ObsEva
Annual Report 2018

Annual Report 2018

Annual
Report
2018

Table of Contents

Letter to Shareholders

Business Update

Financial Review

Corporate Governance

Consolidated IFRS Financial Statements for the year ended December 31, 2018

Report from the Auditor on the Consolidated IFRS Financial Statements

Statutory Financial Statements of ObsEva SA for the year ended December 31, 2018

Report from the Auditor on the Statutory Financial Statements of ObsEva SA

Compensation Report of ObsEva SA for the year ended December 31, 2018

Report from the Auditor on the Compensation Report of ObsEva SA

Forward-Looking Statements

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ObsEva SA l Annual Report 2018 

3

Letter to shareholders

Dear Shareholders,

2018 was a year of tremendous progress for ObsEva, our second year as a public company. Our pipeline 
of three potential best and/or first in class new chemical entities are advancing well in clinical trials, having 
generated important Phase 2b and Phase 3 efficacy and safety data in 2018, leading to as many as six Phase 
3 trials potentially ongoing in 2019. Importantly, we have delivered our milestones both successfully and on 
time according to plan, through the hard work of our employees, and ObsEva is now positioned to begin the 
transition to a commercial stage company in 2019 with expected confirmatory Phase 3 results for nolasiban 
and a planned regulatory filing. 

A review of our important achievements in 2018 is headlined with the first Phase 3 trial results for nolasiban, 
the oral oxytocin receptor antagonist for the improvement of outcomes in patients who are experiencing 
infertility and undergo in-vitro fertilization (IVF) procedures. The IMPLANT 2 trial of nolasiban successfully 
achieved primary and secondary endpoints of improved rates of 10 week pregnancy as well as live birth. We 
believe that the magnitude of effect, or an approximate increase of one third in the ultimate goal of taking 
home a baby, is an impressive outcome. Given the significant psychological, emotional, physical and financial 
costs that accompany IVF cycle failure, we believe improved outcomes can provide benefit to patients, IVF 
centers, and health care providers. Following IMPLANT 2 results we have initiated a confirmatory Phase 3 trial 
of nolasiban in Europe, which has the largest population undergoing IVF, approximately 800,000 cycles being 
performed in 2014. Assuming positive IMPLANT 4 trial results expected later this year, we plan to proceed 
with a Marketing Authorization Application (MAA) in Europe prior to the end of the year. In the U.S., we are 
discussing clinical trial design with the U.S. Food and Drug Administration (FDA), with a goal of starting this 
Phase 3 program in 2019. 

Another positive data point was reached in 2018 for linzagolix, our oral gonadotropin- releasing hormone 
(GnRH) receptor antagonist for the treatment of uterine fibroids and endometriosis. Primary and secondary 
endpoints were successfully achieved in the phase 2b EDELWEISS trial of linzagolix for the treatment of en-
dometriosis associated pelvic pain. These trial results were highlighted by the low dose, 75mg, with sustained 
reduction or further improvement in patient response ratein over 70% of patients without observed significant 
adverse impact on bone mineral density (BMD). We are excited about the prospect of being able to treat a 
large majority of patients through partial estrogen suppression only, hence without the need for hormonal add 
back therapy (ABT) to protect from BMD loss. For this reason, we view linzagolix to be a potential best in class 
therapy in two populations, endometriosis and uterine fibroids, which comprise millions of women in both the 
U.S. and Europe. We expect Phase 3 endometriosis trials to commence in 2019, and the Phase 3 PRIMROSE 1 
and 2 trials in the uterine fibroids indication are ongoing, with initial results expected later in 2019. 

4 

ObsEva SA l Annual Report 2018

LETTER TO SHAREHOLDERS

We believe our third compound, although earlier stage, is very promising in an area where health risks and 
medical costs are high, and safe and effective treatment alternatives are lacking. OBE022 is our oral prosta-
glandin F2 alpha receptor antagonist in development for treating acute preterm labor in pregnant women at 
24–34 weeks gestation. The open label Part A of the Phase 2a PROLONG trial of OBE022 was completed in 
2018, showing adequate safety and PK/PD characteristics to move to the ongoing randomized, placebo-con-
trolled, double-blind Part B of the trial. We expect preliminary efficacy data form the PROLONG trial in a subset 
of patients during 2019. 

In addition to our clinical trial successes in 2018, we also achieved major corporate objectives. ObsEva was list-
ed on the SIX in Zurich and thus is now present on both the Nasdaq Global Select Market and a leading stock 
exchange for life science companies in Europe. We also hired a Chief Commercial Officer, Wim Souverijns, to 
lead our transition from a development company to a commercial company. 

In 2019 we will continue to focus on executing our strategy of becoming a women’s health leader by bringing 
innovative treatments to physicians and patients that improve upon the efficacy, tolerability and safety of exist-
ing therapeutic alternatives. We are committed to building significant long-term value for our shareholders by 
remaining focused and efficiently achieving relevant milestones. We are grateful for all of the support received 
in these endeavors, and look forward to the exciting months and years ahead. 

Sincerely,

Dr. Ernest Loumaye
CEO & Co-Founder

ObsEva SA l Annual Report 2018 

5

Business
Update
Update

Business Update

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics 
for serious conditions that compromise a woman’s reproductive health and pregnancy. We are advancing a pipeline of oral-
ly-administered innovative new chemical entities, or NCEs, for the treatment of symptoms associated with endometriosis and 
uterine fibroids, improvement of clinical pregnancy and live birth rates in women undergoing IVF and treatment of preterm 
labor. We have assembled a strong management team with extensive experience in successfully developing and commercial-
izing therapeutics in our target market. Our goal is to build the leading women’s reproductive health and pregnancy compa-
ny focused on conditions where current treatment options are limited and significant unmet needs exist. 

We were founded in November 2012 by former executives of PregLem SA, or PregLem, a Swiss-based specialty biophar-
maceutical company dedicated to the development and commercialization of innovative drugs for women’s reproductive 
medicine. While at PregLem, our senior management team collaborated in the clinical development and commercialization 
of several women’s reproductive health therapeutics, including Esmya (ulipristal acetate) for the treatment of uterine fibroids. 
PregLem was subsequently acquired by Gedeon Richter in 2010. We believe we will be able to leverage our senior manage-
ment team’s long-standing experience working together and with key opinion leaders, patient groups, payors, reproductive 
health networks, fertility clinics, obstetricians and gynecologists, or OB/GYNs, nurses and pharmacists to identify, in-license 
or acquire, develop and commercialize product candidates. We are merging our passion for, and extensive experience in, the 
field of women’s reproductive health and pregnancy, to develop therapeutics that can help women lead healthier and more 
fulfilling lives. 

We are focused on providing therapeutic solutions for women between the ages of 15 and 49 who suffer from reproductive 
health conditions that affect their quality of life, ability to conceive or that complicate pregnancy and the health of newborns. 
There are millions of women of reproductive age affected by conditions such as endometriosis, uterine fibroids and preterm 
labor, or that require IVF to conceive. We believe the efficacy of current treatment options is limited and creates a signifi-
cant unmet need for improved therapeutics for these women. The graphic below depicts the therapeutic focus for women’s 
reproductive health products: 

Strategic Focus 

(Women ages 15–49)

ObsEva is a clinical stage biopharma-

ceutical company dedicated exclusively 

to women’s health.

We are passionately focused on 

 addressing serious, quality-of-life 

impacting conditions and reproductive 

challenges faced by women around  

the world.

Uterine Fibroids  

Endometriosis  

Infertility ­ ART 

Preterm Labor  

Preeclampsia  

ObsEva SA l Annual Report 2018 

7

Our portfolio currently consists of three in-licensed NCEs in clinical development for four indications intended to address 
areas that we believe present significant unmet medical needs: 

l 

Linzagolix for the treatment of pain associated with endometriosis and heavy menstrual bleeding associat­
ed with uterine fibroids. We are developing linzagolix as a novel, oral GnRH receptor antagonist, for the treatment 
of pain associated with endometriosis and heavy menstrual bleeding associated with uterine fibroids in pre-menopaus-
al women. Endometriosis is an often painful disorder in which the tissue that normally lines the inside of the uterus, 
called the endometrium, grows outside of the uterus, causing monthly bleeding and chronic inflammatory reactions 
inside the abdomen that may result in ovarian cyst formation, scar tissue and adhesions. The symptoms of endome-
triosis include significant pain during menstrual periods (dysmenorrhea), chronic pelvic pain, pain during intercourse 
(dyspareunia), pain during defecation (dyschezia), excessive menstrual bleeding and infertility. These symptoms can 
impact general physical, mental and social well-being. As of 2014, we believe that approximately 2.5 million women in 
the United States were diagnosed and being treated for endometriosis and that the majority of those women expe-
rience significant pain during menstrual periods. Uterine fibroids are common non-cancerous tumors that develop in 
the muscular wall of the uterus and have disabling symptoms such as heavy menstrual bleeding. According to a study 
published in the American Journal of Obstetrics & Gynecology in 2003, uterine fibroids affect an estimated 20 to 40% 
of women over the age of 30 in the United States based on clinical cases and women who undergo treatment. 

In previous early stage Phase 1 and Phase 2 clinical trials, linzagolix was observed to have a linear PK profile, a pre-
dictable dose-dependent suppression of estradiol and a dose range that was well-tolerated and provided symptom 
relief. Aimed at addressing the need of the largest possible population in each indication, our clinical trials for both of 
these indications are designed to assess and potentially support the registration of two regimens of administrations 
for linzagolix i.e. (i) a moderate dose of linzagolix without hormonal add-back therapy and (ii) a high dose of linzagolix 
with hormonal add-back therapy. Add-back therapy consists of co-administering estrogen and progestin with a high 
dose of GnRH receptor antagonist to compensate for the severe depletion of estrogen levels and thus prevent the side 
effects of estrogen over-suppression such as hot flushes and loss of bone mineral density. 

We have completed during the course of 2018 a 24 week treatment of the multiple-dose, placebo-controlled Phase 
2b clinical trial of linzagolix in approximately 330 patients with endometriosis, or the EDELWEISS clinical trial. We 
are currently conducting a 6 month treatment extension phase of the EDELWEISS clinical trial, which, we expect to 
complete in the first half of 2019. In June 2018, we announced that the EDELWEISS clinical trial successfully met its 
primary endpoint, a statistically significant increase in patient response rate vs. placebo (defined as a reduction of 
at least 30% in combined menstrual and non-menstrual pelvic pain, recorded daily and assessed via electronic diary 
over the last 28 days of treatment on a verbal rating scale, or VRS of 0 (no pain) through 3(severe pain)) following 
12 weeks of treatment. In September 2018, we announced positive 24-week treatment results from the EDELWEISS 
clinical trial, including bone mineral density (BMD) safety assessments. The data showed sustained reduction or 
further improvement in patient response rate at 24 weeks vs. 12 weeks for key doses which are effective at reducing 
menstrual and non-menstrual pain as well as at reducing pain during intercourse (dyspareunia) and during defecation 
(dyschezia). We believe the BMD results support our plan to pursue further development of two doses of linzagolix 
for the treatment of endometriosis, including a 75 mg once daily dose without low dose hormonal add-back therapy 
(ABT), and a 200 mg once daily dose in combination with low dose ABT (1mg E2 / 0.5mg NETA). Based on the results 
of our EDELWEISS trial, we believe nearly 3 out of 4 patients may achieve significant symptom relief with linzagolix 
75 mg once daily with no need for ABT to mitigate BMD loss. We met with the FDA for an End of Phase 2 meeting in 
December 2018 to discuss the design of our planned two pivotal Phase 3 clinical trials (EDELWEISS 2 and EDELWEISS 
3). Based on the feedback and meeting minutes received from the FDA, we plan to commence this clinical trial pro-
gram in the first quarter of 2019.

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ObsEva SA l Annual Report 2018

BUSINESS UPDATE 
 
For the uterine fibroids indication, we have completed a Phase 1 PK and PD clinical trial to assess two different doses of 
add-back therapy in patients receiving 100 mg and 200 mg doses of linzagolix over six weeks. The results of this clinical 
trial, which were announced in June 2017, support the add-back therapy dose (1mg E2 /0.5mg NETA) being utilized 
in the two randomized, placebo-controlled Phase 3 clinical trials that commenced in the first half of 2017. We refer to 
these Phase 3 clinical trials of linzagolix in patients with heavy menstrual bleeding associated with uterine fibroids as 
the PRIMROSE clinical trials. The PRIMROSE clinical trials each have a target enrollment of approximately 500 patients. 
We announced that the PRIMROSE 2 trial, being conducted in both the U.S. and Europe, completed patient recruit-
ment in December 2018, and we expect to complete recruitment of the PRIMROSE 1 trial being conducted in the U.S. 
in the second quarter of 2019. We expect to report primary endpoint results following 24 weeks of treatment in the 
PRIMROSE 1 and 2 clinical trials in the first quarter of 2020 and fourth quarter of 2019, respectively, with a regulatory 
filing with the FDA based on 52 weeks treatment duration in both trials, planned prior to the end of 2020. 

We believe linzagolix, if approved in either indication, has the potential to be a best-in-class oral GnRH receptor 
antagonist based on its favorable PK and PD profiles, and its expected balance between safety and efficacy. We 
expect linzagolix to potentially reduce pain symptoms associated with endometriosis and heavy menstrual bleeding 
associated with uterine fibroids, while mitigating bone mineral density loss and other adverse effects associated with 
excessive estradiol suppression. Further, we believe that linzagolix has the potential to offer flexible dosing alterna-
tives to achieve either partial or full estrogen suppression in individual patients that can be administered either with 
or without hormonal add-back therapy. Our intent is to demonstrate that the majority of endometriosis patients may 
be able to experience significant symptomatic relief with partial suppression utilizing our partial estrogen suppression 
linzagolix dose of 75 mg with no ABT. For uterine fibroids, we believe our 100 mg linzagolix dose without ABT is the 
only oral GnRH dosing regimen being developed for this indication without the use of ABT. Finally, we believe linza-
golix has certain advantageous characteristics including the absence of food effect, high bioavailability, low volume 
of distribution, no induction of liver enzymes known as cytochrome P450 3A4, or CYP3A4, no active transport into 
the liver by organic-anion-transporting polypeptide 1B1 and 1B3 or OATP1B1/1B3, and low PK and PD variability. We 
believe these characteristics could be key product differentiators compared to other GnRH receptor antagonists in 
clinical development.

l 

Nolasiban to improve IVF outcomes. We are developing nolasiban, an oral oxytocin receptor antagonist, to 
improve clinical pregnancy and live birth rates in women undergoing IVF. Infertility is a disease of the reproductive 
system that impairs the body’s ability to perform the basic function of reproduction. IVF helps women achieve preg-
nancy through the collection of mature eggs in the ovaries, followed by fertilization and early embryo development 
in the laboratory before transfer of the embryos into the womb. In Europe, nearly 800,000 IVF cycles were performed 
in 2014, and in the United States, approximately 230,000 IVF cycles were performed in 2015. In China, more than 
700,000 ART cycles were performed in 2017, and year over year growth is double digit supported by government 
policies related to childbirth. We are currently assessing the regulatory development pathway in China, as well as 
various alternatives for future potential commercialization. We believe that nolasiban, if approved, could represent a 
compelling option for increasing rates of pregnancy and live birth in patients undergoing IVF treatment. In 2016, we 
completed our 247-patient, dose-finding, Phase 2 clinical trial (IMPLANT 1) of nolasiban in women undergoing IVF. 
Nolasiban did not reach the primary endpoint of a statistically significant, dose-proportional, increase in pregnancy 
rate at six weeks after embryo transfer. In our post-hoc analysis of the data, which excluded patients with proges-
terone levels in the top quartile of the patient pool, we identified a statistically significant dose-proportional increase 
in pregnancy rate at 10 weeks and live birth rate. We initiated a European Phase 3 clinical trial, which we refer to as 
IMPLANT 2, in women undergoing IVF in March 2017, announced patient enrollment completion in September 2017, 
and reported positive topline 10-week on going pregnancy rate results in February 2018 and positive live birth rate 
results in October 2018.

ObsEva SA l Annual Report 2018 

9

BUSINESS UPDATE 
 
The IMPLANT 2 clinical trial demonstrated that Nolasiban significantly increased ongoing pregnancy rate at 10 weeks. 
The primary endpoint of the clinical trial was met, with an absolute increase in ongoing pregnancy rate at 10 weeks 
of 7.1% (placebo 28.5% and nolasiban 35.6%, p = 0.031). This represents a relative increase of 25% in the ongo-
ing pregnancy rate after administration of nolasiban compared to placebo. Patients who underwent ET 5 days post 
oocyte retrieval achieved ongoing pregnancy 10 weeks post ET at a rate of 45.9% when administered nolasiban, vs. 
34.7% of those who received placebo, a 32% relative increase with a p value of 0.034. The live birth rate results were 
consistent with the benefit seen in pregnancy rates for patients treated with nolasiban. Live birth rate, reflecting the 
ultimate goal of IVF procedures, taking home a baby, showed a statistically and clinically significant benefit in favor of 
patients receiving nolasiban, 34.8% vs. 27.7% for placebo, p=0.025. For patients undergoing Day 5 ET, the live birth 
rate benefit was even more pronounced for nolasiban, 44.8% vs. 33.2%, p=0.025. Nolasiban was observed to be 
well tolerated with a safety profile not different from placebo. 28-day neonatal safety data from the IMPLANT 2 trial 
did not reveal any adverse consequences from nolasiban treatment, and 6-month infant follow-up data is expected in 
mid-2019. 

Based on feedback received in the third quarter of 2018 from regulatory authorities in Europe on our nolasiban devel-
opment program, we initiated in late November 2018 an additional Phase 3 trial primarily in European, Canadian and 
CIS or Russian centers, or the IMPLANT 4 trial. Patients are being randomized and the IMPLANT 4 primary endpoint 
readout (10-week ongoing pregnancy results) is expected to support the filing of a Marketing Authorization Applica-
tion (MAA) in Europe is being planned for late 2019. Feedback received from the FDA did not provide the clarity that 
we were hoping to see on the design of pivotal clinical trials to support an IVF indication in the United States. We are 
working with the FDA to reach agreement on certain elements. Upon agreement with the FDA, which we hope will 
be achieved in 2019, we are ready to pursue our clinical trial program in the United States that may begin in the sec-
ond half of 2019. In the meantime, we do not anticipate incurring any significant cost for the U.S. clinical program. 

l 

OBE022 for the treatment of preterm labor (GA 24–34 weeks). We are developing OBE022, an oral and selective 
prostaglandin F2α, or PGF2α, receptor antagonist, as a once daily treatment for preterm labor from 24 to 34 weeks 
gestational age, or GA. PGF2α is a naturally occurring prostaglandin, or active lipid compound, that acts to induce 
labor. Preterm labor, defined as the body commencing the birthing process prior to 37 weeks, is characterized by 
uterine contractions, cervical dilation and rupture of the fetal membranes that surround and protect the fetus during 
pregnancy. Preterm labor can lead to preterm birth, which is currently the leading worldwide cause of death of 
newborn babies. According to the National Center for Health Statistics, approximately 9.6% of babies in the Unit-
ed States were born preterm in 2014. Over 1 million children under the age of five died in 2013 worldwide due to 
preterm birth complications, and many infants who survive preterm birth are at greater risk for cerebral palsy, delays 
in development, hearing and vision issues, and often face a lifetime of disability. The rates of preterm births are rising 
in almost all countries with reliable data for preterm birth, and are associated with an immense financial impact to the 
global healthcare system.

To date, only treatments with limited efficacy or restrictive safety issues are available to treat preterm labor. In the 
United States, no drugs are approved for acute treatment of preterm labor and recommended off-label tocolytic treat-
ments (medications that inhibit labor) include beta-adrenergic receptor agonists, calcium channel blockers, or NSAIDs, 
which are used for short-term prolongation of pregnancy (up to 48 hours) to allow for the administration of antenatal 
steroids (e.g. betamethasone). Magnesium sulfate, used for fetal neuroprotection can also be used (up to 48 hours) 
to inhibit acute preterm labor. Approved tocolytic treatments in Europe include beta-adrenergic agonists, which carry 
severe maternal cardiovascular risks, and intravenous infusions of atosiban (an oxytocin receptor antagonist).

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ObsEva SA l Annual Report 2018

BUSINESS UPDATE 
 
 
While prostaglandin synthesis inhibitors, such as NSAIDs, have been shown to be effective for inhibiting preterm la-
bor, use of such drugs is limited, due to the threat of serious and sometimes life-threatening side effects in the fetus. 
In nonclinical studies, ObsEva has observed that OBE022 markedly reduces spontaneous and induced uterine contrac-
tions in pregnant rats without causing the fetal side effects seen with NSAIDS such as indomethacin.

Through specific antagonism of the PGF2α receptor, OBE022 is designed to control preterm labor by reducing inflam-
mation, decreasing uterine contractions and preventing cervical changes and fetal membrane ruptures. Based on its 
PK profile and efficacy observed in animal models, we believe OBE022 has the potential to become a first-in-class 
therapy to suppress preterm labor and delay or avoid preterm birth, without significant safety concerns for the fetus. 
In February 2017, we completed a Phase 1 clinical trial assessing the safety, tolerability and PK profile of OBE022 in 
healthy post-menopausal female volunteers after single doses of 10 mg to 1,300 mg and multiple doses between 100 
mg per day and 1,000 mg per day over 7 consecutive days. In this trial, OBE022 was observed to have a favorable PK 
profile, no clinically significant food effect, a favorable safety profile and to be well-tolerated at doses up to 1,300 mg 
after single dose administration and up to 1,000 mg per day after multiple dose administration over 7 days, each of 
which are above the estimated clinical effective dose. In March 2017, we completed a set of drug-drug interaction, 
or DDI, Phase 1 clinical pharmacology studies investigating the safety, tolerability and PK profile of OBE022 when 
combined with magnesium sulfate, atosiban, nifedipine or betamethasone (medications typically used in patients 
with preterm labor) in pre-menopausal female volunteers. OBE022 in combination with those drugs was observed to 
have a favorable safety profile and to be well-tolerated up to 1,100 mg per day, which was the highest tested dose. 
In December, 2017, we announced the initiation of our Phase 2a proof-of-concept trial of OBE022, referred to as the 
PROLONG clinical trial. PROLONG is a proof-of-concept Phase 2a trial conducted in two parts: Part A and Part B. In 
this trial, OBE022 is orally administered daily for 7 days, to pregnant women, who are already receiving standard of 
care therapy for preterm labor, atosiban infusion for 48 hours. This clinical trial will enroll up to 120 pregnant women 
presenting with spontaneous preterm labor at gestational ages between 24 and 34 weeks. 

In December 2018, we announced the completion of the open label Part A of the PROLONG trial in nine patients 
assessing OBE022 safety and pharmacokinetic (PK) profile. OBE022 was observed to be well tolerated by the moth-
ers and their fetuses and we were able to demonstrate that the pharmacokinetics of OBE022 were similar to those 
previously observed in non-pregnant women. Also, 8 of the 9 treated women did not deliver during the 7 days of 
treatment. Based on these data, we began the randomized Part B of the trial assessing efficacy in delaying childbirth 
in women at 24 to 34 weeks gestation who are experiencing symptoms of preterm labor and potentially preterm 
delivery. Depending on the pace of patient enrollment in Part B of the trial, we expect to report interim efficacy results 
in 30 patients in the first half of 2019. 

ObsEva SA l Annual Report 2018 

11

BUSINESS UPDATE 
 
The following table summarizes key information regarding our current product candidates: 

PRODUCT 
CANDIDATE 

PRE­
CLINICAL

PHASE 1

PHASE 2

PHASE 3

NEXT MILESTONES

COMMERCIAL
RIGHTS

NOLASIBAN 
Oral oxytocin  
receptor antagonist

IVF – Ph3 IMPLANT 2 EU *

IVF – Ph3 IMPLANT 4 EU **

IVF – Ph3 IMPLANT 3 US

Primary endpoint data IMPLANT 
4 Q4 2019

EU MAA filing planned late 2019

FDA feedback expected in 2019 
for potential US IMPLANT 3 
Initiation 2H 2019

Exclusive
Worldwide

Endometriosis – Ph2b EDELWEISS ***

52W extension data 1H 2019

LINZAGOLIX 
(OBE2109) 
Oral GnRH  
receptor antagonist

Endometriosis – Ph3 EDELWEISS 2 US

Endometriosis – Ph3 EDELWEISS 3 EU & US

Uterine Fibroids – Ph3 PRIMROSE 1 US

EoP2 meeting completed

Commencing Phase 3Q1 2019

Phase 3 PRIMROSE 1 & 2 
Enrolling

24W Primary Endpoint Data Q4 
2019-Q1 2020

Exclusive
Worldwide
(ex-Asia)

Uterine Fibroids – Ph3 PRIMROSE 2 EU & US

NDA targeted end of 2020

OBE022 
Oral PGF2α 
receptor antagonist

Preterm Labor – Ph2a PROLONG

EU Phase 2a PROLONG 
Interim Efficacy 1H 2019

Exclusive
Worldwide

    * Week 10 ongoing pregnancy primary endpoint met – Live Birth Rate secondary endpoint met
  ** Second Phase 3 study (EU/Canada/Russia) initiated
*** Primary and secondary endpoints met

We are also evaluating additional indications for our current product candidates as well as opportunities to in-license or 
acquire additional product candidates in our therapeutic field. 

Our executive team has substantial experience in developing and commercializing pharmaceutical products in this field. For 
example, Ernest Loumaye, M.D., Ph.D., OB/GYN, our Chief Executive Officer and co-founder, is a board certified and aca-
demically trained OB/GYN with extensive experience developing therapeutics for women’s health and over 90 publications in 
peer-reviewed journals. Most recently he was the Chief Executive Officer and Co-Founder of PregLem. Prior to PregLem, Dr. 
Loumaye spent nine years as Head of Clinical Development for Reproductive Health at Serono, now Merck Serono, where he 
led the worldwide clinical development and contributed to the worldwide registration of Gonal-F, Luveris and Ovidrel.

12 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEIn addition, Jean-Pierre Gotteland, Ph.D., our Chief Scientific Officer and Head of R&D, and Elke Bestel M.D., our Chief Medi-
cal Officer and Head of PV held the same roles at PregLem where they worked with Dr. Loumaye for six years and successful-
ly in-licensed, developed and registered a first-in-class product, Esmya (ulipristal acetate), for the treatment of uterine fibroids. 

In July 2018 we announced the hiring of a Chief Commercial Officer, Wim Souverijns, who is based at our headquarters in 
Geneva, Switzerland and who will lead our transition from a development company to a commercial company. Mr. Sou-
verijns brings nearly 20 years of experience in the pharmaceutical industry and recently served as Corporate Vice President, 
Global Marketing, Hematology & Oncology within Celgene out of Summit, New Jersey. Previously, Mr. Souverijns developed 
his pharmaceutical experience through various international assignments at PwC Consulting and in different market access 
leadership roles at Amgen, both in Europe and the U.S.

Collectively, our management team has led the clinical development or contributed to the worldwide registration of three 
market-leading fertility products at Serono, Gonal-F, Luveris and Ovidrel, as well as other products including Esmya, Puregon 
Pen, Implanon, NuvaRing and Evamist. In addition, members of our management team bring pharmaceutical development, 
regulatory approval, manufacturing, reimbursement and commercialization experience from other pharmaceutical and 
biotechnology companies, including Merck Serono, PregLem, Organon, Allergan, Pierre Fabre, Novartis Pharma AG, Roche, 
SmithKline Beecham, Shire, Galderma, Speedel, Evolva SA and Acrux. 

We have demonstrated an ability to successfully execute on the first part of our strategy by leveraging our extensive network 
in the field of women’s reproductive health and pregnancy to in-license linzagolix from Kissei and nolasiban and OBE022 
from Merck Serono. Additionally, we have raised USD 330.5 million in equity financing from inception to December 31, 2018 
from leading healthcare investors. 

Our Strengths 
We believe our clinical and product development experience in the field of women’s reproductive health and pregnancy 
provides us with the following strengths: 

l 

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Strategic focus on diseases in women’s reproductive health and pregnancy that affect growing female populations 
with high unmet medical needs and significant commercial potential; 
Three product candidates with clear mechanisms of action and early evidence of efficacy that have the potential to 
progress into and through late-stage clinical trials and potentially commercial stage;
Management with substantial experience working together and developing and commercializing pharmaceutical 
products in the field of women’s reproductive health and pregnancy; 
Strong industry and key opinion leader relationships in the field of women’s reproductive health and pregnancy that 
provide access to potential product in-licensing opportunities and product development experience; and 
Support from leading healthcare-focused investors and board members with experience in building and operating life 
science companies. 

ObsEva SA l Annual Report 2018 

13

BUSINESS UPDATEOur Strategy 
Our goal is to build the leading women’s reproductive health and pregnancy company focused on conditions where current 
treatment options are limited and significant unmet needs exist. The key elements of our strategy include the following: 

l 
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Continue to advance each of our current product candidates in their respective indications.
Develop a targeted commercialization strategy for any approved product candidates. We have obtained 
worldwide commercial rights to our lead product candidates, except for certain countries in Asia with respect to 
linzagolix. As we move our product candidates through development toward regulatory approval we will evaluate sev-
eral options for each product candidate’s commercialization strategy. These options include building our own internal 
sales force, entering into a joint marketing partnership with another pharmaceutical or biotechnology company, or 
out-licensing the product to another pharmaceutical or biotechnology company. More specifically, we have assessed 
the IVF markets in Europe and the U.S. to be highly concentrated, likely requiring a relatively small commercial infra-
structure, and we believe that nolasiban will be our first product to reach the commercial stage in Europe in 2021 
assuming positive results in our ongoing IMPLANT 4 trial.
Pursue additional indications for our current product candidates. We believe each of our current product candi-
dates have application outside the indications we are currently developing and we plan to pursue additional indications 
for our existing product candidates in the near future. For example, we are seeking initial regulatory approvals for 
nolasiban in the setting of fresh embryo transfers during IVF procedures, and plan longer term to conduct clinical trials 
with frozen embryo transfers given the growing use of this type of procedure both in the U.S. and internationally.
Leverage our international product development experience and extensive network of clinical experts and 
pharmaceutical industry executives within women’s reproductive health and pregnancy to in­license or 
acquire novel product candidates. We are focused on identifying, and in-licensing or acquiring, additional clini-
cal-stage product candidates that we believe have the potential to become best-in-class or first-in-class products for 
the treatment of serious conditions in women’s reproductive health and pregnancy, if approved. We intend to focus 
on product candidates that we believe will be efficient from a capital-management standpoint, and we are exploring 
additional needs in our therapeutic field, such as premenstrual syndrome, fibrocystic breast disease, post-menopausal 
hot flashes, preeclampsia, dysmenorrhea and menopause-related auto-immune diseases. 

Linzagolix: Investigational GnRH Receptor Antagonist for Symptoms Associated with Endometriosis and Uterine 
Fibroids 
We are developing linzagolix as an oral GnRH receptor antagonist, which we have observed in our clinical trials to induce a 
dose-dependent reduction of estradiol levels. Through that mechanism, we expect linzagolix to be indicated for the treatment 
of pain associated with endometriosis and heavy menstrual bleeding associated with uterine fibroids. We believe linzagolix, 
if approved, has the potential to be a best-in-class oral GnRH receptor antagonist based on its favorable PK and PD profiles, 
and its potential to provide targeted estradiol suppression to reduce pain symptoms associated with endometriosis and heavy 
menstrual bleeding associated with uterine fibroids, while mitigating bone mineral density loss and other adverse effects that 
are typically associated with excessive estradiol suppression. We believe that linzagolix has the potential to offer flexible dosing 
alternatives to address the symptoms of the broad patient population, supported by key differentiating product characteristics, 
including absence of food effect, high bioavailability, low volume of distribution, no CYP3A4 induction or OATP1B1/B3 interac-
tion, and low PK and PD variability. We believe these characteristics are key product differentiators compared to other GnRH 
receptor antagonists in development.

In 2015, we in-licensed linzagolix from Kissei. Kissei completed three Phase 2a clinical trials in Japan of linzagolix in patients 
with endometriosis, including one double blind placebo-controlled trial with a subgroup of patients diagnosed with both 
endometriosis and uterine fibroids. 

14 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEAimed at addressing the need of the largest possible population in each indication, our clinical trials for both of these indica-
tions are designed to assess and potentially support the registration of two regimens of administrations for linzagolix i.e. (i) 
a moderate dose of linzagolix without hormonal add-back therapy and (ii) a high dose of linzagolix with hormonal add-back 
therapy. We have completed the main part following 24 weeks of treatment, of the 330-patient multiple-dose, placebo-con-
trolled Phase 2b EDELWEISS clinical trial of linzagolix in endometriosis patients across 70 sites in the United States and 15 
sites in Central and Eastern Europe. We are currently conducting a 6-month treatment extension phase of the EDELWEISS 
clinical trial which we expect to complete by first half of 2019. In June 2018, we announced that the EDELWEISS clinical 
trial successfully met its primary endpoint, a statistically significant increase in patient response rate vs. placebo following 12 
weeks of treatment. Patient response was measured by a reduction of at least 30% in combined menstrual and non-men-
strual pelvic pain on a verbal rating scale (VRS) of 0 (no pain) through 3 (severe pain). Observed response rates were 34.5% 
for placebo, 61.5% for 75mg linzagolix, and 56.3% for 200mg linzagolix. Respective p values were 0.003 and 0.034.

In September 2018, we announced positive 24-week treatment results from the EDELWEISS clinical trial, including bone min-
eral density (BMD) safety assessments. The data showed sustained reduction or further improvement in patient response rate 
at 24 weeks vs. 12 weeks for key doses, with patient response in 70.8% of women at the 75mg once daily dose, and patient 
response in 77.3% of women at the 200mg once daily dose. The key safety endpoint of mean change in BMD at the lumbar 
spine, which is the site of greatest bone loss, was -0.8% at the 75mg once daily dose and -2.6% at the 200mg once daily 
dose. We believe the BMD results support our plan to pursue further development of two doses of linzagolix for the treat-
ment of endometriosis, including a 75 mg once daily dose without low dose ABT, and a 200mg once daily dose in combina-
tion with low dose ABT. We met with the FDA for an End of Phase 2 meeting in December 2018 to discuss the design of our 
planned two pivotal Phase 3 clinical trials (EDELWEISS 2 and EDELWEISS 3). Based on the feedback received from the FDA, 
we plan to begin these trials in the first quarter of 2019.

In addition, we are conducting two Phase 3 clinical trials of linzagolix in patients with heavy menstrual bleeding associated 
with uterine fibroids, the PRIMROSE clinical trials. The PRIMROSE clinical trials each have a target enrollment of approximately 
500 patients and are being conducted in the United States and in Europe. We announced that the PRIMROSE 2 trial, being 
conducted in both the U.S. and Europe, completed patient recruitment in December 2018. The PRIMROSE 1 and 2 clinical 
trials are expected to readout 6 month primary endpoint results in the first quarter of 2020 and fourth quarter of 2019, 
respectively, with a regulatory filing with the FDA based on 52 weeks treatment duration in both trials, planned prior to the 
end of 2020.

