purpose of reserves

i. Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

ii. Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of equity instruments designated at FVOCI.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 22 Other financial liabilities

A. Composition

Other financial liabilities were comprised of the following:

GROUP

KSEK	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
Lease liabilities	16,228	1,420	-
Total non-current other financial liabilities	16,228	1,420	-
Lease liabilities	6,937	649	-
Formue Nord Loan	24,346	-	-
Nice & Green Loan	-	-	6,000
Accrued interest	3,721	-	-
Warrants	4,794	-	-
Reimbursement of cost	825	1,072	25,944
Other	-	2	3,414
Total current other financial liabilities	40,623	1,723	35,358

PARENT

KSEK	2020-12-31	2019-12-31 (Restated)
Formue Nord Loan	24,346	-
Accrued interest	3,721	-
Warrants	4,794	-
Total current other financial liabilities	32,861	-

B. Lease liabilities

Lease liabilities are payable as follows:

KSEK	Future minimum lease payments	Interest	Present value of minimum lease payments
Less than one year	8,349	1,844	6,505
Between one and five years	18,609	1,949	16,660
More than five years	-	-	-

Total cash outflow for leases for the year 2020 was SEK 6.0 million, including security deposits totaling net SEK 1.1 million. Total cash outflow for leases for the year 2019 was SEK 3.4 million.

C. Formue Nord Loan

On January 10, 2020, the Group entered into a fixed-rate loan facility agreement with Formue Nord entitling the Group to draw loans in an aggregate amount of SEK 25.0 million (the 'Formue Nord Loan'). In March 2020 Saniona drew loans of SEK 25.0 million under the loan facility agreement. The loans are subject to market interest rates and mature on February 7, 2021. The loans were repaid on February 5, 2021.

D. Nice & Green

Saniona entered into a convertible notes funding agreement with Nice & Green S.A on December 29, 2017. Under the terms of the agreement, Nice & Green committed to subscribe up to SEK 72 million in convertible notes in 12 individual tranches of SEK 6 million each over a 12-month period subject to prolongation by Saniona.

The convertible notes did not bear any interest. Nice & Green had the right to request conversion of the convertible notes at any time during a period of 12 months following the issue of the respective tranche. The pricing of the shares was determined as 92% of the lowest daily volume-weighted average share price (VWAP) of the five trading days prior to the date on which Nice & Green had sent a conversion notice to Saniona.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 22 Other financial liabilities (continued)

In 2019, Saniona has drawn four tranches totaling SEK 24 million and Nice & Green has converted SEK 30 million of which SEK 6 million had been outstanding as of December 31, 2018. The converted amount of SEK 30 million was taken to equity after deducting expenses relating to capital increase totaling KSEK 949. Therefore, Saniona has drawn all tranches (SEK 72 million) under the convertible notes funding agreement with Nice & Green and all outstanding loan notes (SEK 72 million) had been converted into shares during 2018 and 2019.

In 2019, Saniona extended the convertible notes funding agreement with Nice & Green for an additional SEK 72 million with the same terms. In January 2020, Saniona terminated the convertible notes funding agreement without having drawn any tranches under the extended agreement.

E. Warrants

Refer to Note 21 Share capital and reserves regarding a description of the Unit Rights Issue 2020.

As of December 31, 2020, all warrants of the series TO3 were outstanding. They are listed for trading on Nasdaq Stockholm with the short name "SANION TO3" and ISIN SE0013775319. The last day for trading in warrants of series TO3 was April 16, 2021. Holders of warrants of series TO3 were entitled to subscribe for one new share in the Parent Company for each warrant of series TO3 during the exercise period April 6 – April 20, 2021. Refer to Note 30 Subsequent Events to the Balance Sheet Date for details regarding the exercise.

Note 23 Other liabilities

Other liabilities were comprised of the following:

GROUP

KSEK	2020-12-31	2019-12-31 (Restated)	2019-01-01 (Restated)
Holiday fund obligation	2,079	727	-
Other	-	-	-
Total non-current other liabilities	2,079	727	-
Accrued short-term employee benefits	8,079	1,983	2,603
Accrued employee social security tax and withholdings	2,838	222	160
Other	1	-	-
Total current other liabilities	10,918	2,205	2,763

In September 2020, the Danish Government enacted a new Holiday Act. Under this act, the Group is required deposit certain amounts related to paid time-off earned by the Group's employees that are based in Denmark in a new fund ('Lønmodtagernes Feriemidler'). As of December 31, 2020, the Group has accrued SEK 2.1 million (0.7) related to its obligations to the fund under the Holiday Act.

PARENT

KSEK	2020-12-31	2019-12-31 (Restated)
Accrued short-term employee benefits	-	234
Accrued employee social security tax and withholdings	114	116
Total current other liabilities	114	350

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 24 Financial instruments – Fair values and risk management

A. Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.

It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

i. Group

December 31, 2020	Carrying amount						Fair value
	Note	Financial assets at amortized cost	Mandatorily at FVTPL - others	FVOCI - equity instruments	Other financial liabilities	Total	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Investment in equity instruments - publicly traded	18	-	-	22,241	-	22,241	22,241	-	-	22,241
Investment in equity instruments - privately-held	18	-	37,319	-	-	37,319	-	-	37,319	37,319
		-	37,319	22,241	-	59,560	22,241	-	37,319	59,560
Financial assets not measured at fair value
Trade receivables		5,043	-	-	-	5,043	-	-	-	-
Other non-current financial assets		2,100	-	-	-	2,100	-	-	-	-
Cash and cash equivalents	20	573,866	-	-	-	573,866	-	-	-	-
		581,009	-	-	-	581,009	-	-	-	-
Financial liabilities measured at fair value
Warrants	22	-	-4,794	-	-	-4,794	-	-4,794	-	-4,794
		-	-4,794	-	-	-4,794	-	-4,794	-	-4,794
Financial liabilities not measured at fair value
Trade payables		-	-	-	-18,875	-18,875	-	-	-	-
Loan	22	-	-	-	-24,346	-24,346	-	-	-	-
Other financial liabilities	22	-	-	-	-4,546	-4,546	-	-	-	-
Lease liabilities	22	-	-	-	-23,165	-23,165	-	-	-	-
		-	-	-	-70,932	-70,932	-	-	-	-

SANIONA AB - ANNUAL REPORT 2020

NOTES

December 31, 2019		Carrying amount					Fair value
	Note	Financial assets at amortized cost	Mandatorily at FVTPL - others	FVOCI - equity instruments	Other financial liabilities	Total	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Investment in equity instruments - privately-held	18	-	25,060	-	-	25,060	-	-	25,060	25,060
		-	25,060	-	-	25,060	-	-	25,060	25,060
Financial assets not measured at fair value
Trade receivables		930	-	-	-	930	-	-	-	-
Cash and cash equivalents	20	40,248	-	-	-	40,248	-	-	-	-
		41,178	-	-	-	41,178	-	-	-	-
Financial liabilities not measured at fair value
Trade payables		-	-	-	-34,849	-34,849	-	-	-	-
Other financial liabilities	22	-	-	-	-1,074	-1,074	-	-	-	-
Lease liabilities	22	-	-	-	-2,069	-2,069	-	-	-	-
		-	-	-	-37,992	-37,992	-	-	-	-

SANIONA AB - ANNUAL REPORT 2020

NOTES

ii. Parent Company

December 31, 2020		Carrying amount					Fair value
	Note	Financial assets at amortized cost	Mandatorily at FVTPL - others	FVOCI - equity instruments	Other financial liabilities	Total	Level 1	Level 2	Level 3	Total
Financial assets not measured at fair value
Investment in subsidiaries	25	929,244	-	-	-	929,244	-	-	-	-
Receivables from group companies		5,721	-	-	-	5,721	-	-	-	-
Other financial assets		1,746	-	-	-	1,746	-	-	-	-
Cash and cash equivalents	20	45,733	-	-	-	45,733	-	-	-	-
		982,444	-	-	-	982,444	-	-	-	-
Financial liabilities measured at fair value
Warrants	22	-	-4,794	-	-	-4,794	-	-4,794	-	-4,794
		-	-4,794	-	-	-4,794	-	-4,794	-	-4,794
Financial liabilities not measured at fair value
Trade payables		-	-	-	-754	-754	-	-	-	-
Loan	22	-	-	-	-24,346	-24,346	-	-	-	-
Other financial liabilities	22	-	-	-	-3,721	-3,721	-	-	-	-
		-	-	-	-28,821	-28,821	-	-	-	-
December 31, 2019
Financial assets not measured at fair value
Investment in subsidiaries	25	205,533	-	-	-	205,533	-	-	-	-
Receivables from group companies	17	5,395				5,395	-	-	-	-
Cash and cash equivalents	20	9,899	-	-	-	9,899	-	-	-	-
		220,827	-	-	-	220,827	-	-	-	-
Financial liabilities not measured at fair value
Trade payables		-	-	-	-395	-754	-	-	-	-
		-	-	-	-395	-754	-	-	-	-

SANIONA AB - ANNUAL REPORT 2020

NOTES

B. Measurement of fair values

i. Valuation techniques and significant unobservable inputs

The investment in Scandion has been measured using Scandion's closing share price at the Spotlight Stock Exchange on December 30, 2020. The TO 3 Warrants are valued at the TO 3 trading price on Nasdaq on December 30, 2020.

The investment in Cadent as of December 31, 2020 has been measured using a discounted cash flow valuation technique, which considers the present value of expected payments, discounted using a risk-adjusted discount rate. Expected payments have been estimated based on the consideration that Novartis AG ('Novartis') has agreed to pay to the shareholders of Cadent in connection with Novartis' acquisition of Cadent that was announced in December 2020 and closed in January 2021. Expected cash flows range from SEK 23 million to SEK 137 million. Expected cash flows resulting from development and regulatory-milestone based contingent consideration have been adjusted for estimated probabilities that underlying milestones are achieved (9% - 34%). The risk-adjusted discount rate was 11.5%. The estimated fair value would increase (decrease) if the expected cash flows were higher (lower); or the probability of achieving milestones increases (decreases); or the risk-adjusted discount rate were lower (higher).

The investment in Cadent as of January 1, 2019 has been measured using the Contingent Claims Analysis valuation techniques, which determines the value of equity in a company based on the principles of option pricing theory. Significant unobservable inputs include the term (2.5 years) and the equity volatility (70%), which was calculated using historical equity volatilities of publicly traded comparable companies. The equity value of Cadent was determined using the price paid during a rights issue for Series B Preferred Stock of Cadent during the second half of 2018. The estimated fair value would increase (decrease) if the expected term was longer (shorter); or the volatility was higher (lower).

The investment in Cadent as of December 31, 2019 has been measured using a combination and linear interpolation based on the values as of December 31, 2020 and January 1, 2019, absent any additional publicly available information.

ii. Transfers

Compared with 2019, no transfers have been made between the different levels in the hierarchy.

iii. Reconciliation of Level 3 fair values

Gains resulting from the increase of the fair value of the investment in equity instruments – privately held were 13.4 MSEK and 17.9 MSEK in 2020 and 2019, respectively. Such gains are included in 'net gains/losses on financial items'.

iv. Sensitivity

For the fair values of equity instruments – privately-held, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant, would have the following effects.

