It is my privilege to meet many people living with skin diseases and those helping them. These conversations are a daily reminder of LEO Pharma’s purpose: to help people achieve healthy skin. Living with a skin condition has an impact on a person far beyond the skin, as it is often both debilitating and stigmatizing. To provide patients with safe, effective, and innovative life-changing solutions is what motivates all of us at LEO Pharma every day.

For 2025, we set ourselves the goal to be the leading company in medical dermatology. To get there, we aim to understand patients and their lives better than anyone else, and apply this knowledge to provide even better treatments. Our 2025 Strat- egy is to strengthen our successful established portfolio, and invest the proceeds in building our innovative portfolio. In 2018, we made significant progress on both areas.

Good results in line with expectations
Following a record year in 2017, LEO Pharma made significant progress with our 2025 Strategy. We invested heavily in our R&D pipeline, which is now one of the strongest pipelines in dermatology, and we considerably strengthened our established portfolio with the agreement to acquire Bayer’s prescription dermatology unit.

In 2018, LEO Pharma’s revenue amounted to DKK 10,410 million, a level similar to revenue in 2017. EBITDA increased from DKK 2,005 million in 2017 to DKK 2,366 million in 2018, an increase of 18%, mainly driven by the divestment of a number of non-core products to Karo Pharma AB. Revenue from the established portfolio amounted to DKK 10,268 million in 2018, which is in line with 2017. I am proud to see that Enstilar®, our foam-based solution for psoriasis, continued its success being the primary growth driver in our established portfolio.

For our innovative portfolio, the European launches of Kyntheum®, our biologic solution for psoriasis, continued throughout 2018 following the first launch in Germany in late 2017. We are excited to follow the progress of Kyntheum® as we continue the launch process in Europe.

A strong and expanding pipeline
Increasing investments in R&D to 18% of revenues in 2018 fueled the progression of our clinical pipeline and added candidates to our future innovative portfolio. In 2018, we initiated our third phase 3 clinical study for tralokinumab, an investigational monoclonal antibody for the treatment of moder- ate-to-severe atopic dermatitis, and entered phase 2b for delgocitinib for atopic dermatitis and hand eczema. Together with further early-stage projects, including oral treatments, we now have one of the world’s strongest pipelines in eczema.

In November, we entered the rare disease arena by partnering with PellePharm to treat Gorlin Syndrome. We consulted patients before we made this decision, a process that not only gave us very important insights, but also involved very moving discussions about how we might be able to help change the course of this life-altering condition.

We are proud of our collaborative approach and how we work with specialists within and outside our company. It enables us to drive scientific advance- ments further and to pioneer medical dermatology, bringing about much needed progress for patients.

Expanding our lead in medical dermatology In July, we agreed with Bayer to acquire their prescription dermatology unit. This adds a series of strong brands to our established portfolio, and will expand our global footprint in key markets in Europe, Asia and Latin America.

High engagement leads to success
The collective skills and efforts of everyone at LEO Pharma are the basis for our success, and I would like to thank our 5,528 employees for their strong dedication in 2018. Our transformation process towards achieving our 2025 goals, and the contin- ued high engagement of our employees is more important than ever. LEO Pharma’s unique and caring culture is a key factor for our success.

Therefore, it was great to see the results of our 2018 global employee engagement survey, which showed a sustainable engagement score of 83%, well above the pharmaceutical industry average. These results confirm that LEO Pharma’s workforce is highly committed and purpose-driven. They also tell us that LEO Pharma’s employees are deeply engaged in pursuing our mission of helping people achieve healthy skin.

Our responsible commitment
As a global company, we have the opportunity as well as the obligation to pursue our business and strategic objectives in a way that fulfills our responsibilities to the society we operate in. This is reflected in our CSR Commitment.

I am pleased and proud that, as a UN Global Compact member, LEO Pharma supports the Ten Principles, which cover the areas of human rights, labor, environment and anti-corruption. We remain committed to engaging with our stakeholders. From 2018 onwards, we will report on our progress, actions and measurements of outcomes, as we integrate the UN Global Compact principles into our business strategy, our culture and our day-to- day operations.

I am looking very much forward to 2019, which will show significant progress in the tralokinumab development, as well as the full integration of the Bayer prescription dermatology portfolio.

We have set ourselves ambitious goals to make a true difference in the lives of people living with skin diseases. We will continue to work relentlessly to further strengthen patients’ voice, develop our partnerships with patient advocacy, and support our patients in getting access to the dermatology care they need.