Background of Endometriosis and Uterine Fibroids 
Endometriosis is a painful disorder in which the endometrium grows outside of the uterus, typically on the lining of the 
pelvis, on the ovaries, in the rectovaginal septum, on the bladder, and on the bowels. Endometriosis causes monthly bleeding 
and chronic inflammatory reactions in the abdomen that may result in ovarian cyst formation, scar tissue and adhesions. The 
symptoms of endometriosis include significant pain during menstrual periods, chronic pelvic pain, pain during intercourse, 
excessive menstrual bleeding and infertility which in turn can impact general physical, mental and social well-being. Often 
the pain associated with endometriosis is cyclical in nature and reflects the response to reproductive hormones circulating 
throughout the body, particularly estrogen. Endometriosis is also one of the leading causes of infertility. In many instances, 
endometriosis is only diagnosed when women seek treatment for such infertility. 

According to the World Endometriosis Research Foundation, as of 2014, endometriosis affects an estimated one in ten wom-
en during their reproductive years, totaling approximately 176 million women globally between the ages of 15 and 49. As of 
2014, we believe that approximately 2.5 million women in the United States were diagnosed and treated for endometriosis, 
and the majority of those women experience significant pain during menstrual periods. 

ObsEva SA l Annual Report 2018 

15

BUSINESS UPDATEUterine fibroids are common non-cancerous tumors that develop in the muscular wall of the uterus. Uterine fibroids can vary 
in size from a few millimeters to more than 20 centimeters, and in number from a single fibroid to several dozen fibroids. The 
main symptoms of uterine fibroids are heavy menstrual bleeding, anemia, abdominal pressure, abdominal pain, bloating, in-
creased urinary frequency and reproductive dysfunction. Heavy menstrual blood loss is the most frequent disabling symptom 
of uterine fibroids which often lead to anemia. Uterine fibroids also carry an increased risk of pregnancy complications such 
as infertility, miscarriage, placental abruption and premature onset of labor. 

According to a study published in the American Journal of Obstetrics & Gynecology in 2003, uterine fibroids affect an 
estimated 20 to 40% of women over the age of 30 in the United States based on clinical cases and women who undergo 
treatment. We believe that more than four million women in the United States are diagnosed and being treated for uterine 
fibroids. 

The Role of GnRH 
The exact causes of endometriosis and uterine fibroids are not currently understood. However, several factors can contribute 
to their development and progression, including the rise and fall of hormones, particularly estrogen, mainly in the form of 
estradiol. The production of estrogen in the body is regulated by GnRH. GnRH is responsible for stimulating the synthesis and 
release of luteinizing hormone, or LH, and follicle stimulating hormone, or FSH, by the pituitary gland. LH and FSH in turn 
drive estrogen production through stimulation of the ovaries. Estradiol is the hormone that, among other effects, causes the 
endometrium inside the uterus to thicken during the menstrual cycle. Similarly, estradiol has been determined to promote the 
growth of endometriosis lesions and uterine fibroids. Various pharmacological treatments directed at addressing endometri-
osis and uterine fibroids attempt to regulate the production of estrogen, particularly estradiol, by controlling the activity of 
GnRH. 

Limitations of Current Therapies for Endometriosis and Uterine Fibroids 
Current treatment options for endometriosis and uterine fibroids are either pharmacological or surgical. 

Endometriosis 
For endometriosis, the treatment selected is based on the severity of pain and the extent of the disease. Endometriosis 
treatments aim first to alleviate pain, then to remove or decrease the size and number of endometrial lesions, and possibly 
improve fertility. Oral contraceptives, progestins and NSAIDs are generally first-line treatments for women experiencing pain. 
Following the failure of first-line therapies, current treatment options are limited to intra-muscular or subcutaneous GnRH 
agonist injections and GnRH agonists nasal spray pumps. In July 2018, AbbVie Inc announced that their GnRH antagonist 
elagolix (Orilissa) received regulatory approval in the U.S. for the treatment of moderate-to-severe pain associated with endo-
metriosis. Surgery may be performed for the most symptomatic cases. 

Surgery can provide short-term relief by excising the endometrial lesions, but often does not prevent the endometrial lesions 
from recurring. Surgery requires general anesthesia, and has a risk of scar tissue and adhesion formation in the pelvis, which 
could lead to infertility, make pain worse, require additional surgeries or damage other pelvic structures. Surgical treatments 
for endometriosis range from laparoscopy to more complex open abdominal surgery. If a woman has not responded to other 
medical or surgical treatments, a radical hysterectomy, which is the removal of all or part of the uterus and the ovaries may 
be required, resulting in definitive infertility and immediate menopause. 

The World Endometriosis Research Foundation through its EndoCost study estimated the aggregate annual cost of endome-
triosis to be approximately USD 80 billion in the United States and approximately USD 60 billion in Germany, the UK, France 
and Italy in 2012 based on current exchange rates. 

16 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEUterine Fibroids 
For heavy menstrual bleeding associated with uterine fibroids, current treatment options are limited and generally consist of 
oral contraceptives, GnRH agonist injections or surgery. Oral contraceptives are generally used as the first-line therapy. Upon 
failure of a first-line therapy or contraindication to oral contraceptives, surgical intervention is generally the next treatment 
option. Hysterectomy is the most commonly performed surgical treatment option. Other less invasive procedures include (1) 
myomectomy, which is a selective removal of the fibroid typically performed by laparoscopy, which usually preserves fertili-
ty, (2) uterine artery embolization, which is a procedure to obstruct the arteries nurturing the fibroid, performed by arterial 
catheterization, and (3) if the dominant symptom is bleeding, endometrial ablation, which is a procedure to remove the inner 
layer of the uterus performed by thermic or ultrasonic process. According to a study published in the American Journal of 
Obstetrics & Gynecology in 2012, approximately 200,000 hysterectomies and 30,000 myomectomies are performed annually 
for the treatment of uterine fibroids in the United States as of 2003. Hysterectomies are major surgeries and, according to 
the National Uterine Fibroids Foundation, approximately 660 women die each year in the United States from complications 
from a hysterectomy. Hysterectomies can be both physically and psychologically damaging, not only resulting in a woman 
becoming infertile, but they also can be perceived by some women as impairing their feminine integrity. Surgery also carries 
a risk of scar tissue and adhesions, which could lead to infertility, make pain worse, require additional surgeries or damage 
other pelvic structures. 

Treating uterine fibroids is expensive, as surgery constitutes a significant cost burden. Patients who do not undergo surgery 
often require medical management, hospitalization and additional outpatient physician visits, which further increase the 
annual costs of the disease. According to a systematic review of literature published in the American Journal of Obstetrics 
&Gynecology in 2012, direct and indirect costs associated with uterine fibroids were estimated in 2010 to be up to USD 34.4 
billion annually in the United States. 

Mechanism of Action and Limitations of GnRH Agonists 
GnRH agonists are a standard pharmaceutical therapy for estrogen dependent conditions such as endometriosis and uterine 
fibroids as they have been demonstrated to induce a dose-dependent reduction of estradiol levels. However, GnRH agonists 
have significant drawbacks and limitations. 

GnRH agonists act by overstimulating the GnRH receptors which initially may worsen the symptoms for several weeks (the 
flair effect). Subsequently it desensitizes the pituitary cells, resulting in reduced secretion of LH and FSH, and severely reduced 
production of estrogen, a contributing factor to endometriosis and uterine fibroids. This leads to a state referred to as pseu-
do-menopause, in which patients experience menopausal symptoms before ultimately experiencing symptom relief. While 
GnRH agonists may be effective at treating the symptoms of endometriosis and uterine fibroids, they can be accompanied 
with serious drawbacks and limitations including: 

l 

l 

l 

Excessive suppression of estradiol and related unfavorable side effect profile. Because GnRH agonists cannot 
be titrated, they act by excessively suppressing estradiol to a post-menopausal level of less than 20 picogram/milliliter, 
or pg/ml. Excessive suppression of estrogen can result in multiple side effects before the patient experiences any relief, 
including hot flashes, vaginal dryness, and bone mineral density loss. Clinical trials of an approved GnRH agonist 
demonstrated that patients lose an average of up to 6% of their bone mineral density after 12 months of GnRH ago-
nist treatment. 
Delayed therapeutic effect and initial worsening of symptoms. Since GnRH agonists act by overstimulating the 
GnRH receptors, they can cause an initial worsening of symptoms that can last for several weeks. 
Administration by injection. Many GnRH agonists such as Lupron (leuprolide acetate) must be injected on a month-
ly basis or a tri-monthly basis, which generally requires the assistance of a doctor or nurse. 

ObsEva SA l Annual Report 2018 

17

BUSINESS UPDATEl 

l 

Required add­back therapy. To counteract the side effects of the excessive suppression of estrogen, additional ad-
ministration of estrogen, referred to as “add-back therapy,” may be recommended after three months of treatment 
and is required after six months of treatment. Add-back therapy which is standard hormone replacement therapy or 
HRT, used in post-menopausal women, may result in additional contraindications and adverse effects. 
Variable and unpredictable reversibility of treatment. After stopping treatment with injectable GnRH agonists, a 
patient’s ovarian function can take weeks or months to return to normal. This is particularly relevant and problematic 
if a patient wishes to conceive after treatment or if treatment is interrupted for lack of tolerability. 

Linzagolix’s Mechanism of Action and Solution to GnRH Agonist Drawbacks and Limitations 
Linzagolix has been designed to be a GnRH receptor antagonist with oral administration and low PK and PD variability. Linza-
golix binds to and blocks the GnRH receptor in the pituitary gland, which clinical trials suggest, results in a dose-dependent 
reduction of LH and FSH production. This reduction in LH and FSH production in turn leads to a dose dependent reduction of 
estrogen levels. 
At selected doses, linzagolix has been observed to maintain estradiol levels in the target range of 20 to 60 pg/ml, which we 
believe is the optimal range to relieve symptoms associated with endometriosis and uterine fibroids while mitigating bone 
mineral density loss or other adverse effects that can be associated with excessive estradiol suppression. Higher dose of linza-
golix drives estradiol below 20 pg/mL.

We believe linzagolix has the potential to overcome certain drawbacks and limitations of GnRH agonists. The potential advan-
tages of linzagolix compared to GnRH agonists include: 

l 

l 

l 

l 

Fast onset of therapeutic effect. By blocking, as opposed to stimulating, the GnRH receptor, linzagolix has the po-
tential to suppress LH and FSH within hours, lowering estradiol levels and reducing pain within days while potentially 
avoiding the initial worsening of symptoms which is often associated with GnRH agonist treatments. 
Ease of administration. linzagolix has the potential to be administered orally once daily, and regardless of food 
intake timing. This potential dosing regime is a more convenient treatment option than GnRH agonist intramuscular 
or subcutaneous injections. 
Optionality for endometriosis and uterine fibroids treatment: stand alone or in combination with add­back 
therapy. In contrast to GnRH agonists, for which hormonal add-back therapy is required when treatment exceeds six 
months, and may be considered earlier, we believe that the 75mg once daily dose tested in our EDELWEISS Phase 2b 
trial, has the potential to be utilized as a stand-alone treatment for a majority of patients with pain associated with 
endometriosis by maintaining estradiol levels between 20 and 60 pg/ml. The once daily 200 mg dose of linzagolix 
will require the addition of ABT to protect bone mineral density if used for long-term to counteract the side effects 
associated with full suppression of estradiol i.e. below 20 pg/ml. The doses of 75 mg without ABT and 200 mg with 
ABT will be tested in the confirmatory Phase 3 trials.
For the treatment of heavy menstrual bleeding associated with uterine fibroids, we believe that the once daily 100 mg 
dose tested in our PRIMROSE 1 and PRIMROSE 2 Phase 3 trials also has the potential to be utilized as a stand-alone 
treatment for a majority of patients. Other patients may require add-back therapy, depending on the treatment dos-
age required to control symptoms.
Quick reversibility of effect. As a result of linzagolix’s observed half-life of approximately 15 hours, we believe 
linzagolix has the potential for ovarian function to resume within days following the end of treatment. In contrast, 
a patient’s ovarian function can take weeks or months to return to normal after stopping treatment with injectable 
GnRH agonists. 

18 

ObsEva SA l Annual Report 2018

BUSINESS UPDATE 
Linzagolix’s Potential Clinical Profile 
In July 2018, AbbVie Inc. announced that their GnRH antagonist elagolix (Orilissa®) received regulatory approval in the U.S. 
for the treatment of pain associated with endometriosis (150mg QD up to 2-year and 400mg (200mg BID) up to 6 months). 
In addition, AbbVie Inc is conducting Phase 3 trials with elagolix 600mg daily dose (300mg BID) in combination with ABT 
only for the indication of heavy menstrual bleeding associated with uterine fibroids and publicly stated intentions to submit 
a regulatory application for this indication in 2019. In addition, Myovant Sciences, Inc. is conducting Phase 3 trials with the 
GnRH receptor antagonist relugolix 40mg daily dose in combination with ABT only for the treatment of symptoms associated 
with endometriosis or uterine fibroids. 

We believe that linzagolix has a favorable overall clinical profile as assessed by: 

l 

l 

l 

l 

Optimal characteristics for consistent PK. linzagolix has been observed to have a consistent PK profile and low 
variability, due to high bioavailability and low volume of distribution. In addition, linzagolix’s half-life allows for once 
daily dosing for across indications. We believe these characteristics are important for optimizing patient compliance 
and drug exposure.
Two dosing options. Based on linzagolix’s consistent PK and PD profile observed in preclinical studies and clinical 
trials, we are currently pursuing the development of dosages both without and with hormonal ABT, which is related 
to partial or full suppression of estrogen. We believe that various levels of estrogen suppression may be required to 
successfully treat symptoms in different patients in different indications to account for patient characteristics, individ-
ual response or patient preference, but that the option of partial suppression, with no need for ABT has the potential 
to be a first line therapy for many patients.
No systematic need for hormonal add­back therapy. For symptoms associated with both endometriosis and 
uterine fibroids, we are developing linzagolix as a stand-alone treatment (without need for ABT) and in association 
with ABT to fulfill the needs of a broad patient population with endometriosis or uterine fibroids. Relatedly, we do not 
believe that all patients will have the desire or need for hormonal ABT, some of whom may have a contraindication 
or tolerability issue (as per boxed warning on ABT), or simply prefer the management of endogenous estrogen levels 
in the clinical setting where bone mineral density loss is not reduced to the degree that would require such add-back 
therapy. 
Compliance benefit. Linzagolix may have an advantage in patient compliance due to the lack of observed interac-
tions with food, CYP3A4 or OATP1B1/B3 enzyme pathways, and the ability to be taken once anytime throughout the 
day, without the risk of reduced and/or variable exposure to active drug.

Linzagolix Preclinical and Clinical Development for Pain Associated with Endometriosis 
Prior to in-licensing linzagolix, Kissei completed a preclinical program, a Phase 1 clinical trial in healthy female volunteers 
of Japanese and European descent and three Phase 2a clinical trials in patients of Japanese descent with endometriosis, 
including one trial that included a subgroup of patients with both endometriosis and uterine fibroids. In these trials, linzag-
olix was observed to have a linear PK profile, a predictable dose-dependent suppression of estradiol and a dose range that 
was well-tolerated and provided symptom relief. Following our in-license of linzagolix from Kissei, we submitted an IND for 
linzagolix in May 2016, which was accepted by the FDA. We are currently completing the multiple-dose, placebo-controlled 
Phase 2b EDELWEISS clinical trial of linzagolix in approximately 330 endometriosis patients in the United States and Europe, 
from which we reported positive primary endpoint results following 12 weeks of treatment as well as 24 week efficacy and 
safety follow-up in 2018. We met with the FDA for an End of Phase 2 meeting in December 2018 to discuss the design of 
our planned two pivotal Phase 3 clinical trials (EDELWEISS 2 and EDELWEISS 3). We have received the meeting minutes, and 
are moving forward, commencing the Phase 3 program in the first quarter of 2019.

ObsEva SA l Annual Report 2018 

19

BUSINESS UPDATEBUSINESS UPDATE

Preclinical Studies and Phase 1 Clinical Trial 
In preclinical studies, linzagolix was observed to be a highly potent and selective antagonist of the GnRH receptor. The 
preclinical toxicology and safety pharmacology studies did not raise tolerance or safety concerns or potential for DDIs. In the 
Phase 1 clinical trial, linzagolix was observed to have a favorable safety profi le and to be well-tolerated up to 400 mg once 
daily for seven days. Additionally, linzagolix had a linear PK profi le, a half-life of approximately 15 hours and no signifi cant 
differences between women of Japanese and European descent. Moreover, linzagolix was observed to have a low volume 
of distribution, meaning the drug remained in the blood and did not accumulate in fatty tissue, and a dose-proportional 
response shown in the Figure 1 below. Furthermore, in the Phase 1 clinical trial, there was no food effect observed. linzagolix 
was observed to induce a dose-dependent decrease in LH and FSH over time, which we believe correlates with the ability of 
linzagolix to control estradiol levels in a dose-dependent manner. Based on the low PK variability and lack of dose overlap 
observed in the Phase 1 clinical trial, we believe we will be able to more tightly control biological response with personalized 
doses of linzagolix. In addition, in 2016 we completed a Phase 1 trial to assess the impact of linzagolix on the potential induc-
tion of CYP3A4, which is responsible for most of the metabolism of add-back therapy. In this trial, we observed no relevant 
CYP3A4 induction, which we believe indicates that linzagolix will not interfere with add-back therapy. 

Figure 1: Mean linzagolix Concentration Over Time 

Figure 2: LH Reduction from Baseline Over Time

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In 2017, we conducted a Phase 1 PK and PD clinical trial to assess two different doses of add-back therapy in patients re-
ceiving 100 mg and 200 mg doses of linzagolix over six weeks. The results of this clinical trial, which we announced in June 
2017, supported our add-back therapy dose (1mg E2 / 0.5mg NETA) and linzagolix doses being utilized in the PRIMROSE clin-
ical trials, which we are planning to utilize solely with the 200 mg dose in our Phase 3 endometriosis clinical trials that we are 
planning to start in the fi rst quarter of 2019. In addition, in 2016, we completed a Phase 1 trial to assess the impact of linza-
golix on CYP3A4 induction, which is responsible for most metabolism of add-back back therapy. In this trial, we observed no 
relevant CYP3A4 induction, which we believe suggests that linzagolix will not interfere with add-back therapy.

In 2018, we completed a drug-drug interaction study for the organic anion-transporting polypeptide (OATP) 1B1 and OAT-
P1B3, which demonstrated that clinically relevant drug interactions between linzagolix and OATP1B1 / OATP1B3 inhibitors 
are not to be expected.

20 

ObsEva SA l Annual Report 2018

 
 
 
 
 
 
 
 
 
 
BUSINESS UPDATE

Completed Phase 2a Clinical Trials 
Kissei completed three Phase 2a clinical trials of linzagolix in patients of Japanese descent with endometriosis in 2013 and 
2014. Endometriosis was either diagnosed by laparoscopy or by confi rmation using ultrasound of ovarian chocolate cysts, 
which are a particular type of ovarian cyst associated with endometriosis. Outcomes included changes in pelvic menstrual, 
non-menstrual and overall pain scores, analgesic use and hormone levels. The designs of these trials are summarized in the 
table below. 

Trial

KLH1201

KLH1202

KLH1203

Trial Design

Open-label parallel-group

Daily Dose

50 mg (n=12) or 200 mg (n=12)

Placebo-controlled, double- blind, 
parallel-group

50 mg (n=29), 100 mg (n=26), 
200 mg (n=28) or placebo (n=24)

Open-label parallel-group

75 mg (n=11) or 150 mg (n=10)

Treatment Duration

8 weeks

12 weeks

8 weeks

Trial Population

24 endometriosis patients

107 endometriosis patients

21 endometriosis patients

Demographics

Key Endpoints

•  Japanese women
•  Average age: 35 years
•  Average weight: 53kg
•  Average duration of endometrio-

sis: 6 years

•  Japanese women
•  Average age: 35 years
•  Average weight: 54kg
•  Average duration of 

 endometriosis: 4 years

•  Japanese women
•  Average age: 35 years
•  Average weight: 53kg
•  Average duration of 

 endometriosis: 4 years

•  Varying severity of endometriosis

•  Varying severity of endometriosis

•  Varying severity of endometriosis

•  Severity of pelvic pain* during menstruation verbal and numerical rating scales
•  Severity of pelvic pain* during non-menstruation using verbal and numerical rating scales
•  Analgesics usage during menstruation
•  Analgesics usage during non-menstruation
•  Estradiol levels
*  Pelvic pain refers to any pain symptoms around the pelvic area such as lower 

abdominal pain and low back pain excluding temporary pains

Patients reported daily whether they were bleeding, and the level of their pelvic pain using a verbal rating scale from 0 to 4, 
with 0 representing no pain and 4 representing unbearable pain even after using a pain relieving drug. 

Improvement rate of pelvic pain severity was assessed using the proportion of pain free days during the evaluation period. 
Pain free is defi ned as the absence of pain or slight pain during menstruation and the absence of pain during non-menstru-
ation. Across all three studies, linzagolix was observed to rapidly and consistently reduce pelvic pain scores. All doses were 
observed to have statistically signifi cant reductions of both menstrual and non-menstrual pelvic pain compared to placebo. 
In the KLH1201 trial, the average severity of pelvic pain during menstruation in the 50 mg and 200 mg treatment groups was 
1.74 +/– 0.62 (mean +/– standard deviation), and 1.42 +/– 0.61, respectively, at baseline, as compared to 0.94 +/– 0.98 and 
0.00 +/– 0.00, respectively, at week 8. The average severity of pelvic pain during non-menstruation in the 50 mg and 200 
mg treatment groups was 0.25 +/– 0.26 and 0.23 +/– 0.30, respectively, at baseline, as compared to 0.06 +/– 0.12 and 0.12 
+/– 0.29, respectively, at week 8. As the trial was not placebo-controlled, no statistical testing was conducted. 

In the KLH1203 trial, the average reduction from baseline to week 8 in severity of pelvic pain during menstruation in the 75 
mg and 150 mg treatment groups was 1.39 +/– 0.79 and 2.05 +/– 0.90, respectively. The average reduction from baseline 
to week 8 in average severity of pelvic pain during non-menstruation in these groups was 0.46 +/– 0.68 and 0.64 +/– 0.70, 
respectively. As the trial was not placebo-controlled, no statistical testing was conducted. 

ObsEva SA l Annual Report 2018 

21

In the placebo-controlled KLH1202 trial, there was a statistically significant reduction in pain for each of the 50 mg, 100 mg 
and 200 mg treatment groups, as compared to placebo at weeks 4, 8 and 12. For menstrual pain, a p-value of less than 
0.001 was considered to be statistically significant for all doses. For non-menstrual pain, a p-value equal to 0.003, 0.010 and 
0.005 for the 50 mg, 100 mg and 200 mg doses, respectively, was considered to be statistically significant. Patients also re-
ported that their pelvic pain reduction was maintained four weeks after treatment. The decrease in average severity of pelvic 
pain (regardless of presence or absence of menstrual bleeding) and the associated p-value is shown in Figure 3 below. 

Figure 3: Average Change in Severity of Pelvic Pain Over Time 
(Menstrual and Non­menstrual Pain Combined) 

Mean±SEM 
OBE2109 50 mg 
OBE2109 100 mg 
OBE2109 200 mg 
Placebo 

 p < 0.05   *
 p < 0.01   **
 p < 0.001 ***
Two sample t-test 
vs Placebo 

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Week 8 

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 (Week 4) 

Time (weeks)

In addition, patients reported significant dose-dependent reductions in analgesic use (p<0.001 for all comparisons) and 
bleeding days. Estradiol levels were increasingly suppressed in a dose-dependent manner consistently across all three 
Phase 2a trials, which we believe resulted in the reduction of pelvic pain, analgesic use and bleeding days. 

Clinical Development Plan–Pain Associated with Endometriosis 
We are currently completing the Phase 2b EDELWEISS clinical trial in patients with endometriosis. In this trial, 328 women 
were enrolled with moderate-to-severe endometriosis-associated pain recruited from 64 gynecological clinics across the U.S. 
and Europe. Following a lead-in phase of two menstrual cycles to establish baseline pain level, patients were randomized to 
one of 6 treatment groups: placebo, fixed-dose groups at 50, 75, 100 and 200 mg once daily and a titrated-dose group at 
75 mg once daily for up to 12 weeks, followed by 12 additional weeks of treatment. The placebo was provided for 12 weeks 
after which all placebo subjects were crossed-over on to active treatment (100 mg daily). In the titrated-dose arm, all subjects 
started on 75 mg daily for 12 weeks after which the dose was titrated up or down to 100 or 50 mg, or remain at the same 
dose for the following 12 weeks. Up- or down-titration depended on the mean of serum E2 assay results collected at weeks 
4 and 8. The trial design is provided in Figure 4 below. 

22 

ObsEva SA l Annual Report 2018

BUSINESS UPDATE 
 
 
 
 
Figure 4: Design of Phase 2b EDELWEISS Clinical Trial 

8–14 weeks

LEAD-IN

12 weeks

Placebo

50 mg daily

75 mg daily

100 mg daily

200 mg daily

75 mg daily*

Primary endpoint:
VRS pain scores
Mid 2018

Key secondary 
endpoint:
BMD

12 weeks

50 mg daily

75 mg daily

100 mg daily

200 mg daily

75 mg daily*

24 weeks

FOLLOW-UP

Optional 
extension
6m +6m f-up

*Titration after 12 weeks based on E2 serum level at weeks 4 and 8

Menstrual and non-menstrual pelvic pain (dysmenorrhea) was assessed with a 4-point Verbal Rating Scale, or VRS, and an 
11-point Numeric Rating Scale, or NRS. The primary endpoint of the EDELWEISS clinical trial was a responder analysis, with 
responses defined as a reduction of at least 30% in combined menstrual and non-menstrual pelvic pain, recorded daily and 
assessed via electronic diary over the last 28 days of treatment on a verbal rating scale (VRS) of 0 (no pain) through 3 (severe 
pain). The key secondary endpoint was the bone mineral density after 24 weeks of treatment assessed with a dual-energy 
x-ray absorptiometry scan. 

A 24-week post-treatment follow-up (PTFU) was planned after the completion of the 24 weeks of treatment or an extension 
trial was proposed for subjects willing to continue treatment with linzagolix. The extension trial consisted of a further 28 
weeks of treatment (with the exception of patients receiving a 200 mg dose, who will be switched to a 100 mg daily dose) 
and a 24-week PTFU. This part of EDELWEISS trial is currently ongoing and we expect will be completed by mid-2019. 

Efficacy data are summarized below in Figure 5.

In June 2018, we announced that the EDELWEISS clinical trial successfully met its primary endpoint, a statistically significant 
increase in patient response rate vs. placebo following 12 weeks of treatment. Observed response rates were 34.5% for 
placebo, 61.5% for 75mg linzagolix and 56.3% for 200mg linzagolix.

With respect to the dysmenorrhea (DYS), VRS scale, patients receiving a 200 mg dose reported the highest responder rate at 
78.9%, compared to a placebo responder rate of 28.5%. Response to doses from 75 mg and above were highly statistically 
significant. Responder rates for the non-menstrual pelvic pain (NMPP), VRS scale, endpoint were statistically significant for the 
75 mg dose and the 100 mg dose and both doses showed comparable responder rates at 58.5% and 61.5% respectively. 

In addition, the 75, 100 and 200 mg doses of linzagolix were observed to improve dyschezia and patient well-being as 
assessed by Endometriosis Health Profile-30 score (EHP- 30), Patient Global Impression of Change (PGIC) scale, Patient Global 
Impression of Severity (PGIS), the activity impairment score and the modified Biberoglu & Behrman score. Dyspareunia was 
also improved for all doses and reached statistical significance at the 200 mg dose.

ObsEva SA l Annual Report 2018 

23

BUSINESS UPDATEMedian serum estradiol levels at week 12 were 12 pg/ml for the 200 mg dose and 48 pg/ml for the 75mg dose, which indi-
cates full suppression at the higher dose and partial suppression at the 75 mg dose. 

In September 2018, we announced positive 24-week treatment results from the EDELWEISS clinical trial. Overall pelvic pain, 
DYS and NMPP showed sustained reduction or further improvement, as compared to the positive 12-week results. Sustained 
efficacy was also seen in additional endpoints such as daily activity, dyschezia, and dyspareunia, as well as in the assessments 
of patient well- being, most notably the Patient Global Impression of Change (PGIC) and Endometriosis Health Profile-30 
(EHP-30) questionnaire. 

Based on the efficacy and QoL results, 75 mg daily and 200 mg daily were chosen for confirmatory testing in Phase 3.

The key safety endpoint for linzagolix is BMD loss due to suppression of estradiol. In the 75 mg treatment group, the mean 
BMD loss for lumbar spine at 6 months was –0.798% with the lower boundary of the 95% confidence interval of BMD 
reduction from baseline to week 24 at –1.57%; therefore, we believe that this dose could be given chronically with an 
appropriate benefit/risk ratio without the need for administering ABT. By contrast, in the linzagolix 200 mg group, the mean 
BMD at lumbar spine decreased by more than –2.5% after 6 months of treatment, which indicates the need for combin-
ing linzagolix with a low dose ABT. Consequently, for confirmatory testing, we are planning to combine the 200 mg dose 
with a low dose estrogen/progestin add-back therapy (E2 1 mg/NETA 0.5 mg) to avoid significant BMD loss during chronic 
administration. We believe the BMD results support our plan to pursue further development of two doses of linzagolix for the 
treatment of endometriosis, including a 75 mg once daily dose without low dose hormonal add-back therapy (ABT), and a 
200 mg once daily dose in combination with low dose ABT. With regards to the titration scheme, although there were some 
numerical differences between treatment groups, we did not conclude there was sufficient benefit to continue further devel-
opment, and are instead focused upon fixed dosing of linzagolix.

Overall, we believe these data support the planned development of a 75 mg once daily dose (without ABT), and a 200 mg 
once daily dose in combination with low dose ABT.

24 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEFigure 5: Primary and key secondary efficacy endpoints

Overall Pelvic Pain 
Responder (0–3 VRS)
 75 mg FD     
 Pic     

 200 mg

77.3

70.8

61.5

**

56.3

*

34.5

Dysmenorrhea 
Responder (0–3 VRS)
 75 mg FD     
 Pic     

 200 mg

78.9

***

68.2

***

84.1

58.3

28.5

Non­Menstrual Pelvic Pain 
Responder (0–3 VRS)
 75 mg FD     
 Pic     

 200 mg

72.9

72.7

58.5

*

47.7

37.1

Week 12

Week 24

Week 12

Week 24

Week 12

Week 24

Dyspareunia 
from Baseline (0–3 VRS)
 200 mg
 75 mg FD     

 Pic     

Week 12

Week 24

–0.39

–0.59

*

–0.79

–0.7

–1

p. values
*<0.05
**<0.01
***<0.001

Amenorrhea 
Proportion %
 75 mg FD     

 Pic     

 200 mg

74.2

***

75

Dyschezia 
from Baseline =-10 NRS
 200 mg
 75 mg FD     

 Pic     

Week 12

Week 24

35.3

***

4

27.1

–0.78

Week 12

Week 24

*

–1.7

**

–1.87

–2.1

–2.5

We met with the FDA for an End of Phase 2 meeting in December 2018 to discuss the design of our planned two pivotal 
Phase 3 clinical trials (EDELWEISS 2 and EDELWEISS 3). Based on the feedback and meeting minutes received from the FDA, 
we plan to commence this trial program in the first quarter of 2019.

Our Phase 3 program will consist of two clinical trials: EDELWEISS 2 will enroll approximately 420 patients in the United States. 
EDELWEISS 3 will enroll approximately 570 patients across sites in the U.S., as well as Canada, Europe and CIS countries. In 
these two double-blind, placebo-controlled trials, we will evaluate two doses of linzagolix, the 75 mg without any ABT and 
200 mg with a low-dose ABT. Patients will report their pain on a daily basis with an electronic diary. The data will be analyzed 
at 24 weeks after initial treatment. After the initial 24-week evaluation period, an optional extension study will be proposed 
to patients. In this extension study, patients receiving placebo will be randomly allocated to either 75 mg without ABT or 200 
mg with low-dose ABT, whereas patients on active doses of linzagolix will continue on their respective dose. The co-primary 
endpoint will be a responder analysis of Dysmenorrhea (DYS) and non-menstrual pelvic pain (NMPP) performed after 12-week. 
After treatment, all patients will be followed for at least an additional, 24-week period that will be treatment free.

ObsEva SA l Annual Report 2018 

25

BUSINESS UPDATEFigure 6 below depicts the trial design of the Phase 3 EDELWEISS 2 and 3 clinical trials:

Figure 6: Design of Phase 3 EDELWEISS 2/3 Clinical Trials 

Co-Primary endpoint:
DYS/NMPP responder analysis

6 months

6 months extension study

11±5 weeks

LEAD-IN

Placebo

75 mg daily

75 mg daily

200 mg daily + add back therapy

75 mg daily

6 months

FOLLOW-UP

200 mg daily + add back therapy

200 mg daily + add back therapy

6 months Follow-up

Linzagolix Clinical Development for Heavy Menstrual Bleeding Associated with Uterine Fibroids 
We are also developing linzagolix for reduction of heavy menstrual bleeding associated with uterine fibroids in adult women 
of reproductive age. We believe linzagolix has the potential to provide an alternative to surgery, which is the most common 
treatment for uterine fibroids. One of the three Phase 2a clinical trials in patients of Japanese descent with endometriosis, 
KLH1202, included a subgroup of 57 patients with both endometriosis and uterine fibroids. 

Completed Phase 2a Clinical Trial 
In the KLH1202 clinical trial, 57 patients presented with uterine fibroids in addition to endometriosis. For these patients, both 
menstrual bleeding and uterine volume were evaluated. 

Efficacy Results 
As shown in Figure 7 below, we observed a dose-dependent reduction in the percentage of days in which bleeding occurred 
during the 12-week treatment period in patients treated with linzagolix. 

26 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEBUSINESS UPDATE

Figure 7: Percentage of Days with Bleeding During 12­Week Treatment Period 

)

%

i

(
g
n
d
e
e
l
B
h
t
i

w

s
y
a
D
f
o
e
g
a
t
n
e
c
r
e
P

50

40

30

20

10

0

28.98%

24.18%

13.63%

7.99%

Placebo

OBE2109 
50 mg

OBE2109 
100 mg

OBE2109 
200 mg

Further, in these patients with uterine fi broids, the 50 mg dose of linzagolix suppressed bleeding in approximately 55% of 
patients, whereas the 200 mg daily dose of linzagolix suppressed bleeding in approximately 95% of patients as shown in 
Figure 8 below. In addition, most patients stopped bleeding within a few weeks of treatment initiation in the 100 mg and 
200 mg group, as shown in Figure 8 below. 