KSEK	Profit or loss
	Increase	Decrease
December 31, 2020
Risk-neutral expected payments to the Group (+/- 1,000bps)	1,012	-1,078
January 1, 2019
Time to liquidity (+/- 1 year)	981	-491
Volatility (+/- 500bps)	491	0

The sensitivity of the fair value as of December 31, 2019 is between the range set by increases/decreases as of January 1, 2019 and December 31, 2020.

C. Financial risk management

The Group has exposure to the following risks arising from financial instruments:

credit risk;
liquidity risk; and
market risk.

i. Risk management framework

The Parent Company's Board of Directors is ultimately responsible for the exposure, management and monitoring of the Group's financial risks. The Board of Directors sets the framework that applies to the exposure, management and monitoring of the financial risks and this framework is evaluated and revised yearly. The Board of Directors can decide on temporary departures from its predetermined framework.

ii. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's cash and cash equivalents and its receivables from customers.

The carrying amounts of financial assets represent the maximum credit exposure.

The Group has not recorded any material impairment losses on financial assets arising from credit risk in the years ended 2020 and 2019.

Cash and cash equivalents

The Group held cash and cash equivalents of SEK 573.9 million, SEK 40.2 million, and SEK 54.7 million as of December 31, 2020, 2019, and 2018, respectively. The Board of Directors' predetermined framework stipulates that surplus liquidity shall be held on the Group's bank accounts. The cash and cash equivalents are held with bank and financial institution

SANIONA AB - ANNUAL REPORT 2020

NOTES

counterparties, which are rated P-1 (short-term) and Aa3 to Baa1 (long-term) based on Moody's rating. The Group monitors changes in credit risk by tracking published external credit ratings.

Trade receivables

The Group's exposure to credit risk from trade receivables is influenced mainly by the individual characteristics of each customer. For the years ended 2020 and 2019, the Group had a very narrow customer base of less than 5 customers, which were all pharmaceutical companies, resulting in a concentration of credit risk from trade receivables. The Group monitors payment history for each customer and their creditworthiness, as well as the economic environments in which they operate. Historically, the Group has not sustained any losses on trade receivables.

iii. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Group's research and development efforts require significant investments. Absent any stream of predictable cash inflows from operations (revenue), the Group is dependent on its ability to raise capital in the future to finance its planned activities. The Group models its cash flow and cash position for the foreseeable future to determine if and when additional capital is required in order to meet its financial obligations.

iv. Market risk

Market risk is the risk that changes in market prices – e.g. foreign exchange rates, interest rates and equity prices – will affect the Group's income or the value of its holdings of financial instruments. The objective of the Group's market risk management is to manage and control market risk exposures within acceptable parameters.

Currency risk

The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily SEK, Danish Krona ('DKK') and US dollar ('USD'). Operating and investing transactions in 2020 and 2019 were primarily denominated in those currencies, while financing transactions were primarily denominated in USD and SEK.

The following significant exchange rates have been applied:

SEK	Average rate		Year-end spot rate
	2020	2019	2020-12-31	2019-12-31	2019-01-01
DKK 1	1.4072	1.4196	1.3492	1.3968	1.3760
USD 1	9.2486	-	8.1893	9.3038	8.9756
EUR 1	10.4867	10.5892	10.0375	10.4336	10.2753

The summary quantitative data about the Group's exposure to currency risk as reported to the management of the Group is as follows:

SEK	2020-12-31			2019-12-31			2019-01-01
	SEK	DKK	USD	EUR	SEK	DKK	USD	EUR	SEK
Investments in equity instruments – privately-held	-	-	4,560	-	-	-	2,693	-	-
Trade receivables	-	-	300	186	-	-	100	-	-
Cash and cash equivalents	715	143	3,603	73	30,029	7,079	-	16	59
Trade payables	138	308	723	149	23,535	9	118	134	267

Interest risks

Interest risk means the risk that fair value or future cash flows fluctuates as a result of changes in market interest rates. As of December 31, 2020, the Group's borrowings were at a fixed rate. The Group does not account for any fixed-rate financial liabilities, at FVTPL. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 25 Investments in subsidiaries and intercompany transactions

A. Subsidiaries

Specification of Parent Company's direct and indirect holding of shares and participations in Group companies

Subsidiary / Domicile	Share of equity	Share of voting power	Carrying amount in Parent Company KSEK
Direct subsidiary
Saniona A/S / Glostrup, Denmark	100%	100%	929,244
Indirect subsidiary
Saniona Inc. / Waltham, MA, United States	100%	100%	-
Cost
KSEK		2020	2019 (Restated)
Opening cost		205,533	12,788
Share right issue		723,711	-192,745
Closing cost		929,244	205,533
Carrying amount at year-end		929,244	205,533

Saniona, Inc. was established as a subsidiary of Saniona A/S in January 2020.

To capitalize Saniona, Inc., the Parent Company carried out a rights issue for Saniona A/S.

B. Intercompany transactions

Purchases between the Parent Company and subsidiaries amounted to KSEK 5,646 (1,504) and sales between the Parent Company and subsidiaries to KSEK 5,721 (1,354). The Parent Company recognized an interest income of KSEK 41,334 (8,657) pertaining to loans from the subsidiary. The Parent Company has receivables of KSEK 5,721 (0) in subsidiaries.

Note 26 Related parties

A. Identification of related parties

Related parties comprise the Group's Executive Management, Board of Directors and companies within the Group.

B. Transaction with related parties

During 2020 and 2019, the Group had a business advisor agreement with one of its Directors, Edward Saltzman, for the provision of advisory services regarding the general business development of the Group for a total consideration of SEK 181k. As of December 31, 2020 and 2019, balances of SEK 181k and SEK 99k, respectively, were outstanding.

As part of the Units Rights Issue 2020, certain members of key management received Investor Warrants on a pro-rata basis on the same terms as other unrelated investors, refer to Note 21 Share capital and reserves. In total, 145,334 unit rights (resulting in 436,002 warrants) were issued to key management personnel.

Apart from these transaction as well as intercompany transactions, board fees, and as remuneration of management in accordance to the remuneration policy as resolved at the annual general meeting, there has been no transaction with related parties during 2019 and 2020. Refer to Note 10 Employee benefits and Note 11 Share-based payments for details regarding the board fees and management remuneration.

Note 27 Commitments and contingencies

A. Pledged assets and contingent liabilities

The Parent Company has provided a guarantee to the subsidiary Saniona A/S to ensure that Saniona A/S will be able to pay its creditors as the obligations fall due for the period until June 30, 2022.

B. Contractual obligations

During 2020, the Group entered into letters of intent and agreements predominantly in relation to its preclinical research activities as well as planned clinical development activities for approximately SEK 60.4 million.

SANIONA AB - ANNUAL REPORT 2020

NOTES

Note 28 Restatements

A. General

The consolidated financial statements for the Group that were previously issued for the year ended December 31, 2019 (the "Previously Issued Consolidated Financial Statements") have been restated for the correction of certain errors with respect to certain items within the consolidated statement of comprehensive income, consolidated statement of financial position/balance sheet, statement of changes in equity and consolidated statement of cash flows in accordance with the requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. This also includes restatements to the opening statement of financial position/balance sheet and statement of changes in equity as of January 1, 2019.

The total impact of the restatements on selected key performance measures for the year ended December 31, 2019 is as follows:

| KSEK | 2019-01-01
2019-12-31
(Restated) | Adjustments | 2019-01-01
2020-12-31
(Previously Reported) |
| --- | --- | --- | --- |
| Revenue | 7,201 | 4,543 | 2,658 |
| Operating loss | -93,628 | 10,277 | -103,905 |
| Profit/loss for the period | -68,751 | 7,037 | -75,788 |
| Total Assets | 94,808 | -1,192 | 96,000 |
| Equity | 53,884 | -4,553 | 58,437 |

B. Nature and impact of restatements

The nature and impact of each restatement is described below.

a. Measurement of financial assets: In our Previously Issued Consolidated Financial Statements, we had concluded that the fair value of our investment in Cadent could not be determined reliably and we had recorded the investment at zero cost, as disclosed in such

Previously Issued Consolidated Financial Statements. IFRS 13 Fair Value Measurement, which defines fair value as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (exit price) requires, however, the use of valuation techniques when an exit price for an identical asset is not observable. Using an appropriate valuation technique, we have determined that the fair value of our investment in Cadent was SEK 7.4 million and SEK 25.1 million as of January 1, 2019 and December 31, 2019, respectively. We are accounting for this investment as a financial asset measured at FVTPL. Accordingly, we recorded an increase in other financial assets and a corresponding financial income of SEK 17.9 million, and a decrease in other comprehensive income for the effect of foreign currency translation of SEK 0.4 million, in 2019.

b. Investments in associates: Through September 30, 2019, we had accounted for our investment in Scandion under the equity method of accounting, as the criteria for significant influence were met. Accordingly, we had classified the investment as an investment in associates and recorded Saniona's share of Scandion's profit and loss in the Group's consolidated statement of comprehensive income. Effective October 1, 2019, we reclassified our investment in Scandion from investments in associates to financial assets, as it was determined that we no longer met the criteria for significant influence upon Saniona's ownership percentage of Scandion decreasing below 20% to 18.23%. Upon the reclassification, in the fourth quarter of 2019, the Group recognized financial income of SEK 26.7 million related to the fair value of the Scandion investment as of October 1, 2019, and other comprehensive income of SEK 10.7 million related to the subsequent change in the fair value of the Scandion investment through December 31, 2019. IAS 28 Investments in Associates and Joint Ventures states that significant influence is the power to participate in the financial and operating policy decisions of the investee without the power to control or jointly control those policies. Based on a comprehensive analysis of all indicators for significant influence, including, but not limited to, representation on the Board of Directors and dispersion of shareholder base, we have determined that Saniona retained significant influence over Scandion through March 31, 2020. As a result, the financial income of SEK 21.2 million and other comprehensive income of SEK 10.7 million that was previously recognized during the fourth quarter of 2019 has been reversed. Alternatively, we recorded Saniona's share of Scandion's profit and loss for the fourth quarter of 2019, including a gain from dilution resulting from a rights issue performed by Scandion.

SANIONA AB - ANNUAL REPORT 2020

NOTES

The effect of this restatement for the year ended December 31, 2019 is as follows:

KSEK	Investments in associates	Other financial assets	Profit/(loss)	OCI
Previously reported
September 30, 2019	2,783	-	2,783	-
Loss of significant influence on October 1	-2,783	26,719	23,936	-
Change in fair value after October 1	-	10,657	-	10,657
December 31, 2019	-	37,376	26,719	10,657
Restated
September 30, 2019	2,610	-	2,610	-
Saniona's share of loss in fourth quarter	-1,610	-	-1,610	-
Saniona's gain from rights issue	4,395		4,395	-
December 31, 2019	5,395	-	5,395	-

c. Intangible assets: The Group purchased certain intellectual property from NeuroSearch between 2012 and 2017. In the third quarter of 2017, we had made a one-time cash payment of SEK 7.1 million to NeuroSearch in connection with the purchased intellectual property. In our Previously Issued Consolidated Financial Statements, we had recorded the payment as a prepaid asset and presented it within current prepayments and accrued income. We had amortized it to other external costs over a period of 4 years, resulting in an accumulated amortization of SEK 2.8 million as of January 1, 2019, and an expense of approximately SEK 2.0 million in 2019. We should have accounted for this payment as a separate acquisition of intangible assets that are not yet available for use in accordance with IAS 38 Intangible Assets. As a result, the aforementioned amortization expense and the associated accumulated amortization expense has been reversed. Refer to Note 15 Intangible assets for details.

d. Revenue Boehringer Ingelheim: In August 2016, Saniona had received an upfront payment of SEK 48.8 million from Boehringer Ingelheim ("BI") as consideration for a license and research collaboration agreement that included options for BI to extend the research collaboration term. The payment had been recognized as revenue in full in 2016 upon receipt. Under IFRS 15 Revenue from Contracts with Customers, we should have bundled the promises in the agreement to a single performance obligation that is satisfied over time. Based on that, we also should have accounted for the extension terms as modifications of the original contract when the respective extension options were exercised by BI in 2018 and 2019. Accordingly, we have derecognized SEK 3.4 million of previously recognized revenue by adjusting our December 31, 2018 retained earnings and recorded it as revenue in the first quarter of 2019. We also derecognized SEK 7.4 million or previously recognized revenue and recorded it as revenue on a straight-line basis over the second and the third quarters of 2019.

e. Revenue Medix: Revenue Medix: In 2016, we entered into a license and collaboration agreement with Productos Medix, S.A de S.V. (Medix). Under that agreement, Saniona received an upfront payment and is entitled to receive certain variable consideration when certain events occur. In February 2019, uncertainties pertaining to contingent payments from Medix in the amount of SEK 0.9 million were resolved. In our Previously Issued Consolidated Financial Statements, we had not recognized revenue for these payments. We should have recorded revenue and corresponding trade receivables of SEK 0.9 million in 2019.

f. Operating expenses: We have adjusted for the allocation of certain costs between prior reporting periods. In addition, we have performed new grant-date valuations of existing share-based payment grants.

g. Other restatements: In accordance with presentation requirements under IAS 1, as well as other applicable recognition and measurement principles codified in other IFRS, the Company has made certain other adjustments and reclassifications which affect the consolidated statement of comprehensive income, consolidated statement of financial position, statement of changes in equity and consolidated statement of cash flows. Individually, such other restatements did not have a material impact on our consolidated financial statements.

87 SANIONA AB - ANNUAL REPORT 2020

NOTES

The total impact of restatements on the year ended December 31, 2019, as well as the opening statement of financial position/balance sheet as of January 1, 2019, are presented in the tables below:

Reconciliation of the condensed statement of comprehensive income for the year ended December 31, 2019

| KSEK | 2019-01-01
2019-12-31
(Restated) | Adjustments | 2019-01-01
2019-12-31
(Previously Reported) |
| --- | --- | --- | --- |
| Revenue | 7,201 | 4,543 (d), (e) | 2,658 |
| Total operating income | 7,201 | 4,543 | 2,658 |
| Raw materials and consumables | -3,517 | - | -3,517 |
| Other external costs | -69,174 | 5,810 (f) | -74,984 |
| Personnel costs | -25,936 | -76 (g) | -25,860 |
| Depreciation and write-downs | -2,202 | - | -2,202 |
| Total operating expenses | -100,829 | 5,734 | -106,563 |
| Operating profit/loss | -93,628 | 10,277 | -103,905 |
| Share of result of associates | -5,331 | -25,545 (b), (g) | 20,214 |
| Financial income | 656 | -18 (g) | 674 |
| Financial expenses | -456 | 27 (g) | -483 |
| Net gains on financial items | 22,295 | 22,295 (a), (g) | - |
| Total financial items | 17,164 | -3,241 | 20,405 |
| Profit/loss after financial items | -76,464 | 7,036 | -83,500 |
| Tax on net profit/loss | 7,713 | - | 7,713 |
| Profit/loss for the period | -68,751 | 7,036 | -75,787 |
| Other comprehensive income | | | |
| Item that may be reclassified to profit and loss | -699 | -512 (a), (c), (d), (e), (f), (g) | -187 |
| Translation differences | | | |
| Items that will not be reclassified to profit and losses | - | -10,657 (b) | 10,657 |
| Fair value financial assets | | | |
| Total Other comprehensive income | -699 | -11,169 | 10,470 |
| Total comprehensive income | -69,450 | -4,133 | -65,317 |

SANIONA AB - ANNUAL REPORT 2020

NOTES

Reconciliation of the condensed consolidated statement of financial position – Group
December 31, 2019

| KSEK | 2019-12-31
(Restated) | Adjustments | 2019-12-31
(Previously Reported) |
| --- | --- | --- | --- |
| ASSETS | | | |
| Intangible assets | 7,682 | 7,682 (c) | - |
| Property and equipment | 1,241 | -2,174 (g) | 3,415 |
| Right of use assets | 2,172 | 2,172 (g) | - |
| Tangible assets | 3,413 | -2 | 3,415 |
| Other financial assets | 25,060 | -12,316 (a), (b) | 37,376 |
| Investments in associated companies | 5,395 | 5,395 (b) | - |
| Other long-term receivables | - | -1,259 (c), (g) | 1,259 |
| Financial assets | 30,455 | -8,180 | 38,635 |
| Other assets | 299 | 299 (g) | - |
| Deferred tax | 67 | - | 67 |
| Non-current assets | 41,916 | -201 | 42,117 |
| Trade receivables | 930 | 930 (e) | - |
| Current tax assets | 7,682 | - | 7,682 |
| Other assets | 4,032 | -398 (c), (g) | 4,430 |
| Prepayments and accrued income | - | -1,523 (g) | 1,523 |
| Current receivables | 12,644 | -991 | 13,635 |
| Cash and cash equivalent | 40,248 | - | 40,248 |
| Current assets | 52,892 | -991 | 53,883 |
| Total assets | 94,808 | -1,192 | 96,000 |
| KSEK | 2019-12-31
(Restated) | Adjustments | 2019-12-31
(Previously Reported) |
| --- | --- | --- | --- |
| EQUITY AND LIABILITIES | | | |
| Share capital | 1,421 | - | 1,421 |
| Additional paid in capital | 239,592 | - | 239,592 |
| Reserves | -3,296 | -12,989 (a), (b), (c), (d), (e), (f), (g) | 9,693 |
| Retained earnings including profit or loss for the period | -183,833 | 8,435 (a), (b), (c), (d), (e), (f), (g) | -192,268 |
| Equity | 53,884 | -4,554 | 58,438 |
| Other financial liabilities (previously: Lease liabilities) | 1,420 | - | 1,420 |
| Other liabilities | 727 | - | 727 |
| Non-current liabilities | 2,147 | - | 2,147 |
| Trade payables | 34,849 | 5,603 (g) | 29,246 |
| Other liabilities | 2,205 | 1,460 (g) | 745 |
| Accrued expenses and deferred income | - | -5,424 (f), (g) | 5,424 |
| Other financial liabilities | 1,723 | 1,723 (g) | - |
| Current liabilities | 38,777 | 3,362 | 35,415 |
| Total liabilities | 40,924 | 3,362 | 37,562 |
| Total equity and liabilities | 94,808 | -1,192 | 96,000 |

89 SANIONA AB - ANNUAL REPORT 2020

NOTES

January 1, 2019

KSEK	2019-01-01 (Restated)	Adjustments	2019-01-01 (Previously Reported)
ASSETS
Intangible assets	7,568	7,568 (c)	-
Property and equipment	1,841	-	1,841
Tangible assets	1,841	-	1,841
Other financial assets	7,426	7,426 (a)	-
Investments in associated companies	6,332	-173 (b)	6,505
Other long-term receivables	-	-3,999 (c),(g)	3,999
Financial assets	13,758	3,254	10,504
Other assets	1,161	1,161 (g)	-
Deferred tax	62	-	62
Non-current assets	24,390	11,983	12,407
Trade receivables	2,093	-	2,093
Current tax assets	7,568	-	7,568
Other assets	4,437	-217 (c),(g)	4,654
Prepayments and accrued income	-	-1,675 (g)	1,675
Current receivables	14,098	-1,892	15,990
Cash and cash equivalent	54,678	-	54,678
Current assets	68,776	-1,892	70,668
Total assets	93,166	10,091	83,075
KSEK	2019-01-01 (Restated)	Adjustments	2019-01-01 (Previously Reported)
---	---	---	---
EQUITY AND LIABILITIES
Share capital	1,166	-	1,166
Additional paid in capital	157,118	-	157,118
Reserves	-2,597	-1,820 (a),(b),(c),(d),(f),(g)	-777
Retained earnings including profit or loss for the period	-116,614	1,437 (a),(b),(c),(d),(f),(g)	-118,051
Equity	39,073	-383	39,456
Trade payables	15,972	8,729 (g)	7,243
Other financial liabilities (previously: Loan)	35,358	29,358 (g)	6,000
Other liabilities	2,763	2,147 (g)	616
Accrued expenses and deferred income	-	-29,760 (d),(f),(g)	29,760
Current liabilities	54,093	10,474	43,619
Total liabilities	54,093	10,474	43,619
Total equity and liabilities	93,166	10,091	83,075

SANIONA AB - ANNUAL REPORT 2020

NOTES

C. Parent Company

The Parent Company financial statements that were previously issued for the year ended December 31, 2019 have been restated with respect to certain of the restatements that were recorded for the Group as discussed above.

The total impact of the restatements on selected key performance measures for the year ended December 31, 2019 is as follows.

| KSEK | 2019-01-01
2019-12-31
(Restated) | Adjustments | 2019-01-01
2019-12-31
(Previously Reported) |
| --- | --- | --- | --- |
| Operating loss | -10,358 | -1,237 (f) | -9,121 |
| Profit/loss for the period | -3,080 | -1,254 (f) | -1,826 |
| Total Assets | 221,877 | 1,417 | 220,460 |
| Equity | 221,132 | 1,417 | 219,715 |

Investments in associates: Through September 30, 2019, we had accounted for our investment in Scandion under the equity method of accounting, as the criteria for significant influence were met. Based on a comprehensive analysis of all indicators for significant influence, including, but not limited to, representation on the Board of Directors and dispersion of shareholder base, we have determined that Saniona retained significant influence over Scandion through March 31, 2020. The reclassification in the parent company resolved in a decrease of SEK 18 thousand from SEK 5,413 thousand to SEK 5,395 thousand in Other financial assets.

Note 29 Proposed appropriation of funds

The following funds are at the disposal of the Annual General Meeting:

KSEK
Share premium reserve	808,607
Profit/loss carried forward	(7,804)
Profit/loss for the year	148,180
Total	948,983

The Board of Directors propose that the funds at their disposal, KSEK 948,983 be carried forward.