Figure 8: Time to No Bleeding for Uterine Fibroids Patients in KLH1202 Trial 

100

90

80

70

60

50

40

30

20

10

0

)

%

(

e
t
a
m

i
t
s
e

r
e

i

e
M
-
n
a
p
a
K

l

0

28

56
Time (Days)

84

112

LSX 50 mg

LSX 100 mg

LSX 200 mg

Placebo

Censor

ObsEva SA l Annual Report 2018 

27

 
 
 
 
 
 
 
 
BUSINESS UPDATE

These patients experienced a dose-dependent reduction in uterine volume, while no meaningful reduction in uterine volume 
was observed in the placebo group, as shown in Figure 9 below. Reducing uterine volume is relevant for the treatment of 
uterine fi broid patients, as patients with lower uterine volume may be eligible for less invasive surgical procedures, such as a 
hysterectomy by vaginal route rather than abdominal route. In addition, increased uterine volume is associated with several 
symptoms, such as urinary incontinence at an increased frequency. 

Figure 9: Change in Uterine Volume over Time 

OBE2109 50 mg
OBE2109 100 mg
OBE2109 200 mg

l

e
m
u
o
v
e
n
i
r
e
t
u
n

i

e
g
a
t
n
e
c
r
e
P

100

50

0

–50

–100

Time (Weeks)

Clinical Development Plan–Heavy Menstrual Bleeding Associated with Uterine Fibroids 
Based on feedback we received from the FDA in November 2016, we commenced the two PRIMROSE Phase 3 clinical trials in 
patients with heavy menstrual bleeding associated with uterine fi broids in the fi rst half of 2017. The PRIMROSE clinical trials 
each have a target enrollment of approximately 500 patients. We announced that the PRIMROSE 2 trial, being conducted in 
both the U.S. and Europe, completed patient recruitment in December 2018, and we expect the PRIMROSE 1 trial being con-
ducted in the U.S. to do so in the second quarter of 2019. We expect to report primary endpoint results following 24 weeks 
of treatment in the PRIMROSE 1 and 2 clinical trials in the fi rst quarter of 2020 and fourth quarter of 2019, respectively, with 
a regulatory fi ling with the FDA based on 52 weeks treatment duration in both trials, planned prior to the end of 2020. We 
are assessing the effi cacy of both a 100 mg dose and a 200 mg dose of linzagolix both with and without ABT in the ongoing 
PRIMROSE clinical trials. We believe that the 200 mg dose will require ABT to prevent excessive bone mineral density loss, 
while the 100mg dose may not necessitate the use of ABT.

28 

ObsEva SA l Annual Report 2018

 
 
 
Figure 10 below depicts the trial design of the Phase 3 PRIMROSE clinical trials: 

Figure 10: Design of Phase 3 PRIMROSE Clinical Trials 

Primary endpoint: 
Responder-HMB Reduction 2H:19

8–14 weeks

24 weeks

28 weeks

24 weeks

Placebo + placebo add-back

Placebo + placebo add-back

200 mg + add-back

100 mg + placebo add-back

100 mg + placebo add-back

Screening

100 mg + add-back

100 mg + add-back

24w follow-up

200 mg + placebo add-back

200 mg + add-back

200 mg + add-back

200 mg + add-back

Placebo + placebo add-back

200 mg + add-back

100 mg + placebo add-back

100 mg + placebo add-back

Screening

100 mg + add-back

100 mg + add-back

24w follow-up

200 mg + placebo add-back

200 mg + add-back

200 mg + add-back

200 mg + add-back

PRIMROSE 1 
100% US sites

PRIMROSE 2 
70% Europe
30% US sites

n=100

n=100

n=100

n=100

n=100

n=100

n=100

n=100

n=100

n=100

Throughout the PRIMROSE clinical trials, patients will collect and deliver their used sanitary protection to a central laboratory 
analysis using a validated alkaline hematin method. In addition, patients will report their bleeding status on a daily basis with 
an electronic diary. 

The PRIMROSE clinical trials will have a 52-week evaluation period. The primary endpoint of these clinical trials will be the re-
duction from baseline at week 24 of menstrual blood loss, defined as menstrual blood loss of less than 80 mL and equal to or 
greater than a 50% reduction from baseline, assessed with the alkaline hematin method. A key secondary endpoint will be 
the bone mineral density after 24 weeks of treatment assessed with a dual-energy x-ray absorptiometry scan. After the 52-
week evaluation period, all patients will be followed for an additional, 24-week period that will be treatment free. We expect 
to report primary endpoint 24-week data from the PRIMROSE Phase 3 clinical trials starting in the second half of 2019, and 
the 52-week data are expected in 2020. If the results from these trials are favorable, we plan to submit an NDA prior to the 
end of 2020. 

Safety Results of Phase 1, Phase 2a and Ongoing Phase 2b and Phase 3 Clinical Trials
As of February 2019, more than 1,900 subjects have been exposed to linzagolix in completed and ongoing clinical studies 
and linzagolix has been generally well tolerated. 

In the three completed Phase 1 clinical trials (n=177), adverse events were reported with similar frequency in all groups, 
including the placebo group. No serious adverse events were reported.

In the three completed Phase 2a clinical trials (n=128), almost all of the adverse events were mild. The most common adverse 
events were abnormal bleeding from the uterus, contracting a cold, headaches and hot flashes. Most hot flashes were mild, 
three were moderate in severity and none were severe. No serious adverse events were reported in the KLH1203 trial. A 
single serious adverse event was observed in each of the KLH1201 and KLH1202 trials and both were determined by the 
principal investigators to be unrelated to linzagolix.

ObsEva SA l Annual Report 2018 

29

BUSINESS UPDATEIn the EDELWEISS Phase 2b clinical study in European and U.S. subjects (n=327), headaches were the most frequently report-
ed TEAE followed by hot flushes. The occurrence of headaches did not show any dose-dependent increase and ranged from 
20.2% to 29.8%. The occurrence of hot flushes increased with increasing dose but their intensity were most often mild to 
moderate. A dose-dependent decrease in BMD was observed.

Over all multiple dose trials, in a very small number of subjects, an increase in transaminase values was observed under treat-
ment, however this increase was generally reversible under treatment and was never associated with any increase in Bilirubin.

Nolasiban in IVF 
We are developing nolasiban as an oral oxytocin receptor antagonist, to improve clinical pregnancy and live birth rates in 
women undergoing embryo transfer after IVF, including intracytoplasmic sperm injection, or ICSI. We have observed nolasi-
ban’s ability to improve uterine receptivity by, we believe, decreasing uterine contractions, improving uterine blood flow and 
enhancing the receptivity of the endometrium to embryo implantation. We in-licensed nolasiban from Merck Serono, which 
previously completed preclinical studies and Phase 1 clinical trials in 103 healthy female volunteers that evaluated the safety 
and PK profile of nolasiban. We completed a 247-patient Phase 2 clinical trial of nolasiban in women undergoing IVF, which 
we refer to as the IMPLANT 1 trial. In the IMPLANT 1 trial, nolasiban did not reach the primary endpoint of demonstrating a 
statistically significant increase in pregnancy rate at six weeks after ET. However, in our post-hoc analysis, which excluded pa-
tients with progesterone levels in the top quartile of the patient pool, we identified a statistically significant dose-proportional 
increase in pregnancy rate at 10 weeks and live birth rate. We believe that high progesterone levels can lead to a premature 
closing of the embryo implantation window. Based on these results, we believe that nolasiban could represent a compelling 
option for increasing IVF outcomes. We initiated our IMPLANT 2 European Phase 3 clinical trial in women undergoing IVF 
in March 2017, announced patient recruitment completion in September 2017, reported data for the primary endpoint in 
February 2018 and the live birth rate in October 2018. The IMPLANT 2 clinical trial demonstrated that nolasiban significantly 
increased ongoing pregnancy rate at 10 weeks. The primary endpoint of the clinical trial was met, with an absolute increase 
in ongoing pregnancy rate at 10 weeks of 7.1% (placebo 28.5% and nolasiban 35.6%, p = 0.031). This represents a relative 
increase of 25% in the ongoing pregnancy rate after administration of nolasiban compared to placebo. Patients who under-
went ET 5 days post oocyte retrieval achieved ongoing pregnancy 10 weeks post ET at a rate of 45.9% when administered 
nolasiban, vs. 34.7% of those who received placebo, a 32% relative increase with a p value of 0.034. In October 2018, we 
announced live birth rate results from the IMPLANT 2 trial, which were consistent with the benefit seen in pregnancy rates for 
patients treated with nolasiban. Live birth rate, the ultimate goal of IVF procedures, taking home a baby, showed a statisti-
cally and clinically significant benefit in favor of patients receiving nolasiban, 34.8% vs. 27.7% for placebo, p=0.025. For pa-
tients undergoing Day 5 ET, the live birth rate benefit was even more pronounced for nolasiban, 44.8% vs. 33.2%, p=0.025. 
Nolasiban was observed to be well tolerated with a safety profile not different from placebo. 28-day neonatal safety data 
from the IMPLANT 2 trial did not reveal any adverse consequences from nolasiban treatment, and 6-month infant follow-up 
results are expected in the second quarter of 2019. 

Based on the feedback we received from regulatory authorities in Europe, following scientific advice meetings on our no-
lasiban development program, we initiated an additional Phase 3 trial primarily in European, Canadian and CIS or Russian 
centers, or the IMPLANT 4 trial, in November 2018. 

Background on Assisted Reproductive Technology (IVF/ICSI) 
Infertility is a disease of the reproductive system that impairs the body’s ability to reproduce. From 2006 to 2010, the inability 
to have a child affected approximately 6.7 million women in the United States, which represented approximately 11% of the 
reproductive-age population. An increasing number of women in developed countries are delaying having children until their 
mid-thirties, which has resulted in decreased fertility rates and increased demand for reproductive therapies. 

30 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEART is used primarily for infertility treatments. According to the Centers for Disease Control and the European Society of 
Human Reproduction and Embryology, IVF represents the vast majority of ART treatments or procedures. IVF helps women 
achieve pregnancy by the collection of mature eggs in the ovaries, followed by fertilization and early embryo development 
in the laboratory before transfer of the embryos into the womb. According to the European Society of Human Reproduction 
and Embryology, more than 2.0 million ART cycles are performed worldwide. In Europe, ART treatments doubled from 2000 
to 2010, and nearly 800,000 IVF cycles were performed in 2014. In the United States, IVF treatments increased by 41.7% 
from 2010 to 2014. Approximately 230,000 IVF treatments were performed in the United States in 2015. In Japan, approxi-
mately 400,000 IVF treatments were performed in 2015. In China, more than 700,000 ART cycles were performed in 2017, 
and year over year growth is double digit supported by government policies related to childbirth. We are currently assessing 
the regulatory development pathway in China, as well as various alternatives for future potential commercialization.

The first step in IVF is stimulation of egg production. Approximately ten days later, the eggs are harvested from the ovaries, 
otherwise known as ovum pick-up, or OPU, and co-incubated with sperm cells, with this day being referred to as Day 0. The 
resulting embryos are either used for fresh transfer to the uterus over the next three to five days or frozen for future use. 
In Europe in 2012, we estimate that approximately 39% of all embryo transfers occur three days after Day 0 and an addi-
tional 36% occur five days after Day 0, with the remaining 25% frozen for future transfer. In the United States in 2015, we 
estimate that the respective percentages were 19% (Day 3, or D3), 38% (Day 5, or D5) and 43% (frozen-thawed embryo 
transfers). The figure below depicts the IVF procedure: 

4

DAY 0

Eggs and sperm combined
to allow fertilization

5

DAY 3 or DAY 5

Fertilized eggs introduced
into uterus

1

Egg production
stimulated by
hormone therapy

2

Eggs retreived
from ovary

3

Sperm sample
provided

The cost of one IVF cycle varies between USD 8,000 to USD 15,000 in the United States, EUR 2,000 to EUR 10,000 in Europe 
and USD 3,000 to USD 6,000 in Japan. As of 2006, fertility drugs account for more than USD 2,000 of the cost of a treat-
ment cycle. Most patients require multiple fertility treatment cycles. Data from IQVIA estimates that global sales of fertility 
drugs approximated USD 2.7 billion in 2017. 

ObsEva SA l Annual Report 2018 

31

BUSINESS UPDATEBUSINESS UPDATE

The success of IVF depends on the quality of the embryo, the transfer procedure and ultimately the receptivity of the uterus. In 
order for the embryo transfer to be successful, it is important for the uterus to be receptive to embryo implantation, which in-
cludes a proper hormonal environment, appropriate blood fl ow within the uterus, and minimal uterine contractions at the time 
of embryo transfer. The endometrium is the inner layer of the uterus that is in direct contact with the implanting embryo. 

Role of Oxytocin in Embryo Implantation 
Oxytocin is a hormone that is secreted by the pituitary gland. Oxytocin receptors are present on the uterus smooth muscle 
cells, the endometrium and the uterus arteries. The release of oxytocin by the pituitary gland activates oxytocin receptors, 
which results in uterine contractions. As shown in the graphic below, blocking the activation of the uterine oxytocin recep-
tors at the time of embryo transfer may enhance uterine receptivity by decreasing uterine contractions, improving uterine 
blood fl ow and enhancing the receptivity of the endometrium to embryo implantation, which can lead to increased clinical 
pregnancy and live birth rates. 

Oxytocin

XX

Oxytocin Receptor

Smooth Muscle Cells

Uterine Arteries

Endometrium Lining

Uterine Contractions

Uterine Blood Flow

Endometrium Receptivity

Increase
Clinical Pregnancy and Live Birth Rates 

A systematic review and meta-analysis of investigator-sponsored trials conducted in 2014 and published in Fertility & Sterility 
concluded that pregnancy rates doubled with the infusion of an oxytocin receptor antagonist at the time of embryo trans-
fer. As part of this analysis, it was observed that improvement in pregnancy rates was not restricted to women with a high 
rate of uterine contractions. According to this analysis, additional mechanisms, such as endometrium receptivity and uterine 
blood fl ow, may also contribute to improving pregnancy rates. A systematic review and meta-analysis of investigator-spon-
sored trials conducted in 2017 and published in PLOS/one by Qian-Yi Huang also concluded that the clinical pregnancy rates 
was signifi cantly increased with the infusion of an oxytocin receptor antagonist at the time of embryo transfer (OR = 1.84, 
95% CI: 1.31±2.57; P < 0.001), but not the live birth rate (P=0.083). Moreover, in a recent trial published in 2016 involving 
patients with endometriosis undergoing frozen-thawed embryo transfer, clinical pregnancy rates were approximately 20% 
higher after treatment with an oxytocin receptor antagonist, representing a 51% increase relative to the placebo. In addition, 
according to studies published in Archives of Gynecology and Obstetrics in 2011, women who received an oxytocin receptor 
antagonist after embryo transfer, were observed, based on three dimensional power doppler ultrasound, to have improved 
characteristics for uterine receptivity, including enhanced endometrial blood fl ow.

32 

ObsEva SA l Annual Report 2018

Limitations of Current Treatment Options 
Currently, there are no oxytocin receptor antagonists approved for use in connection with IVF. 

Potential Therapeutic Benefits of nolasiban 
We are developing nolasiban, an oxytocin receptor antagonist, for use in connection with IVF. We believe nolasiban has the 
potential to offer the following therapeutic benefits: 

l 

l 

l 

l 

Increased pregnancy and live birth rate. In the IMPLANT 2 clinical trial, we observed that nolasiban significantly 
increased ongoing pregnancy rate at 10 weeks: Pooled D3/D5 (primary): Placebo 28.5%, nolasiban 35.6%, p=0.03 
(7.1% absolute increase, 25% relative increase). The largest increase in ongoing pregnancy rate was seen with D5 ET, 
Placebo 34.7%, nolasiban 45.9%, p=0.03 (11.2% absolute increase, 32% relative increase). Live birth rate, reflecting 
the ultimate goal of IVF procedures, taking home a baby, showed a statistically and clinically significant benefit in 
favor of patients receiving nolasiban, 34.8% vs. 27.7% for placebo, p=0.025. For patients undergoing Day 5 ET, the 
live birth rate benefit was even more pronounced for nolasiban, 44.8% vs. 33.2%, p=0.025. 
Convenience of administration. Nolasiban is an oral oxytocin receptor antagonist, that is being studied as a one-
time single dose oral administration which could be easily incorporated into IVF procedures and this without changing 
standard of care except this single oral administration prior to ET. 
Fast and sustained therapeutic effect. In clinical trials, nolasiban was observed to be rapidly absorbed in the body 
and, in the case of the 900 mg dose, to maintain effective concentrations in the body for three days after treatment, 
potentially allowing for a single administration at the time of embryo transfer.
Favorable safety profile. In Phase 1 and Phase 2 clinical trials, single doses of nolasiban were well tolerated by pa-
tients. In addition, extensive testing in animal models around the time of embryo implantation and during pregnancy 
has not revealed any concerns regarding embryo toxicity. Topline IMPLANT 2 clinical trial results that were announced 
in February 2018 showed rates of study discontinuation and treatment emergent adverse events that were very low 
and comparable to placebo rates, and the few reported serious adverse event reports were numerically higher for 
placebo than for nolasiban, although none were reported to be related to treatment. Live birth and 28-day neonatal 
safety from the IMPLANT 2 trial did not reveal any adverse consequences from nolasiban treatment, and 6-month 
infant follow-up is expected in mid-2019. 

Nolasiban Preclinical and Clinical Development 
Nolasiban was discovered and initially developed by Merck Serono. Following our in-license of nolasiban from Merck Serono 
in 2013, we submitted an IND for nolasiban, which became effective in January 2015. Under that IND, we completed a 
Phase 2 clinical trial of nolasiban in 2016. Though nolasiban did not reach the primary endpoint of a statistically significant 
increase in pregnancy rate six weeks after the ET but based on our post-hoc analysis of the Phase 2 data, we identified a 
statistically and clinically significant dose-proportional increase in ongoing pregnancy rate at week 10 and live birth rate. In 
March 2017, we initiated our IMPLANT 2 European Phase 3 clinical trial in women undergoing IVF to further evaluate the 
efficacy and safety of a single oral dose of nolasiban, announced patient recruitment completion in September 2017, and 
reported positive primary endpoint pregnancy results in February 2018, and positive live birth results in October 2018. Based 
on these results, we sought feedback from regulatory authorities in Europe and the United States on any necessary addition-
al clinical requirements, and also solicited guidance on the regulatory registration path forward. Based on the feedback we 
received from regulatory authorities in Europe following scientific advice meetings on our nolasiban development program, 
we initiated an additional Phase 3 trial primarily in European, Canadian and CIS or Russian centers, or the IMPLANT 4 trial, in 
November 2018. Assuming IMPLANT 4 trial results confirm IMPLANT 1 and IMPLANT 2 results, we intend to use this data to 
file a European marketing authorization application (MAA), which is being planned for late 2019. Feedback received from the 
FDA did not provide the clarity that we were hoping to see on the design of pivotal clinical trials to support an IVF indication 
in the United States. We are working with the FDA to reach agreement on certain elements. Upon agreement with the FDA, 
which we anticipate may be achieved in 2019, we are ready to pursue our clinical trial program in the United States.

ObsEva SA l Annual Report 2018 

33

BUSINESS UPDATEPreclinical Studies and Phase 1 Clinical Trials 
In preclinical studies, the ability of nolasiban to inhibit uterine contraction was observed, and there were no tolerance or safe-
ty concerns. Specifically, studies were conducted focusing on the reproductive toxicology in rats and rabbits during the time 
of implantation, and such studies did not reveal concerns of embryo toxicity after repeated exposure to nolasiban. 

In single and multiple ascending dose Phase 1 clinical trials conducted in the United Kingdom by Merck Serono, nolasiban 
was tested in 103 healthy female volunteers with single doses up to 1,500 mg and multiple doses up to 900 mg for seven 
days. There were no safety signals, trends in adverse events or negative findings from vital signs or laboratory parameters. 
Nolasiban was observed to be quickly absorbed, reaching maximum concentration in approximately two hours, and to have a 
dose-proportional PK profile and a half-life that could support once daily dosing. There was no observed food effect. 

Completed Phase 2 Clinical Trial
In 2016, we completed a Phase 2, double-blind, placebo-controlled, dose ranging, clinical trial of nolasiban in women un-
dergoing IVF, which we refer to as the IMPLANT trial. This trial enrolled 247 women across 26 fertility clinics in five European 
countries. Patients were between the ages of 18 and 36, were currently undergoing medically indicated IVF and had no more 
than one previous IVF cycle failure. The study evaluated three doses of nolasiban, 100 mg, 300 mg or 900 mg, compared 
to placebo. Patients received a single oral dose approximately four hours before a Day 3 fresh embryo transfer. The patients 
were evaluated once pregnant at weeks 2, 6 and 10 and we also evaluated the infants born for up to six months after birth. 
Assuming a 20% pregnancy rate in placebo and a 40% pregnancy rate in nolasiban at 900 mg, the number of patients in 
each arm of the trial provided an 80% chance to show a statistically significant increase in pregnancy rate from placebo 
through ascending doses of nolasiban using a trend test. We believed this was the appropriate trial design to determine dose 
effect and guide future clinical development. 

The trial design is summarized below: 

STUDY TOTAL DURATION PER SUBJECT: UP TO 22 WEEKS

Screening Visit: Up to 
12 weeks Prior OPU

OPU Day + 3 (Baseline Visit) Dosing and Embryo Transfer

Post­Treatment Period

Key Measurements Taken

Prior to 
Dosing

Uterine
contractions

OBE001 PK

Estradiol,
progesterone
vital signs

Dosing (T0)

T+3.5 h

T+4 h

T+4.5 h

14 days

6 & 10 weeks

Uterine
contractions

Nolasiban PK

Estradiol,
progesterone

Embryo
transfer
(ET)

Vital signs

Blood pregn. 
lest

Hemato /
chemistry

Vital signs

Physical exam

Ultrasound to 
confirm preg-
nancy contin-
uation: No. of 
gestational sac 
& embryo with 
cardiac activity 

34 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEThe primary endpoint of this trial was:

l 

the percentage of women with an intra-uterine pregnancy with positive embryo heartbeat at six weeks after the ET 
day. 

Secondary endpoints included:

l 
l 

l 

l 

the percentage of women with a positive blood pregnancy test at 14 days after the OPU day; 
the percentage of women with an intra-uterine pregnancy with positive embryo heartbeat at 10 weeks after the OPU 
day; 
the embryo-implantation rate defined as the number of intra-uterine embryos with positive heartbeat at six weeks 
after the ET day divided by the number of embryos transferred; and 
the absolute and relative change from baseline, prior to nolasiban or placebo administration, to the time of embryo 
transfer, which is about 3.5 hours after nolasiban/placebo administration and prior to embryo transfer, in the rate of 
uterine contractions per minute. 

Efficacy Results 
As shown in Figure 11 below, which we refer to as the “Full Set Analysis,” the overall percentage of patients with an in-
tra-uterine pregnancy with a positive heartbeat at six weeks after ET and the live birth rate were increased by over 9%, equiv-
alent to a 26% increase relative to placebo. The median uterine contractions decreased by 8.7%, 4.0% and 13.3% for the 
100 mg, 300 mg and 900 mg groups, respectively, compared to placebo. However, statistical significance was not reached 
for the primary endpoint, as indicated in the “Trend Test” column in Figure 11 below. We believe the lack of statistical signif-
icance was attributable to the limited sample size and based on the 300 mg dose group of nolasiban which had lower clinical 
pregnancy and live birth rates than the 100 mg and 900 mg treatment groups. 

The trend test is a statistical technique that was used to determine whether there was a statistically significant linear relation-
ship between the dose of nolasiban administered and the amplitude of the increase in ongoing pregnancy rate at six weeks 
after the ET day. In this Phase 2 IMPLANT trial, we considered a p-value of less than 0.10 to be statistically significant. 

Figure 11 

Full Set Analysis

Number of patients

Relative change in uterine contractions

Ongoing pregnancy rate at 6 weeks 
after ET day

Ongoing pregnancy rate at 10 weeks 
after OPU day

Live birth rate (baby born alive 
24 weeks gestation)

*p≤0.10 **p≤0.05

Placebo

65

0.0%

Nolasiban
100 mg

Nolasiban
300 mg

Nolasiban
900 mg

Nolasiban
All Doses

Trend Test

62

–8.7%

60

60

182

–4.0%

–13.3%**

33.8%

46.8%

35.0%

46.7%

42.9%

p=0.33

29.2%

43.5%*

35.0%

45.0%*

41.2%

p=0.15

29.2%

40.3%

35.0%

43.3%

39.6%

p=0.20

ObsEva SA l Annual Report 2018 

35

BUSINESS UPDATE 
 
Following our receipt of the initial data, we reviewed the patients’ characteristics within each of the dose groups. From this 
review, we discovered that patients in the 300 mg group demonstrated higher estradiol levels and higher progesterone 
levels prior to embryo transfer than in the other groups. We believe that high estradiol levels are responsible for the earlier 
expression of progesterone receptors, which induce advancement of endometrial maturation, and that high progesterone 
levels can lead to a premature closing of the embryo implantation window, preventing or impairing the embryo implantation. 
Therefore, we subsequently conducted a post-hoc analysis of the results of the Phase 2 clinical trial, removing patients with a 
progesterone level in the top quartile of the patient pool. There were 25 patients excluded in this post-hoc analysis from the 
300 mg group, while only 16, 12 and 11 patients were excluded in this post-hoc analysis from the placebo, 100 mg and 900 
mg groups, respectively, which we believe demonstrates the imbalance between the 300 mg group and the other groups. 

In our post-hoc analysis, we identified a statistically significant relationship between the dose of nolasiban and the ongoing 
pregnancy rate at week 10 and live birth rate, with an increase from 30.6% for placebo to 51.0% for 900 mg nolasiban at 
week 10 and for live birth rate, equivalent to a 67% increase relative to placebo (trend test p-value < 0.05). The results of our 
post-hoc analysis are shown in Figure 12 below: 

Figure 12 

Subset Post­Hoc Analysis

Number of Patients

Placebo

49

Nolasiban
100 mg

Nolasiban
300 mg

Nolasiban
900 mg

Nolasiban
All Doses

Trend Test

50

35

49

134

Ongoing Pregnancy Rate at 6 weeks 
After ET day

Ongoing Pregnancy Rate at 10 weeks 
After OPU day

Live birth rate (baby born alive 
24 weeks gestation)

*p≤0.10 **p≤0.05

36.7%

44.0%

48.6%

53.1%

48.5%

p=0.095*

30.6%

42.0%*

48.6%

51.0%*

47.0%

p=0.035**

30.6%

38.0%

48.6%

51.0%

45.5%

p=0.025**

Based on these results, we believe that a single 900 mg dose of nolasiban administered just before embryo transfer has the 
potential to increase clinical pregnancy and live birth rates following IVF. 

Phase 2 Clinical Safety Results 
In the IMPLANT 1 trial, nolasiban was well tolerated at doses up to 900 mg. Adverse events were reported through 10 weeks 
following the OPU day. Increased doses were not observed to result in increased occurrence of adverse events. The most 
common adverse events were determined to be related to pregnancy, menstrual bleeding or the IVF procedure and occurred 
at similar frequencies in the placebo and active treatment groups. Serious adverse events were reported in six patients and in-
cluded ectopic pregnancy in three patients, and adnexal torsion, vaginal hemorrhage and ovarian hyperstimulation syndrome 
in one patient each. None of these serious adverse events were determined by the investigator to be related to the treatment 
and none caused trial discontinuation. One patient in the nolasiban 900 mg group discontinued participation in the trial 
due to a non-serious adverse event of ovarian hyperstimulation syndrome, which was determined by the investigator to be 
unrelated to treatment. Only three adverse events, which occurred in patients in the 300 mg group, were considered related 
to treatment (mild nausea, mild dizziness and mild rash), and the patients fully recovered from the adverse events. 

36 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEIn the trial, ongoing pregnancies were followed up to 28 days post-delivery. As expected with human pregnancies, some 
congenital malformations were observed both in the placebo group and the treatment groups. There appeared to be no 
relationship between the nolasiban dose and the incidence of the congenital malformations, as shown in Figure 13 below, 
and none were determined by the investigator to be related to treatment. In addition, nolasiban was not associated with an 
increase in ectopic pregnancy or in intra-uterine growth retardation. 

Figure 13

Parameters

Ectopic Pregnancy

Congenital Malformation

Intra-uterine Growth Retardation

Placebo
n=65

Nolasiban 100 mg  
n=62

Nolasiban 300 mg  
n=60

Nolasiban 900 mg  
n=60

1

2*

0

1

4°

0

0

0

2

1

1§

0

*  Club-Foot/Renal hydrops 
°  Acrania/Turner Syndrome/Prader Willi Syndrome/Left Ventricular Hypoplasia
§  Polydactyly

Ongoing Phase 3 Clinical Trial and Clinical Development Plan 
We have advanced nolasiban into Phase 3 clinical development to evaluate its potential to improve clinical pregnancy and live 
birth rates for women undergoing IVF. We are conducting a Phase 3 clinical trial in Europe, which we refer to as IMPLANT 
2, where we believe more IVF treatments are conducted. The study included eligibility criteria to exclude patients with high 
progesterone level on day of hCG from entering the trial.

IMPLANT 2 is a randomized, double blind, placebo controlled clinical trial that included 778 patients from 41 fertility clinics 
across nine European countries. Patients received either a single 900 mg dose of nolasiban or placebo (1:1) orally on the day 
of ET. Recruitment included patients undergoing single, fresh ET on day 3 (D3, n=388) or on day 5 (D5, n=390) after oocyte 
retrieval. The primary endpoint of the trial was ongoing pregnancy as determined by ultrasound at 10 weeks following ET. 
The pre-defined primary analysis was conducted on the pooled population of D3 and D5 ET. Secondary endpoints include 
clinical pregnancy rates at six weeks after the ET day, live birth rates, maternal, newborn baby and infant follow-up. The 
design of this IMPLANT 2 European Phase 3 clinical trial is shown in Figure 14 below. 

Figure 14 

Main Study

Primary Analysis

Follow­Up

10 weeks

10 weeks

1 months

Screening

D3 or D5 ET

Randomize

Nolasiban 900mg 
n=380

Placebo 
n=380

Not Preg.

FU

7–8 months

6 months

Preg.*
n=275

*Estimate

Preg. FU

Neonatal F

ObsEva SA l Annual Report 2018 

37

BUSINESS UPDATEWe initiated this IMPLANT 2 European Phase 3 clinical trial in March 2017, announced patient recruitment completion in 
September 2017, and reported data for the primary endpoint in February 2018 and for live birth rate in October 2018. 

These top line results include efficacy and safety data up to week 10 of pregnancy following embryo transfer. Demographics 
and baseline characteristics were comparable between groups. The primary endpoint of the clinical trial was met, with an 
absolute increase in ongoing pregnancy rate at 10 weeks of 7.1% (placebo 28.5% and nolasiban 35.6%, p = 0.031). This 
represents a relative increase of 25% in the ongoing pregnancy rate after administration of nolasiban compared to placebo. 
In the ET D5 subgroup, the absolute increase was 11.2% in favor of nolasiban (placebo 34.7% and nolasiban 45.9%, p = 
0.034). This represents a relative increase in ongoing pregnancy rate of 32% after administration of nolasiban compared 
to placebo. In the ET D3 subgroup, there was a statistically non-significant 3.1% absolute increase in favor of nolasiban 
(placebo 22.2% and nolasiban 25.3%, p > 0.05), or a 14.0% relative increase in ongoing pregnancy rate after administration 
of nolasiban compared to placebo. The live birth rate results were consistent with the benefit seen in pregnancy rates for 
patients treated with nolasiban. Live birth rate, reflecting the ultimate goal of IVF procedures, taking home a baby, showed a 
statistically and clinically significant benefit in favor of patients receiving nolasiban, 34.8% vs. 27.7% for placebo, p=0.025. 
For patients undergoing Day 5 ET, the live birth rate benefit was even more pronounced for nolasiban, 44.8% vs. 33.2%, 
p=0.025. The 28-day neonatal safety data did not reveal any adverse consequences from nolasiban treatment. 

Figure 15

Pooled D3 and D5

Placebo

Nolasiban
900 mg

p­value

Placebo

D3

Nolasiban
900 mg

p­value

Placebo

D5

Nolasiban
900 mg

p­value

Number of Patients

390

388

194

194

196

194

Ongoing Pregnancy Rate 
at 10 weeks

28.5%

35.6%

0.031

22.2%

25.3%

0.477

34.7%

45.9%

0.034

Live Birth Rate

27.7%

34.8%

0.025

22.7%

24.7%

0.552

33.2%

44.8%

0.025

Overall, nolasiban was well tolerated, with low rates of study discontinuation that were comparable between treatment and 
placebo. The safety profile of nolasiban was also similar to placebo. Safety data from the IMPLANT 2 trial did not reveal any 
adverse consequences from nolasiban treatment. 

Figure 16

Pregnant at week 2 (Safety Set)

Pregnancy loss (week 10)

Ectopic pregnancy

Other SAEs up to week 10

Pregnant at week 10 (Safety Set)

Pregnancy loss (week 10 to 24)

Congenital malformations (cumulative)

Placebo

156

Nolasiban

174

44 (28.2%)

37 (21.3%)

4 (2.6%)

5 (3.2%)

112

3 (2.7%)

5 (4.5%)

1 (5.7%)

4 (2.3%)

137

3 (2.2%)

6 (4.3%)

38 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEBased on feedback received from regulatory authorities in Europe on our nolasiban development program, we initiated an 
additional Phase 3 trial, or the IMPLANT 4 trial in late November 2018. 

IMPLANT 4 is a randomized, double blind, placebo controlled clinical trial that will include 820 patients from about 50 fertility 
clinics across primarily European, Canadian and CIS or Russian centers. Patients undergoing single, fresh ET on day 5 (D5) 
after oocyte retrieval will be randomized to receive either a single 900 mg dose of nolasiban or placebo (1:1) orally on the 
day of ET. The primary endpoint of the trial will be similar to IMPLANT 2, including ongoing pregnancy as determined by 
ultrasound at 10 weeks following ET. The key secondary endpoint are live birth rates as well as maternal, newborn and infant 
follow-up. The design of this IMPLANT 4 Phase 3 clinical trial is shown in Figure 17 below. 