Note 30 Subsequent Events to the Balance Sheet Date

On January 25, 2021: Saniona received approximately USD $2.9 million (SEK 24.2 million) in an upfront payment resulting from the completed acquisition of Cadent Therapeutics by Novartis.
On February 22, 2021: Saniona postponed its 2020 year-end financial report due to the restatement and re-audit of prior period financial statements in line with U.S. PCAOB audit standards.
On March 3, 2021: Saniona received U.S. FDA Orphan Drug Designation for Tesomet in Prader-Willi syndrome.
On March 8, 2021: Saniona received feedback from the U.S. FDA providing a regulatory path forward for Tesomet in hypothalamic obesity.
On March 19, 2021: Saniona Chairman J. Donald deBethizy and CEO Rami Levin, as well as additional members of the board and management, purchased Saniona shares in the open market.
On April 12, 2021: Saniona completed the sale of its shares in Scandion Oncology A/S
On April 14, 2021: Saniona announced that its research team will present preclinical data on SAN903 in a model of idiopathic pulmonary fibrosis at the American Society of Pharmacology and Experimental Therapeutics (ASPET) Annual Meeting
On April 19, 2021: Saniona announced partnership with the Foundation for Prader-Willi Research (FPWR) to increase awareness about Saniona's Phase 2b clinical trial of Tesomet for the treatment of Prader-Willi syndrome (PWS).
On April 22, 2021: Saniona announced the receipt of manufacturing feedback from the FDA that will delay the start of the Tesomet Phase 2b trials into the second half of 2021

SANIONA AB - ANNUAL REPORT 2020

BOARD OF DIRECTORS DECLARATION

The Board of Directors and Chief Executive Officer declare that the consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and give a true and fair view of the Group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting principles and give a true and fair view of the Group's and the Parent Company's financial position and results of operations.

The Directors Report of the Group and Parent Company gives a true and fair view of the progress of the Group's and Parent Company's operations, financial position and results of operations, and states significant risks and uncertainty factors facing the Group and the Parent Company.

The Income Statements and Balance Sheets will be submitted to the Annual General Meeting on May 26, 2021, for adoption.

J. Donald deBethizy – Chairman

Anna Ljung – Board member

Carl Johan Sundberg – Board member

Our Audit Report was presented on April 29, 2021

Deloitte AB

Glostrup, Denmark, April 29, 2021

Rami Levin – CEO

Jørgen Drejer – Board member

Edward Saltzman – Board member

SANIONA AB – ANNUAL REPORT 2020

AUDITOR'S REPORT

To the general meeting of the shareholders of Saniona AB (publ) corporate identity number 556962-5345

This is a translation of the Swedish language original. In the events of any differences between this translation and the Swedish original the latter shall prevail.

Report on the annual accounts and consolidated accounts

Opinions

We have audited the annual accounts and consolidated accounts of Saniona AB (publ) for the financial year 2020-01-01 – 2020-12-31 except for the corporate governance statement on pages 97-106. The annual accounts and consolidated accounts of the company are included on pages 34-92 in this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company as of 31 December 2020 its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2020 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 97-106. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.

Our opinions in this report on the the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.

Basis for Opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.

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

Key Audit Matters

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

Revenue recognition in the correct period

The group accounts for revenue of 8 MSEK (7) in 2020. The revenues of the group are related to research, development and license agreements and other research funding in accordance with collaboration agreements.

The revenues comprise of upfront payments, milestone payments, royalties and other revenues in accordance with research, development and license agreements.

Every agreement is unique and comprises of different requirements of performance. There could be a risk that the revenue recognition criteria are not fully met and that the financial benefits related to the transaction are not recognized in the correct period which leads to that the revenue is not recognized correctly.

For further information, please refer to note 7 and 8 for group accounting principles as regards revenue and note 5, critical accounting judgments and key sources of estimation uncertainty in the annual accounts.

Our audit procedures

Our audit procedures concluded, but where not limited to:

review of the group accounting principles of revenue recognition to verify the compliance of IFRS,
review and testing of transactions in accordance with agreements to be recognized as revenues in the correct period, and
review that appropriate accounting principles are applied and that relevant disclosures are presented.

SANIONA AB - ANNUAL REPORT 2020

AUDITOR'S REPORT

Valuation of investments in subsidiary

In the Balance Sheet of the Parent company as of 31 December 2020, the investments in subsidiaries accounts to 929 MSEK (206). The valuation of the accounted assets is dependent on the future cash flow from the subsidiary. The subsidiary leads all research and development in the group. Saniona has assessed this impairment test related to the valuation of the investment in subsidiary. Any changes of the judgements or assumptions could have an effect on the result and financial position of the parent. For further information refers to the accounting principles of the parent company in note 7 and investments in subsidiaries in note 25 in the annual accounts.

Our audit procedures

Our audit procedures concluded, but where not limited to:

review of the group’s key controls to identify indications that could result in an impairment, and
review of the parent company’s assessment and methods for the impairment test to assure that the relevant assumptions and routines are consistent, and that integrity is included in the calculations. Our valuation specialist has been involved in the review.

Financing agreement

In January 2020, the group signed a loan arrangement, which also included the issue of shares and warrants. There is considerable complexity around accounting to determine the nature of instrument (debt or equity) and complexity in subsequent valuation. For further information, please refer to Note 5, critical accounting judgments and key sources of estimation uncertainty and Note 21 share capital and reserves in the annual accounts.

Our audit procedures

Our audit procedures concluded, but where not limited to:

review of the group’s accounting principles for the different elements in the financing agreement to verify the compliance of IFRS,
review of the group’s assessments and methods for the calculation to assure that the assessments and assumptions are reasonable, and that integrity is included in the calculations made. Our valuation specialist has been involved in the review.
review that appropriate accounting principles are applied and that relevant disclosures are presented.

Other information than the annual accounts and consolidated accounts

Other information contains of other information than the annual accounts and consolidated accounts and is found on pages 1-33 in this document and the Board’s remuneration report. The Board of Directors and the Managing Director are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. We expect to receive the Board’s remuneration report after the date of our audit report is signed.

In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our

knowledge otherwise obtained in the audit an assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process.

SANIONA AB - ANNUAL REPORT 2020

AUDITOR'S REPORT

Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden 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 annual accounts and consolidated accounts.

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

Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, 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 opinions. 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 the company’s internal control relevant to our 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 company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director.
Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company’s and 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 auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of significant audit findings during our audit, including any significant deficiencies in internal control that we identified.

We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Saniona AB (publ) for the financial year 2020-01-01 – 2020-12-31 and the proposed appropriations of the company’s profit or loss.

We recommend to the general meeting of shareholders that the profit to be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

95 SANIONA AB – ANNUAL REPORT 2020

AUDITOR'S REPORT

Basis for Opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

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

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.

As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the company's profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company's situation. We examine

and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability. As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss we examined whether the proposal is in accordance with the Companies Act.

Deloitte AB was appointed auditor at the annual general meeting May 6, 2020 and has been the appointed auditor since February 19, 2014.

Malmö April 29, 2021

Deloitte AB

Jeanette Roosberg
Authorized Public Accountant

SANIONA AB - ANNUAL REPORT 2020

Corporate Governance Report

97 SANIONA AB - ANNUAL REPORT 2020

CORPORATE GOVERNANCE REPORT

Introduction

Saniona AB (publ), Corporate Registration Number 556962-5345, the Parent Company and its subsidiaries, collectively the Group, is a publicly listed biopharmaceutical company focused on discovering, developing, and delivering innovative treatments for rare disease patients around the world.

The Parent Company is a public limited liability company registered and headquartered in the municipality of Malmö in the county of Skåne, Sweden. The address of the head office is Smedeland 26B, DK-2600, Glostrup, Denmark.

Saniona is listed on Nasdaq Stockholm Small Cap (OMX: SANION). Saniona applies the Swedish Code of Corporate Governance completely. This Corporate Governance Report has been prepared in accordance with the Annual Accounts Act and the Code and audited by the company's auditor in accordance with RevU16.

Application of and departure from the Swedish Code of Corporate Governance

The Swedish Corporate Governance Code (the "Code") applies to all Swedish companies whose shares are listed on a regulated marketplace in Sweden. The company is not obliged to adhere to all the regulations of the Code and is free to adopt alternative solutions deemed more suitable to its circumstances, provided that potential departures are reported, the alternative solution described, and the reasons explained (Comply or Explain principle) in the Corporate Governance Report.

Saniona is today listed on Nasdaq Stockholm Small Cap and follows the applicable rules of the Swedish Companies Act, the regulations and recommendations resulting from the Nasdaq Stockholm's Rule Book for Issuers, the Code, as well as generally accepted practices in the stock market. Saniona did not depart from the Code in 2020.

Compliance with Swedish stock market regulations and accepted stock market practice

Saniona has not been subject to any ruling by Nasdaq Stockholm's disciplinary commission or statements by the Swedish Securities Council relating to breaches of Nasdaq's regulatory framework for issuers or generally accepted accounting practices on the stock market in the 2020 fiscal year.

Ownership structure, share capital and voting rights

On December 31, 2020, the company had 8,150 (6,108) shareholders excluding holdings in life insurance and foreign custody account holders. The largest shareholder is RA Capital with 18.6 percent (0) of the share capital and voting rights. The ten largest shareholders jointly accounted for 50.2 percent (38.6) of the share capital and voting rights.

Saniona's share capital totaled SEK 3,118,641 divided between 62,372,831 shares as of December 31, 2020. In 2019, Saniona's share capital totaled SEK 1,420,625 divided between 28,412,519 shares. There is only a single share class. All shares have a quotient value of SEK 0.05 and one vote and confer equal entitlement to the Company's assets and profits. Saniona's Articles of Association have no limitations regarding the number of votes each shareholder may cast at the general meeting.

Dividend policy

Saniona may generate income through upfront payments, milestone payments, royalty payments and upon exits in relation to the sale of spinouts. The Board of Directors has decided upon a residual dividend policy. This means that Saniona will only pay a dividend on net income and internally generated equity after it has reserved capital to finance continued development and expansion of the business, including its product pipeline. The Board of Directors' intention at present is to use any future profits made by Saniona to finance continued development and expansion of the business. Regular dividends will only be paid once the company has a product on the market and the company records annual net income through royalty payments. Consequently, the Board of Directors does not intend to propose any dividend within the foreseeable future.

The Board of Directors proposes that no dividend be distributed for the 2020 fiscal year.

Authorization for the Board of Directors regarding new issues

SANIONA AB - ANNUAL REPORT 2020

CORPORATE GOVERNANCE REPORT

to customary new issue discount, as applicable). The purpose of the authorization is to be able to source working capital, to be able to execute and finance acquisitions of companies and assets as well as to enable new issues to industrial partners within the framework of partnerships and alliances.

Corporate governance within Saniona

Saniona's internal controls and corporate governance are based on applicable legislation/regulations and on sector-specific parameters considered significant to the company. The control system encompasses all applicable regulatory frameworks as well as the specific demands Saniona places on its operations.

The internal control and corporate governance framework provide overall control of all critical stages relating to the company. This provides Saniona's Board and executive management with the conditions required to control and govern operations so that they satisfy the stringent demands of the company, the market, the stock market, the shareholders and the authorities.

Multiple external regulations, including but not limited to The Swedish Corporate Governance Code and The Swedish Companies Act, as well as multiple internal policies and documents as are prudent for effective internal control, form the basis of Saniona's corporate governance.

Saniona's corporate governance structure is presented in the figure below and further described in the following subsections.

Annual General Meeting

The annual general meeting, or as applicable, the extraordinary general meeting, is the primary meeting within Saniona where all shareholders can take part. For example, the general meeting resolves on amendments to the Articles of Association, election of Members of the Board and Auditors, adoption of the income statement and balance sheet, the discharge of the Board of Directors and the CEO from personal responsibility, appropriation of the profit or loss, the principles for the establishment of a Nominating Committee and the guidelines for remuneration of senior executives. Shareholders wishing to raise a matter at the Annual General Meeting must submit a written request to the Board of Directors. Such a request shall normally be received by the Board of Directors no later than seven weeks prior to the general meeting, to allow time for the request to be considered prior to the notice of the annual general meeting being issued.

The general meeting is to be held in Malmö, except when it must be held through postal voting only due to the COVID-19 pandemic. Notice of annual general meetings should be made no earlier than six weeks and not later than four weeks before the meeting if the agenda includes an amendment of the Articles of Association. The notice of other general meetings should be made no earlier than six weeks and not later than three weeks prior to the meeting. Notice of a general meeting is announced in the Swedish Official Gazette (Sw. Post- och Inrikes Tidningar) and on the company's website. An announcement that a meeting has been convened is published in the Swedish daily newspaper Svenska Dagbladet.

A shareholder, who has been duly registered as such with Euroclear Sweden AB, may attend and vote at the general meeting in person or by proxy. A shareholder wishing to attend the general meeting must notify Saniona of his intention to attend. The manner in which to notify Saniona is described in the notice convening the general meeting.

SANIONA AB - ANNUAL REPORT 2020

CORPORATE GOVERNANCE REPORT

Annual General Meeting 2020

The Annual General Meeting for 2020 was held on May 6, 2020, in Malmö. Including shareholders represented by proxy, 11 shareholders were represented at the meeting, representing approximately 25.6 percent of the total voting rights. Lawyer Ola Grahn was elected as Chairman of the meeting. The AGM passed the following resolutions:

Resolution on adoption of accounts and distribution of the company's profit, including that no dividends are paid for the financial year 2019 and that available funds are carried forward to a new account.
Resolution on discharge from liability in relation to the company for the Members of the Board and the CEO for the 2019 fiscal year.
Re-election of J. Donald deBethizy, Jørgen Drejer, Anna Ljung, Edward C. Saltzman and Carl Johan Sundberg as ordinary board members. J. Donald deBethizy was re-elected as chairman of the board.
Remuneration of the Chairman of the Board, the Members of the Board and the auditor.
Re-election of Deloitte AB as the auditing firm. It was noted that Deloitte AB had informed that Jeanette Roosberg will be the auditor in charge.
Approval of instruction and charter for the Nomination Committee.
Guidelines for remuneration of senior executives.
Resolution on amendment of the Articles of Association
Authorization of the Board of Directors on one or several occasions, during the time up until the next annual shareholders' meeting, with or without deviation from the shareholders' preferential rights, to decide to issue shares, convertibles and/or warrants.

Extraordinary General Meeting February 2020

An extraordinary general meeting was held on February 7, 2020. Including shareholders represented by proxy, 3 shareholders were represented at the meeting, representing approximately 14.6 per cent of the total voting rights. Lawyer Ola Grahn was elected as Chairman of the meeting. The extraordinary general meeting passed the following resolutions:

Approval of the board of directors' resolution on directed issue of units.
Approval of the board of directors' resolution on rights issue of units.
Resolution on (A) employee option program for the CEO; and (B) directed issue of warrants and approval of transfer of warrants.

Extraordinary General Meeting October 2020

An extraordinary general meeting was held on October 23, 2020. Including shareholders represented by proxy, 12 shareholders were represented at the meeting, representing approximately 32.3 percent of the total voting rights. Lawyer Ola Grahn was elected as Chairman of the meeting. The extraordinary general meeting passed the following resolutions:

Resolution on (A) employee option program; and (B) directed issue of warrants and approval of transfer of warrants.
Resolution on (A) option program for members of the board of directors; and (B) directed issue of warrants and approval of transfer of warrants.

The minutes and information from the general meetings are available on www.saniona.com.

Annual General Meeting 2021

The annual general meeting 2021 will be held on 26 May 2021. In accordance with temporary legislation, the annual general meeting 2021 will be held only through advance voting (postal voting).

Nomination Committee

The 2020 annual shareholders' meeting resolved, in accordance with the proposal from the Nomination Committee, that a Nomination Committee shall be appointed before coming election and remuneration. The Nomination Committee shall be comprised of three members, which shall be the chairman of the board of directors and two members appointed by the two largest shareholders as of September 30, 2020. Furthermore, an instruction and charter for the Nomination Committee was adopted.

If one of the two largest shareholders abstains from appointing an owner representative, or such owner representative resigns before the assignment is completed without the relevant shareholder appointing a new member, the Chairman of the Board is to request the next owner in line (e.g. initially the third-largest owner) to appoint an owner representative within one week of such request. The procedure shall be continued until the Nominating Committee consists of three members.

If there is a significant change in ownership six weeks prior to the Annual General Meeting, a new owner representative shall be elected. The Chairman shall then contact the one of the two largest shareholders who does not have an owner representative and ask him to appoint one. The new owner representative is to replace the previous member of the Nomination Committee who no longer represents one of the two largest shareholders.

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The Nominating Committee shall appoint the Chairman of the Nomination Committee. The Chairman of the Nomination Committee must not be the Chairman or any other member of the Board. The term of office of the appointed Nominating Committee shall run until a new Nomination Committee has been appointed.

The composition of the Nomination Committee for the 2021 Annual General Meeting was announced in a press release on November 26, 2020 and is as follows:

| Name/Represented | Share of votes
December 31, 2020 | Share of votes
September 30, 2020 |
| --- | --- | --- |
| Søren Skjærbæk (Chair)
Owner of Ursus law firm, Vejle, Denmark. | 3.8% | 3.8% |
| Appointed by Jørgen Drejer | | |
| John Haurum
Professional board member of life science companies and
former CEO of F-star Biotechnology Limited Cambridge, UK | 3.8% | 3.8% |
| Appointed by New Leaf Venture Partners | | |
| J. Donald deBethizy
Chairman of Saniona AB's Board | - | - |
| Total | 7.6% | 7.6% |

In 2020/2021, the Nomination Committee held four (2019/20: one) meetings and also maintained contact by telephone. As a basis for its work, the Nomination Committee has taken note of the Chairman's presentation of the Board's work.

The Nomination Committee has prepared proposals to the Annual General Meeting, including proposals for Board members, remuneration of Board and Committee members, proposals for auditors and fees to the auditors and the Chairman of the AGM, and proposals for remuneration of Nomination Committee members. When preparing its proposals, the Nomination Committee has applied paragraph 4.1 of the Code as its Diversity Policy.

Shareholders who would like to submit proposals to the Nomination Committee can do so via e-mail to [email protected] marked "Recommendation to the Nomination Committee" or by ordinary mail to the address: Saniona AB, Attn. Nomination Committee, Smedeland 26B, DK-2600 Glostrup, Denmark.

Board of Directors

The Board of Directors is the highest decision-making body under the Annual General Meeting.

The Board is responsible for the company's organization and management of the company's affairs, for example by setting objectives and strategy, establishing procedures and systems for monitoring of the established objectives, continuously assessing the company's financial position and the operational management. Furthermore, it is the Board's responsibility to ensure that accurate information is provided to the company's stakeholders, that the company complies with laws and regulations and that the company develops and implements internal policies and ethical guidelines. The Board also appoints the CEO and determines the salary and other remuneration of the latter based on the guidelines adopted by the general meeting.

The work of the Board of Directors is regulated by applicable legislation and recommendations, and by the Board of Directors' rules of procedure, which are adopted annually. The rules of procedure contain stipulations regulating the division of responsibilities between the Board of Directors and the CEO, financial reporting and audit matters. At the statutory Board meeting, the Board of Directors adopts other requisite rules of procedure, policies and guidelines that form the basis of the company's internal regulatory framework.

Composition of the Board

Members of the Board are to be appointed for a period extending no longer than to the end of the next Annual General Meeting.

Pursuant to the company's articles of association, the Board of Directors shall be composed of not fewer than three and not more than eight ordinary members.

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Prior to the Annual General Meeting in May 2020, the Board consisted of six members. One member, Claus Braestrup, resigned as board member at the AGM in May 2020. All five other existing Board members were re-elected at the AGM May 2020.

One of the current board members is a woman and four are men. The company will continue to pursue the objective of achieving a better diversity. For more information about the Board, see Board of Directors.

Independence

The company complies with the Swedish Corporate Governance Code such that the majority of the Board members elected at the Annual General Meeting are independent of the company and management, and that at least two of them are independent in relation to the major shareholders. In 2020, four of the five Board members were independent of the company and its management, and all Board members were independent in relation to major shareholders, defined as greater than 5% ownership.

Chairman of the Board

The Chairman represents the Board of Directors externally and internally. The Chairman leads the Board's work, monitors the work and assumes responsibility for the Board completing its duties according to applicable legislation, the Articles of Association, the Swedish Code of Corporate Governance and the Board of Director's rules of procedure.

The Chairman shall monitor the company's progress through contact with the CEO, consultation with the CEO on strategic matters and by ensuring that strategic considerations are recorded and addressed by the Board of Directors. The Chairman is also to ensure that the Board of Directors, through the CEO, receives information on the company on an ongoing basis to enable analysis of the company's position.

The Chairman is responsible for contacts with the shareholders regarding ownership issues and for communicating the shareholders' views to the Board.

Evaluation of the work of the Board of Directors

The Board evaluates the work of the Board at least annually. The work is evaluated along various parameters such as whether the number of Board meetings and their duration are appropriate, the quality of the Board material, whether the agenda items are relevant and comprehensive, the preparedness and performance of individual Board members, the composition of the Board and desirable experience of potential new Board members, the role and performance of the Chairman and the executive management. The conclusions are included in the minutes and shared with the Nomination Committee.

Number of meetings

The Board is to meet at least six times per year, usually in conjunction with the publication of interim and annual financial statements and the AGM. Additional meetings or teleconferences are convened as necessary. The Board carries out an in-depth strategic review of the operations during at least one Board meeting each year.

The Board's work in 2020

In 2020, the Board held a total of 13 (6) meetings, of which 5 (5) were scheduled and 8 (1) were unscheduled. In addition, the Board passed additional resolutions on 13 (12) occasions through written resolutions. Saniona's CSO is a member of the Board and Saniona's CEO and Chief Legal Officer participate in Board meetings. Other Saniona employees participate and present reports as needed.

Board committees

The company has established two committees to support the Board: the Audit Committee and the Remuneration Committee. The Board has adopted rules of procedure for both committees.

	Elected	Independence	Audit Committee	Remuneration Committee	Attendance Board of Directors	Attendance Audit Committee	Attendance Remuneration Committee
J. Donald deBethizy	2018	Yes		Chair	13/13		12/12
Anna Ljung	2018	Yes	Chair		13/13	5/5
Claus Braestrup*	2014	Yes	Member	Member	5/13	2/5	3/12
Jørgen Drejer	2014	1)			13/13
Carl Johan Sundberg	2015	Yes	Member	Member	13/13	5/5	12/12
Edward Saltzman	2019	Yes			13/13

1) Affiliated with the company
* Claus Braestrup resigned as board member at the AGM May 2020.