Figure 17

9 weeks

Screening

D5 SET

Nolasiban 900mg 
n=410

Placebo 
n=410

Randomize

Main Study

Follow­Up

2 weeks

Not Pregnant

Up to 28 days  
post delivery

6 months

Pregnant

W6

W10

Preg. FU

Infant FU

OBE022: Our PGF2α Receptor Antagonist for the Treatment of Preterm Labor (GA 24–34 weeks)
We are developing OBE022 as a potential first-in-class, once daily, oral and selective PGF2α, receptor antagonist for the treat-
ment of preterm labor in weeks 24 to 34 of pregnancy. PGF2α is a naturally occurring prostaglandin that acts to induce labor 
in pregnant women. Through specific antagonism of the PGF2α receptor, OBE022 is designed to control preterm labor by 
reducing inflammation, decreasing uterine contractions and preventing cervical changes and membrane ruptures. Based on 
its PK profile and efficacy observed in animal models, we believe OBE022 has the potential to become a first-in-class therapy 
to suppress premature labor and delay or avoid preterm birth while also being safe for the fetus. In February 2017, we com-
pleted a Phase 1 clinical trial assessing the safety, tolerability and PK profile of OBE022 in healthy post-menopausal female 
volunteers after single doses of 10 mg to 1,300 mg and multiple doses between 100 mg per day and 1,000 mg per day over 
7 consecutive days. OBE022 was observed to have a favorable pharmacokinetic profile, no clinically significant food effect, 
a favorable safety profile and to be well-tolerated at doses up to 1,300 mg after single dose administration and up to 1,000 
mg per day after multiple dose administration over 7 days, each of which are above the estimated clinical effective dose. In 
March 2017, we completed a set of drug-drug interaction, or DDI, Phase 1 clinical pharmacology studies investigating the 
safety, tolerability and PK profile of OBE022 when combined with magnesium sulfate, atosiban, nifedipine or betamethasone 
(medications typically used in patients with preterm labor) in pre-menopausal female volunteers. OBE022 in combination with 
those drugs was observed to have a favorable safety profile and to be well-tolerated up to 1,100 mg per day, which was 
the highest tested dose. In December 2017, we announced the initiation of our Phase 2a proof-of-concept clinical trial of 
OBE022 known as PROLONG, which is being conducted in two parts: Part A and Part B. Part A is an open-label trial assess-
ing the safety and pharmacokinetics of OBE022 in pregnant women, who were already receiving standard of care therapy 
for preterm labour, atosiban infusion. Part B, is a randomized, double-blind, placebo-controlled, parallel-group trial to assess 

ObsEva SA l Annual Report 2018 

39

BUSINESS UPDATEthe efficacy, safety and pharmacokinetics of OBE022. In December 2018, following completion of the open-label Part A and 
based on the favorable safety and pharmacokinetics results, we announced the initiation of the randomized placebo-con-
trolled Part B of the trial. Part B will enroll up to 120 women at 24-34 weeks gestation who are experiencing preterm labor 
symptom. We expect initial interim efficacy results to be available in the first 30 patients in the first half of 2019. 

Background and Impact of Preterm Labor 
Preterm labor, defined as the body commencing the birthing process prior to 37 weeks, is characterized by uterine contrac-
tions, cervical dilation and rupture of the fetal membranes that surround and protect the fetus during pregnancy. Accord-
ing to a study published in the Lancet in 2012, approximately 15 million babies were born preterm in 2010, accounting 
for 11.1% of all live births worldwide. In the 65 countries with reliable data for preterm birth, 62 countries had increasing 
rates of preterm birth over the period from 1990 to 2010. According to the National Center for Health Statistics, the United 
States’ preterm birth rate was 9.6% in 2014, which, according to the March of Dimes Foundation, ranks among the worst 
of high-resource countries. In 2007, the Institute of Medicine reported that the cost associated with premature birth in the 
United States was approximately USD 26.2 billion each year. 

According to the World Health Organization, preterm birth is the leading worldwide cause of neonatal death, defined as 
death in the first 28 days of life. Preterm birth complications are also the leading cause of death in children under the age of 
five, having caused nearly one million deaths in 2013 worldwide. Infants who survive preterm birth may have lifelong health 
problems such as cerebral palsy, vision and hearing impairment and intellectual disabilities. Approximately one-third of chil-
dren born prematurely need special school services, according to the March of Dimes Foundation. 

Role of Prostaglandins in Preterm Labor 
Prostaglandins play a major role in the normal function of the female reproductive system. There are various prostaglandins 
at work in the human body with different functions, such as prostaglandin E2, or PGE2, and PGF2α . PGE2 and PGF2α have 
opposing effects on the female reproductive system. PGE2 causes the widening of blood vessels. PGE2 is produced by the 
fetus and is important in fetal physiology and development, and therefore, blocking its action has the potential to produce 
unwanted fetal effects. By contrast, PGF2α is a constrictor of the myometrium and uterine blood vessels. PGF2α is present in 
the uterus and plays a major role in the initiation and process of childbirth. PGF2α modulates various functions leading to the 
progression of labor and is involved in all aspects of childbirth including ripening of the cervix, membrane rupture and induc-
tion of uterine contraction. PGF2α promotes the establishment of a pro-inflammatory intra-uterine environment by stimula-
tion of pro-inflammatory cytokine and chemokine production in the myometrium, leading to the initiation of labor. 

Limitations of Current Treatment Options
Various classes of pharmaceutical agents that decrease uterine contractions, also known as tocolytics, are used to delay 
preterm labor. These different classes act on the uterine muscle through various mechanisms of action but have limited 
efficacy, restrictive safety issues and are all used off-label in the United States. These different classes include nifedipine, a cal-
cium channel blocker, magnesium sulfate, indomethacin (a NSAID) and glyceryl trinitrate, each of which have been observed 
to have limited efficacy and/or safety issues. Beta-adrenergic agonists have been largely discontinued because of severe 
maternal cardiovascular side effects. Atosiban, an oxytocin receptor antagonist, is approved in Europe but not in the United 
States. It can delay preterm labor, but is administered through a bolus injection followed by an infusion and is not indicated 
for dosing beyond 48 hours. 

40 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEReviews of these different classes of tocolytic drugs concluded that prostaglandin synthesis inhibitors, such as NSAIDs, provid-
ed the best efficacy for delaying labor at 48 hours and seven days. According to a study published in Obstetrics & Gynecology 
in 2009, prostaglandin antagonists were most effective at delaying delivery at 48 hours and seven days among the class of 
drugs available in the United States. Delaying delivery as long as possible up to full term is ideal, but delaying delivery by at 
least 48 hours is significant because betamethasone (a glucocorticosteroid) can be administered to the mother to mature the 
baby’s lungs so the baby can potentially breathe on its own. The table below, which shows the results of that study, displays 
the percentage of patients that did not deliver a baby at various time points following treatment. 

Figure 18: Weighted Percentages of Tocolytic Agents for Efficacy 

Placebo/Control

Betamimetics

Delay of Delivery

48 hours

7 days

53 (45–61) [9]

39 (28–49) [8]

75 (65–85) [29]

65 (59–71) [26]

Calcium-Channel Blocker

76 (57–95) [17]

62 (56–69) [10]

Magnesium Sulfate

89 (85–93) [11]

61 (39–84) [5]

Oxytocin Receptor Antagonists

86 (80–91) [8]

78 (68–88) [6]

Prostaglandin Inhibitors

93 (90–65) [8]

76 (67–85) [3]

Data presented as percentage of women experiencing delay
() = 95% confidence interval
[] = number of studies

Currently available prostaglandin inhibitors, such as the NSAID indomethacin, act by non-selective inhibition of prostaglan-
din-forming enzymes, thus blocking the generation and signaling of many prostaglandin sub-types, including both PGE2 and 
PGF2α. Because they potentially adversely affect fetal physiology, use of NSAIDs is restricted to 48 hours in women at gesta-
tional age below 32 weeks, due to these unwanted side effects. According to a publication in 2015 in the American Journal 
of Obstetrics and Gynecology, the most concerning side effects associated with the non-selective prostaglandin inhibitors 
include severe conditions in newborn babies, such as renal function impairment, constriction of the blood vessel connecting 
the pulmonary artery to the aorta, bleeding in the area surrounding the fluid-filled areas of the brain, necrotizing enterocoli-
tis, which is a serious condition that occurs when the intestinal tissue blood flow is damaged and begins to die, and periven-
tricular leukomalacia, which is a form of brain injury that can lead to serious disabilities. 

As a result of the limited efficacy and unfavorable safety profile of many current therapies used off-label to treat preterm 
labor, we believe there remains a significant unmet need for a selective prostaglandin inhibitor focused on the inhibition of 
only PGF2α to delay preterm labor and provide a safe treatment option for both mother and child. 

OBE022 Preclinical and Clinical Development 
OBE022 was discovered and initially developed by Merck Serono as a selective inhibitor of PGF2α. We in-licensed OBE022 
from Merck Serono in 2015. In preclinical studies, OBE022 was observed to reduce uterine contractions and to exert a syn-
ergistic effect in combination with nifedipine to delay delivery. We advanced OBE022 into Phase 2a proof-of-concept clinical 
trial in December 2017 to assess the safety and efficacy of OBE022 to delay birth in women 24 to 34 weeks pregnant who 
face preterm labor and potentially preterm delivery. In February 2017, we completed a Phase 1 clinical trial assessing the safe-
ty, tolerability and PK profile of OBE022 in healthy post-menopausal female volunteers after single doses of 10 mg to 1,300 
mg and multiple doses between 100 mg per day and 1,000 mg per day over 7 consecutive days. OBE022 was observed to 
have a favorable PK profile, no clinically significant food effect, a favorable safety profile and to be well-tolerated at doses 
up to 1,300 mg after single dose administration and up to 1,000 mg per day after multiple dose administration over 7 days. 

ObsEva SA l Annual Report 2018 

41

BUSINESS UPDATEIn March 2017, we completed a set of DDI Phase 1 clinical pharmacology studies investigating the safety, tolerability and PK 
profile of OBE022 when combined with magnesium sulfate, atosiban, nifedipine or betamethasone (medications typically 
used in patients with preterm labor) in pre-menopausal female volunteers. OBE022 in combination with those drugs was ob-
served to have a favorable safety profile and to be well-tolerated up to 1,100 mg per day, which was the highest tested dose. 

Preclinical Development 
In the preclinical pharmacology, PK and toxicology studies conducted by Merck Serono, OBE022 was observed to be a highly 
selective, competitive and reversible PGF2α receptor antagonist with over 100 times the affinity for it compared to other 
prostaglandin receptor subtypes. OBE022 has been observed to have tocolytic effects in vitro and in vivo by markedly reduc-
ing spontaneous uterine contractions in a preterm labor animal model. At the Society for Reproductive Investigations’ 64th 
Annual Scientific Meeting in March 2017, we presented results of a non-clinical study in which we observed that OBE022 
exerted a synergistic effect in combination with nifedipine on the delay of delivery in an animal model for preterm labor. 
The study evaluated the effect of OBE022 and nifedipine, alone and in combination with each other, on an animal model of 
RU486-induced birth in pregnant mice. The induction of labor by the antiprogestin RU486 results from inhibition of proges-
terone activation leading to the up-regulation of labor-associated proteins as seen in the case of idiopathic preterm labor. 
Compared to the vehicle control, we observed nifedipine (5mg/kg, taken orally), as well as OBE022 (100mg/kg, taken orally), 
alone resulted in statistically significant delays in RU486-induced preterm labor. We also observed a synergistic effect of com-
bination treatment with OBE022 and nifedipine on the delay of delivery when compared to vehicle, nifedipine or OBE022 
alone (p<0.001, p<0.001 and p<0.01, respectively). Preclinical studies have also been conducted to support oral administra-
tion of OBE022 in humans. Overall, the toxicological profile of OBE022 observed in repeated-dose toxicity studies in rats and 
dogs as well as reprotoxicity in rabbits and rats appeared to be benign. We also conducted safety studies to evaluate OBE022 
compared to NSAIDs in pregnant rats prior to delivery. In these studies, we observed that the NSAID indomethacin induced, 
as expected, constriction of the blood vessel connecting the pulmonary artery to the aorta and impaired the renal function in 
the newborn rats, while OBE022 did not. In addition, we have observed that OBE022 does not inhibit platelet aggregation 
whereas the NSAIDs were confirmed to significantly inhibit it, which is considered to be a potential risk factor for neonatal 
tissue hemorrhagia, e.g. periventricular brain hemorrhagia. Based on the results of these preclinical studies, we believe that 
OBE022 has the potential to be an effective, safer tocolytic agent for the treatment of preterm labor. 

Phase 1 Clinical Trials 
We completed a Phase 1 clinical trial assessing the safety, tolerability and PK profile of OBE022 when administered in ap-
proximately 70 healthy post-menopausal female volunteers as single and multiple ascending doses at one site in the United 
Kingdom. As PGF2α is also involved in uterine contractions and the related pain that can occur during normal menstruation in 
non-pregnant women, we are assessing the feasibility of measuring the ability of OBE022 to reduce the intra-uterine pressure 
and the pelvic pain scores in healthy female volunteers of child bearing age during menstruation. From the single doses 
administered of 10 mg to 1,300 mg and multiple doses between 100 mg per day and 1,000 mg per day administered over 7 
consecutive days in the completed Phase 1 clinical trial, we observed that pro-drug OBE022 was readily absorbed and rapidly 
converted into its equally active stable metabolite OBE002. The plasma level of OBE002 increased with increasing doses of 
OBE022 reaching exposure levels that were anticipated to be clinically relevant within an hour following administration. There 
was no clinically significant food interaction with peak exposures reduced to 80% and AUC staying bioequivalent. The mean 
half-life of OBE002 ranged between 8 and 11 hours following administration of a single dose and between 22 to 29 hours 
after multiple doses (figure 19). Single and multiple administrations of OBE022 were well tolerated at all doses. There have 
been no serious adverse events and no clinically relevant changes in safety parameters. 

42 

ObsEva SA l Annual Report 2018

BUSINESS UPDATEFigure 19: 

We also completed a set of DDI Phase 1 clinical pharmacology studies investigating the safety, tolerability and PK profile of 
OBE022 when combined with therapeutic doses of magnesium sulfate, atosiban, nifedipine or betamethasone (medications 
typically used in patients with preterm labor) in pre-menopausal female volunteers. We performed an open-label, randomized, 
three-period crossover trial assessing co-administration of single doses of OBE022 (1100 mg) and MgSO4 (15.5g) and also 
performed an open-label, single-sequence crossover trial assessing the interactions of OBE022 (1000 mg/d) at steady-state 
co-administered with single doses of atosiban (60.75 mg), nifedipine (20 mg) and betamethasone (12 mg). Both trials enrolled 
12 healthy non-pregnant women of reproductive age at one clinical center in the United Kingdom. There were no clinically 
relevant pharmacokinetic interactions between OBE022 and MgSO4, betamethasone or atosiban; however, nifedipine expo-
sure increased notably. Co-administration of OBE022 with MgSO4, betamethasone, atosiban and nifedipine was generally well 
tolerated. 

Clinical Development Plan 
Based on these Phase 1 clinical trial results, we initiated the PROLONG Phase 2a proof-of-concept clinical trial. The trial objec-
tives are to assess the pharmacokinetic, the safety and efficacy of OBE022 when co-administered with atosiban, to delay birth 
after oral administration in pregnant women who face preterm labor and potentially preterm delivery. The targeted patient 
population will include women who are at least 24 weeks and less than 34 weeks pregnant, with intact membranes, present-
ing with spontaneous preterm labor for which they receive atosiban for 48 hours and no contraindications to a prolongation 
of  pregnancy.

The PROLONG Phase 2a trial is being conducted in two parts: Part A and Part B. Part A was an open-label trial of OBE022 
administered orally, with a loading dose of 1000 mg, then 500 mg twice a day for 7 days to pregnant women with threatened 
preterm labor. OBE022 pharmacokinetics and maternal, fetal and infant safety were assessed. Fetal cardiac safety was moni-
tored using Doppler ultrasound. Time to delivery was also measured. 9 patients were included in this part. Eight of the nine pa-
tients did not deliver within the 7 days of OBE022 treatment and one patient delivered the day after starting OBE022. OBE022 
was observed to be well absorbed from Day 1 to Day 7 and steady-state serum concentrations and pharmacokinetics were 
comparable to those observed previously in non-pregnant women. OBE022 administration was observed to be well tolerated 
by the mother and there were no adverse events reported for the fetuses, and no clinically significant abnormal findings on the 
Doppler ultrasound including no constrictive effect on the ductus arteriosus. The results will be presented at the 66th Annual 
Scientific Meeting of the Society for Reproductive Investigation from 12th to 16th of March 2019 in Paris, France. 

ObsEva SA l Annual Report 2018 

43

BUSINESS UPDATE 
In January 2019, and based on the favorable safety and pharmacokinetic results we observed in Part A, we announced the 
initiation of Part B of the PROLONG trial, which is a randomized, double-blind, placebo-controlled, parallel-group trial to as-
sess the efficacy, safety and pharmacokinetics of OBE022. We are planning to enroll up to 120 patients with preterm labor at 
a gestational age of 24 to 34 weeks. As in Part A, OBE022 or placebo will be administered orally, with 1,000 mg as a starting 
dose, then 500 mg twice a day for 7 days to women already receiving atosiban infusion for 48 hours.

Based on the results of this trial, and after receiving expert and regulatory feedback, we will decide whether to further devel-
op OBE022 as a self-standing tocolytic or in combination with atosiban or another currently used tocolytic. 

Commercialization 
We have not yet established a sales, marketing or product distribution infrastructure. In order to commercialize any of 
our product candidates if approved for commercial sale, we must either establish a sales and marketing organization with 
technical expertise and supporting distribution capabilities or collaborate with third-parties that have sales and marketing 
experience. As we move our product candidates through development toward regulatory approval we will evaluate several 
options for each product candidate’s commercialization strategy. These options include building our own internal sales force, 
entering into a joint marketing partnership with another pharmaceutical or biotechnology company, or out-licensing the 
product to another pharmaceutical or biotechnology company.

Manufacturing 
We rely on CMOs to produce our product candidates in accordance with the FDA’s cGMP regulations for use in our clinical 
trials. The manufacture of pharmaceuticals is subject to extensive cGMP regulations, which impose various procedural and 
documentation requirements and govern all areas of record keeping, production processes and controls, personnel and 
quality control. Replacement of any of our CMOs would require us to qualify new manufacturers and negotiate and exe-
cute contractual agreements with them. If any of our supply or service agreements with our CMOs are terminated, we will 
experience delays and additional expenses in the completion of the development of and obtaining regulatory approval for 
linzagolix, nolasiban and OBE022. 

To meet our projected needs for clinical supplies to support our activities through regulatory approval and commercial 
manufacturing, the CMOs with whom we currently work will need to increase scale of production or we will need to secure 
alternate suppliers. Pursuant to the Kissei license and supply agreement, we have agreed to exclusively purchase the active 
pharmaceutical ingredient for linzagolix from Kissei who is now obtaining linzagolix cGMP supply from two suppliers, both of 
which are different from the supplier who received the warning letter from the FDA in November 2016. If we are unable to 
obtain sufficient quantities of our products candidates or receive raw materials in a timely manner, we could be required to 
delay our ongoing clinical trials and seek alternative manufacturers, which would be costly and time-consuming.

The CMOs with whom we currently work will also need to ensure and maintain quality (cGMP compliance, specifications, 
shelf-life, expiry, in-process-control) throughout the production process of our clinical and commercial supplies. If we are 
unable to ensure and maintain quality of our products candidates, we could be required to delay our ongoing clinical trials 
which would be costly and time-consuming. 

To mitigate the risks above, our relationships with CMOs are managed by internal personnel with extensive experience in 
NCE pharmaceutical development and chemistry, manufacturing and controls, or CMC. 

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ObsEva SA l Annual Report 2018

BUSINESS UPDATECompetition 
Biopharmaceutical product development is highly competitive and subject to rapid and significant technological advance-
ments. Our success is highly dependent upon our ability to in-license, acquire, develop and obtain regulatory approval for 
new and innovative products on a cost-effective basis and to market them successfully. In doing so, we face and will continue 
to face intense competition from a variety of businesses, including large, fully integrated, well-established pharmaceutical 
companies who already possess a large share of the market, specialty pharmaceutical and biopharmaceutical companies, 
academic institutions, government agencies and other private and public research institutions in the European Union, United 
States and other jurisdictions. 

With respect to linzagolix, in 2018 the first compound from the oral gonadotropin-releasing hormone, or GnRH, receptor 
antagonist class received regulatory approval in the United States for the treatment of pain associated with endometrio-
sis. AbbVie Inc. has been commercializing elagolix, brand named Orilissa, in the United States since August 2018, and has 
publicly stated intentions to submit a regulatory application for the uterine fibroids associated with heavy menstrual bleeding 
indication in 2019. We are aware of one other oral GnRH receptor antagonist product candidate being developed in Phase 
3 clinical trials for the endometriosis and uterine fibroids indications, relugolix from Myovant Sciences, Inc. We also antici-
pate competing with GnRH receptor agonists, including Lupron (leuprolide acetate), marketed by AbbVie Inc. and Takeda 
Pharmaceuticals, Visanne (dienogest), which is approved for the treatment of endometriosis outside the United States and is 
marketed by Bayer. Ulipristal acetate, a Selective Progesterone Receptor Modulator (or SPRM) which is approved for the treat-
ment of moderate-to-severe symptoms of uterine fibroids outside the United States and is marketed by Gedeon Richter in 
Europe and other regions, and by Allergan in Canada. Ulipristal acetate experienced severe label restrictions regarding usage 
in 2018 due to post marketing liver safety issues. Allergan had submitted an NDA for ulipristal acetate but disclosed receipt 
of a complete response letter (CRL) from the FDA in August 2018 indicating that the NDA was not approvable in its current 
form and requesting additional information. Recently, Bayer Schering which was conducting an exhaustive clinical develop-
ment program for Vilaprisan for the treatment of uterine fibroids and endometriosis, announced that it would be stopping 
its development activities. In addition, oral contraceptives and nonsteroidal anti-inflammatory drugs, or NSAIDs, are routinely 
used as a first-line therapy for the treatment of symptoms associated with endometriosis and uterine fibroids and have a 
meaningful success rate at mitigating the symptoms associated with these conditions. 

With respect to nolasiban, there are no other oxytocin receptor antagonists approved either for oral administration or for use 
in connection with IVF. However, it is our understanding that Ferring Pharmaceuticals Inc. has barusiban in its development 
pipeline, an oxytocin receptor antagonist, to be administered subcutaneously, that may be developed for use in connection 
with IVF. Nevertheless, to our knowledge, no new clinical trial activity has been publicly announced since completion of a 
Phase 2 in 2015. Ferring Pharmaceuticals’ atosiban, an oxytocin receptor antagonist, to be administered by continuous infu-
sion, has been used off-label in investigator initiated trials in connection with IVF outside the United States. 

With respect to OBE022, Tractotile (atosiban) is approved to delay preterm birth outside of the United States, and we antic-
ipate potential competition as a single agent, if not used in combination with OBE022 given their different mechanisms of 
action. In terms of clinical development, it is our understanding that GlaxoSmithKline terminated the in-house development 
of retosiban, an oxytocin receptor antagonist, designed to delay preterm birth. Currently available prostaglandin synthesis in-
hibitors, such as NSAIDs may also represent competitive therapies, some of which may be used off-label as standard of care, 
despite risk of serious side effects for the neonates. Makena, which is registered in the USA for preventing preterm delivery in 
high risk patients is seen as a complement rather than a competitor for OBE022, due to its mechanism of action and regime 
of administration (bi-weekly administration to be initiated between week 16 and 20 of gestation). 

We may also compete with other companies acquiring and developing or marketing drug therapies or products for women’s 
reproductive health diseases.

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45

BUSINESS UPDATEMany of the companies against which we are competing or against which we may compete in the future have significantly 
greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical 
trials, obtaining regulatory approvals and marketing approved drugs than we do. Mergers and acquisitions in the biopharma-
ceutical industry could result in even more resources being concentrated among a small number of our competitors. Smaller 
or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with 
large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and man-
agement personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technolo-
gies complementary to, or necessary for, our programs. 

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that 
are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than linzagolix, 
nolasiban or OBE022 or any other product candidate that we may develop. Our competitors also may obtain FDA or other 
regulatory approval for their product candidates more rapidly than we may obtain approval for our product candidates, 
which could result in our competitors establishing a strong market position before we are able to enter the market. Any new 
product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolera-
bility and safety in order to overcome price competition and to be commercially successful. 

In addition, established biopharmaceutical companies may invest heavily to accelerate discovery and development of novel 
compounds or to in-license novel compounds that could make linzagolix, nolasiban, OBE022 or any of our future product 
candidates less competitive.

Intellectual Property 
We have filed numerous patent applications and have licensed numerous issued patents and patent applications pertaining 
to our product candidates and methods of manufacture and clinical use. We strive to protect and enhance the proprietary 
technology, inventions, and improvements that are commercially important to the development of our business by seeking, 
maintaining and defending our intellectual property, whether developed internally or licensed from third parties. For additional 
information regarding the license agreements to which we are a party, see the sections entitled “2013 License Agreement 
with Merck Serono,” “2015 License Agreement with Merck Serono” and “License and Supply Agreement with Kissei.” We 
also rely on trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop, 
strengthen and maintain our proprietary position in the field of reproductive healthcare. Additionally, we intend to rely on reg-
ulatory protection afforded through data exclusivity and market exclusivity, as well as patent term extensions, where available. 

As of December 31, 2018, our patent portfolio as it pertains to certain of our product candidates included: 

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four United States (U.S.) patents, projected to expire between 2034 and 2035, three U.S. patent applications, which, 
if granted, project to expire between 2034 and 2035, as well as corresponding patents and patent applications inter-
nationally, directed to nolasiban as a composition of matter and uses of nolasiban in assisted reproductive technology; 
one international (PCT) application, which, if granted in the U.S., projects to expire in 2037, directed to compositions 
of matter containing nolasiban and uses of nolasiban in assisted reproductive technology; 
two U.S. patent applications, which, if granted, project to expire between 2037 and 2039, as well as corresponding 
patent applications internationally, directed to compositions of matter containing OBE022 and uses of OBE022 for the 
treatment of preterm labor; 
two U.S. patent applications, which, if granted, project to expire in 2039, directed to uses of linzagolix for the treat-
ment of sex hormone-dependent diseases; and
two PCT applications, which, if granted in the U.S., project to expire in 2038, directed to uses of linzagolix for the 
treatment of endometriosis and uterine fibroids

ObsEva SA l Annual Report 2018

BUSINESS UPDATEAs of December 31, 2018, our in-licensed patent portfolio as it pertains to certain of our product candidates included: 

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one U.S. patent, projected to expire in 2023, as well as corresponding patents and patent applications internationally, 
directed to nolasiban as a composition of matter; 
three U.S. patents, projected to expire between 2024 and 2036, one U.S. patent application, which, if granted, proj-
ects to expire in 2036, as well as corresponding patents and patent applications internationally, directed to OBE022 as 
a composition of matter and uses of OBE022 for the treatment of preterm labor; and 
three U.S. patents, projected to expire between 2030 and 2032, one U.S. patent application, which, if granted, 
projects to expire in 2031, as well as corresponding patents and patent applications internationally outside of speci-
fied Asian countries, directed to linzagolix as a composition of matter and uses of linzagolix for the treatment of sex 
hormone-dependent diseases. 

The terms of individual patents may vary based on the countries in which they are obtained. Generally, patents issued for ap-
plications filed in the United States are effective for 20 years from the earliest effective non-provisional filing date in the ab-
sence, for example, of a terminal disclaimer shortening the term of the patent or patent term adjustment increasing the term 
of the patent. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively 
lost as a result of FDA regulatory review periods. The restoration period cannot be longer than five years and the total patent 
term, including the restoration period, must not exceed 14 years following FDA approval. The duration of patents outside of 
the United States varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest 
effective non-provisional filing date. 

In addition to the U.S. patents and U.S. patent applications described above, our patent portfolio and our in-licensed patent 
portfolio include issued patents and pending patent applications in various other jurisdictions. For example, we have ob-
tained, or we license from third parties, issued patents in Europe that pertain to certain aspects of our product candidates 
described above. 

In addition to patents and patent applications that we own and license, we rely on trade secrets and know-how to develop 
and maintain our competitive position. However, trade secrets can be difficult to protect. We seek to protect our proprietary 
technology and processes, and obtain and maintain ownership of certain technologies, in part, through confidentiality agree-
ments and invention assignment agreements with our employees, consultants, scientific advisors, contractors, and commer-
cial partners. 

Our future commercial success depends, in part, on our ability to obtain and maintain patent and other proprietary pro-
tection for commercially important technology, inventions and know-how related to our business; defend and enforce 
our patents; preserve the confidentiality of our trade secrets; and operate without infringing valid enforceable patents and 
proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell, or importing 
our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that 
cover these activities. With respect to our owned and licensed intellectual property, we cannot be sure that patents will issue 
from any of the pending patent applications to which we own or license rights or from any patent applications that we or 
our licensors may file in the future, nor can we be sure that any of our licensed patents or any patents that may be issued in 
the future to us or to our licensors will be commercially useful in protecting our product candidates and methods of using 
or manufacturing the same. Moreover, we may be unable to obtain patent protection for certain aspects of our product 
candidates generally, as well as with respect to certain indications. See the section entitled “Risk Factors–Risks Related to Our 
Intellectual Property” for a more comprehensive description of risks related to our intellectual property. 

ObsEva SA l Annual Report 2018 

47

BUSINESS UPDATE2013 License Agreement with Merck Serono 
In August 2013, we entered into a license agreement, or the 2013 license agreement, with Merck Serono, pursuant to which 
we received a worldwide exclusive license to develop, manufacture and commercialize compounds covered by the licensed 
patent rights, including nolasiban, which we are developing for the treatment of conditions associated with ART. In consid-
eration for the license, we issued 914,069 Series A preferred shares to Merck Serono at the time of our Series A financing, 
which had a fair-value of USD 4.9 million. With respect to any products we commercialize under the 2013 license agreement, 
we have agreed to pay Merck Serono quarterly royalties based on our annual net sales of each product at a high-single-digit 
percentage of annual net sales, subject to specified reductions, until the later of the date that all of the patent rights for that 
product have expired, as determined on a country-by-country and product-by-product basis, or ten years from the first com-
mercial sale of such product on a country-by-country and product-by-product basis. 

We are solely responsible for the development and commercialization of the product candidates licensed under the 2013 
license agreement. Merck Serono has the first right to maintain, prosecute, and even enforce the licensed patent rights. The 
2013 license agreement expires on the date of expiration of all royalty obligations, at which time our license becomes fully 
paid-up, irrevocable, and perpetual. Either party may terminate the 2013 license agreement earlier for an uncured material 
breach, subject to notice requirements and specified exceptions. Merck may terminate the 2013 license agreement if we 
or any of our affiliates or sublicensees challenge the licensed patent rights or in the event of our bankruptcy if we do not 
obtain a sublicensee within two years thereafter. We may also terminate the 2013 license agreement without cause at any 
time upon advance written notice to Merck Serono. Upon any termination, all license granted to us under the 2013 license 
agreement terminate. 

2015 License Agreement with Merck Serono 
In June 2015, we entered into a second license agreement with Merck Serono, or the 2015 license agreement, which we 
amended in July 2016, pursuant to which we received a worldwide exclusive license to develop, manufacture and commer-
cialize compounds covered by the licensed patent rights, including OBE022, which we are developing for the treatment of 
preterm labor in weeks 24 to 34 of pregnancy. In consideration for the license, we agreed to issue 325,000 Series A pre-
ferred shares to Merck Serono upon the initiation of a Phase 1 clinical trial for a licensed product. With respect to any prod-
ucts we commercialize under the 2015 license agreement, we have agreed to pay Merck Serono quarterly royalties based 
on our annual net sales of each product at a mid-single-digit percentage of annual net sales, subject to specified reductions, 
until the later of the date that all of the patent rights for that product have expired, as determined on a country-by-country 
and product-by-product basis or ten years from the first commercial sale of such product on a country-by-country and prod-
uct-by-product basis. 

We are solely responsible for the development and commercialization of the product candidates licensed under the 2015 
license agreement. Merck Serono has the first right to maintain, prosecute, and even enforce the licensed patent rights. The 
2015 license agreement expires on the date of expiration of all royalty obligations, at which time our license becomes fully 
paid-up, irrevocable and perpetual. Either party may terminate the 2015 license agreement earlier for an uncured material 
breach, subject to notice requirements and specified exceptions. Merck may terminate the 2015 license agreement if we or 
any of our affiliates or sublicensees challenge the licensed patent rights or in the event of our bankruptcy if we do not obtain 
a sublicensee within two years thereafter. We may also terminate the agreement without cause at any time upon advance 
written notice to Merck Serono. Upon any termination, all license granted to us under the 2015 license agreement terminate. 

48 

ObsEva SA l Annual Report 2018

BUSINESS UPDATELicense and Supply Agreement with Kissei 
In November 2015, we entered into a license and supply agreement, or the Kissei license and supply agreement, with Kissei. 
Pursuant to the Kissei license and supply agreement we received an exclusive license to develop, manufacture and commer-
cialize products, or the Product, containing the compounds which is a specified GnRH antagonist and covered by certain li-
censed patent rights, or the Compound, throughout the world except for specified Asian countries and we arranged to exclu-
sively acquire from Kissei the material necessary to produce linzagolix. Under the Kissei license and supply agreement, we are 
developing linzagolix for the treatment of heavy menstrual bleeding associated with uterine fibroids and pain associated with 
endometriosis. The agreement also establishes a joint development committee, and upon the filing of regulatory approval, 
a joint marketing committee, each of which shall be composed of an equal number of representatives for each party, which 
will exchange information and monitor progress in the development and marketing of the Product, respectively. We must 
use commercially reasonable efforts to develop, manufacture and commercialize the Compound and the Product. We and 
Kissei will share development data and regulatory filings from our respective territories with one another. Further, we granted 
Kissei an exclusive license under any of our know-how and patents related to inventions or improvements resulting from our 
activities under the Kissei license and supply agreement, for Kissei to use in exploiting the Compound and the Product in their 
retained territory. 

In consideration for the license, we made an initial USD 10.0 million upfront payment. We also made a payment of 
USD 5.0 million to Kissei in 2017 related to our commencement of the PRIMROSE Phase 3 clinical trials in the uterine fibroid 
indication. In addition, we have agreed to make additional aggregate milestone payments of up to USD 58.0 million upon 
the achievement of specified developmental milestones, such as the initiation of clinical trials and receipt of regulatory 
approvals. With respect to any Product we commercialize under the Kissei license and supply agreement, we have agreed 
to make additional aggregate milestone payments of up to USD 125.0 million to Kissei upon the achievement of specified 
commercial milestones. 

Pursuant to the Kissei license and supply agreement, we have agreed to exclusively purchase the active pharmaceutical 
ingredient for linzagolix from Kissei. During the development stage, we are obligated to pay Kissei a specified supply price. 
Following the first commercial sale of licensed product, we are obligated to pay Kissei a royalty payment in the low twenty 
percent range as a percentage of net sales, which includes payment for Kissei’s supply of the active pharmaceutical ingredi-
ent until the latest of the date that the valid claim of a patent for the Product has expired, the expiration of our regulatory 
exclusivity period or 15 years from the first commercial sale of such product on a country-by-country and product-by-product 
basis. During the term, we are restricted from developing, marketing and selling GnRH agonists and GnRH antagonists other 
than the Compound to the extent allowed by applicable laws. 

We are solely responsible, at our expense, for the development and commercialization of the Product candidates licensed 
under the Kissei license and supply agreement in the licensed territory. Kissei has the responsibility to maintain and prose-
cute the licensed patent rights in the licensed territory and we have the right to enforce any of them in the event that Kissei 
abandons it. The Kissei license and supply agreement terminates on the date of expiration of all royalty obligations, unless 
we elect to continue to purchase the Compound from Kissei after the expiration of all royalty obligations. Either party may 
terminate the Kissei license and supply agreement earlier for an uncured breach, subject to notice requirements and specified 
exceptions, including that Kissei has the option to convert the exclusive licenses granted to us to non-exclusive if we breach 
the agreement and fail to cure within a specified time period. We may also terminate the agreement for scientific, commer-
cial, strategic or intellectual property reasons at any time upon advance written notice to Kissei. Kissei may also terminate 
the agreement if we do not fulfill certain development-related obligations for a specified period of time, or if, in connection 
with a change of control by us, we do not fulfill certain diligence obligations for a specified period of time. Further, under the 

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49

BUSINESS UPDATEterms of the Kissei license and supply agreement, Kissei is obligated to have a backup supplier based on the pharmaceutical 
industry standard. We may only gain the right to obtain an alternative source of the supply of linzagolix upon Kissei failing 
to deliver a substantial percentage of the requested supply, delivering the supply late or delivering the supply of linzagolix 
in nonconforming manner; provided that Kissei has a specified period of time to cure any of these defects. In the event that 
Kissei failed to deliver a substantial percentage of requested supply of linzagolix, we may gain the right to obtain an alterna-
tive source of supply. Further, we and Kissei are each obligated to maintain a specified percentage of supply in excess of the 
estimate for yearly requirements that we submit to Kissei. 

Government Regulation 

FDA Drug Approval Process 
In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and 
Cosmetic Act, or FDCA, and other federal and state statutes and regulations, govern, among other things, the research, de-
velopment, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-ap-
proval monitoring and reporting, sampling and import and export of pharmaceutical products. To obtain regulatory approvals 
in the United States and in foreign countries, and subsequently comply with applicable statutes and regulations, we will need 
to spend substantial time and financial resources. 

Approval Process 
The FDA must approve any new drug or a drug with certain changes to a previously approved drug before a company can 
market it in the United States. Failure to comply with applicable U.S. requirements may subject a company to a variety of 
administrative or judicial sanctions, such as FDA refusal to approve pending applications, warning or untitled letters, clinical 
holds, withdrawal of an approval, product recalls, product seizures, total or partial suspension of production or distribution, 
injunctions, fines, refusals of government contracts, restitution, disgorgement, civil penalties or criminal prosecution. 

The steps required before a drug may be marketed in the United States generally include the following: 

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completion of extensive preclinical laboratory tests, animal studies and CMC studies, all performed in accordance with 
the FDA’s Good Laboratory Practice, or GLP, regulations; 
submission to the FDA of an IND application for human clinical testing, which must become effective before human 
clinical trials may begin. The sponsor must update the IND annually; 
approval of the study by an IRB or ethics committee at each site before the study begins; 
performance of adequate and well-controlled human clinical trials in accordance with good clinical practice, or GCP, 
requirements to establish the safety and efficacy of the drug for each proposed indication to the FDA’s satisfaction; 
submission to the FDA of an NDA after completion of all clinical trials; 
potential review of the drug application by an FDA advisory committee, if applicable; 
satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the products is 
produced to assess compliance with cGMP regulations and to assure that the facilities, methods and controls are 
adequate to preserve the drug’s identity; and 
FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States. 

Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary sub-
stantially based upon the type, complexity and novelty of the product or disease. 

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ObsEva SA l Annual Report 2018

BUSINESS UPDATEPreclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess 
the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with 
federal regulations and requirements, including GLP. The company submits the results of the preclinical testing, together with 
manufacturing information, analytical data and any available clinical data or literature to the FDA as part of an IND along 
with other information, including information about product CMC and a proposed clinical trial protocol. Long term preclinical 
tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after submitting the initial IND. 

The FDA requires a 30-day waiting period after the submission of each IND before the company can begin clinical testing in 
humans. The FDA may, within the 30-day time period, raise concerns or questions relating to one or more proposed clinical 
trials and place the study on a clinical hold. In such a case, the company and the FDA must resolve any outstanding concerns 
before the company may begin the clinical trial. Accordingly, the submission of an IND may or may not be sufficient to permit 
the sponsor to start a clinical trial. If, following the 30-day period, the FDA does not raise any concerns regarding the IND 
submission, the company may begin clinical testing under the IND. The company must also make a separate submission to an 
existing IND for each successive clinical trial conducted during drug development. 

Clinical Trials 
Clinical trials involve administering the investigational new drug to healthy volunteers or patient trials under the supervision 
of a qualified investigator. The company must conduct clinical trials: 

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in compliance with federal regulations; 
in compliance with GCP, an international standard meant to protect the rights and health of patients and to define 
the roles of clinical trial sponsors, administrators, and monitors; as well as 
under protocols detailing the objectives of the trial, the safety monitoring parameters, and the effectiveness criteria to 
be evaluated. 

The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it 
believes that the sponsor is not conducting the clinical trial in accordance with FDA requirements or presents an unacceptable 
risk to the clinical trial patients. The sponsor must also submit the study protocol, any amendments to protocols and informed 
consent information for patients in clinical trials to an IRB for approval at each site at which the clinical trial will be conduct-
ed. An IRB may halt the clinical trial, either temporarily or permanently, for failure to comply with the IRB’s requirements, or 
may impose other conditions. Information about certain clinical trials and their results must be also submitted within specific 
timeframes to the National Institutes of Health, or NIH, for public dissemination on their www.clinicaltrials.gov website. 
Companies generally divide the clinical investigation of a drug into three or four phases. While companies usually conduct 
these phases sequentially, they are sometimes overlapped or combined. 

Phase 1. These trials typically evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the investiga-
tional new drug in humans, the side effects associated with increasing doses, and if possible, gain early evidence on effective-
ness. Other Phase 1 or clinical pharmacology studies generally evaluate the drug for potential DDI, cardiovascular safety and 
special population interactions. These studies, if needed, are to be conducted prior to NDA submission but may be conducted 
in parallel to Phase 2 and Phase 3. 

Phase 2. The drug is administered to a limited patient population to evaluate dosage tolerance and optimal dosage, identify 
possible adverse side effects and safety risks, and preliminarily evaluate efficacy. Phase 2 trials may be denoted as Phase 2a, 
wherein initial dose-response relationship is explored, and Phase 2b, wherein dose ranging and proof-of-concept is targeted. 

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BUSINESS UPDATEPhase 3. The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, 
in well-controlled clinical trials to generate enough data to statistically evaluate dosage, clinical effectiveness and safety, to 
establish the overall benefit-risk relationship of the investigational drug, and to provide an adequate basis for labeling and 
product approval. 

Phase 4. In some cases, the FDA may condition approval of an NDA for a drug on the company’s agreement to conduct addi-
tional clinical trials after approval. In other cases, a sponsor may voluntarily conduct additional clinical trials after approval to 
gain more information about the drug. Companies typically refer to such post-approval trials as Phase 4 clinical trials. 

The FDA, the IRB, or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, includ-
ing a finding that the research patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or 
terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s 
requirements or if the drug has been associated with unexpected serious harm to patients. Additionally, an independent 
group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee, 
may oversee some clinical trials. This group provides authorization for whether or not a trial may move forward at designated 
check points based on access to certain data from the trial. We may also suspend or terminate a clinical trial based on evolv-
ing business objectives and the competitive climate. 

Submission of an NDA 
After we complete the required preclinical, CMC and clinical testing, we can prepare and submit an NDA to the FDA, which 
must approve the NDA before we can start marketing the drug in the United States. An NDA must include all relevant data 
available from pertinent preclinical studies and clinical trials, including negative or ambiguous results as well as positive 
findings, together with detailed information relating to the drug’s chemistry, manufacturing, controls, and proposed labeling, 
among other things. Data can come from company-sponsored clinical trials on a drug, or from a number of alternative sourc-
es, including studies initiated by investigators. To support marketing authorization, the data we submit must be sufficient in 
quality and quantity to establish the safety and effectiveness of the investigational drug to the FDA’s satisfaction. 

The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to a sub-
stantial application user fee, and the sponsor under an approved NDA is also subject to annual program user fees. The FDA 
typically increases these fees annually. 

The FDA has 60 days from its receipt of an NDA to determine whether it will accept the application for filing based on the 
agency’s threshold determination that the application is sufficiently complete to permit substantive review. The FDA may 
request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with 
the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once 
the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, 
among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, 
packaged or held meets standards designed to assure the product’s continued safety, quality and purity. Once the FDA ac-
cepts the filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. 
Under the Prescription Drug User Fee Act, the FDA has a goal of responding to standard review NDAs within ten months 
after the 60-day filing review period, but this timeframe is often extended. The FDA reviews most applications for standard 
review drugs within ten to 12 months and most applications for priority review drugs within six to eight months. Priority 
review can be applied to drugs that the FDA determines offer major advances in treatment, or provide a treatment where no 
adequate therapy exists. 

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BUSINESS UPDATEIn addition, under the Pediatric Research Equity Act of 2003, as amended and reauthorized, certain NDAs or supplements to 
an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in 
all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which 
the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for 
submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the 
pediatric data requirements. 

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or 
efficacy, to an advisory committee. This is typically a panel that includes clinicians and other experts that will review, evalu-
ate, and recommend whether the FDA should approve the application. The FDA is not bound by the recommendation of an 
advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect 
one or more clinical sites to assure compliance with GCP, and will inspect the facility or the facilities at which the drug is 
manufactured. The FDA will not approve the product unless compliance with cGMP is satisfactory and the NDA contains data 
that provide evidence that the drug is safe and effective in the indication studied. 

The FDA’s Decision on an NDA 
After the FDA evaluates the NDA and all related information, including the advisory committee recommendation, if any, 
and inspection reports regarding the manufacturing facilities and clinical trial sites, it issues either an approval letter or a 
complete response letter. A complete response letter indicates that the FDA has completed its review of the application, and 
the agency has determined that it will not approve the application in its present form. A complete response letter generally 
outlines the deficiencies in the submission and may require substantial additional clinical data or other significant, expensive, 
and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. The FDA has committed to 
reviewing resubmissions of the NDA addressing such deficiencies in two or six months, depending on the type of information 
included. Even with the submission of this additional information, the FDA may ultimately decide that the NDA does not sat-
isfy the criteria for approval. The government may establish additional requirements, including those resulting from new legis-
lation, or the FDA’s policies may change, which could delay or prevent regulatory approval of our drugs under development. 

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. 
As a condition of NDA approval, the FDA may require an REMS, to help ensure that the benefits of the drug outweigh the 
potential risks. REMS can include medication guides, communication plans for healthcare professionals, special training or 
certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of pa-
tient registries. The requirement for REMS can materially affect the potential market and profitability of the drug. Moreover, 
the FDA may condition approval on substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. 

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or 
manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before we can 
implement the change. An NDA supplement for a new indication typically requires clinical data similar to that in the original 
application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing new 
NDAs. As with new NDAs, the FDA often significantly extends the review process with requests for additional information or 
clarification. 

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BUSINESS UPDATEPost-approval Requirements 
The FDA regulates products that are manufactured or distributed pursuant to FDA approvals and has specific requirements 
pertaining to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting 
of adverse experiences with the product. After approval, the FDA must provide review and approval for most changes to 
the approved product, such as adding new indications or other labeling claims. There also are continuing, annual user fee 
requirements for any marketed products and the establishments who manufacture our products, as well as new application 
fees for supplemental applications with clinical data. 

In some cases, the FDA may condition approval of an NDA for a product on the sponsor’s agreement to conduct additional 
clinical trials after approval. In other cases, a sponsor may voluntarily conduct additional clinical trials after approval to gain 
more information about the product. Such post-approval trials are typically referred to as Phase 4 clinical trials. 

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are re-
quired to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections 
by the FDA and state agencies for compliance with cGMP requirements. There are strict regulations regarding changes to the 
manufacturing process, and, depending on the significance of the change, it may require prior FDA approval before we can 
implement it. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting 
and documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manu-
facturers must continue to expend time, money and effort in the area of production and quality control to maintain compli-
ance with cGMP and other aspects of regulatory compliance. 

The FDA may withdraw approval if a company does not comply with regulatory requirements and maintain standards or if 
problems occur after the product reaches the market. If a company or the FDA discovers previously unknown problems with 
a product, including adverse events of unanticipated severity or frequency, issues with manufacturing processes, or the com-
pany’s failure to comply with regulatory requirements, the FDA may revise the approved labeling to add new safety informa-
tion; impose post-marketing trials or other clinical trials to assess new safety risks; or impose distribution or other restrictions 
under a REMS program. Other potential consequences may include: 

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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market 
or product recalls; 
fines, warning letters or holds on post-approval clinical trials; 
the FDA refusing to approve pending NDAs or supplements to approved NDAs, or suspending or revoking of product 
license approvals; 
product seizure or detention, or refusal to permit the import or export of products; or 
injunctions or the imposition of civil or criminal penalties. 

The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Prod-
ucts may be promoted only for the approved indications and in accordance with the provisions of the approved label. The 
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. We could be 
subject to significant liability if we violated these laws and regulations. 

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BUSINESS UPDATEHealthcare Reform 
In the United States, the European Union and foreign jurisdictions, the legislative landscape continues to evolve. There have 
been a number of legislative and regulatory changes to the healthcare system that could affect our future results of opera-
tions. In particular, there have been and continue to be a number of initiatives at the United States federal and state levels 
that seek to reduce healthcare costs. In March 2010, the Patient Protection and Affordable Care Act, as amended by the 
Health Care and Education Reconciliation Act, or collectively, the ACA, was enacted, which includes measures that have sig-
nificantly changed health care financing by both governmental and private insurers. The provisions of the ACA of importance 
to the pharmaceutical and biotechnology industry are, among others, the following: 

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an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs agents 
and biologic agents, which is apportioned among these entities according to their market share in certain government 
healthcare programs; 
an increase in the rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of 
the average manufacturer price for branded and generic drugs, respectively; 
a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-
of-sale discounts to negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap 
period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; 
extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in 
Medicaid managed care organizations, unless the drug is subject to discounts under the 340B drug discount program; 
a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculat-
ed for drugs that are inhaled, infused, instilled, implanted or injected; 
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid cover-
age to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at 
or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; 
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; 
new requirements under the federal Physician Payments Sunshine Act for drug manufacturers to report information 
related to payments and other transfers of value made to physicians and teaching hospitals as well as ownership or 
investment interests held by physicians and their immediate family members; 
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical 
effectiveness research, along with funding for such research; and
establishment of a Center for Medicare and Medicaid Innovation at the CMS to test innovative payment and service 
delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. 

Some of the provisions of the ACA have yet to be implemented, and there have been judicial and Congressional challenges 
to certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the 
ACA. Since January 2017, President Trump has signed two Executive Orders and other directives designed to delay the imple-
mentation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated 
by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. 
While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes un-
der the ACA have been signed into law. Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, or Tax Act, 
includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA 
on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as 
the “individual mandate”. On January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal 
year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain 
high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on mar-
ket share, and the medical device excise tax on non-exempt medical devices. The Bipartisan Budget Act of 2018, or the BBA, 

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BUSINESS UPDATEamong other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, 
commonly referred to as the “donut hole”. In July 2018, CMS published a final rule permitting further collections and pay-
ments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in 
response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. 
On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the 
“individual mandate” was repealed by Congress as part of the Tax Act. While the Texas U.S. District Court Judge, as well as 
the Trump administration and CMS, have stated that the ruling will have no immediate effect pending appeal of the decision, 
it is unclear how this decision, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA.

In addition, other federal health reform measures have been proposed and adopted in the United States since the ACA was 
enacted. For example, as a result of the Budget Control Act of 2011, providers are subject to Medicare payment reductions 
of 2% per fiscal year, which, due to subsequent legislation, including the BBA, will remain in effect through 2027 unless 
additional Congressional action is taken. 

Further, the American Taxpayer Relief Act of 2012 reduced Medicare payments to several providers and increased the statute 
of limitations period for the government to recover overpayments from providers from three to five years. More recently, 
there has been heightened governmental scrutiny recently over the manner in which manufacturers set prices for their mar-
keted products, which have resulted in several recent Congressional inquiries and proposed and enacted federal and state 
legislation designed to, among other things, bring more transparency to product pricing, review the relationship between 
pricing and manufacturer patient programs, reduce the cost of drugs under Medicare and reform government program reim-
bursement methodologies for products. 

At the federal level, the Trump administration’s budget proposal for fiscal year 2019 contains further drug price control 
measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, mea-
sures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to 
negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. Additionally, 
the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains 
additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare pro-
grams, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products 
paid by consumers. The U.S. Department of Health and Human Services, or HHS, has already started the process of soliciting 
feedback on some of these measures and, at the same, is immediately implementing others under its existing authority. For 
example, in September 2018, CMS announced that it will allow Medicare Advantage Plans the option to use step therapy for 
Part B drugs beginning January 1, 2019, and in October 2018, CMS proposed a new rule that would require direct-to-con-
sumer television advertisements of prescription drugs and biological products, for which payment is available through or 
under Medicare or Medicaid, to include in the advertisement the Wholesale Acquisition Cost, or list price, of that drug or bi-
ological product. On January 31, 2019, the HHS Office of Inspector General proposed modifications to federal Anti-Kickback 
Statute safe harbors which, among other things, may affect rebates paid by manufacturers to Medicare Part D plans, the pur-
pose of which is to further reduce the cost of drug products to consumers. While a number of any proposed measures will 
require authorization through additional legislation to become effective, Congress and the Trump administration have each 
indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, 
individual states in the United States have increasingly passed legislation and implemented regulations designed to control 
pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on 
certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage 
importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals 
are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in 
their prescription drug and other healthcare programs. 

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BUSINESS UPDATEAdditionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act 
of 2017, or the Right to Try Act, was signed into law. The law, among other things, provides a federal framework for certain 
patients to access certain investigational new drug products that have completed a Phase I clinical trial and that are under-
going investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in 
clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a 
prescription drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act.

Coverage, Reimbursement and Pricing 
Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regu-
latory approval. In the United States and markets in other countries, sales of any products for which we receive regulatory 
approval for commercial sale will depend, in part, on the availability of coverage and the adequacy of reimbursement from 
third-party payors. Third-party payors include government authorities, managed care organizations, private health insurers 
and other organizations. The process for determining whether a third-party payor will provide coverage for a product may 
be separate from the process for setting the reimbursement rate that the payor will pay for the product. Third-party payors 
may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA-approved 
products for a particular indication. Moreover, a third-party payor’s decision to provide coverage for a product does not imply 
that an adequate reimbursement rate will be approved. For example, the payor’s reimbursement payment rate may not be 
adequate or may require co-payments that patients find unacceptably high. Additionally, coverage and reimbursement for 
products can differ significantly from payor to payor. The Medicare and Medicaid programs increasingly are used as models 
for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs and bio-
logics. However, one third-party payor’s decision to cover a particular product does not ensure that other payors will also pro-
vide coverage for the product, or will provide coverage at an adequate reimbursement rate. Adequate third-party reimburse-
ment may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment 
in product development. Further, some third-party payors may require pre-approval of coverage for new or innovative devices 
or drug therapies before they provide reimbursement for use of such therapies. 

Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of prod-
ucts and services, in addition to their safety and efficacy. To obtain coverage and reimbursement for any product that might 
be approved for sale, we may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity 
and cost-effectiveness of our product. These studies will be in addition to the studies required to obtain regulatory approvals. 
If third-party payors do not consider a product to be cost-effective compared to other available therapies, they may not cover 
the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a 
company to sell its products at a profit. Thus, obtaining and maintaining reimbursement status is time-consuming and costly. 

The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost con-
tainment programs to limit the growth of government-paid health care costs, including price controls, restrictions on reim-
bursement and requirements for substitution of generic products for branded prescription products. By way of example, the 
ACA contains provisions that may reduce the profitability of products, including, for example, increased rebates for products 
sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain 
Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care pro-
grams. CMS may develop new payment and delivery models, such as bundled payment models. For example, the HHS moved 
30% of Medicare payments to alternative payment models tied to the quality or value of services in 2016. Additionally, HHS 
set a goal of moving 50% of Medicare payments into these alternative payments by the end of 2018, but due a policy shift 
under the Trump administration, it is unclear how and when such changes will be implemented. 

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BUSINESS UPDATEIn the European Community, governments influence the price of products through their pricing and reimbursement rules and 
control of national health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions 
operate positive and negative list systems under which products may only be marketed once a reimbursement price has been 
agreed to by the government. To obtain reimbursement or pricing approval, some of these countries may require the com-
pletion of clinical trials that compare the cost effectiveness of a particular product candidate to currently available therapies. 
Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The 
downward pressure on health care costs in general, particularly prescription products, has become very intense. As a result, 
increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross border imports 
from low-priced markets exert a commercial pressure on pricing within a country. 

The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government 
and third-party payors fail to provide coverage and adequate reimbursement. In addition, the focus on cost containment 
measures in the United States and other countries has increased and we expect will continue to increase the pressure on 
pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if we attain 
favorable coverage and reimbursement status for one or more products for which we receive regulatory approval, less favor-
able coverage policies and reimbursement rates may be implemented in the future. 

Sales and Marketing 
Numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid 
Services, or CMS, other divisions of HHS, the U.S. Department of Justice, and similar foreign, state, and local government au-
thorities, regulate sales, promotion and other activities of prescription drug manufacturers. As described above, the FDA reg-
ulates all advertising and promotion activities for products under its jurisdiction both prior to and after approval. Only those 
claims relating to safety and efficacy that the FDA has approved may be used in labeling. Physicians may prescribe legally 
available products for uses that are not described in the product’s labeling and that differ from those we tested and the FDA 
approved. Such off-label uses are common across medical specialties, and often reflect a physician’s belief that the off-label 
use is the best treatment for the patients. The FDA does not regulate the behavior of physicians in their choice of treatments, 
but FDA regulations do impose stringent restrictions on manufacturers’ communications regarding off-label uses. If we do 
not comply with applicable FDA requirements we may face adverse publicity, enforcement action by the FDA, corrective 
advertising, consent decrees and the full range of civil and criminal penalties available to the FDA. Promotion of off-label uses 
of products can also implicate the false claims laws described below. 

In the United States, clinical research, sales, marketing and scientific/educational programs must also comply with various fed-
eral and state laws pertaining to healthcare “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kick-
back laws including, without limitation, the federal Anti-Kickback Statute that applies to items and services reimbursable 
under governmental healthcare programs such as Medicare and Medicaid, makes it illegal for a prescription drug manufac-
turer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the 
purchase or prescription of a particular product. Due to the breadth of the statutory provisions, limited statutory exceptions 
and regulatory safe harbors, and the scarcity of guidance in the form of regulations, agency advisory opinions, sub-regulatory 
guidance and judicial decisions addressing industry practices, it is possible that our practices might be challenged under the 
federal Anti-Kickback Statute or similar laws. Moreover, recent healthcare reform legislation has strengthened these laws. For 
example, the ACA, among other things, amended the intent requirement of the federal Anti-Kickback Statute and criminal 
healthcare fraud statutes to clarify that a person or entity does not need to have actual knowledge of this statute or specif-
ic intent to violate it in order to have committed a violation. In addition, the ACA clarifies that the government may assert 
that a claim that includes items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false 

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BUSINESS UPDATEor fraudulent claim for purposes of the federal civil False Claims Act. In addition, the U.S. federal government and private 
individuals, on behalf of the U.S. federal government, can bring similar actions under the federal civil False Claims Act. False 
claims laws, including, without limitation, the federal civil False Claims Act, prohibit anyone from knowingly and willingly 
presenting, or causing to be presented for payment, to third-party payors (including Medicare and Medicaid) claims for 
reimbursed products or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for 
medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to 
scrutiny under these laws, as well as civil monetary penalties laws and the criminal healthcare fraud provisions enacted as part 
of the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA. Violations of fraud and abuse laws 
may be punishable by criminal, civil and administrative sanctions, including fines and civil monetary penalties, the possibility 
of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement, individual imprisonment, 
and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements 
on companies. Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and em-
ployees, including criminal sanctions against executive officers under the so-called “responsible corporate officer” doctrine, 
even in situations where the executive officer did not intend to violate the law and was unaware of any wrongdoing. 

Given the significant penalties and fines that can be imposed on companies and individuals if convicted, allegations of such 
violations often result in settlements even if the company or individual being investigated admits no wrongdoing. Settlements 
often include significant civil sanctions, including fines and civil monetary penalties, and corporate integrity agreements. If the 
government were to allege or convict us or our executive officers of violating these laws, our business could be harmed. Our 
activities could be subject to challenge for the reasons discussed above and due to the broad scope of these laws and the 
increasing attention being given to them by law enforcement authorities. Other healthcare laws that may affect our ability 
to operate include HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, 
or HITECH, and their implementing regulations, which governs the conduct of certain electronic healthcare transactions and 
protects the security and privacy of protected health information; and the federal Physician Payments Sunshine Act, which 
requires certain manufacturers of products, devices, biologics, and medical supplies to report annually to CMS information re-
lated to payments and other transfers of value to physicians and teaching hospitals, and ownership and investment interests 
held by physicians and their immediate family members. 

Further, there are an increasing number of state laws that affect our business operations. Some state and local laws require 
manufacturers to make reports to on pricing and marketing information and impose registration requirements on salesper-
sons within the jurisdiction. Other state laws require pharmaceutical companies to comply with the pharmaceutical industry’s 
voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or oth-
erwise restrict payments that may be made to healthcare providers and other potential referral sources. Some states maintain 
anti-kickback and false claims laws that apply to claims involving healthcare items or services reimbursed by any third-party 
payor, including private insurers. We may also be subject to state laws governing the privacy and security of health infor-
mation in certain circumstances, many of which differ from each other in significant ways and often are not preempted by 
HIPAA, thus complicating compliance efforts. Many of these state laws contain ambiguities as to what is required to comply 
with the laws. Given the lack of clarity in laws and their implementation, our reporting actions could be subject to the penalty 
provisions of the pertinent state authorities. Ensuring that our internal operations and future business arrangements with 
third parties comply with applicable healthcare laws and regulations could involve substantial costs. 

Similar rigid restrictions are imposed on the promotion and marketing of products in the European Union and other coun-
tries. Even in those countries where we may not be directly responsible for the promotion and marketing of our products, if 
our potential international distribution partners engage in inappropriate activity it can have adverse implications for us. 

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BUSINESS UPDATEForeign Regulation 
In order to market any product outside of the United States, we would need to comply with numerous and varying regulato-
ry requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, 
clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA 
approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities 
before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions. Although many of 
the issues discussed above with respect to the United States apply similarly in the context of the European Union, the approv-
al process varies between countries and jurisdictions and can involve additional product testing and additional administrative 
review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than 
that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval 
in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the 
regulatory process in others. 

The Foreign Corrupt Practices Act 
The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, or authorizing 
payment or offering of anything of value, directly or indirectly, to any foreign official, political party, or candidate for the 
purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or 
retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with ac-
counting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of 
the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting 
controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the United States, can 
result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts. 

European Union – EMA process 
In the European Union, products follow a similar demanding process as that we described above for the United States and 
the ICH Common Technical Document is the basis for applications. 

Centralized Procedure 
Under the centralized procedure, after the EMA issues an opinion, the European Commission issues a single marketing 
authorization valid across the European Union, as well as Iceland, Liechtenstein and Norway. The centralized procedure is 
compulsory for human products that are: derived from biotechnology processes, such as genetic engineering; contain a 
new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative 
disorders or autoimmune diseases and other immune dysfunctions; and officially designated orphan drugs. For products 
that do not fall within these categories, an applicant has the option of submitting an application for a centralized marketing 
authorization to the EMA as long as the product concerned is a significant therapeutic, scientific or technical innovation, or if 
its authorization would be in the interest of public health. 

60 

ObsEva SA l Annual Report 2018

BUSINESS UPDATENational Authorization Procedures 
There are also two other possible routes to authorize medicinal products in several countries, which are available for products 
that fall outside the scope of the centralized procedure: 

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Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous authorization 
in more than one European Union country of a medicinal product that has not yet been authorized in any European 
Union country and that does not fall within the mandatory scope of the centralized procedure. 
Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in one European 
Union Member State, in accordance with the national procedures of that country. Thereafter, further marketing 
authorizations can be sought from other European Union countries in a procedure whereby the countries concerned 
agree to recognize the validity of the original, national marketing authorization. 

Good Manufacturing Practices 
Like the FDA, the EMA, the competent authorities of the European Union Member States and other regulatory agencies 
regulate and inspect equipment, facilities and processes used in the manufacturing of products prior to approving a product. 
If, after receiving clearance from regulatory agencies, a company makes a material change in manufacturing equipment, 
location, or process, additional regulatory review and approval may be required. Once we or our partners commercialize 
products, we will be required to comply with cGMP, and product-specific regulations enforced by, the European Commis-
sion, the EMA and the competent authorities of European Union Member States following product approval. Also like the 
FDA, the EMA, the competent authorities of the European Union Member States and other regulatory agencies also conduct 
regular, periodic visits to re-inspect equipment, facilities, and processes following the initial approval of a product. If, as a 
result of these inspections, the regulatory agencies determine that our or our partners’ equipment, facilities, or processes do 
not comply with applicable regulations and conditions of product approval, they may seek civil, criminal or administrative 
sanctions or remedies against us, including the suspension of our manufacturing operations or the withdrawal of our product 
from the market. 

Data and Market Exclusivity 
Similar to the United States, there is a process to authorize generic versions of innovative products in the European Union. 
Generic competitors can submit abridged applications to authorize generic versions of products authorized by EMA through 
a centralized procedure referencing the innovator’s data and demonstrating bioequivalence to the reference product, among 
other things. New products in the European Union can receive eight years of data exclusivity coupled with two years of mar-
ket exclusivity, and a potential one-year extension, if the marketing authorizations holder obtains an authorization for one 
or more new therapeutic indications that demonstrates “significant clinical benefit” in comparison with existing therapies. 
This system is usually referred to as “8+2”. Abridged applications cannot rely on an innovator’s data until after expiration of 
the eight year date exclusivity term, meaning that a competitor can file an application for a generic product but the product 
cannot be marketed until the end of the market exclusivity term. 

ObsEva SA l Annual Report 2018 

61

BUSINESS UPDATEFinancial
Review
Review

Financial Review

We are a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics 
for serious conditions that compromise a woman’s reproductive health and pregnancy. We are focused on providing thera-
peutic solutions for women between the ages of 15 and 49 who suffer from reproductive health conditions that affect their 
quality of life, ability to conceive or that complicate pregnancy and the health of newborns. Our goal is to build the leading 
women’s reproductive health and pregnancy company focused on conditions where current treatment options are limited 
and significant unmet needs exist. 

We are developing linzagolix as a novel, oral gonadotropin releasing hormone, or GnRH, receptor antagonist, for the treat-
ment of pain associated with endometriosis and heavy menstrual bleeding associated with uterine fibroids in pre-menopausal 
women. Aimed at addressing the need of the largest possible population in each indication, our clinical trials for both of 
these indications are designed to assess and potentially support the registration of two regimens of administrations for linza-
golix i.e. (i) a moderate dose of linzagolix without hormonal add-back therapy and (ii) a high dose of linzagolix with hormonal 
add-back therapy. 

In 2018 we completed a 24-week treatment of 330-patient multiple-dose, placebo-controlled Phase 2b EDELWEISS clinical 
trial of linzagolix in endometriosis patients across 70 sites in the United States and 15 sites in Central and Eastern Europe. We 
are currently conducting a 6-month treatment extension phase of the EDELWEISS clinical trial which we expect to complete in 
the first half of 2019. In June 2018, we announced that the EDELWEISS clinical trial successfully met its primary endpoint, a 
statistically significant increase in patient response rate vs. placebo following 12 weeks of treatment. In September 2018, we 
announced positive 24-week treatment results from the EDELWEISS clinical trial, including bone mineral density (BMD) safety 
assessments. We believe the BMD results support our plan to pursue further development of two doses of linzagolix for the 
treatment of endometriosis, including a 75 mg once daily dose without low dose ABT, and a 200 mg once daily dose in com-
bination with low dose ABT. We met with the FDA for an End of Phase 2 meeting in December 2018 to discuss the design of 
our planned two pivotal Phase 3 clinical trials (EDELWEISS 2 and EDELWEISS 3). Based on the feedback and meeting minutes 
received from the FDA, we plan to commence this trial program in the first quarter of 2019.

In addition, we are conducting two Phase 3 clinical trials of linzagolix in patients with heavy menstrual bleeding associated 
with uterine fibroids, the PRIMROSE clinical trials. The PRIMROSE clinical trials each have a target enrollment of approximately 
500 patients and are being conducted in the United States and in Europe. We announced that the PRIMROSE 2 trial, being 
conducted in both the U.S. and Europe, completed patient recruitment in December 2018, and we expect the PRIMROSE 1 
trial being conducted in the U.S. to do so in the second quarter of 2019. We expect to report primary endpoint results fol-
lowing 24 weeks of treatment in the PRIMROSE 1 and 2 clinical trials in the first quarter of 2020 and fourth quarter of 2019, 
respectively, with a regulatory filing with the FDA based on 52 weeks treatment duration in both trials, planned prior to the 
end of 2020.

We are also developing nolasiban, an oral oxytocin receptor antagonist, to improve clinical pregnancy and live birth rates in 
women undergoing in-vitro fertilization, or IVF. We completed randomization of 778 patients in our European Phase 3 clinical 
trial in women undergoing IVF, or the IMPLANT 2 clinical trial, in 2017 and reported positive results for the primary endpoint 
of ongoing pregnancy 10 weeks post embryo transfer in February 2018, and positive live birth rate results in October 2018. 
Nolasiban was observed to be well tolerated with a safety profile not different from placebo. 28-day neonatal safety data 
from the IMPLANT 2 trial did not reveal any adverse consequences from nolasiban treatment, and 6-month infant follow-up 
data is expected in the second quarter of 2019. 

Based on feedback received in the third quarter of 2018 from regulatory authorities in Europe on our nolasiban development 
program, we initiated in late November 2018 an additional Phase 3 trial primarily in European, Canadian and CIS or Rus-
sian centers, or the IMPLANT 4 trial. Patients are being randomized and the IMPLANT 4 primary endpoint readout (10-week 
ongoing pregnancy results) is expected to support the filing of a Marketing Authorization Application (MAA) in Europe being 
planned for late 2019.

ObsEva SA l Annual Report 2018 

63

In addition, we are developing OBE022, an oral and selective prostaglandin F2α receptor antagonist, for preterm labor in 
weeks 24 to 34 of pregnancy. In December 2017, we announced the initiation of our Phase 2a proof-of-concept clinical trial 
of OBE022 known as PROLONG which is being conducted in two parts: Part A and Part B. Part A is an open-label trial assess-
ing the safety and pharmacokinetics of OBE022 in pregnant women, who were already receiving standard of care therapy 
for preterm labour, atosiban infusion. Part B, is a randomized, double-blind, placebo-controlled, parallel-group trial to assess 
the efficacy, safety and pharmacokinetics of OBE022. In December 2018, following completion of the open-label Part A and 
based on the favorable safety and pharmacokinetics results, we announced the initiation of the randomized placebo-con-
trolled Part B of the trial. Part B will enroll up to 120 women at 24-34 weeks gestation who are experiencing preterm labor 
symptom. We expect initial interim efficacy results to be available in the first 30 patients in the first half of 2019. 