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The Audit Committee

The main task of the Audit Committee is to oversee the company's financial position, to monitor the effectiveness of the company's internal control, internal audit and risk management, to keep itself informed of the audit of the annual accounts and consolidated accounts and to review and monitor the independence of the auditor. The Audit Committee is also to assist the Nominating Committee in the proposal for a decision on the choice of and remuneration of the auditor. The Audit Committee consists of two members, both of whom are independent of management. In 2020, the Audit Committee was composed of Anna Ljung (Chairman) and Carl Johan Sundberg.

The Remuneration Committee

The Remuneration Committee is to primarily propose guidelines and principles for remuneration and other terms of employment of the CEO and senior executives. The Remuneration Committee is also to monitor and evaluate ongoing and completed application for variable remuneration of executive management and monitor and evaluate the implementation of the guidelines for remuneration of senior executives as resolved by the Annual General Meeting. In 2020, the Remuneration Committee consisted of J. Donald deBethizy (Chairman) and Carl Johan Sundberg.

Chief Executive Officer and other executive managers

The CEO is appointed by the Board of Directors. The CEO's work follows the written instructions adopted annually by the Board of Directors at the statutory Board meeting.

The instructions for the CEO regulate customary areas such as the CEO's undertaking in relation to the company and the Board of Directors, including responsibility for presenting expedient reports to the Board of Directors relevant to the Board's completion of its evaluation of the company. The CEO is to ensure that ongoing planning, including business plans and budgets, is completed and presented to the Board of Directors for resolution.

The CEO shall exercise good leadership in the management of operations to ensure that the company progresses according to plan and follows the strategies and policies adopted. When departure from these plans and special events of a significant nature is feared, the CEO must immediately inform the Board of Directors through the Chairman. The CEO is to ensure that the company's operations, including its administration, are organized so that they satisfy market requirements, and efficient and secure organizational control of operations.

Within the framework of the directives provided by the Board of Directors for the company's operations, management deals with consultation regarding, and monitoring of, strategies and budgets, the distribution of resources, the monitoring of operations and preparation for Board meetings.

In 2020, executive management consisted of Saniona's Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Scientific Officer (CSO), Chief Medical Officer (CMO), Chief Communications Officer (CCO) and Chief Human Resources Officer (CHRO). For information about executive management, see Management below.

For information about salaries and remuneration of the CEO and senior executives, see the table under remuneration and note 10.

Remuneration of the Board of Directors and Executive Management

The Annual General Meeting resolves on remuneration of the Chairman of the Board and other Board members. The Annual General Meeting also resolves on guidelines for remunerating the CEO and other senior executives.

At the Annual General Meeting on May 6, 2020, it was resolved that the Board members who are not employed by Saniona AB or any of its subsidiaries will be entitled to a Board fee. Furthermore, it was resolved that the Board be remunerated so that SEK 300,000 is paid to the Chairman of the Board and SEK 160,000 to each of Anna Ljung, Carl Johan Sundberg and Edward Saltzman. Finally, it was resolved that remuneration for committee work will be paid in an amount of SEK 60,000 to the Chairman of the Audit Committee and with SEK 30,000 to each of the other members of the Audit Committee and with SEK 30,000 to each member of the Remuneration Committee. No additional remuneration shall be paid for other committee work. No remuneration for committee work shall be paid to members of the board who are employed by Saniona AB or any of its subsidiaries.

At the Annual General Meeting on May 6, 2020, it was resolved to adopt guidelines for remuneration to senior executives. The guidelines are included in this document, within the Board of Director's Report. In general, Saniona shall offer remuneration that enables the company to recruit and retain senior executives. The CEO and other senior executives shall be offered a fixed annual cash salary. In addition to fixed salary, the CEO and other senior executives may, according to separate agreements, receive variable cash remuneration, which is intended to promote

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Saniona's business strategy and long-term interests, including its sustainability. Pension benefits (for Danish employees), and a US-based 401(k) Retirement Plan, shall be defined contribution, given that no senior executive is covered by defined benefit pension under mandatory collective bargaining agreements. Other benefits may include life insurance, medical insurance, dental insurance, vision insurance, flexible spending accounts, and other customary benefits as may be considered reasonable in relation to market practices. Senior executives shall be employed until further notice or for a specified period of time. Upon termination of an employment by Saniona, the notice period may not exceed 12 months. Fixed cash salary during the notice period and severance pay may not together exceed an amount corresponding to the fixed cash salary for 24 months. Upon termination by the senior executive, the notice period may not exceed six months, without any right to severance pay. In addition to fixed cash salary during the period of notice and severance pay, additional remuneration may be paid for non-compete undertakings.

The board of directors may temporarily resolve to deviate from these guidelines, in whole or in part, if in a specific case there is special cause for the deviation and a deviation is necessary to serve the company's long-term interests, including its sustainability, or to ensure the company's financial viability, such as was the case to hire the new CEO in early 2020.

The remuneration of the Board of Directors and senior executives is set out below.

Please see note 10 for additional details regarding employment terms and conditions for the Board and senior management.

SALARIES AND REMUNERATION FOR THE YEAR 2020 GROUP AND PARENT COMPANY

KSEK	Board fee	Fixed salary	Variable salary	Pension costs	Share based payment	Social security expenses	Other staff expenses	Total
J. Donald deBethizy, Chairman	330	-	-	-	441	-	-	771
Claus Bræstrup, Board member***	-	-	-	-	-	-	-	-
Carl Johan Sundberg, Board member	220	-	-	-	94	59	-	373
Anna Ljung, Board member	220	-	-	-	94	59	-	373
Jørgen Drejer, Board member	-	-	-	-	65	-	-	65
Edward Saltzman, Board member	160	-	-	-	82		-	242
Total Board*	930	-	-	-	776	118	-	1,824
Rami Levin, CEO		4,624	2,312	99	5,445	463	-	12,943
Jørgen Drejer, CSO**	-	1,999	290	-	-	5	-	2,294
Other EXCOM***	-	6,397	2,960	230	4,172	1,115	-	14,874
Total EXCOM	-	13,020	5,562	329	9,617	1,583	-	30,111
Other Employees	-	24,700	1,324	1,570	1,694	1,164	30	30,482
Total	930	37,720	6,886	1,899	12,087	2,865	30	62,417

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Auditors

Saniona's auditor is the auditing firm Deloitte AB, with Authorized Public Accountant Jeanette Roosberg as auditor in charge.

Deloitte has been Saniona's auditor since the formation of the Group in 2014. At the Annual General Meeting on May 6, 2020, Deloitte was elected as auditor until the end of the 2021 Annual General Meeting.

The external auditors discuss the external audit plan and risk management with the Audit Committee. In 2020, the auditors performed a review of the interim report for the third quarter and audited the annual accounts and consolidated financial statements. The auditors also express an opinion on whether this Corporate Governance Report has been prepared in accordance with the Annual Accounts Act.

The auditor reports the results of their audit of the annual accounts and consolidated financial statements in the audit opinion to the Annual General Meeting. In addition, the auditors present detailed findings from their reviews to the Audit Committee and to the Board of Directors in its entirety once per year.

For information regarding fees for the company's auditors, see note 9.

Internal control and risk management systems in relation to financial reporting

The Board of Directors is ultimately responsible for the internal control of the company. The responsibility is governed by the Swedish Companies Act, the Swedish Annual Reports Act and the Swedish Corporate Governance Code. The Board of Directors is required to ensure that Saniona has enough

formalized procedures for ensuring compliance with established principles for financial reporting and internal control. The procedures for internal control with respect to financial reporting have been designed to ensure reliable and accurate reporting in accordance with IFRS, applicable laws and regulations as well as other requirements that apply to companies listed on Nasdaq Stockholm. Saniona has decided to adopt the COSO framework as a basis of internal control of financial reporting. The framework consists of the following five components: control environment, risk assessment, control activities, information and communication and monitoring.

Control environment

The control environment constitutes the basis of Saniona's internal control. The control environment comprises a clear organizational structure, decision-making processes, powers and responsibilities that are documented and communicated in governing documents. The guidelines for Saniona's business activities include the following:

Rules and procedure for the Board of Directors and the instruction to the CEO;
Saniona's business model, vision, strategies, objectives, business plans and values;
Saniona's Code of Conduct;
Organizational structure and descriptions of positions; and
Administrative processes, guidelines and instructions such as powers, authorization instructions, risk policy, finance policy, instruction for financial reporting and the finance manual.

The governing documents such as internal policies, guidelines and instructions relating to financial reporting have been adopted by the Board of Directors to ensure an effective control environment.

In accordance with the instruction to the CEO, the CEO is to keep the Board of Directors continuously informed about the development of the company's operations, profit/loss and financial position as well as other events that are likely to be significant to the company and its shareholders. The CEO is also responsible for preparing reports and compiling information from management before Board meetings and to present the material at Board meetings.

The CFO is responsible for ensuring that internal controls are performed and obeyed, and that continuous work is conducted to strengthen the internal control of financial reporting. The responsibility and duties of the CFO, inter alia, are regulated in detail in the company's finance policy, instruction for financial reporting and the financing manual.

The Audit Committee is responsible for ensuring that the internal control regarding financial reporting and reporting to the Board of Directors is effective. The Audit Committee performs quarterly reconciliations with the company's CFO. In addition, the Audit Committee reviews and evaluates Saniona's internal control annually.

Risk assessment

At least once a year, the CFO conducts an overall risk assessment to assess the risk exposure in Saniona with regards to financial reporting, as well as identify potential problem areas. The risk assessment includes identifying risks that Saniona's external and internal financial reporting is not prepared in accordance with applicable accounting standards. A review takes place to ensure that the company has an infrastructure that enables effective and expedient control, and an assessment of the company's financial position and significant financial, legal and operational risks.

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On an annual basis, the CFO conducts an operational risk assessment to identify and analyze relevant events and risks that could have a negative impact on Saniona's ability to achieve its set goals.

Control activities

To ensure that business is conducted efficiently, and that financial reporting gives a fair and accurate impression on each reporting date, control activities are implemented to address risks at all levels of the organization. Control activities include manuals, processes and policies that ensure that directives and decisions are implemented.

The aim of the control activities is to prevent and detect errors and irregularities with regards to the financial reporting, and to propose subsequent corrective actions should any such irregularities occur. Activities include analytical monitoring and comparison of financial performance; account reconciliation; monitoring, approval and reporting of business transactions and partnership agreements, policies and procedures, mandate and authorization instructions, as well as accounting and valuation principles.

The CFO is responsible for maintaining internal controls and ensuring that they are developed as necessary. The CFO monitors the operations through a variety of control measures, such as forecasts and budgets, income statement and balance sheet analyses and reconciliations. The result of this work is reported to the CEO, the Audit Committee and/or the Board of Directors.

Saniona's CFO is responsible for the recording and accounting financial transactions and ensuring that the performed transactions comply with the established signatory powers and authorization powers. The CFO reviews the project costs and activities together with project and line management on quarterly basis. Furthermore, several control activities are carried out on monthly basis to further detect and correct errors and deviations. The results are presented to the CEO on monthly basis.

Information and communication

The company has information and communication paths intended to promote the accuracy of financial reporting and ensure reporting and feedback from operations to the Board of Directors and management. The information and communication procedures are described in several governing documents such as internal policies, guidelines and instructions relating to financial reporting. These documents are made available in company-wide IT drives and presented to the relevant employees.