We were founded in November 2012 and our operations to date have included organizing and staffing our company, raising 
capital, in-licensing rights to linzagolix, nolasiban and OBE022 and conducting nonclinical studies and clinical trials. To date, 
we have not generated any revenue from product sales as none of our product candidates have been approved for commer-
cialization. We have historically financed our operations exclusively through the sale of equity. To date, we have raised an 
aggregate of USD 330.5 million of net proceeds, including USD 88.5 million of net proceeds from our initial public offering 
in January 2017, USD 56.3 million of net proceeds from our private placement with institutional investors in October 2017, 
and USD 72.4 million in net proceeds from our underwritten public offering in June 2018. In addition, during 2018, we sold 
treasury shares from its “at the market” (ATM) program, generating net proceeds of USD 19.4 million.

We have never been profitable and have incurred significant net losses in each period since our inception. Our net losses 
were USD 76.7 million, USD 66.9 million, and USD 30.2 million for the years ended December 31, 2018, 2017 and 2016, 
respectively. As of December 31, 2018, we had accumulated losses of USD 214.5 million, out of which USD 30.6 million 
were offset with share premium. This reclassification transaction had no impact on total equity. We expect to continue to 
incur significant expenses and operating losses for the foreseeable future. We used USD 63.9 million and USD 55.7 million of 
cash in operations in 2018 and 2017, respectively, and we anticipate that our expenses will continue to increase significantly 
in connection with our ongoing activities as we:

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continue to invest in the clinical development of our product candidates and specifically in connection with our on-
going EDELWEISS, PRIMROSE 1 and 2, IMPLANT 2, IMPLANT 4 and PROLONG clinical trials, and any additional clinical 
trials, nonclinical studies and pre-commercial activities that we may conduct for product candidates; 
hire additional research and development, and general and administrative personnel; 
maintain, expand and protect our intellectual property portfolio; 
identify and in-license or acquire additional product candidates; and 
continue to incur additional costs associated with operating as a public company.

We will need substantial additional funding to support our operating activities as we advance our product candidates 
through clinical development, seek regulatory approval and prepare for and invest in future commercialization of these candi-
dates, if approved. Adequate funding may not be available to us on acceptable terms, or at all.

We have no manufacturing facilities, and all of our manufacturing activities are contracted out to third parties. We currently 
utilize third-party contract research organizations, or CROs, to carry out our clinical development and trials. Additionally, we 
do not yet have a commercialization organization. 

64 

ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
Strategic Licensing Agreements 

Linzagolix
In November 2015, we entered into the Kissei license and supply agreement with Kissei Pharmaceutical Co., Ltd., or Kissei. 
Pursuant to the Kissei license and supply agreement we received an exclusive license to develop, manufacture and commer-
cialize products, or the Product, containing the compounds which is a specified GnRH antagonist and covered by certain 
licensed patent rights, or the Compound, throughout the world except for specified Asian countries. We arranged to exclu-
sively acquire from Kissei the material necessary to produce linzagolix.

In consideration for the license, we made an initial USD 10.0 million upfront payment. In addition, we agreed to make aggre-
gate milestone payments of up to USD 63.0 million upon the achievement of specified developmental milestones, such as the 
initiation of clinical trials and receipt of regulatory approvals. In connection with the initiation of the Phase 3 clinical program 
for linzagolix in uterine fibroids in the second quarter of 2017, a USD 5.0 million milestone was paid. With respect to any 
products we commercialize under the Kissei license and supply agreement, we agreed to make further payments of up to an 
additional USD 125.0 million to Kissei upon the achievement of specified commercial milestones.

Pursuant to the Kissei license and supply agreement, we have agreed to exclusively purchase the active pharmaceutical 
ingredient for linzagolix from Kissei. During the development stage, we are obligated to pay Kissei a specified supply price. 
Following the first commercial sale of licensed product, we are obligated to pay Kissei a royalty in the low twenty percent 
range as a percentage of net sales. This payment includes Kissei’s supply of the active pharmaceutical ingredient until the 
latest of (i) the date that the valid claim of a patent for the Product has expired, (ii) the expiration of our regulatory exclusivity 
period, or (iii) 15 years from the first commercial sale of such product on a country-by-country and product-by-product basis. 
During the term, we are restricted from developing, marketing and selling GnRH agonists and GnRH antagonists other than 
the Compound to the extent allowed by applicable laws. 

Nolasiban
In August 2013, we entered into the 2013 license agreement with Ares Trading S.A., an affiliate of Merck Serono, or Merck 
Serono, pursuant to which we received a worldwide exclusive license to develop, manufacture and commercialize com-
pounds covered by the licensed patent rights, including nolasiban. In consideration for the license, we issued 914,069 Series 
A preferred shares to Merck Serono at the time of our Series A financing, which had a fair-value of USD 4.9 million based on 
an exchange rate of USD 1.00 for CHF 0.9244 as of the date of the transaction. With respect to any products we commer-
cialize under the 2013 license agreement, we agreed to pay Merck Serono royalties based on a high-single-digit percentage 
of annual net sales of each product, subject to specified reductions, until the later of (i) the date that all of the patent rights 
for that product have expired, as determined on a country-by-country and product-by-product basis, or (ii) ten years from the 
first commercial sale of such product on a country-by-country and product-by-product basis.

OBE022
In June 2015, we entered into the 2015 license agreement with Merck Serono, which we amended in July 2016, pursuant 
to which we received a worldwide exclusive license to develop, manufacture and commercialize compounds covered by the 
licensed patent rights, including OBE022. In consideration for the license, we issued 325,000 Series A preferred shares to 
Merck Serono in September 2016 upon the initiation of a Phase 1 clinical trial for a licensed product. With respect to any 
products we commercialize under the 2015 license agreement, we agreed to pay Merck Serono royalties based on a mid-sin-
gle-digit percentage of annual net sales of each product, subject to specified reductions, until the later of (i) the date that all 
of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or (ii) 
ten years from the first commercial sale of such product on a country-by-country and product-by-product basis. 

ObsEva SA l Annual Report 2018 

65

FINANCIAL REVIEWComponents of Results of Operations 

Revenue 
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from product 
sales in the near term. 

Operating Expenses 

Research and Development Expenses 
Research and development expenses consist primarily of costs incurred in connection with our research and development ac-
tivities and consist mainly of direct research and development costs, which include: costs associated with the use of CROs and 
consultants hired to assist on our research and development activities; personnel expenses, which include salaries, benefits 
and share-based compensation expenses for our employees; expenses related to regulatory affairs and intellectual property; 
manufacturing costs in connection with conducting nonclinical studies and clinical trials; and depreciation expense for assets 
used in research and development activities. Research and development costs are generally expensed as incurred. However, 
costs for certain activities, such as manufacturing and nonclinical studies and clinical trials, are generally recognized based on 
an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and 
collaborators.

Our employee, consultant and infrastructure resources are typically utilized across our multiple research and development 
programs. We track outsourced research and development costs by product candidate or nonclinical program, but we do not 
allocate personnel costs, other internal costs or external consultant costs to specific product candidates. 

From inception through December 31, 2018, we have incurred USD 172.6 million in research and development expenses to 
advance the development of our product candidates. The following table provides a breakdown of our outsourced research 
and development expenses that are directly attributable to the specified product candidates for the years ended December 
31, 2018, 2017 and 2016, respectively. 

Linzagolix

Nolasiban

OBE022

Total outsourced research and development expenses

Year Ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

(39,315)

(7,515)

(2,502)

(49,332)

(32,166)

(8,873)

(2,178)

(43,217)

(9,689)

(2,873)

(4,103)

(16,665)

66 

ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
 
We expect our research and development expense will increase for the foreseeable future as we seek to advance the de-
velopment of our product candidates through clinical trials and potentially toward regulatory submissions. At this time, we 
cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete 
the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will com-
mence from sales of our product candidates. This is due to the numerous risks and uncertainties associated with developing 
such product candidates, including: 

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the number of clinical sites included in the trials; 
the length of time required to enroll suitable patients; 
the number of patients that ultimately participate in the trials; 
the number of doses patients receive; 
the duration of patient follow-up; 
the results of our clinical trials; and
regulatory requirements in support of potential approvals. 

In addition, the probability of success for any of our product candidates will depend on numerous factors, including compe-
tition, manufacturing capability and commercial viability. A change in the outcome of any of these variables with respect to 
the development of any of our product candidates would significantly change the costs, timing and viability associated with 
the development of that product candidate. 

General and Administrative Expenses
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and share-based 
compensation expense, related to executive, finance, accounting, business development, legal and human resource functions. 
General and administrative expense also includes facility costs not otherwise included in research and development expenses, 
legal fees related to corporate matters, fees for accounting and consulting services, and costs of director and officer insurance.

We anticipate that our general and administrative expense will increase in the future to support continued research and de-
velopment activities. We also anticipate that we will incur increased accounting, audit, legal, regulatory and compliance costs, 
as well as investor and public relations expenses, associated with operating as a public company. 

Finance Result, Net 
Finance result, net, consists mainly of interest income and expense derived from our cash and cash equivalents and foreign 
exchange gains and losses. 

Taxation
We are subject to corporate taxation in Switzerland, Ireland and the United States.

In 2015, the Canton of Geneva granted us a ten-year tax holiday for all income and capital taxes on a communal and canton-
al level commencing in fiscal year 2013 and valid through to 2022, subject to our Swiss domiciliation and compliance with 
certain reporting provisions. We remain subject to Swiss federal income tax on our profits after tax but have only incurred net 
losses since our inception. We are entitled under Swiss laws to carry forward any losses incurred for a period of seven years 
and can offset such losses carried forward against future taxes. As of December 31, 2018, we had tax loss carryforwards 
totaling USD 184.2 million. We do not believe it is probable that we will generate sufficient profits to avail ourselves of these 
tax loss carryforwards. 

Our Irish subsidiary had no activity in 2017 and 2018 and our U.S. subsidiary, as a service organization to the group under 
cost plus arrangement, was the only entity to generate income tax expenses for the year ended December 31, 2018. 

ObsEva SA l Annual Report 2018 

67

FINANCIAL REVIEWA. Operating Results 

Analysis of Results of Operations 
The following table sets forth our selected consolidated statements of operations data for the periods indicated: 

Consolidated Statements of Operations Data:

Operating income other than revenue

Operating expenses:

Research and development expenses

General and administrative expenses

Total operating expenses

Finance result, net

Income tax benefit / (expense)

Net loss

Years Ended December 31, 2018 and 2017

Operating Expenses 
Research and Development Expenses 

(unaudited)

Research and development expenses by product candidate

Linzagolix

Nolasiban

OBE022

Unallocated expenses

Staff costs

Other research and development costs

Total research and development expenses

Year Ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

15

16

22

(62,872)

(14,297)

(77,169)

393

45

(54,912)

(12,568)

(67,480)

589

(51)

(23,711)

(6,452)

(30,163)

(61)

–

(76,716)

(66,926)

(30,202)

Year Ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

(39,315)

(7,515)

(2,502)

(11,001)

(2,539)

(62,872)

(32,166)

(8,873)

(2,178)

(9,950)

(1,745)

(54,912)

Research and development expenses increased by USD 8.0 million in 2018 compared to 2017 primarily due to the increased 
costs of USD 7.2 million resulting primarily from the ramp up of our PRIMROSE 1 and 2 clinical trials with linzagolix, and in-
creased staff costs of USD 1.0 million associated with increased headcount, partially offset by decreased costs of USD 1.4 mil-
lion for nolasiban primarily due to the completion in 2018 of our IMPLANT 2 study. Other research and development costs also 
contributed to the overall increase, primarily due to patent costs that were USD 0.6 million higher in 2018 compared to 2017.

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ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
 
 
 
 
 
 
 
 
 
 
 
 
General and Administrative Expenses 

(unaudited)

Staff costs

Professional fees

Other general and administrative costs

Total general and administrative expenses

Year Ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

(8,536)

(3,739)

(2,022)

(14,297)

(8,049)

(2,793)

(1,726)

(12,568)

General and administrative expenses increased by USD 1.7 million in 2018 compared to 2017 primarily due to increased staff 
costs of USD 0.5 million associated with increased headcount, and increased professional fees of USD 0.9 million resulting 
from our financings completed in 2018, our Swiss listing completed in July 2018, as well as increased efforts in communica-
tion and advertising. 

Finance Result, Net 

Finance result, net

Year Ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

393

589

Finance result, net, in 2018 and 2017 primarily consisted of foreign exchange gains and losses. 

Years Ended December 31, 2017 and 2016 

Operating Expenses 
Research and Development Expenses 

(unaudited)

Research and development expenses by product candidate

Linzagolix

Nolasiban

OBE022

Unallocated expenses

Staff costs

)Other research and development costs

Total research and development expenses

Year Ended December 31,

2017

2016

(in USD ,000)

(in USD ,000)

(32,166)

(8,873)

(2,178)

(9,950)

(1,745)

(54,912)

(9,689)

(2,873)

(4,103)

(5,520)

(1,526)

(23,711)

ObsEva SA l Annual Report 2018 

69

FINANCIAL REVIEW 
 
 
 
 
 
 
 
Research and development expenses increased by USD 31.2 million in 2017 compared to 2016 primarily due to the increased 
costs of USD 22.5 million resulting primarily from our ongoing PRIMROSE 1 and 2 and EDELWEISS clinical trials with linzag-
olix, the increased costs of USD 6.0 million resulting from our ongoing IMPLANT 2 clinical trial with nolasiban and increased 
staff costs of USD 4.4 million associated with increased headcount, including a USD 2.3 million increase of share-based com-
pensation, partially offset by decreased costs of USD 1.9 million primarily due to our Phase 1 clinical trials with OBE022. 

General and Administrative Expenses 

(unaudited)

Staff costs

Professional fees

Other general and administrative costs

Total general and administrative expenses

Year Ended December 31,

2017

2016

(in USD ,000)

(in USD ,000)

(8,049)

(2,793)

(1,726)

(12,568)

(1,916)

(3,959)

(577)

(6,452)

General and administrative expenses increased by USD 6.1 million in 2017 compared to 2016 primarily due to increased staff 
costs of USD 6.1 million associated with increased headcount, including a USD 4.3 million increase of share-based compensa-
tion, and increased costs of USD 1.1 million resulting from other general and administrative expenses associated with operat-
ing as a public company, which were partially offset by decreased professional fees of USD 1.2 million due to fees associated 
with the preparation of our initial public offering in late 2016. 

Finance Result, Net 

Finance result, net

Year Ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

589

(61)

Finance result, net, in 2017 and 2016 primarily consisted of foreign exchange losses. 

B. Liquidity and Capital Resources 

Since our inception, we have not generated any revenue and have incurred net losses and negative cash flows from our oper-
ations. We have funded our operations primarily through the sale of equity. From inception through December 31, 2018, we 
have raised an aggregate of USD 330.5 million of net proceeds from the sale of equity securities. In January 2017, we com-
pleted our initial public offering of 6,450,000 common shares at a public offering price of USD 15.00 per share. We received 
USD 88.5 million in net proceeds after deducting USD 8.3 million of underwriting discounts and commissions and other 
offering expenses. Additionally, in October 2017, we raised USD 56.3 million of net proceeds after deducting USD 3.7 million 
of placement expenses through the issuance of 7,500,000 shares at a price of USD 8.00 per share in a private placement 
with institutional investors. 

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ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
 
 
 
 
In May 2018, we sold 1,600,851 treasury shares at a price of USD 12.50 per share as part of our ATM program, receiving net 
proceeds of USD 19.4 million after deducting USD 0.6 million of directly related issuance costs. 

In June 2018, we completed an underwritten public offering of common shares and issued 4,750,000 shares at a price of 
USD 15.39 per share, raising USD 68.0 million in net proceeds after deducting USD 5.1 million of underwriting discounts, 
commissions and other offering expenses. In July 2018, we raised additional funds for net proceeds of USD 4.4 million from 
the exercise of the option available to the underwriters in connection with the June 2018 offering. As of December 31, 2018, 
we had USD 138.6 million in cash and cash equivalents.

Our primary uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to 
fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our out-
standing accounts payable and accrued expenses. We currently have no ongoing material financing commitments, such as 
lines of credit or guarantees.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and 
development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if 
we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses 
related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution 
are not the responsibility of potential collaborators. Furthermore, we expect to continue to incur additional costs associated 
with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with 
our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, 
reduce or eliminate our research and development programs or future commercialization efforts.

We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure re-
quirements into mid-2020. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust 
our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, 
including: 

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the scope, progress, results and costs of our ongoing and planned nonclinical studies and clinical trials for linzagolix, 
nolasiban and OBE022;
the cost and timing of ongoing and planned manufacturing activities including active pharmaceutical ingredient and 
drug product pharmaceutical development and clinical trial supplies production for linzagolix, nolasiban and OBE022;
the timing and amount of milestone and royalty payments we are required to make under our license agreements; 
the extent to which we in-license or acquire other product candidates and technologies; 
the number and development requirements of other product candidates that we may pursue; 
the costs, timing and outcome of regulatory review of our product candidates; 
the costs and timing of future commercialization activities, including drug manufacturing, marketing, sales and distri-
bution, for any of our product candidates for which we receive marketing approval; 
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing 
 approval; 
our ability to establish strategic collaborations; and 
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellec-
tual property rights and defending any intellectual property-related claims. 

ObsEva SA l Annual Report 2018 

71

FINANCIAL REVIEWIdentifying potential product candidates and conducting nonclinical studies and clinical trials is a time-consuming, expensive 
and uncertain process that takes many years to complete, and we may never generate the necessary data or results required 
to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve 
commercial success. Our revenue, if any, will be derived from sales of products that we do not expect to be commercially 
available for many years, if at all.

Until such time that we can generate substantial product revenue, if ever, we may finance our cash needs through a combi-
nation of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, shareholder ownership 
interest may be diluted, and the terms of any additional securities may include liquidation or other preferences that adverse-
ly affect the rights of shareholders. Debt financing, if available, may involve agreements that include covenants limiting or 
restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring 
dividends.

If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may 
have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or 
to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, lim-
it, reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market 
product candidates that we would otherwise prefer to develop and market ourselves. 

The following table shows a summary of our cash flows for the periods indicated: 

Cash and cash equivalents at beginning of period

Net cash used in operating activities

Net cash used in investing activities

Net cash from / (used in) financing activities

Effect of exchange rates

Cash and cash equivalents at end of period

Year Ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

110,841

(63,941)

(271)

91,652

359

138,640

25,508

(55,715)

(5,285)

145,743

590

110,841

54,275

(28,589)

(45)

(167)

34

25,508

Operating Activities 
Net cash used in operating activities consists of net loss before tax adjusted for changes in net working capital, or current as-
sets less current liabilities, and for non-cash items such as depreciation and amortization, as well as the value of share-based 
services.

72 

ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
 
 
During the year ended December 31, 2018, USD 63.9 million of cash was used for operating activities, primarily as the result 
of our net loss before tax of USD 76.8 million, as adjusted for non-cash items and changes in net working capital. Non-cash 
items amounted to USD 8.8 million and mainly consisted of share-based payments. Changes in net working capital includ-
ed primarily a USD 8.4 million increase in accrued expenses, primarily due to the progress in our PRIMROSE 1 and 2 clinical 
trials (including the cost of supplies), as well as a USD 4.3 million increase in prepaid expenses, mainly attributable to upfront 
payments made in relation to our Phase 3 EDELWEISS 2 and 3 clinical trials announced late 2018.

During the year ended December 31, 2017, USD 55.7 million of cash was used for operating activities, primarily as the result 
of our net loss before tax of USD 66.9 million, as adjusted for non-cash items and changes in net working capital. Non-cash 
items amounted to USD 8.3 million and mainly consisted of share-based payments. Changes in net working capital included 
primarily a USD 1.7 million increase in accrued expenses, primarily due to the costs of our clinical trial supplies for our PRIM-
ROSE 1 and 2 and EDELWEISS clinical trials, as well as a USD 0.7 million decrease in prepaid expenses, mainly attributable to 
upfront payments made in relation to our PRIMROSE 1 and 2 clinical trials during 2016. 

During the year ended December 31, 2016, USD 28.6 million of cash was used for operating activities, primarily as the result 
of our net loss before tax of USD 30.2 million, as adjusted for non-cash items and changes in net working capital. Non-cash 
items amounted to USD 2.0 million and mainly consisted of share-based payments. Changes in net working capital included 
primarily a USD 2.0 million increase in prepaid expenses, primarily due to upfront payments made in relation to our PRIM-
ROSE 1 and 2 clinical trials in uterine fibroids, as well as a USD 1.8 million increase in other payables and current liabilities 
mainly attributable to our ongoing EDELWEISS clinical trial of linzagolix in endometriosis and Phase 1 clinical trials of OBE022 
during 2016. 

Investing Activities 
Net cash used in investing activities consists primarily of investments in leasehold improvements and furniture and fixtures, 
as well as investments in intangible assets through the execution of in-licensing agreements or the payment of develop-
ment-based milestones to our licensors. 

During 2018, net cash used in investing activities consisted primarily of USD 0.2 million in purchases of furniture and fixtures 
for our offices in Switzerland and the United States.

During 2017, net cash used in investing activities consisted primarily of a USD 5.0 million milestone payment to Kissei made 
upon initiation of the Phase 3 clinical program for linzagolix in uterine fibroids, as well as payments made for leasehold 
improvements and furniture for the opening of our office in the United States. Net cash used in investing activities in 2016, 
consisted primarily of purchase of furniture and fixtures for our office in Switzerland. 

Financing Activities 
Net cash from financing activities consists primarily of proceeds from the sale of equity securities. 

Cash flows from financing activities in 2018 mainly consisted of the net proceeds from our underwritten public offering com-
pleted in June 2018 and our “at the market” (ATM) program, which we established in May 2018. Cash flows from financing 
activities in 2017 consisted mainly of the net proceeds from our initial public offering in January 2017 and from our private 
placement with institutional investors in October 2017. Cash flows used in financing activities in 2016 mainly consisted of 
payments for costs incurred in connection with our initial public offering and related issuance of new shares.

ObsEva SA l Annual Report 2018 

73

FINANCIAL REVIEWC. Research and Development 

For a discussion of our research and development activities, see “Item 4.B-Business Overview” and “Item 5.A-Operating 
Results.” 

D. Trend Information 

For a discussion of trends, see “Item 5.A-Operating Results” and “Item 5.B-Liquidity and Capital Resources.”

E. Off­Balance Sheet Arrangements 

During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as de-
fined in the rules and regulations of the U.S. Securities and Exchange Commission. 

F. Tabular Disclosure of Contractual Obligations 

The following table summarizes our contractual obligations at December 31, 2018: 

Less than 1 Year

1 to 3 Years

3 to 5 Years More than 5 Years

Total

(in USD ,000) 

(in USD ,000) 

(in USD ,000) 

(in USD ,000)

(in USD ,000)

Operating leases

Total

705

705

1,421

1,421

948

948

–

–

3,074

3,074

Under our license agreements with Kissei and Merck Serono, we may be required to pay royalties in the future. In addi-
tion, pursuant to the Kissei license and supply agreement, we have agreed to make aggregate milestone payments of up 
to USD 63.0 million upon the achievement of specified developmental milestones, such as the initiation of clinical trials and 
receipt of regulatory approvals, of which we had paid USD 5.0 million as of December 31, 2018. With respect to any product 
we commercialize under the Kissei license and supply agreement, we have agreed to make additional aggregate milestone 
payments of up to USD 125.0 million to Kissei upon the achievement of specified commercial milestones.

We have not included any contingent payment obligation, such as milestone payments and royalties, in the table above as 
the amount, timing and likelihood of such payments are not known.

We enter into contracts in the normal course of business with CROs for clinical trials, nonclinical studies, manufacturing and 
other services and products for operating purposes. These contracts generally provide for termination upon notice, and there-
fore we believe that our non-cancelable obligations under these agreements are not material. 

74 

ObsEva SA l Annual Report 2018

FINANCIAL REVIEW 
 
Corporate
Corporate
Governance
Governance

Corporate Governance

ObsEva’s articles of association (the “Articles”), organizational regulations (the “Organizational Regulations”) and policies 
provide the basis for the principles of Corporate Governance. This Corporate Governance report has been prepared in ac-
cordance with the SIX Swiss Exchange Directive on Information Related to Corporate Governance effective as of October 1, 
2014, as amended on April 1, 2016, July 1, 2017 and May 1, 2018.

1 – Group Structure and Shareholders.

Group Structure
ObsEva SA (“ObsEva”, or the “Company”) is a Swiss stock corporation (société anonyme) organized under the laws of Swit-
zerland (CHE-253.914.856) and formed in 2012 with an indefinite duration. ObsEva is registered in Plan-les-Ouates, Geneva, 
Switzerland, with principal offices located at Chemin des Aulx, 12, 1228 Plan-les-Ouates, Geneva, Switzerland.

ObsEva is the holding company of the ObsEva Group (the “Group”) which includes two fully-owned subsidiaries:

l 

l 

ObsEva USA, Inc, a limited company registered in Delaware, USA, with principal registered offices located at One 
Financial Center, 24th Floor, Boston MA 02111, USA, and a share capital of USD 0.50 fully-owned by ObsEva, and

ObsEva Ireland Ltd, a limited company registered in Ireland, with principal registered offices located at Penthouse 
Floor, 5 Lapps Quay, Cork, Ireland, and a share capital of EUR 2.00 fully-owned by ObsEva.

The Group operates in one segment, which is the research and development of innovative women’s reproductive, health and 
pregnancy therapeutics, with an aim to market and commercialize such therapeutics depending on, in large part, the success 
of the development phases. The Chief Executive Officer (“CEO”) of the Company reviews the consolidated statement of 
operations of the Group on an aggregated basis and manages the operations of the Group as a single operating segment. 

ObsEva’s shares have been listed on the Nasdaq Global Select Market (“Nasdaq”) since January 26, 2017 under the ticker 
symbol OBSV and the CUSIP number H5861P103, and on the SIX Swiss Exchange (“SIX”) since July 13, 2018 under the ticker 
symbol OBSN, the ISIN number CH0346177709 and Swiss security number 34’617’770. On December 31, 2018, the market 
capitalization of ObsEva was USD 575,740,554 on the Nasdaq and CHF 570,738,069 on the SIX.

76 

ObsEva SA l Annual Report 2018

Significant Shareholders
As of December 31, 2018, based on published notifications to the SIX (unless otherwise indicated), the following sharehold-
ers own 3% or more of the Company’s share capital:

Shareholder

Sofinnova Investments (3)

New Enterprise Associates 15 L.P.

Venrock Healthcare Capital Partners (4)

Ernest Loumaye (5)

OrbiMed Advisors LLC

Sofinnova Partners

FMR LLC (6)

ObsEva

Medicxi Ventures Management (Jersey) Limited

Wellington Management Group LLP

Select Biotechnology Portfolio

First Manhattan Co.

Aisling Capital (7)

HBM Healthcare Investments AG (8)

Number of shares held (1)

% of voting rights (2) 

% of capital (2)

4,749,623

4,586,563

3,412,249

3,063,098

2,605,531

1,846,649

1,800,105

1,602,601

1,570,000

1,539,017

1,516,805

1,508,966

1,394,838

1,386,598

10.5%

10.1%

7.5%

6.8%

5.7%

4.1%

4.0%

3.5%

3.5%

3.4%

3.3%

3.3%

3.1%

3.1%

10.5%

10.1%

7.5%

6.8%

5.7%

4.1%

4.0%

3.5%

3.5%

3.4%

3.3%

3.3%

3.1%

3.1%

(1)   This table presents the shares held by the shareholders listed therein, or in respect of which the persons or entities men-

tioned have been granted voting discretion. The derivative holdings held by such shareholders are not included.

(2)   Based on the share capital registered in the Swiss Commercial Register as of December 31, 2018 (i.e. CHF 3,490,865 and 

7/13th of a franc, divided into 45,381,252 registered shares).

(3)   Beneficial owners of shares reported under Sofinnova Investments are Dr. Anand Mehra, Dr. James I. Healy and Dr. Mi-

chael F. Powell, which are acting in concert and form an organized group within the meaning of Article 121 of the Swiss 
Financial Market Infrastructure Act (“FMIA”) pursuant to a shareholders’ agreement.

(4)   Beneficial owners of shares reported under Venrock Healthcare Capital Partners are Mr. Bong Koh and Mr. Nimish Shah, 
which are acting in concert and form an organized group within the meaning of Article 121 FMIA pursuant to fund 
agreements. 

(5)   According to the Company’s share register, Dr. Ernest Loumaye held 3,063,098 shares, or 6.8% of the Company’s share 

capital and voting rights, as of December 31, 2018.

(6)   The positions held by FMR LLC are positions of third parties over which FMR LLC has the discretion to exercise the voting 
rights pursuant to Article 120 para. 3 FMIA. The positions are disclosed by the entity that decides how voting rights are 
exercised (and not on a consolidated basis within the meaning of Article 10 para. 2 sentences 2 and 3 FMIO-FINMA).
(7)   Beneficial owners of shares reported under Aisling Capital are Dr. Drew Schiff and Mr. Steve Elms, which are acting in 
concert and form an organized group within the meaning of Article 121 FMIA pursuant to a shareholders agreement.
(8)   According to a Schedule 13 G filed with the United Stated Securities and Exchange Commission (“SEC”) on February 14, 
2019, HBM Healthcare Investments AG held 1,386,598 shares, or 3.1% of the Company’s share capital and voting rights, 
as of December 31, 2018.

ObsEva SA l Annual Report 2018 

77

CORPORATE GOVERNANCE 
For a comprehensive list of notifications of shareholdings received during 2018 pursuant to article 120 and seq. FMIA and its 
implementing ordinances, refer to the SIX website (https://www.six-exchange-regulation.com/en/home/publications/signifi-
cant-shareholders.html).

Cross Shareholdings
There are no cross-shareholdings in terms of capital or voting rights in excess of 5%.

2 – Capital Structure. 

Capital
As of December 31, 2018, the Company’s share capital registered with the Swiss Commercial Register amounted to CHF 
3,490,865 and 7/13th of a franc, consisting of 45,381,252 registered shares (or “common shares”) with a par value of 
1/13th of a Swiss franc each, and the issued share capital amounted to CHF 3,498,241 and 4/13th of a franc, consisting of 
45,477,137 common shares with a par value of 1/13th of a Swiss franc each. As of December 31, 2018, the Company direct-
ly held 1,602,601 of its own shares, recorded as treasury shares.

Authorized Share Capital
As of December 31, 2018, according to the Articles, the Board of Directors (the “Board”) is authorized at any time until 
May 9, 2020 to increase the share capital by a maximum aggregate amount of CHF 1,197,355 and 5/13th of a franc, which 
equates to approximately 34% of the existing share capital, through the issuance of not more than 15,565,620 common 
shares, which will have to be fully paid-in, with a par value of 1/13th of a Swiss franc each. Increases in partial amounts are 
permitted. The Board may issue new shares also by means of underwriting or in any other manner by one or more banks and 
subsequent offer to shareholders or third parties. The Board determines the type of contributions, the issue price, the time of 
the issue, the conditions for the exercise of the pre-emptive rights, the allocation of pre-emptive rights which have not been 
exercised, and the date on which the dividend entitlement starts. The Board is authorized to permit, to restrict or to exclude 
the trading of pre-emptive rights.

If pre-emptive rights are granted, but not exercised, the Board shall use the relevant shares in the interest of the Company.

The Board is authorized to withdraw or limit the pre-emptive rights of the shareholders, and to allocate them to third parties 
or to the Company, in the event of use of the shares for the purpose of: (i) expanding the shareholder base in certain capital 
markets or in the context of the listing, admission to official trading or registration of the shares at domestic or international 
stock exchanges; (ii) granting an over-allotment option (“greenshoe”) to one or several underwriters in connection with a 
placement of shares; (iii) share placements, provided the issue price is determined by reference to market price; (iv) the par-
ticipation of employees, members of the Board or consultant of the Company or of one of its subsidiaries according to one 
or several equity incentive plans adopted by the Board; (v) the acquisition of companies, company assets, participations, the 
acquisition of products, intellectual property rights, licenses or new investment projects or for public or private share place-
ments for the financing and/or refinancing of such transactions; (vi) for raising equity capital in a fast and flexible manner as 
such transaction would be difficult to carry out, or could be carried out only at less favorable terms, without the exclusion 
of the pre-emptive rights of the existing shareholders; or (vii) the acquisition of a participation in the company by a strategic 
partner (including in the case of a public takeover offer).

78 

ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEConditional Share Capital for Financing Purposes
As of December 31, 2018, according to the Articles, the Company’s share capital may be increased by a maximum aggregate 
amount of CHF 1,107,154, which equates to approximately 32% of the existing share capital, through the issuance of not 
more than 14,393,002 common shares, which will have to be fully paid-in, with a par value of 1/13th of a Swiss franc each, 
by the exercise of option and conversion rights which are granted in connection with bonds, similar debt instruments, loans 
or other financial market instruments or contractual obligations of the Company or one of its subsidiaries, and/or by the exer-
cise of option rights issued by the Company or one of its subsidiaries (the “Financial Instruments”). The pre-emptive rights of 
shareholders are excluded. The right to subscribe for the new shares shall be held by the holders of the Financial Instruments. 
The Board determines the terms of the Financial Instruments.

When issuing Financial Instruments, the Board has the right to limit or exclude the right of shareholders to subscribe for the 
Financial Instruments by preference: a) for the purpose of financing or refinancing the acquisition of enterprises, divisions 
thereof, or of participations, products, intellectual property rights, licenses, cooperations or of newly planned investments of 
the Company; b) if the issuance is made on domestic or international capital markets, including by means of private place-
ments; or c) for purposes of an underwriting of the Financial Instruments by a banking institution or a consortium of banks 
with subsequent offering to the public.

To the extent that the right of shareholders to subscribe for the Financial Instruments by preference is excluded, (i) the Finan-
cial Instruments shall be placed at market conditions; (ii) the exercise period, the conversion period or the exchange period 
of the Financial Instruments shall not exceed 10 years as of the date of the issue; and (iii) the conversion price, the exchange 
price or other exercise price of the Financial Instruments shall be determined by reference to market prices.

Conditional Share Capital for Equity Plans
As of December 31, 2018, according to the Articles, the Company’s share capital may be increased by a maximum aggre-
gate amount of CHF 455,586, which equates to approximately 13% of the existing share capital, through the issuance of 
not more than 5,922,618 common shares, which will have to be fully paid-in, with a par value of 1/13th of a Swiss franc 
each, by issuance of shares upon the exercise of options or pre-emptive rights thereof, which have been issued or granted to 
employees, members of the Board or consultant of the Company or of one of its subsidiaries under the terms of one or more 
equity incentive plans or regulations adopted by the Board. The pre-emptive rights of shareholders are excluded. The Board 
determines the terms of the equity incentive plans or regulations and of the issuance of the shares.

Changes in Capital
Before its Initial Public Offering (“IPO”) on the Nasdaq in January 2017, the Company had three categories of shares which 
were common shares, preferred shares and non-voting shares. Effective upon the IPO, the preferred and non-voting shares 
were converted into common shares. Since then, the Company has had only common shares.