In addition to written information, news, risk management and control, results are orally communicated and discussed in physical meetings. Meetings are held within the company in the Saniona Management Group as well as at meetings at which all employees participate. The Board of Directors receives quarterly financial updates relating to the company's financial position and performance.

To ensure timely communication of relevant, reliable and accurate information concerning Saniona's development and financial status to the market, the company has established procedures for providing external information and financial reporting. The information policy and the procedures include a description of the roles and tasks of the employees, finance department, executive management and Board as well the procedures in relation to publication of financial reports and press releases.

All financial reports and press releases are published on the company's website and forwarded to the Board of Directors and all employees in connection with their publication.

Monitoring

The Board of Directors and the Audit Committee decide on the forms of monitoring activities of internal controls. The CFO is responsible for ensuring that internal controls are maintained in accordance with the Board of Directors' and the Audit Committee's decisions.

The Board of Directors is regularly updated on the company's financial position and profit/loss against budget as well as on development projects in relation to the relevant project budgets. The CEO and CFO present a written report at each regular Board meeting, or when the need arises.

The Audit Committee monitors the audit of internal controls. The company's external auditors personally report their observations and assessment of internal controls to the Audit Committee.

Internal audit

In view of the company's size, with relatively few employees, and the scope of transactions, in which most significant transactions are similar in character and relatively uncomplicated, Saniona has not found it necessary to establish a formal internal audit function but has chosen to conduct monitoring and the annual evaluation of compliance with the internal control and risk management related to financial reporting through the existing organization. The Board of Directors and Audit Committee perform an annual assessment of whether there is a need for an internal audit function.

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BOARD OF DIRECTORS

J. Donald deBethizy (born 1950)
Chairman since 2018

J. Donald deBethizy has more than 30 years of biopharmaceutical industry experience including as an entrepreneur, CEO and board member. In addition to serving as Chairman of Saniona's board of directors, he also currently serves as Chairman of the board of directors for Albumedix Ltd. and as a member of the board of directors for argenx N.V., Lophora ApS, Newron Pharmaceuticals SpA, Noxxon NV and Proterris, Inc. He is also a member of management (direktion) of Albumin Holding ApS and White City Consulting ApS.

Previously, deBethizy served as chair of Rigontec GmbH until it was sold to Merck Inc. Prior to that, he served as CEO of Santaris Pharma A/S, until its acquisition by Roche Holdings. Prior to these positions, he served as executive chair of the Danish biotech Contera Pharma A/S until it was sold to Bukwang Pharma Co Ltd. Before that, he served as co-founder and CEO of Targacept, Inc., which was publicly traded on Nasdaq and later sold to Catalyst Biosciences. Before founding Targacept, deBethizy served in various positions with RJ Reynolds for 15 years. He received his Ph.D. and M.Sc. in toxicology from Utah State University and a B.Sc. in biology from the University of Maryland. Additional previous board positions have included Novozymes Biopharma DK A/S, Asceneuron SA, Biosource Inc., Enbiotix Inc., LigoCyte Pharmaceuticals Inc., Serenova A/S (previously Serendex Pharmaceuticals A/S) and Targacept.

deBethizy is independent in relation to both Saniona and its management as well as major shareholders. He holds 12,500 shares and 217,625 options in the warrant program 2018/2024.

Anna Ljung (born 1980)
Board member since 2018

Anna Ljung is CEO of Moberg Pharma AB, a publicly-traded Swedish pharmaceutical company focused on drug delivery within dermatology. In addition to serving as CEO of Moberg Pharma, she also currently serves as Chairman of OncoZenge AB, a publicly-traded Swedish pharmaceutical company, and Chairman of Moberg Derma Incentives AB.

Prior to becoming CEO of Moberg, Ljung served as the company's Chief Financial Officer for 13 years, and prior to that she was CFO at Athera Biotechnologies AB and Controller for Lipopeptide AB. She also previously was an independent consultant within the field of technology licensing. Ljung received her M.Sc. in Economics and Business Administration from Stockholm School of Economics. Additional previous board positions have included MPJ OTC AB and Advantice Health AB.

Ljung is independent in relation to both Saniona and its management as well as major shareholders. She holds 4,629 shares; 4,000 options in the warrant program 2018/2024; 4,000 options in the warrant program 2019/2023; and 77,000 options in the warrant program 2020/2024.

Carl Johan Sundberg, M.D., Ph.D. (born 1958)
Board member since 2015

Carl Johan Sundberg is a physician and professor with extensive experience in healthcare entrepreneurship, investment and communication. He currently serves as the Chair of the Department of Learning, Informatics, Management & Ethics at the Karolinska Institutet, Stockholm. He also currently serves as a board member for Arne Ljungqvist Anti-doping Foundation AB and Medkay Konsulting AB.

Sundberg's affiliation with Karolinska Institutet spans over 30 years and includes work in molecular and applied exercise physiology, medical innovation and bioentrepreneurship. He also cofounded and managed Karolinska Investment Fund, a EUR 60 million biomedicine venture capital fund. His communications experience includes previous working periods with Svenska Dagbladet (a large morning daily) and ABC Television, U.S. He serves in membership and advisory positions with the Royal Swedish Academy of Engineering Sciences, Swedish Professional Associations for Physical Activity, Research!Sweden and the World Anti-Doping Agency (WADA) Gene and Cell Doping Expert Advisory Group. Sundberg earned his medical degree and Ph.D. from Karolinska Institutet. Previous board positions include Cobra Biologics Holding AB, Hypercure Medical AB, Karolinska Development AB and NsGene A/S.

Sundberg is independent in relation to both Saniona and its management as well as major shareholders. He holds 9,800 shares; 4,000 options in the warrant program 2018/2024; 4,000 options in the warrant program 2019/2023; and 77,000 options in the warrant program 2020/2024.

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BOARD OF DIRECTORS

Jørgen Drejer (born 1955)

Board member since 2014

Jørgen Drejer is a neurobiologist with more than 30 years of experience in discovering and developing novel approaches to modulate pathways within the brain. His research has led him to found multiple companies and publish more than 75 scientific articles.

Drejer founded Saniona in 2011 and served as founding Chief Executive Officer until January 2020, when he assumed the role of Chief Scientific Officer. Prior to founding Saniona, he co-founded NeuroSearch A/S in 1989, holding various leadership roles including deputy CEO and head of research over a 20-year period in which NeuroSearch became a major European biotechnology company. Drejer holds a PhD in neurobiology from the University of Copenhagen.

Drejer currently serves as a member of the Board of Directors for Saniona and 2CureX. He has served on the Saniona board since 2014 and served as a board member of Saniona A/S since 2012. He is also a Member of the Danish Academy of Engineering Science. He previously served as a member of the Board of Directors for NeuroSearch A/S, Origio A/S, NsGene A/S, Atonomics A/S, Azign Bioscience A/S, Ellegaard Göttingen Minipigs ApS, Force Technology and Monta Biosciences A/S.

Drejer is not independent in relation to Saniona and its management but is independent in relation to major shareholders. He holds 2,354,711 shares and 77,000 options in the warrant program 2020/2024.

Edward C. Saltzman (born 1955)

Board member since 2019

Edward Saltzman has more than 30 years of experience in the biopharmaceutical industry. He currently serves as chairman and member of management of Cello Health BioConsulting, previously Defined Health, after having led the sale of Defined Health to Cello Health in 2017. Cello Health BioConsulting is a leading strategic business development advisory firm serving senior executives in pharma, biotech and investment. Prior to the acquisition, Saltzman founded and spent 24 years as president of Defined Health. He also currently serves as investment advisor to Israel Biotech Fund and previously served as a board member for Vidac Pharmaceuticals Ltd. Saltzman earned his degree from New York University.

Saltzman is independent in relation to both Saniona and its management as well as major shareholders. He holds 4,200 shares, 4,000 options in the warrant program 2019/2023 and 77,000 options in the warrant program 2020/2024.

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EXECUTIVE MANAGEMENT

Rami Levin, President and Chief Executive Officer (born 1969)

Rami Levin is a seasoned biotech leader with over 24 years of experience in rare diseases and central nervous system disorders. Prior to joining Saniona in January 2020, he most recently served as President of Sobi Inc., the North American affiliate of international rare disease company Sobi. At Sobi, he built and led the North American organization from infancy to a team of approximately 300 employees generating over half a billion USD in annual revenue. Levin's experience in mergers and acquisitions resulted in the successful acquisitions of Gamifant, the first FDA approved treatment for primary hemophagocytic lymphohistiocytosis (pHLH), and Synagis, the only FDA approved prophylaxis for respiratory syncytial virus (RSV). Under his leadership, the Sobi team launched Gamifant and integrated the entire Synagis sales and medical organizations, retaining 100% of the team.

Prior to joining Sobi, Levin held commercial leadership roles of increasing strategic importance for 16 years at Merck Serono in a number of countries, including the U.S., Sweden, Switzerland and Israel. Levin earned his MBA from the Recanati Business School at Tel Aviv University in Israel, majoring in International Marketing, and has a BSc in Biology from Tel Aviv University.

In addition to his current position as President and CEO of Saniona, Levin serves as a member of the Board of Advisors for Life Science Cares.

Levin holds 10,000 shares and 710,313 options in the warrant program 2020/2024 and 1,262,000 options in the warrant program 2020/2031.

Jason A. Amello, Chief Financial Officer (born 1968)

Jason A. Amello has over 25 years of corporate finance experience, contributing to strategic business growth and financial and operational performance. Prior to joining Saniona, he served as Senior Vice President, Chief Financial Officer and Treasurer of Akebia Therapeutics Inc. (Nasdaq:AKBA), where, over a seven-year period, he helped lead Akebia's financing efforts, including its initial public offering, and served as a key advisor for Akebia's merger with Keryx Biopharmaceuticals. During his tenure at Akebia, Amello built out the entire finance organization and was responsible for treasury management, financial planning and budgeting, accounting and reporting, taxation, procurement, facilities, and information technology. Prior to joining Akebia, Amello served as Executive Vice President, Chief Financial Officer and Treasurer of Ziopharm Oncology, Inc. (Nasdaq:ZIOP), and prior to that he held multiple finance leadership positions at Genzyme Corporation, now Sanofi Genzyme, including Senior Vice President, Chief Accounting Officer, and led the Strategic Financial Services group through which he served as a key advisor on all of Genzyme's mergers and acquisitions and other strategic transactions. Earlier in his career, Amello spent 10 years in the business advisory and assurance practice of Deloitte. Amello holds a BS in Accounting from Boston College and is a Certified Public Accountant in the Commonwealth of Massachusetts.

In addition to his current position as Chief Financial Officer of Saniona, Amello currently serves on the Board of Directors of Acer Therapeutics (Nasdaq:ACER), Inc. and the New England Baptist Hospital.

Amello holds 4,200 shares and 829,512 options in the warrant program 2020/2031.

Linea Aspesi, Chief Human Resources Officer (born 1970)

Linea Aspesi has 25 years of human resources leadership experience, with a focus on aligning talent strategies to the business vision, mission and strategy. Prior to joining Saniona, she served as Vice President, Head of Human Resources & Office Management for Sobi in North America, where she supported the company through 5x headcount growth and established and drove cultural transformation strategies in the areas of talent acquisition, integration, retention, development, engagement, total rewards, organizational design, learning and diversity and inclusion. Previously, Aspesi served as Head of Human Resources for the Industrial Affairs organization in the U.S. for Sanofi, where she designed and implemented talent strategies that transformed the organization of approximately 3,000 employees, in the areas of manufacturing plant optimization, inclusive of plant closures and divestitures, business development and expansion. During her tenure at Sanofi, she held HR leadership positions, shaping talent strategies for the Boston Hub R&D organization, the Sanofi Genzyme Specialty Care business unit, of Rare Disease, Oncology, MS, Immunology and the Industrial IS organization. Prior to Sanofi, Aspesi held HR positions at multiple organizations including UMass Memorial Medical Center, Partners Healthcare System Inc., and HealthSouth. In addition, she previously served on the Board of Directors for Partnerships for a Skilled Workforce and for Seaglass Village.

Aspesi holds 4,200 shares and 829,512 options in the warrant program 2020/2031.

SANIONA AB - ANNUAL REPORT 2020

EXECUTIVE MANAGEMENT

Rudolf Baumgartner, Chief Medical Officer and Head of Clinical Development (born 1959)

Rudolf Baumgartner is a physician-scientist with a proven track record of leading cross-functional teams through multiple development programs from Investigational New Drug (IND) applications through New Drug Application (NDA) submissions and product approvals. Trained in basic immunology, he has significant expertise across a broad array of therapeutic areas, including inflammation and autoimmune diseases.

Prior to joining Saniona, Baumgartner served as Chief Medical Officer for the Flatley Discovery lab, a non-profit foundation working in the rare disease space of Cystic Fibrosis. Prior to that, he was the Executive Vice President and Chief Medical Officer for Inotek Pharmaceuticals, where he was instrumental in writing the S1 and co-leading the company's IPO. At Inotek, he oversaw clinical development and operations, medical affairs, regulatory affairs, biostatistics, preclinical development, and intellectual property. Before Inotek, Baumgartner held senior-level development positions at Sepracor and Merck & Co. He began his medical career as a clinician-scientist at the National Institutes of Health (NIH), in the Laboratory of Molecular Immunology at the National Heart, Lung, and Blood Institute (NHLBI). He completed his MD at Pennsylvania State University, his residency in Internal Medicine at the University of Michigan, and his fellowship in Pulmonary and Critical Care Medicine at Johns Hopkins University.

Baumgartner holds 8,300 shares and 829,512 options in the warrant program 2020/2031.

Jørgen Drejer, Founder, Chief Scientific Officer and Deputy CEO (born 1955)

Drejer founded Saniona in 2011 and served as founding Chief Executive Officer until January 2020, when he assumed the role of Chief Scientific Officer. Prior to founding Saniona, he co-founded NeuroSearch A/S in 1989, holding various leadership roles including deputy CEO and head of research over a 20-year period in which NeuroSearch became one of the largest European biotechnology companies. Drejer holds a PhD in neurobiology from the University of Copenhagen.

Drejer currently serves as a member of the Board of Directors for Saniona and 2CureX. He is also a Member of the Danish Academy of Engineering Science. He previously served as a member of the Board of Directors for NeuroSearch A/S, Origio A/S, NsGene A/S, Atonomics A/S, Azign Bioscience A/S, Ellegaard Göttingen Minipigs ApS, Force Technology and Monta Biosciences A/S.

Drejer holds 2,354,711 shares and 77,000 options in the warrant program 2020/2024.

Kyle Haraldsen, Chief Technical Operations Officer (born 1978)

Kyle Haraldsen has nearly 20 years of technical operations and manufacturing experience in the biopharmaceutical industry, including in support of U.S. and E.U. product approvals. Prior to joining Saniona in January 2021, he served as the Vice President of Technical Operations and Project Management at AMAG Pharmaceuticals, where over a 7 year period, he led the process and analytical development, manufacturing, supply chain and project management functions. During his time at AMAG, Haraldsen oversaw multiple product launches, line extensions and the integration of two development stage assets.

Previously, Haraldsen served as Senior Director of Manufacturing at Radius Health where he was responsible for the developmental, operational, and budgetary oversight of CMC programs and clinical trial material in support of global Phase 3 and multinational Phase 2 clinical trials. Haraldsen also worked for Avecia Biotechnology and Johnson Matthey Pharma Services.

He holds a B.S. in Chemical Engineering from Northeastern University.

Haraldsen holds 4,200 shares and 228,000 options in the warrant program 2020/2031.

SANIONA AB - ANNUAL REPORT 2020

EXECUTIVE MANAGEMENT

Trista Morrison, Chief Communications Officer (born 1977)

Trista Morrison has nearly 20 years of experience in healthcare public affairs, including strategic communications and patient advocacy. Prior to joining Saniona, she founded the consulting firm PR with Purpose, LLC, to help life science companies and nonprofits communicate with authenticity and transparency. Previously, she served as Vice President of Communications and Patient Advocacy for rare disease company Sobi in North America, where she built both departments and supported milestones including FDA approvals, product launches, acquisitions, significant data disclosures, and growth from 50 to 300 employees. Prior to joining Sobi, Morrison managed corporate, product and employee communications for Ironwood Pharmaceuticals Inc. She previously worked as a reporter for BioWorld Today and held various positions at multiple biotech public relations agencies.

Morrison currently serves on the Board of Directors for the Network of Tyrosinemia Advocates (NOTA) and the Advisory Board of The Termeer Foundation.

Morrison holds 4,200 shares and 829,512 options in the warrant program 2020/2031.

Denelle J. Waynick, Chief Legal Officer (born 1967)

Denelle Waynick has nearly 30 years of experience advising domestic and international companies in the healthcare and life sciences industries. Prior to joining Saniona in January 2021, Waynick served as Chief Legal Officer and Corporate Secretary at MyoKardia, where she provided strategic and practical counsel to C-suite executives in legal matters, as well as issues impacted by the regulatory and policy environment.

Waynick has also worked as in-house corporate counsel at UCB, Actavis and Schering-Plough, and in corporate law as an Associate and Partner at national and regional law firms. In addition to expertise in corporate, policy, governance and litigation matters, she has served as counsel on a range of global business transactions, including mergers, acquisitions and divestments.

Waynick holds a B.S. in Accounting from Rutgers, the State University of New Jersey-Newark, and a JD from Howard University School of Law.

Waynick holds 4,200 shares and 283,000 options in the warrant program 2020/2031.

SANIONA AB - ANNUAL REPORT 2020

Auditors' report on the Corporate Governance Statement

To the general meeting of the shareholders in Saniona AB (publ), corporate identity number 556962-5345

Engagement and responsibility

It is the Board of Directors that is responsible for the Corporate Governance Statement for the fiscal year from January 1, 2020 through December 31, 2020 on pages 97-106 and that it has been prepared in accordance with the Annual Accounts Act.

The scope of the audit

Our examination has been conducted in accordance with FAR's auditing standard RevU 16 The auditor's examination of the corporate governance statement. This means that our examination of the Corporate Governance Statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.

Opinion

A corporate governance statement has been prepared. Disclosures in accordance with Chapter 6, Section 6, second paragraph, points 2-6 of the Annual Accounts Act and Chapter 7, Section 31, second paragraph of the same act are consistent with the annual accounts and the consolidated accounts and are in accordance with the Annual Accounts Act.

Malmö, April 29, 2021

Deloitte AB

Jeanette Roosberg
Authorized Public Accountant

SANIONA AB - ANNUAL REPORT 2020

saniona AB (publ)
Smedeland 26B
DK-2600 Glostrup
Denmark
Tel +45 7070 5225

Saniona Inc.
500 Totten Pond Road, Suite 620
Waltham, MA 02451
USA
Tel +1 781 839 9100

Web: saniona.com
E-mail: [email protected]

AI assistant

Saniona — Annual Report 2020

3195_10-k_2021-04-29_ea611f93-bbd3-4f83-b34c-4b503337c3c8.pdf

TABLE OF CONTENTS

ABOUT SANIONA

BOARD OF DIRECTORS REPORT

FINANCIAL STATEMENTS

CORPORATE GOVERNANCE REPORT

ABOUT SANIONA

SIGNIFICANT EVENTS IN 2020

Appointed Rami Levin as President and Chief Executive Officer

Raised USD $65 million

Recruited and hired an executive team

Achieved positive results from both the double-blind and open-label extension portions of the Phase 2 study of Tesomet in hypothalamic obesity (HO)

Received feedback from the U.S. Food and Drug Administration (FDA) on the paths forward for Tesomet in Prader-Willi syndrome (PWS) and HO

FINANCIAL OVERVIEW 2020 (2019)

OUR VISION

OUR MISSION

OUR CORE VALUES

Put People First

Innovation With Impact

Integrity, Always

Discovering, developing and delivering innovative rare disease treatments

SANIONA IS BUILDING TOMORROW'S RARE DISEASE COMPANY

Advance our clinical development programs:

Build technical operations capabilities:

Evaluate strategic external innovation opportunities:

Identify novel preclinical programs to build our pipeline:

Build commercial operations:

Explore life cycle management:

PROPRIETARY PIPELINE

TESOMET

Tesomet: a novel fixed-dose combination of a triple monoamine reuptake inhibitor and a beta blocker

TESOMET IN HYPOTHALAMIC OBESITY (HO)

HO: excessive weight gain despite limited food intake

Tesomet in HO: positive Phase 2 data, advancing into Phase 2b clinical trials

An interview with Amy Wood, Executive Director of the Raymond A. Wood Foundation and mother of a hypothalamic obesity survivor

1. Can you please tell us a little about yourself and your background?

2. Tell us about your journey with hypothalamic obesity?

3. What do you see as the greatest challenges facing the hypothalamic obesity community?

4. What do you wish people knew about hypothalamic obesity?

5. Where can people get more information about hypothalamic obesity?

TESOMET IN PRADER-WILLI SYNDROME (PWS)

PWS: a rare disease characterized by insatiable hunger

Tesomet in PWS: positive Phase 2a data, advancing into Phase 2b clinical trials

ADULTS

ADOLESCENTS

Hyperphagia scores declined in both active and placebo groups; active remained low in OLEs

SAN711

SAN711: a novel first-in-class ion channel modulator for rare neuropathic disorders

SAN903

Ion channels: a validated drug class in an untapped market

Saniona's world-class ion channel expertise

OUT-LICENSING AND PARTNERSHIPS

How Saniona Discovers New Medicines for Rare Diseases

Saniona's Ion Channel Drug Discovery Engine

Fast Fact:

Discovery Biology

Initial Biological Screening of Compound Library

Fast Fact:

Discovery Chemistry and In Vitro Pharmacology Aided by Artificial Intelligence (AI)

In Vivo Pharmacology and Efficacy

Preclinical Development

Clinical Development

How Saniona Brings New Therapies to the Rare Disease Community

Saniona's Commitment to Rare Diseases

Fast Fact:

Discovery

Preclinical Development

IND/CTA Submission

Fast Fact:

Clinical Trials

Phases:

Fast Fact:

Submission for Approval

Application Review

Approval

Fast Fact:

Post-Approval

The orphan drug market continues to grow

Saniona Annual Report 2020