On July 29, 2016 and November 22, 2016, the Company issued 279,500 and 817,492 non-voting shares, respectively, at par 
value of 1/13th of a Swiss franc per share, from its authorized non-voting share capital, to its employees, members of the 
Board and consultants under its equity incentive plan.

On September 28, 2016, the Company issued 325,000 preferred shares at par value of 1/13th of a Swiss franc per share. The 
shares were subscribed by Merck Serono under the terms of a licensing agreement for a product candidate of the Company.

On January 25, 2017, the Company executed its IPO on the Nasdaq and all existing preferred shares and non-voting shares 
were converted into common shares at a 1 for 1 ratio.

ObsEva SA l Annual Report 2018 

79

CORPORATE GOVERNANCEOn January 30, 2017, upon completion of the IPO, the Company issued 6,450,000 common shares at a subscription price of 
USD 15.00 per share and a par value of 1/13th of a Swiss franc per share. 

On October 13, 2017, the Company completed a private placement with institutional investors and issued 7,500,000 com-
mon shares at a subscription price of USD 8.00 per share and a par value of 1/13th of a Swiss franc per share.

On March 16, 2018, the Company issued 3,499,990 common shares at par value of 1/13th of a Swiss franc per share. The 
shares were subscribed by the Company and held as treasury shares. On May 17 and 25, 2018, the Company sold 1,000,851 
and 600,000 of these treasury shares, respectively, at a price of USD 12.50 per share. 

On June 22, 2018, the Company completed an underwritten public offering and issued 4,750,000 common shares at a 
subscription price of USD 15.39 per share and a par value of 1/13th of a Swiss franc. Subsequent to the initial closing of this 
follow-on offering and the exercise of an overallotment (i.e. “greenshoe”) option granted in this context, the Company is-
sued an additional 306,721 common shares on July 19, 2018, at a subscription price of USD 15.39 per share and a par value 
of 1/13th of a Swiss franc.

In 2018, 95,885 options granted to employees under equity incentive plans of the Company have been exercised and 95,885 
new shares have been issued from the conditional capital for equity plans at par value of 1/13th of a Swiss franc per share. 
Changes to articles (5) Par Value and Number of Shares and (5c) Conditional Share Capital for Equity Plans in the Articles have 
not been recorded yet with the Swiss Commercial Register as of the reporting date to reflect these exercises and  issuances. 

For further information on changes in capital in 2018, 2017 and 2016, including changes in reserves, refer to the consoli-
dated statements of changes in equity as well as to note 11 of the consolidated financial statements on pages 100 and 115, 
respectively, of this annual report.

Shares and Participation Certificates
ObsEva has one class of shares, which is common shares, i.e. registered shares, with a par value of 1/13th of a Swiss franc 
per share. Each share is indivisible towards the Company, which only recognizes one legal owner for each share. Each share 
confers the right to a portion of the profit resulting from the balance sheet and the proceeds of liquidation, in proportion to 
the payments made to pay-in the share capital. Each share conveys the right to one vote.

The Company’s shares are uncertificated securities (in terms of the Swiss Code of Obligations) and intermediated securities 
(in terms of the Swiss Federal Intermediated Securities Act). Any shareholder registered in the Company’s share register may 
request from the Company a statement his/her common shares at any time. Shareholders are not entitled to request printing 
and delivery of certificates. However, the Company may, at any time and at its option: (i) print and deliver certificates for 
shares; (ii) withdraw uncertificated shares from the custodian system where they have been registered; and (iii) with the 
consent of the shareholder, cancel issued certificates that are returned to the Company. If the Company decides to print and 
deliver share certificates, the share certificates shall bear the signatures of two duly authorized signatories of the Company, 
at least one of which shall be member of the Board. These signatures may be facsimile signatures.

The Company has no participation certificates.

80 

ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEDividend-Right Certificates
The Company has no dividend-right certificates.

Limitations on Transferability and Nominee Registrations
The Articles do not contain clauses limiting the transferability of the Company’s shares and do not provide restrictions to the 
registration of nominee shareholders. 

Convertibles Bonds and Options
As of December 31, 2018, the Company has no convertible bonds outstanding, and has 3,028,275 options issued under the 
Company’s equity incentive plans outstanding, corresponding to an amount of CHF 232,944 and 3/13th of a franc of share 
capital, and equating to approximately 7% of the existing share capital. Such options have a 1:1 subscription ratio, vest un-
der a 3-year or 4-year vesting schedule, have a 10-year expiration term and have a strike price in US Dollars equivalent to the 
closing share price of OBSV on Nasdaq at grant date. For information on the equity incentive plans operated by the Company 
and details of grants made and options outstanding as of December 31, 2018, refer to note 18 of the consolidated financial 
statements on page 122 of this annual report.

3 – Board of Directors.

The following table sets forth the name, nationality, year joined the Board, terms of office, position and directorship term, as 
well as committee memberships, of each member of the Board, followed by a short description of each member’s busi-
ness experience, education and activities. The directors are appointed individually, for one-year terms, which expire on the 
occasion of each annual general meeting, and can be re-elected indefinitely. Accordingly, the terms of the directors set forth 
below will expire at the closing of the 2019 annual general meeting of shareholders. All members of the Board, to the excep-
tion of Dr. Ernest Loumaye, Co-Founder and CEO of the Company, are non-executive members. None of these non-executive 
members have held management roles in the Group in the three financial years preceding the period under review, nor have 
had significant business connections with any entity of the Group.

Name

Frank Verwiel

Ernest Loumaye

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

Nationality

First 
Appointment

Dutch

Belgian

British

American

American

American

French

French

2016

2012

2013

2016

2016

2013

2013

2013

Board

Chair

Member, CEO

Member

Member

Member

Member

Vice-Chair

Member

AC (1)

Member

–

–

Chair

Member

–

–

–

(1)   Audit Committee
(2)   Compensation, Nominating and Corporate Governance Committee

CNCGC (2)

–

–

Chair

–

–

Member

Member

–

ObsEva SA l Annual Report 2018 

81

CORPORATE GOVERNANCEFrank Verwiel has served as a member of the Board since March 2016 and as its 
Chairperson since December 2016. Dr. Verwiel was the President and Chief 
Executive Officer of Aptalis Pharma Inc. from 2005 to 2014, where he also served 
on the board of directors. He also currently serves as a member of the board of 
directors of the public companies Achillion Pharmaceuticals, Inc. (since 2015), a 
pharmaceutical company, Bavarian Nordic A/S (since 2016), a biotechnology 
company and Intellia Inc. (since 2017), also a biotechnology company. Dr. Verwiel 
previously served on the board of directors of InterMune, Inc. from 2012 to 2014 
and Avexis, Inc., a biotechnology company from 2015 to 2018. Dr. Verwiel was 
also a director of the Biotechnology Industry Organisation from 2013 to 2014. Dr. 
Verwiel received his M.D. from Erasmus University, Rotterdam, The Netherlands, 
and his M.B.A. from INSEAD in Fontainebleau, France.

Ernest Loumaye is a Co-Founder of the Company and has served as its Chief 
Executive Officer and member of the Board since its inception in November 2012. 
Previously, Dr. Loumaye co-founded PregLem SA, a Swiss specialty biopharmaceu-
tical company and served as its Chief Executive Officer from 2006 to 2012. Prior 
to founding PregLem SA, Dr. Loumaye held various senior positions at Ipsen, Paris, 
and Serono, Geneva and Boston. Dr. Loumaye also served as Chairman of the 
Swiss biotechnology company GenKyoTex from 2015 to 2016. Dr. Ernest Louma-
ye holds a M.D. and a Ph.D., with a specialization in Obstetrics and Gynaecology, 
from Louvain University, Belgium. He was a research fellow at the National 
Institute of Child Health and Human Development in the US and is the author of 
over 90 publications in peer-reviewed journals.

Annette Clancy has served as a member of the Board since November 2013 and 
served as its Chairperson from November 2013 to December 2016. From 2009 to 
2017, Ms. Clancy has been a senior advisor at Frazier Healthcare Ventures, a 
U.S.-based healthcare venture capital firm. Prior to joining Frazier Healthcare 
Ventures, Ms. Clancy held various senior positions at GlaxoSmithKline, a global 
healthcare company. Ms. Clancy is currently serving as member of the board of 
directors of Swedish Orphan Biovitrum AB (since 2014), a public biopharmaceuti-
cal company, as well as Chairperson of the Board of Directors of Enyo SA (since 
2016) and Lysogene (since 2014), two European Biotech Companies developing 
innovative therapeutics for severe medical needs. Ms. Clancy also served as 
member of the boards of directors of Silence Therapeutics (from 2008 to 2012) 
and Clavis Pharma (from 2010 to 2013), and Chairperson of the board of directors 
of Genable Therapeutics (from 2013 to 2016). Ms. Clancy holds a B.Sc. in 
Pharmacology from Bath University and a series of American Management 
Association diplomas in finance and marketing. 

82 

ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEBarbara Duncan has served as a member of the Board since December 2016. 
From May 2009 through June 2016, Ms. Duncan served as the Chief Financial 
Officer of Intercept Pharmaceuticals, Inc., a biopharmaceutical company. Prior to 
joining Intercept Pharmaceuticals, Inc., Ms. Duncan served as the Chief Financial 
Officer and then Chief Executive Officer of DOV Pharmaceutical, Inc., or DOV, 
from 2001 to April 2009. Prior to joining DOV, Ms. Duncan served as a vice 
president of Lehman Brothers Inc. in its corporate finance division from August 
1998 to August 2001. From September 1994 to August 1998, Ms. Duncan was 
an associate and director at SBC Warburg Dillon Read, Inc. in its corporate finance 
group. Ms. Duncan serves on the board of directors of Aevi Genomic Medicine, 
Inc. (since 2015), Adaptimmune Therapeutics plc (since 2016), Jounce Therapeu-
tics, Inc. (since 2016) and Ovid Therapeutics Inc. (since 2017), publicly traded 
biopharmaceutical companies. She also served as member of the board of 
directors of Edgemont LLC (from 2010 to 2017). Ms. Duncan received her B.S. 
from Louisiana State University in 1985 and her M.B.A. from the Wharton School, 
University of Pennsylvania, in 1994. 

Ed Mathers has served as a member of the Board since February 2016. Mr. 
Mathers is a Partner of NEA since August 2008 and is focused on biotechnology 
and specialty pharmaceuticals investments. He is a director of Liquidia Technolo-
gies (Nasdaq: LQDA), Ra Pharmaceuticals (Nasdaq: RARX – Chairman), Rhythm 
Pharmaceuticals, Envisia Therapeutics, Synlogic (Nasdaq: SYBX), Lumos Pharma, 
Amplyx Pharmaceuticals, Senti Biosciences, Inozyme, Reneo Pharma, Akouos 
(since 2017), Trevi Therapeutics and Mirium Pharmaceuticals (since 2018). 
Previously he was a board member of Lumena (sold to Shire), Ziarco (sold to 
Novartis), Motus Therapeutics (sold to Allergan), Plexxikon (sold to Daiichi Sankyo), 
Intarcia, Satori Pharmaceuticals, Southeast Bio, MedImmune, LLC, and the 
Biotechnology Industry Organization (BIO). Prior to joining NEA, Mr. Mathers most 
recently served as Executive Vice President, Corporate Development and Venture, 
at MedImmune, Inc. Before joining MedImmune in 2002, he was Vice President, 
Marketing and Corporate Licensing and Acquisitions at Inhale Therapeutic 
Systems. Mr. Mathers spent 15 years at Glaxo Wellcome, Inc. (GlaxoSmithKline), 
where he held sales and marketing positions of increasing responsibility. He 
earned his bachelor’s degree in chemistry from North Carolina State University.

ObsEva SA l Annual Report 2018 

83

CORPORATE GOVERNANCEJames I. Healy has served as a member of the Board since August 2013. 
Dr. Healy has been a general partner at Sofinnova Investments, Inc. (previously 
Sofinnova Ventures, Inc.) since 2000. Prior to this, Dr. Healy held various positions 
at Bayer Healthcare Pharmaceuticals, Sanderling Ventures, and ISTA Pharmaceuti-
cals, Inc. Dr. Healy is currently on the board of directors of Ascendis Pharma A/S 
(since 2014), Coherus BioSciences, Inc. (since 2014), Iterum Therapeutics (since 
2015), Natera, Inc. (since 2014), NuCana plc (since 2014), Y-mAbs Therapeutics 
(since 2017) and several private companies. Previously, Dr. Healy served as a board 
member of Amarin Corporation plc (from 2008 to 2016), Anthera Pharmaceuti-
cals (from 2006 to 2014), Auris Medical Holdings AG (from 2013 to 2017), Durata 
Therapeutics, Inc. (from 2009 to 2012), Edge Therapeutics, Inc. (from 2015 to 
2018), Hyperion Therapeutics, Inc. (from 2007 to 2012), InterMune, Inc. (from 
1999 to 2014), KaloBios Pharmaceuticals, Inc. (from 2001 to 2014), Movetis NV 
(from 2006 to 2009) and a number of private companies. Dr. Healy holds a B.A. in 
Molecular Biology and a B.A. Scandinavian Studies from the University of 
 California at Berkeley, and an M.D. and Ph.D. in Immunology from Stanford 
University School of Medicine. 

Rafaèle Tordjman has served as a member of the Board since August 2013. Dr. 
Tordjman joined the French based venture capital firm Sofinnova Partners in 2001 
until March 2017 where she served as Managing Partner specializing in life sciences 
investments. Dr. Tordjman serves on the board of directors of the public company 
Nucana (since 2011), a clinical-stage pharmaceutical company. Dr. Tordjman has 
also served on the boards of directors at several life sciences companies including, 
DBV Technologies SA (from 2005 to 2015), a French publicly traded company 
specializing in allergy therapies, Ascendis Pharma (from 2007 to 2017), Flexion 
Therapeutics, Inc. (from 2009 to 2015), Lysogene (from 2014 to 2018), publicly 
traded companies in clinical-stage pharmaceuticals, as well as a private company, 
and PregLem (from 2006 to 2010), a company that specialized in reproductive 
female medicine. Previously, Dr. Tordjman was a research scientist at the Institut 
National de la Santé et de la Recherche Médicale (INSERM) in Cochin Hospital, Paris, 
France. Dr. Tordjman has also practiced as a medical doctor, specializing in clinical 
hematology and internal medicine. Dr. Tordjman received an M.D. and completed a 
fellowship in hematology and internal medicine at the Paris University Hospitals. She 
received a Ph.D. in hematopoiesis and angiogenesis from and completed a post-doc-
toral fellowship in immunology at the University of Paris VII. 

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CORPORATE GOVERNANCEJacky Vonderscher has served as a member of the Board since October 2013. 
Since September 2013, Dr. Vonderscher has served as the Chief Executive Officer 
of Vonderscher & Co GmbH, a consultancy company, and since January 2014, as 
the President of ENYO Pharma, a biopharmaceutical company. Dr. Vonderscher 
has also served as the Chief Executive Officer of ENYO Pharma since July 2016. 
Prior to joining ENYO Pharma, Dr. Vonderscher served as a Senior Vice President 
of Hoffmann-La-Roche Ltd from 2008 to December 2013. From 1979 to 2008, Dr. 
Vonderscher held a variety of senior positions at Novartis Pharma AG. Dr. Vonder-
scher also serves on the boards of directors of Inatherys SAS (since 2013) and Step 
Pharma SAS (since 2016). Dr. Vonderscher holds an engineering degree in 
Biological Chemistry from the National Institute of Applied Sciences (INSA-Lyon, 
France) and a Ph.D. in Biochemistry from the University of Geneva.

Restrictions on Mandates held outside the Company
The Articles provide certain restrictions to the number of mandates that members of the Board may have in the supreme 
governing bodies of legal entities registered in the Swiss commercial register or similar foreign register. As such no member 
of the Board may hold more than six additional mandates in the highest supervisory or management bodies of third party 
companies whose equity securities are listed on a stock exchange and ten additional mandates in the highest management 
bodies of other companies. The following mandates are not subject to these limitations: (i) mandates in companies which are 
controlled by the Company or which control the Company; and (ii) mandates in the highest supervisory bodies of associa-
tions, charitable organizations, foundations, trust and employee welfare foundations. No member of the Board shall hold 
more than ten such mandates.

Other Activities and Vested Interests
The Articles provide certain restrictions to the number of mandates that members of the Board may have in the supreme 
governing bodies of legal entities registered in the Swiss commercial register or similar foreign register. As such no member 
of the Board may hold more than six additional mandates in the highest supervisory or management bodies of third party 
companies whose equity securities are listed on a stock exchange and ten additional mandates in the highest management 
bodies of other companies. The following mandates are not subject to these limitations: (i) mandates in companies which are 
controlled by the Company or which control the Company; and (ii) mandates in the highest supervisory bodies of associa-
tions, charitable organizations, foundations, trust and employee welfare foundations. No member of the Board shall held 
more than ten such mandates.

Internal Organizational Structure

Responsibilities of the Board
The Board is entrusted with the ultimate direction of the Company and the supervision of management. The Board’s duties 
include:
(i) 
(ii) 

the ultimate supervision of the Company and the issuing of all necessary directives;
the establishment of the Company’s organization, including the enactment and amendment of the Organizational 
Regulations;
the structuring of the Company’s accounting, financial control and financial planning systems, including the approval 
of the annual budget;

(iii) 

ObsEva SA l Annual Report 2018 

85

CORPORATE GOVERNANCE(iv) 

(v) 

(vi) 

(vii) 
(viii) 
(ix) 

the appointment and removal of the persons entrusted with the management and the representation of the Compa-
ny, as well as the determination of their signatory authority;
the ultimate supervision of the persons entrusted with the management of the Company, in particular with regard to 
compliance with the law, the articles of association and the Company’s internal regulations and policies;
the preparation of the annual report as well as the preparation of the general meeting of shareholders and the imple-
menting of its resolutions;
the notification of the court in the event that the Company is overindebted;
the other powers and duties that Swiss law requires to be assumed or discharged by the Board; and
the adoption of a code of business conduct and ethics for the Company.

Additionally, the Board keeps the power to resolve itself on the following duties:
(i) 

approve any loans by the Company to executive officers (to the extent permitted by applicable law and the Articles) 
and loans by the Company to employees that are not executive officers, where the amount of any such loan exceeds 
USD 10,000, such duty being also delegated to the compensation, nominating and corporate governance committee: 
and
administer the Company’s share and equity incentive plans, such duty being also delegated to the compensation, 
nominating and corporate governance committee and subject to further delegation to the executive committee under 
certain circumstances, as described in the Compensation Report on page 149 of this annual report.

(ii) 

The Board may also pass resolutions on all matters not reserved to the general meeting of shareholders or another corporate 
body by law or the Articles.

Working method of the Board 
The Board of the Company is composed of not more than eight members. The Chairman of Board is appointed by the 
general meeting of shareholders for a term of office expiring after completion of the subsequent annual general meeting of 
shareholders.

The meetings of the Board are called and chaired by the Chairman as often as business requires, and may be held by tele-
phone or videoconference. At the first meeting following the annual general meeting of shareholders, the Board appoints 
one or more Vice-Chairperson and a Secretary. It is not mandatory that the Secretary be a member of the Board. The notice 
convening a Board meeting is made in writing (including via telefax or email) and mentions the day, the time and the place of 
the meeting, as well as its agenda. The relevant documentation relating to the forthcoming meeting is delivered reasonably 
in advance. Except in case of emergency, resolutions on items that were not mentioned in the agenda may only be taken if 
all members of the Board have been consulted. Resolutions of the Board are made with a majority of the members present at 
a meeting. No quorum requirement applies for resolutions regarding the completion of a previously decided capital increase 
and the amendment of the Articles evidencing such capital increase.

The discussions and resolutions are kept in minutes signed by the Chairman and the Secretary. Resolutions may also be made 
by written consent to a proposed motion, provided no member requests that it be debated orally. Such resolutions by written 
consent shall be entered in the minutes of the next meeting.

The Board meets at least four times per year, on a quarterly basis, for regular face-to-face sessions. In 2018, the Board held 
four meetings in person, which lasted on average five hours, and one teleconference, which lasted approximately one hour. 
A vast majority of the Board Members were present at each Board meeting and teleconference. Members of the Executive 
Committee are usually invited to attend the meetings of the Board but are required to leave them for the non-Executive 
session that concludes every meeting.

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ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCECommittees of the Board of Directors 
The Board has two established committees: an audit committee and a compensation, nominating and corporate governance 
(“CNCG”) committee. Both committees present reports to the Board on their activities at every regular session of the Board. 

Audit Committee 
The audit committee, which consists of Barbara Duncan, Ed Mathers and Frank Verwiel, assists the Board in overseeing the 
accounting and financial reporting processes and the audits of the Company’s financial statements. In addition, the audit 
committee is directly responsible for the compensation, retention and oversight of the work of the auditors who are ap-
pointed by the shareholders pursuant to Swiss law. Ms. Duncan serves as chair of the audit committee. The audit committee 
consists exclusively of members of the Board who are financially literate, and Ms. Duncan is considered an “audit committee 
financial expert” as defined by the SEC. 

The audit committee is governed by a charter and is responsible, among other things, for:
(i) 
(ii) 

recommending an auditor for submission to the shareholders;
the compensation, retention and oversight of any auditor or accounting firm engaged for the purpose of preparing or 
issuing an audit report or performing other audit, review or attest services;
pre-approving the audit services and non-audit services to be provided by the independent auditor before the auditor 
is engaged to render such services;
reviewing and discussing with the independent auditor its responsibilities under generally accepted auditing stan-
dards, the planned scope and timing of the independent auditor’s annual audit plan(s) and significant findings from 
the audit;
obtaining and reviewing a report from the independent auditor describing all relationships between the independent 
auditor and the Company consistent with the applicable requirements regarding the independent auditor’s communi-
cations with the audit committee concerning independence;
confirming and evaluating the rotation of the audit partners on the audit engagement team as required by law;
reviewing with management and the independent auditor, in separate meetings whenever the audit committee 
deems appropriate, any analyses or other written communications prepared by the management or the independent 
auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of 
the financial statements, including analyses of the effects of alternative IFRS methods on the financial statements, and 
other critical accounting policies and practices;
reviewing, in conjunction with the chief executive officer and the chief financial officer, the Company’s disclosure 
controls and procedures;
establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding 
accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by the 
employees of concerns regarding questionable accounting or auditing matters; and
approving or ratifying any related party transaction (as defined in the company’s related party transaction policy) in 
accordance with the Company’s related party transaction policy. 

(iii) 

(iv) 

(v) 

(vi) 
(vii) 

(viii) 

(ix) 

(x) 

The audit committee meets as often as it determines is appropriate to carry out its responsibilities, but in any event meets at 
least four times per year. In 2018, the audit committee held five meetings, which lasted on average one to two hours. A vast 
majority of the audit committee members were present at each audit committee meeting. The Company’s auditors are invited 
and systematically attend the audit committee meetings. The Chief Financial Officer and V.P. Finance are invited to attend 
the meetings of the audit committee too, but are required to leave them for the non-Executive session that concludes every 
meeting.

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87

CORPORATE GOVERNANCECompensation, Nominating and Corporate Governance Committee 
The CNCG committee consists of three members, Annette Clancy, Rafaèle Tordjman and James I. Healy. The chair of the 
CNCG committee is Ms. Clancy. The primary purpose of the CNCG committee is to oversee the Company’s compensation 
policies, plans and programs and to review and determine the compensation to be paid to the executive officers, directors 
and other senior management, as appropriate. The Company is subject to the Swiss Ordinance against excessive compensa-
tion in listed stock corporations, known as the “Minder” rules. As a result of the Minder rules, the members of the CNCG 
committee must be elected by the shareholders. 

In addition, the CNCG committee is also responsible for director nominations as well as reviewing and making recommenda-
tions to the Board, if required, on the Company’s corporate governance framework and guidelines. 

The CNCG committee has the responsibility to, among other things: 
(i) 

review and approve, or recommend that the Board approves the compensation of the executive officers based on the 
aggregate compensation approved by the shareholders;
review and approve, or recommend that the Board approves the compensation of the members of the Board based 
on the aggregate compensation approved by the shareholders;
review and approve, or recommend that the Board approves the terms of compensatory arrangements with the exec-
utive officers;
administer the Company’s share and equity incentive plans, subject to further delegation to the executive committee 
under certain circumstances, as described in the Compensation Report on page 149 of this annual report;
select independent compensation consultants and assess whether there are any conflicts of interest with any of the 
committees’ compensation advisers;
review and approve, or recommend that the Board approves incentive compensation and equity plans, and any other 
compensatory arrangements for the executive officers and other senior management, as appropriate;
review and establish general policies relating to compensation and benefits of the employees and reviewing the Com-
pany’s overall compensation philosophy;
identify, evaluate and select, or recommend that the Board approves, nominees for election to the Board;
evaluate the performance of the Board and of individual directors;
consider and make recommendations to the Board regarding the composition of its committees;
review developments in corporate governance practices;
evaluate the adequacy of the Company’s corporate governance practices and reporting;
review management succession plans;
approve any loans by the company to executive officers (to the extent permitted by applicable law and the Articles) 
and loans by the company to employees that are not executive officers, where the amount of any such loan exceeds 
USD 10,000;
develop and make recommendations to the Board regarding corporate governance guidelines and matters; and
oversee periodic evaluations of the Board’s performance. 

(ii) 

(iii) 

(iv) 

(v) 

(vi) 

(vii) 

(viii) 
(ix) 
(x) 
(xi) 
(xii) 
(xiii) 
(xiv) 

(xv) 
(xvi) 

The CNCG committee meets as often as it determines is appropriate to carry out its responsibilities. In 2018, the CNCG com-
mittee held six meetings, which lasted on average one hour. A vast majority of the CNCG committee members were present 
at each CNCG committee meeting. The Chief Executive Officer is invited to attend the meetings of the CNCG committee but 
is required to leave them for the non-Executive session that conclude every meeting.

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ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEDefinition of Areas of Responsibility
Subject to responsibilities reserved to the Board and its committees, as set forth in this section 3 of this Corporate Gover-
nance report, and except to the extent required by law, the Articles or the Organizational Regulations, the Board has delegat-
ed all areas of management of the Group’s business to the Executive Committee.

Information and Control Measurements vis-à-vis the Executive Committee
The Board elects the members and appoints the head of the Executive Committee (the CEO), and ensures that it receives 
sufficient information from the CEO to perform its supervisory duty and to make the decisions that are reserved to the Board. 
At each Board meeting the Board receives reports from the CEO on the status of finance, business, research and develop-
ment. These reports focus on the main risks and opportunities related to the Group. In addition, the Board is provided with 
other ad hoc reports on significant matters related to the Group’s operations, as business requires, as well as with monthly 
financial reporting and unaudited consolidated financial statements for the Company on a quarterly basis. The Board receives 
a written report from the auditors on the results of the audit which includes any findings with respect to internal control risks 
arising as a result of the audit procedures. 

For further information on controls measures, refer to section 9 of this corporate governance report.

4 – Executive Committee.

In accordance with the Articles and the Organizational Regulations, the Board has delegated the operational management 
to the Executive Committee which conducts the operational management of the Company pursuant to the Organizational 
Regulations and reports to the Board on a regular basis.

The following table sets forth the name, nationality, position and year of appointment, of each member of the Executive 
Committee, followed by a short description of each member’s business experience, education and activities.

Name

Ernest Loumaye

Tim Adams

Jean-Pierre Gotteland

Wim Souverijns

Elke Bestel

Ben T.G. Tan

Fabien de Ladonchamps

Nationality

Function

Appointment

Belgian

American

French

Belgian

German

Dutch

French

Chief Executive Officer

Chief Financial Officer

Chief Scientific Officer and Head of R&D

Chief Commercial Officer

Chief Medical Officer

V.P. Commercial & B.D.

V.P. Corporate Affairs & Finance

2013

2017

2015

2018

2015

2014

2013

Ernest Loumaye is a Co-Founder of the Company and has served as its Chief 
Executive Officer and member of the Board since its inception in November 2012. 
For further information on Dr. Loumaye biographic details refer to section 3 of this 
corporate governance report. 

ObsEva SA l Annual Report 2018 

89

CORPORATE GOVERNANCETimothy Adams has served as Chief Financial Officer since January 2017. From 
June 2014 to September 2016, Mr. Adams served as the Chief Financial Officer of 
Demandware, Inc. Mr. Adams served as Senior Vice President and Chief Financial 
Officer of athenahealth, Inc. from January 2010 to June 2014. Previously, Mr. 
Adams served as Chief Investment Officer of Constitution Medical Investors, Inc., 
a private investment firm focused on health-care-sector-related acquisitions and 
investments, as well as Senior Vice President of Corporate Strategy for Keystone 
Dental, Inc., a provider of dental health products and solutions. Earlier in his 
career, Mr. Adams was Chief Financial Officer at a number of other publicly 
traded companies. Mr. Adams began his career in public accounting at Pricewa-
terhouseCoopers LLP, formerly Price Waterhouse, and is a Certified Public 
Accountant. Mr. Adams has been serving as a member of the board of directors of 
Model N, a public revenue management solutions company, since December 
2016. Mr. Adams has also served as a member of the board of directors of 
ABILITY Network, a private healthcare technology company, from 2014 to 2018. 
Mr. Adams obtained a B.S. from Murray State University and an M.B.A. from 
Boston University. 

Jean-Pierre Gotteland has served as Chief Scientific Officer since September 
2015. From May 2007 to August 2015, Dr. Gotteland worked at PregLem SA, 
initially as the Vice President of Non-Clinical Development and CMC from 2007 to 
2012 and as the Chief Development Officer from January 2012 to August 2015. 
From 1998 to 2007, Dr. Gotteland held several research and development 
positions at Serono (subsequently Merck Serono). From 1991 to 1998, Dr. 
Gotteland served as medicinal chemistry group leader at Pierre Fabre Medicament. 
Dr. Gotteland holds a Ph.D. in Organic Chemistry from the University Claude 
Bernard and an Engineering Diploma from Ecole Superieure de Chimie Industrielle. 

Wim Souverijns has served as Chief Commercial Officer since November 2018. 
Prior to joining ObsEva, Wim spend 11 years at Celgene where he contributed to 
the successful built out of Celgene’s product portfolio in diverse strategic (Europe-
an & Global Marketing), as well as operational (General Manager for the Nordics 
and the UK & Ireland) roles. Most recently he served as the head of Global 
Marketing for Hematology & Oncology out of Summit, New Jersey. He developed 
a broad pharmaceutical background through various international assignments at 
PwC Consulting (1999–2003) and in different market access leadership roles at 
Amgen (2003–2007), both in the European headquarter in Luzern, Switzerland, as 
well as at the global level out of Thousand Oaks, California. He started of his 
career working for CTG (1997–1999), an IT services company, in Brussels, 
Belgium. Wim studied as a bio-engineer at the KU Leuven, Belgium, and obtained 
a PhD from the same institute.

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ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEElke Bestel has served as Chief Medical Officer and Head of Pharmacovigilance 
since September 2015. Prior to joining the Company, Dr. Bestel worked at 
PregLem SA, initially as a Global Project Director from 2008 to 2009, then as the 
Vice President Clinical Operations from 2009 to August 2012 and finally as the 
Chief Medical Officer from September 2012 to August 2015. Dr. Bestel studied at 
the Georg-August University Medical School of Göttingen, Germany and the 
Ludwig-Maximilian University Medical School of Munich, Germany. Dr. Bestel 
holds an M.D. from the University of Göttingen. 

Ben T.G. Tan has served as Vice President of Commercial & Business Develop-
ment since September 2014. Prior to joining the Company, Mr. Tan worked at 
Evolva SA, as Director, Business Development Pharmaceuticals from April 2012 to 
March 2014. Prior to joining Evolva SA, Mr. Tan worked at Novartis as Global 
Program Strategic Director, Cardiovascular and Metabolic Diseases from 2008 to 
2011. Prior to joining Novartis, Mr. Tan worked at Speedel as Head of Business 
Development & Licensing from 2001 to 2008. Prior to joining Speedel, Mr. Tan 
worked at Devgen, as Executive Vice President of Business from 2000 to 2001. 
Prior to joining Devgen, Mr. Tan worked at Organon, as Global Head of Licensing 
from 1997 to 2000. Prior to joining Organon, Mr. Tan worked at Roche, as Global 
Business Leader/International Product Manager from 1994 to 1997, and at Roche 
Netherlands, as Head of Medical Marketing from 1990 to 1993. Mr. Tan holds an 
M.S. from the Vrije Universiteit Amsterdam. 

Fabien Lefebvre de Ladonchamps has served as Vice President Corporate 
Affairs and Finance since January 2019 and previously served as Vice President of 
Finance from January 2016 to December 2018 and Finance Director from October 
2013 to December 2015. Prior to joining the Company, Mr. de Ladonchamps 
worked at Addex Therapeutics, initially as Chief Accountant from 2008 to 2009 
and then as Group Financial Controller from 2010 to September 2013. Mr. de 
Ladonchamps holds a French degree in Finance and Accounting from the Lyon III 
University in Lyon, France.

Restrictions on Mandates held outside the Company
The Articles provide certain restrictions to the number of mandates that members of the Executive Committee may have in 
the supreme governing bodies of legal entities registered in the Swiss commercial register or similar foreign register. As such 
no member of the Executive Committee may hold more than six additional mandates in the highest supervisory or manage-
ment bodies of third party companies whose equity securities are listed on a stock exchange and ten additional mandates in 
the highest management bodies of other companies. Members of the Executive Committee shall only accept such mandates 
with the prior consent of the Board. The following mandates are not subject to these limitations: (i) mandates in companies 
which are controlled by the Company or which control the Company; and (ii) mandates in the highest supervisory bodies of 
associations, charitable organizations, foundations, trust and employee welfare foundations. No member of the Executive 
Committee shall hold more than ten such mandates.

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91

CORPORATE GOVERNANCEManagement Contracts
There are no management contracts between the Company and third parties not belonging to the Group.

5 – Compensation, Shareholdings and Loans.

For a discussion on compensation and shareholdings of the members of the Board and of the Executive Committee, and 
loans granted to these individuals, refer to the Compensation Report section of this Annual Report on page 149.

6 – Shareholders’ Participation Rights.

Voting Rights Restrictions and Representation
Voting rights may be exercised only after a shareholder has been recorded in the Company’s share register as a shareholder 
or usufructuary with voting rights. A shareholder may be represented by his legal representative, the independent proxy or 
by a duly authorized person who does not need to be a shareholder. Subject to the registration of shares in the share register 
within the deadline set from time to time by the Board before the general meetings of shareholders, the Articles do not 
impose any restrictions on the voting rights of shareholders. Specifically, there is no limitation on the number of voting rights 
per shareholder.

A general meeting of shareholders is duly convened and capable of passing resolutions regardless of the number of shares 
represented. Resolutions of a general meetings of shareholders generally require the approval of the absolute majority 
of the votes cast at the shareholders meeting (more than 50% of the share votes cast at such meeting). Such resolutions 
include amendments to the Articles, elections of the members of the Board and statutory and group auditors, election of the 
chairman of the Board and of the members of the Compensation Committee, election of the independent proxy, approval 
of the annual financial statements, setting the annual dividend, approval of the compensation of the Board and executive 
committee pursuant to the Articles, decisions to discharge the members of the Board and executive committee for liability 
for matters disclosed to the general meeting of shareholders and the ordering of an independent investigation into specific 
matters proposed to the shareholders’ meeting.

However, a qualified majority of at least two-thirds of the votes represented and the absolute majority of the nominal share 
capital is required by law or the Articles for resolution pertaining to: (i) changes to the business purpose; (ii) the creation of 
shares with privileged voting rights; (iii) restrictions on the transferability of registered shares; (iv) an increase of the authorized 
or conditional share capital; (v) an increase in the share capital by way of conversion of capital surplus, through contribution 
in kind, or for purposes of an acquisition of assets or the granting of special privileges; (vi) the withdrawing or limitation of 
pre-emptive rights of shareholders; (vii) a relocation of the registered office; (viii) the dissolution of the Company; (ix) an abro-
gation or amendment of the Articles regarding the limitations of outside mandates for the Board members; or (x) the removal 
of a serving member of the Board. Furthermore, any decision related to a merger, demerger or conversion of the Company 
shall be taken in accordance with the Swiss Federal Act on Mergers, De-Mergers, Transformations and Transfers of Businesses.

Independent Proxy
Article 18 of the Articles provides the basis for election of the independent proxy. The general meeting of shareholders of 
May 9, 2018, elected Perréard de Boccard SA, a law firm located at Rue de la Coulouvrenière 29 in Geneva, Switzerland, as 
the independent proxy of shareholders of the Company.

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ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCEQuorums Required by the Articles
There is no other provision in the Articles requiring a majority for shareholders’ resolutions beyond the majority requirements 
set out by applicable legal provisions other than those disclosed under the above “Voting Rights Restrictions and Representa-
tion” section.

Convocation of the General Meeting of Shareholders
The general meeting of shareholders is the highest authority of the Company and under Swiss law, the ordinary general 
meeting of shareholders takes place annually within six months after the close of the business year. General meetings of 
shareholders are convened by the Board or, if required by law or the Articles, by the auditors, the liquidators of the Company 
or the representatives of the bonds holders, if any. Furthermore, the Board is required to convene an extraordinary general 
meeting of shareholders if so requested by holders of shares representing at least 10% of the share capital or having a total 
par value of one million Swiss francs. Such request must be made in writing not less than sixty days ahead of the meeting 
and shall include a brief description of the items to be discussed and the proposals.

Annual or extraordinary meetings of the shareholders are called by notice in the “Swiss Official Gazette of Commerce” not 
less than twenty days before the date fixed for the meeting. A general meeting of shareholders may also be called by means 
of a notice sent to the shareholders at their address registered in the share register. The notice of the meeting shall state the 
items on the agenda the proposals of the Board and of the shareholders that requested that a general meeting be convened 
or that items be included in the agenda. No resolution shall be passed at a general meeting of shareholders on matters which 
do not appear on the agenda except for a resolution convening an extraordinary general meeting, the setting up of a special 
audit or the election of auditors. No prior notice is required to bring motions related to items already on the agenda or for 
the discussion of matters on which no resolution is to be taken.

Inclusion of Items in the Agenda
Shareholders representing shares of a total par value of one million Swiss francs may require that items be included in the 
agenda of the meeting. Such request must be made in writing not less than sixty days ahead of the meeting and shall include 
a brief description of the items to be discussed and the proposals.

Entries in the Share Register
The Board determines the relevant deadlines for registration in the share register giving the right to attend and to vote at 
the general meetings of shareholders. Such deadlines are published by the Company in its annual report and are mentioned 
in the invitation to the general meeting of shareholders published in the Swiss Official Commercial Gazette. The registration 
deadline for the general meeting of shareholders of May 8, 2019 has been set as April 2, 2019 at 22:00 CET. The Company 
has not enacted any rules on the granting of exceptions in relation to these deadlines. 

7 – Changes of Control and Defense Measures.

Duty to Make an Offer
Swiss law provides for the possibility to have the Articles contain a provision which would eliminate the obligation of an 
acquirer of shares, exceeding the threshold of 33 1/3% of the voting rights (whether exercisable or not), to proceed with a 
public tender offer to acquire 100% of the listed equity securities of the company (opting-out provision pursuant to Article 
art. 125 para. 3 FMIA) or which would increase such threshold to 49% of the voting rights (opting-up provision pursuant to 
Article art. 135 para. 1 FMIA). The Articles do not contain an opting-out or an opting-up provision.

ObsEva SA l Annual Report 2018 

93

CORPORATE GOVERNANCEClauses of Changes of Control
The following agreements and schemes executed by the Company contain provisions in respect of changes in the Company’s 
shareholder base:
(i) 

the equity incentive plan dated 2013 contains provisions such as all equity instruments granted under that plan, 
consisting of 1,844,319 outstanding shares as of December 31, 2018, shall be immediately retransferred to the Com-
pany in case of a change of control at the shares’ fair market value at the time and for the purpose of the change of 
control;
25% of the unvested portion of stock-options granted under the equity incentive plan dated 2017 to an employ-
ee that is not a member of the Executive Committee, or an aggregate 178,915 unvested stock-options for all such 
employees as of December 31, 2018, shall vest immediately if, within three months before or 12 months following a 
change in control, (a) the employee is terminated without cause, or (b) the employee resigns for good reason; and
all of the unvested portion of stock-options granted under the equity incentive plan dated 2017 to a member of the 
Executive Committee, or an aggregate of 1,538,622 unvested stock-options for all members of the Executive Com-
mittee, as of December 31, 2018, shall vest immediately if, within three months before or 12 months following a 
change in control, (a) the member of the Executive Committee is terminated without cause, or (b) the member of the 
Executive Committee resigns for good reason.

(ii) 

(iii) 

8 – Auditors. 

Duration of the Mandate and Term of Office of the Lead Auditor
The Articles provide the basis for election of the Company’s auditors. The general meeting of shareholders of May 9, 2018, 
elected PricewaterhouseCoopers SA as the Company’s Auditors and Independent Registered Public Accounting Firm for the 
fiscal year 2018. PricewaterhouseCoopers SA has served as auditor of the Company since 2013, and PricewaterhouseCoo-
pers SA’s lead auditor, Mike Foley, has been serving in this capacity since the business year 2016. The Company, through its 
audit committee, has not adopted a policy regarding the rotation of audit firms yet.

Auditing Fees
Auditing fees charged for 2018 by the auditor amounted to USD 502 thousands and consisted of fees billed for the annual 
audit of the Company’s consolidated financial statements, and the statutory audit of the Company’s consolidated and stand-
alone financial statements. Audit Fees also include services that only the independent external auditor of the Company can 
reasonably provide, such as the review of documents filed with the U.S. stock exchange.

Additional Fees
Additional fees charged for 2018 by the auditor amounted to USD 188 thousands and consisted of fees billed for assurance 
and related services that are reasonably related to the performance of the audit or review of the financial statements or that 
are traditionally performed by the external auditor, and mainly include services such as comfort letters issued in connection 
with securities offerings, due diligence and agreed-upon or expanded audit procedures.

Information Instruments Pertaining to the External Audit
The audit committee assumes the task of supervising the auditors, and in this regard meets with the auditors at least four 
times a year to discuss the scope and the results of the audit and reviews performed by them, as well as other communica-
tions as may be required by applicable auditing standards. The auditors prepare an audit report to inform the audit commit-
tee of the result of the annual audit and quarterly reviews, as applicable, and to provide it with observations arising from 
the audit or reviews that are significant to the financial reporting process. The auditors also communicate once a year to the 
audit committee an overview of the overall audit strategy and timing of the audit. Other instruments available to the audit 
committee to obtain information on the activities of the auditors include a written disclosure by the auditors prior to their en-
gagement on the assessment of their independence, including a delineation of all relationships between them, or their affili-
ates, and the Group. Furthermore, the quality of the auditors’ service is assessed at least once a year by the audit committee.

94 

ObsEva SA l Annual Report 2018

CORPORATE GOVERNANCE9 – Controls and Procedures.

Management’s Annual Report on Internal Control over Financial Reporting 
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. The management is 
responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the 
effectiveness of such. Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief 
Financial Officer, management assessed the internal control over financial reporting and concluded that such was effective as 
of December 31, 2018.

Conduct of a Risk Assessment
The Company conducts risk management processes to identify and mitigate risks at an early stage. The responsibility for risk 
assessment and management is allocated to the Executive Committee and to other specialized corporate functions such as 
the finance and administrative functions of the Group. Financial risk management is described in more details in note 3 to 
the Consolidated IFRS Financial Statements for the year ended December 31, 2018.

Insider policy
The Board has issued an insider policy and implemented procedures to prevent insiders from benefiting from confidential 
information. The policy defines guidelines on how to deter corporate insiders from making use of confidential information. 
The Board has established blocking periods to prevent insiders from trading during sensitive periods.

Ethical business conduct
As a pharmaceutical business, the Group is operating in a highly regulated business environment. Strict compliance with all 
legal and health authority requirements, as well as requirements of other regulators, is mandatory. The Group expects its 
employees, contractors and agents to observe the highest standards of integrity in the conduct of the Group’s business. The 
Code of Business Conduct and Ethics sets forth the Group’s policy embodying the highest standards of business ethics and 
integrity required of all directors, executives, employees and agents when conducting business affairs on behalf of the Group.

10 – Information Policy. 

The Company publishes financial results in the form of an Annual Report and quarterly interim reports. In addition, the Com-
pany informs shareholders and the public regarding the Group’s business through press releases, conference calls, as well 
as roadshows and Key Opinion Leaders meetings. Where required by law or the Company’s Articles, publications are made 
in the Swiss Official Commercial Gazette. The Annual Report, usually published no later than March of the following year, 
and the quarterly interim reports, usually published no later than in May, August and November, respectively, are announced 
by press release. Annual Reports, quarterly interim reports and press releases are available on request in printed form to all 
registered shareholders, and are also made available on the Group’s website at www.obseva.com. The Group’s website, 
which is the Group’s permanent source of information, also provides other information useful to investors and the public, 
including information on the Group’s research and development programs as well as contact information. Additionally, the 
latest versions of the Articles, Organizational Regulations, charter of the audit committee, charter of the CNCG committee, 
as well as the Company’s Code of Business Conduct and Ethics and whistleblower policy can be found and downloaded 
in the Corporate Governance section of the Investors tab of the Group’s website. The Board has issued a disclosure policy 
to ensure that investors are informed in compliance with all applicable regulations. The Group’s investor relations depart-
ment is available to respond to shareholders’ or potential investors’ queries under IR@obseva.com, through the address and 
telephone number of ObsEva’s principal executive office in Geneva, Chemin de Aulx 12, 1228 Plan-les-Ouates, telephone 
number +41 22 552 38 40, or via the U.S. office at 1 Financial Center in Boston, MA, telephone number +1 (857) 972-9366.

ObsEva SA l Annual Report 2018 

95

CORPORATE GOVERNANCEConsolidated 
IFRS Financial 
IFRS Financial 
Statements
Statements

Consolidated IFRS Financial Statements 
for the year ended December 31, 2018

Consolidated Balance Sheet 

Notes

2018

2017

(in USD ,000)

(in USD ,000)

 As at December 31,

ASSETS

Current assets

Cash and cash equivalents

Other receivables

Prepaid expenses

Total current assets

Non­current assets

Furniture, fixtures and equipment

Intangible assets

Other long-term assets

Total non­current assets

Total assets

LIABILITIES AND EQUITY

Current liabilities

Current tax liability

Other payables and current liabilities

Accrued expenses

Total current liabilities

Non­current liabilities

Post-employment obligations

Other long-term liabilities

Total non­current liabilities

Shareholders’ equity

Share capital

Share premium

Reserves

Accumulated losses

Total shareholders’ equity

4

5

6

7

8

9

16

5

 6

10

9

11

11

11

11

Total liabilities and shareholders’ equity

The accompanying notes form an integral part of these consolidated financial statements. 

138,640

885

5,715

145,240

319

21,608

273

22,200

167,440

–

2,766

14,163

16,929

3,547

48

3,595

3,420

314,565

12,858

(183,927)

146,916

167,440

110,841

783

1,490

113,114

323

21,608

190

22,121

135,235

51

2,865

6,514

9,430

3,099

55

3,154

2,864

219,335

7,119

(106,667)

122,651

135,235

ObsEva SA l Annual Report 2018 

97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of Comprehensive Loss 

Notes

2018

2017

2016

(in USD ,000, 
except per share data)

(in USD ,000, 
except per share data)

(in USD ,000, 
except per share data)

Year ended December 31,

12

13

13

15

15

16

17

17

Operating income other than revenue

OPERATING EXPENSES

Research and development expenses

General and administrative expenses

Total operating expenses

OPERATING LOSS

Finance income

Finance expense

NET LOSS BEFORE TAX

Income tax benefit / (expense)

NET LOSS FOR THE YEAR

Net loss per share

Basic

Diluted

OTHER COMPREHENSIVE LOSS

Items that will not be reclassified to profit and loss

Remeasurements on post-employment benefit plans

Items that may be reclassified to profit or loss

Currency translation differences

TOTAL OTHER COMPREHENSIVE LOSS

15

16

22

(62,872)

(14,297)

(77,169)

(77,154)

393

–

(76,761)

45

(76,716)

(1.91)

(1.91)

(544)

–

(544)

(54,912)

(12,568)

(67,480)

(67,464)

590

(1)

(66,875)

(51)

(66,926)

(2.25)

(2.25)

(142)

–

(142)

(23,711)

(6,452)

(30,163)

(30,141)

36

(97)

(30,202)

–

(30,202)

(1.40)

(1.40)

(599)

(83)

(682)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

(77,260)

(67,068)

(30,884)

The accompanying notes form an integral part of these consolidated financial statements. 

98 

ObsEva SA l Annual Report 2018

CONSOLIDATED IFRS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of Cash Flows 

Notes

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

Year ended December 31,

NET LOSS BEFORE TAX FOR THE YEAR

(76,761)

(66,875)

(30,202)

Adjustments for:

Depreciation expense

Post-employment cost / (benefit)

Share-based compensation expense

Income tax paid

Finance (income) / expense, net

Increase in other receivables

Decrease / (increase) in prepaid expenses, deferred costs and other 
long term-assets

Increase / (decrease) in other payables and current liabilities

Increase in accrued expenses and other long-term liabilities

NET CASH FLOWS USED IN OPERATING ACTIVITIES

Cash used for rental deposits

Payments for plant and equipment

Acquisition of a license

NET CASH FLOWS USED IN INVESTING ACTIVITIES

Proceeds from issuance of shares

Payment of share issuance costs

Proceeds from exercise of stock-options

Payment of deferred costs of financing activities

Interest paid

Interest received

7

18

7

8

11

11

11

NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents as at January 1,

Effects of exchange rate changes on cash and cash equivalents

Cash and cash equivalents as at December 31,

4

109

(96)

9,152

(11)

(359)

(96)

(4,225)

(16)

8,362

(63,941)

(83)

(188)

–

(271)

97,861

(6,881)

672

–

–

–

91,652

27,440

110,841

359

138,640

70

7

8,856

–

(589)

–

721

399

1,696

(55,715)

(96)

(189)

(5,000)

(5,285)

156,786

(11,042)

–

–

(1)

–

145,743

84,743

25,508

590

110,841

46

(384)

2,237

–

61

(714)

(2,033)

1,788

612

(28,589)

–

(45)

–

(45)

46

(33)

–

(206)

(8)

34

(167)

(28,801)

54,275

34

25,508

The accompanying notes form an integral part of these consolidated financial statements. 

ObsEva SA l Annual Report 2018 

99

CONSOLIDATED IFRS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of Changes in Equity 

Notes

Share
capital

Share
premium

Share­
based
payments
reserve

Foreign
currency
translation
reserve

Total
reserves

Accumu­
lated
losses

Total

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

December 31, 2015

Loss for the year

Other comprehensive loss

Total comprehensive loss

Issuance of non-voting shares

Acquisition of license

Share issuance costs

Share-based remuneration

18

Offset of accumulated losses 
with share premium

December 31, 2016

Loss for the year

Other comprehensive loss

Total comprehensive loss

Issuance of shares – IPO

Issuance of shares – PIPE

Issuance of shares – Incentive Plan

Share issuance costs

Share-based remuneration

December 31, 2017

Loss for the year

Other comprehensive loss

Total comprehensive loss

Issuance of shares – Incentive Plan

Issuance of shares – June 2018 
offering

Issuance of shares – ATM program

Share issuance costs

Exercise of stock-options

Share-based remuneration

December 31, 2018

11 

11 

11 

18

11

11 

11 

18

18

1,694

99,597

3,227

(406)

2,821

(39,437)

64,675

–

–

–

20

26

–

–

–

–

–

–

–

–

–

675

(675)

2,366

(2,366)

(33)

–

–

2,237

(30,639)

–

–

(83)

(83)

–

–

–

–

–

–

(30,202)

(30,202)

(83)

(83)

(675)

(2,366)

–

2,237

(599)

(682)

(30,801)

(30,884)

–

–

–

–

20

26

(33)

2,237

–

30,639

–

1,740

71,966

2,423

(489)

1,934

(39,599)

36,041

–

–

–

496

592

36

–

–

–

–

–

96,254

59,408

–

–

–

–

–

3,671

(3,671)

(11,964)

–

2,864

219,335

–

–

–

–

–

–

–

8,856

7,608

–

–

–

27

2,947

(2,947)

392

130

–

7

–

77,431

19,881

(6,160)

1,131

–

–

–

–

(466)

9,152

–

–

–

–

–

–

–

–

–

–

–

–

–

(3,671)

–

8,856

(66,926)

(66,926)

(142)

(142)

(67,068)

(67,068)

–

–

–

–

–

96,750

60,000

36

(11,964)

8,856

(489)

7,119

(106,667)

122,651

–

–

–

–

–

–

–

–

–

–

–

–

(76,716)

(76,716)

(544)

(544)

(77,260)

(77,260)

(2,947)

–

–

–

(466)

9,152

–

–

–

–

–

–

27

77,823

20,011

(6,160)

672

9,152

3,420

314,565

13,347

(489)

12,858

(183,927)

146,916

The accompanying notes form an integral part of these consolidated financial statements. 

100 

ObsEva SA l Annual Report 2018

CONSOLIDATED IFRS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the Consolidated Financial Statements 

1. General information 

ObsEva SA (the “Company”) was founded on November 14, 2012, and its address is 12 Chemin des Aulx, 1228 Plan-les-
Ouates, Geneva, Switzerland. The terms “ObsEva” or “the Group” refer to ObsEva SA together with its subsidiaries included 
in the scope of consolidation (note 2.2). 

The Group is focused on the development and commercialization of novel therapeutics for serious conditions that com-
promise women’s reproductive health and pregnancy. The Group has a portfolio of three mid- to late-stage development 
in-licensed compounds (linzagolix, nolasiban and OBE022) being developed in four indications. The Group has no currently 
marketed products. 

These consolidated financial statements are presented in dollars of the United States (USD), rounded to the nearest thousand, 
except share and per share data, and have been prepared on the basis of the accounting principles described in note 2. 

These consolidated financial statements were authorized for issue by the Company’s Board of Directors (the “Board of Direc-
tors”) on March 5, 2019. 

2. Accounting principles applied in the preparation of the consolidated financial statements 

2.1 Basis of preparation 
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Stan-
dards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements are 
based on a historical cost basis. 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also 
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involv-
ing a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidat-
ed financial statements, are disclosed in note 2.5. 

Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the to-
tals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount. 

2.2 Scope of consolidation 
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, 
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its 
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to 
the Group. They are deconsolidated from the date that control ceases. 

The Company currently consolidates the financial operations of its two fully-owned subsidiaries, ObsEva Ireland Ltd, which is 
registered in Cork, Ireland and organized under the laws of Ireland, and ObsEva USA Inc., which is registered and organized 
under the laws of Delaware, USA. ObsEva Ireland Ltd had no operations and no results of operations to report as of Decem-
ber 31, 2018 and 2017. 

2.3 Standards and interpretations published by the IASB 
The IASB and the International Financing Reporting Standards Interpretations Committee have recently issued new standards 
and interpretations to be applied to the Group’s consolidated financial statements. 

ObsEva SA l Annual Report 2018 

101

On January 1, 2018, the Group adopted IFRS 9 Financial Instruments, which replaced IAS 39 Financial Instruments: Recognition 
and Measurement. The adoption of the standard had no material impact on the Group’s consolidated financial statements.

On January 1, 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers which replaces IAS 11 Construc-
tion Contracts and IAS 18 Revenue and related interpretations. The adoption of the standard had no material impact on the 
Group’s consolidated financial statements.

No other new standards and amendments applied by the Group in 2018 had a material impact on its consolidated financial 
statements. 

In 2019, the Group will adopt the following new relevant standard: 

IFRS 16 Leases, effective for annual periods beginning on or after January 1, 2019 
In January 2016, the IASB issued IFRS 16 Leases, which replaces IAS 17 Leases and related interpretations. The new standard 
will require lessees to recognize a lease liability reflecting future lease payments and a right-of-use asset for virtually all lease 
contracts, removing the distinction between operating and finance leases. As at December 31, 2018, the Group has non-can-
cellable operating lease commitments of USD 3 million (excluding short-term and low-value leases) and has recognized right-
of-use assets and lease liabilities of USD 2.7 million on January 1, 2019. The Group does not expect a significant impact on 
the net profit after tax resulting from the adoption of IFRS 16.

The Group will apply the standard from its mandatory adoption date of January 1, 2019. The Group intends to apply the sim-
plified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets 
for property leases will be measured on transition as if the new rules had always been applied. All other right-of-use assets 
will be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).

Other new standards and amendments published but not yet effective are not expected to have any material impact on the 
consolidated financial statements of the Group. 

2.4 Significant accounting policies 

Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly 
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and 
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrow-
ings in current liabilities in the balance sheet.

Current assets 
Other receivables and other current receivables or prepaid expenses are carried at their nominal value. 

Individual receivables that are known to be uncollectible are written off by reducing the carrying amount directly. The Group 
considers that there is evidence of impairment if any of the following indicators are present: 

l 
l 
l 

significant financial difficulties of the debtor; 
probability that the debtor will enter bankruptcy or financial reorganization; and 
default or delinquency in payments (more than 30 days overdue). 

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss 
allowance for all receivables.

102 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Receivables for which an impairment provision was recognized are written off against the provision when there is no expecta-
tion of recovering additional cash. 

Furniture, fixtures and equipment 
Furniture, fixtures and equipment are carried at cost less depreciation and impairment. Historical cost includes expenditure 
that is directly attributable to the acquisition of the items. Depreciation is calculated using the straight-line method, on the 
basis of the following useful lives: 

l 
l 
l 

furniture 
hardware 
leasehold improvement 

5 years
3 years
duration of lease

Furniture, fixtures and equipment are reviewed for impairment whenever events or changes in circumstances indicate that 
their carrying amount may not be recoverable, on an individual basis. An impairment loss is recognized for the amount by 
which the asset’s carrying amount exceeds its recoverable amount. 

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. 

Intangible assets 
Separately acquired patents, licenses and other intangible assets are recorded at historical cost and subsequently measured at 
cost less accumulated amortization and any impairment losses. 

The acquisition of certain intangible assets, mainly licenses, may involve additional payments contingent on the occurrence of 
specific events or milestones. Unless the Group already has a present obligation to make the payment at a future date, the 
initial measurement of the intangible asset does not include such contingent payments. Instead, such payments are subse-
quently capitalized as intangible assets when the contingency or milestone occurs.

Estimated useful life is the lower of legal duration and economic useful life, which does not exceed 20 years. The estimated 
useful life of the intangible assets is annually reviewed, and if necessary, the future amortization charge is accelerated. 

For licenses, the amortization starts when the assets become available for use, generally once proper regulatory and market-
ing approval are obtained.

Intangible assets are subject to impairment testing annually, and whenever events or changes in circumstances indicate that 
the carrying amount may not be recoverable.

Post-employment benefits 
Group companies operate two pension schemes.

All employees of ObsEva SA participate in a retirement defined benefit plan. A defined benefit plan is a pension plan that 
defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors 
such as age, years of service and compensation. The liability recognized in the balance sheet in respect of defined benefit 
pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of 
plan assets. The defined benefit obligation is calculated annually by an independent actuary, using the projected unit credit 
method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows 
using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, 
and that have terms to maturity approximating to the terms of the related pension obligation.

ObsEva SA l Annual Report 2018 

103

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited 
to equity in other comprehensive income in the period in which they arise. Past-service costs are recognized immediately in 
the consolidated statement of comprehensive loss. 

During 2017, ObsEva USA, Inc established a 401K, defined contribution plan, for the employees of the company. A defined 
contribution plan is a pension plan under which the amounts paid by the employer are fixed in advance. The plan assets are 
held by a third party custodian. ObsEva USA, Inc. contributions to the defined contribution plan are charged to the income 
statement as incurred. The Group has no further obligation once the contributions have been paid. 

Equity 
Incremental costs directly attributable to the issuance of common shares and options are recognized as a deduction from 
equity, net of any tax effects. 

Research and development 
Research expenses are charged to the consolidated statement of comprehensive loss as incurred. Development expenses are 
capitalized as intangible assets when it is probable that future economic benefits will flow to the Group, and the following 
criteria are fulfilled: 

l 
l 
l 
l 
l 

l 

it is technically feasible to complete the intangible asset so that it will be available for use or sale; 
management intends to complete the intangible asset and use or sell it; 
there is an ability to use or sell the intangible asset; 
the asset will generate probable future economic benefits and demonstrate the existence of a market;
adequate technical, financial and other resources to complete the development and to use or sell the intangible asset 
are available; and 
the expenditure attributable to the intangible asset during its development can be reliably measured. 

In the opinion of management, due to uncertainties inherent in the development of the Group’s product candidates, the 
criteria for development costs to be recognized as an asset as defined by IAS 38 Intangible Assets are not met. 

Foreign currencies 

Functional and presentation currency 
Items included in the consolidated financial statements of the Group are measured using the currency of the primary eco-
nomic environment in which each Group’s entity operates (the “functional currencies”).

Until December 31, 2016, the functional currency of the Company was the Swiss franc (CHF). As from January 1, 2017, due 
to a change of its primary economic environment, the functional currency of ObsEva SA became the US dollar (USD), which is 
also the functional currency of ObsEva USA, Inc. and the presentation currency of the Group. 

Transactions and balances 
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the 
transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of 
such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end 
exchange rates are recognized in profit or loss. 

104 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of comprehensive 
loss, within finance costs. All other foreign exchange gains and losses are presented in the consolidated statement of com-
prehensive loss on a net basis within other income or other expenses. 

The following rates have been used for the translation from the functional currency to the presentation currency: 

Income statement
Average rate

Balance sheet
Closing rate as of December 31,

2016

(CHF)

2015

(CHF)

2016

(CHF)

2015

(CHF)

USD

 0.9850

0.9624

 1.0160

1.0010

Share-based compensation 
The Group operates two equity incentive plans.

A share-based, equity-settled, plan was formally set-up by the Group in 2013 (the “2013 EIP”). Participants eligible for 
awards under the 2013 EIP are executives, directors, employees, agents and consultants. The fair value of the shares granted 
under the 2013 EIP is determined at each grant date by using either an option pricing method that uses a Black-Scholes mod-
el or a hybrid method, as appropriate, both based on a combination of the discounted cash flow method, under the income 
approach, and the backsolve method.

A share-based, equity-settled, plan was formally set-up by the Group in 2017 (the “2017 EIP”). Participants eligible for 
awards under this plan are executives, directors, employees, agents and consultants. The fair value of the stock-options 
granted under the 2017 EIP is determined at each grant date by using a Black-Scholes model.

When the equity instruments granted do not vest until the counterparty completes a specified period of services, the Group 
accounts for those services as they are rendered by the counterparty, during the vesting period, with a corresponding in-
crease in equity.

Deferred income taxes 
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of 
assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax 
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the 
transaction affects neither accounting nor taxable profit and loss, it is not accounted for. Deferred income tax is determined 
using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to 
apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. 

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against 
which the temporary differences can be utilized. 

Leases 
Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as 
operating leases, and payments made are charged to the statement of comprehensive loss on a straight-line basis. 

ObsEva SA l Annual Report 2018 

105

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
Segment information 
The Group operates in one segment, which is the research and development of innovative women’s reproductive, health and 
pregnancy therapeutics. The marketing and commercialization of such therapeutics depend, in large part, on the success of 
the development phase. The Chief Executive Officer of the Company (Chief Operating Decision Maker) reviews the consol-
idated statement of operations of the Group on an aggregated basis and manages the operations of the Group as a single 
operating segment. 

The Group currently generates no revenue from the sales of therapeutics products. 

The Group’s activities are not affected by any significant seasonal effect.

The geographical analysis of non-current assets is as follows:

Switzerland

USA

Total non­current assets

The geographical analysis of operating expenses is as follows:

Switzerland

USA

Total operating expenses

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

21,954

246

22,200

21,832

289

22,121

Year ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

2016

 (in USD ,000)

73,050

4,119

77,169

63,956

3,524

67,480

30,163

–

30,163

2.5 Critical accounting estimates and judgments 
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expec-
tations of future events that are believed to be reasonable under the circumstances. 

Critical accounting estimates and assumptions 
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will not necessarily 
equal to related actual outcome. The following areas involve a higher degree of judgement or complexity or are areas where 
assumptions and estimates can have a significant impact on the consolidated financial statements: 

l 

l 

Post-employment obligations: the actuarial valuation involves making assumptions about discount rates, future salary 
increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are 
subject to significant uncertainty (note 10); 
Share-based compensation: the determination of the fair value of the equity instruments granted involves the use of 
certain assumptions subject to judgement (note 18); 

106 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
l 

l 

l 

l 

Commencement of depreciation and amortization: the depreciation and amortization starts when the assets are avail-
able for use in the manner intended by management, which requires judgement (notes 7 and 8); 
Research and development costs: the Group recognizes expenditure incurred in carrying out its research and devel-
opment activities until it becomes probable that future economic benefits will flow to the Group, which results in 
recognizing such costs as intangible assets, involving a certain degree of judgement (note 13); 
Deferred taxes: the recognition of deferred tax assets requires assessment of whether it is probable that sufficient 
future taxable profit will be available against which the deferred tax assets can be utilized (note 16); 
Impairment of assets: as part of impairment tests, the recoverable amounts of tested assets have been determined 
based on fair value calculations requiring the use of certain assumptions, subject to judgement (note 8).

3. Financial risk management 

3.1 Financial risk factors 
The Group’s activities expose it to a variety of financial risks such as foreign exchange risk, credit risk, interest rate risk and 
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks 
to minimize potential adverse effects on the Group’s financial performance. Financial risk management is carried out by the 
Group`s finance department subject to and pursuing policies approved by the Board of Directors. 

Foreign exchange risk 
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily 
with respect to the Swiss franc (CHF), Euro (EUR) and British Pound (GBP). Foreign exchange risk arises from future com-
mercial transactions (e.g. costs for clinical services) and recognized assets and liabilities. Management has set up a policy to 
manage the foreign exchange risk against their functional currency. To manage its foreign exchange risk arising from future 
commercial transactions and recognized assets and liabilities, the Group’s finance department maintains foreign currency 
cash balances to cover anticipated future requirements. 

The sensitivity of profit or loss to changes in the exchange rates in the reported periods are as follows: 

EUR positions

Increase /decrease
exchange rate vs USD

Effect on profit 
before tax

(in USD ,000)

Effect on share­
holders’ equity

(in USD ,000)

2018

2017

+5%

–5%

+5%

–5%

770

(770)

924

(924)

770

(770)

924

(924)

ObsEva SA l Annual Report 2018 

107

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
GBP positions

Increase /decrease
exchange rate vs USD

Effect on profit 
before tax

(in USD ,000)

Effect on share­
holders’ equity

(in USD ,000)

2018

2017

+5%

–5%

+5%

–5%

110

(110)

98

(98)

110

(110)

98

(98)

CHF positions

Increase /decrease
exchange rate vs USD

Effect on profit 
before tax

(in USD ,000)

Effect on share­
holders’ equity

(in USD ,000)

2018

2017

+5%

–5%

+5%

–5%

607

(607)

474

(474)

607

(607)

474

(474)

Credit risk 
Cash and cash equivalents are deposited with top tier banks and institutions with a short term rating of “A-1” or “P-1” with 
Standard & Poor’s and Moody’s, respectively. 

The maximum credit risk exposure the Group faces in connection with its financial assets, being cash and cash equivalents 
and other receivables, is the carrying amounts of these balances as shown in the consolidated balance sheet. 

Interest rate risk 
The Group’s exposure to interest rate fluctuations is limited because the Group has no interest-bearing indebtedness. 

Liquidity risk 
The Group’s principal source of liquidity is the cash reserves which are obtained through the issuance of new shares. The 
Group’s policy is to invest these funds in low risk investments including interest bearing deposits. The ability of the Group to 
maintain adequate cash reserves to sustain its activities in the medium term is subject to risk as it is highly dependent on the 
Group’s ability to raise further funds from the sale of new shares. 

3.2 Capital management 
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order 
to ensure the financing of successful research and development activities so that future profits can be generated and to 
maintain sufficient financial resources to mitigate against risks and unforeseen events. 

The Group is also subject to capital maintenance requirements under Swiss law. To ensure that statutory capital requirements 
are met, the Group monitors capital periodically.

3.3 Fair value estimation and financial instruments 
The carrying value less impairment provision of receivables and payables approximate their fair values due to their short-term 
nature. 

108 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
All financial assets and liabilities, respectively, are held at their amortized cost. 

The Group’s financial assets consist of cash and cash equivalents and other receivables which are classified as financial assets 
at amortized cost according to IFRS 9. The Group’s financial liabilities consist of other payables and accruals which are classi-
fied as liabilities at amortized cost according to IFRS 9. 

4. Cash and cash equivalents 

Bank deposits

Interest bearing deposits

Total cash and cash equivalents

Split by currency: 

CHF

USD

EUR

GBP

5. Receivables and payables 

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

138,640

–

138,640

2018

5%

89%

5%

1%

110,841

–

110,841

2017

6%

93%

1%

–

As at December 31, 2018 and 2017, other receivables consist mainly of reimbursements to be received from third parties, 
including VAT, insurance premiums and shared-costs of research and development studies, and other payables and other 
current liabilities include mainly costs of clinical services. All receivables and payables are due from and to third parties and 
carried at amortized cost. 

All payables have a contract maturity within 1 year. 

6. Prepaid and accrued expenses 

As at December 31, 2018 and 2017, prepaid expenses mainly consist of advance or milestone payments made as part of our 
ongoing clinical trials. The balance as at December 31, 2018 includes USD 4.3 million attributable to the upfront payment 
made in relation to the Company’s Phase 3 EDELWEISS 2 and 3 clinical trials expected to be initiated in the first quarter of 
2019.

ObsEva SA l Annual Report 2018 

109

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
As at December 31, 2018 and 2017, accrued expenses consisted of the following:

Accrued research and development expenses

Accrued compensation-related expenses

Accrued other expenses

Total accrued expenses

7. Furniture, fixtures and equipment

Net book value as at January 1

Additions

Depreciation charge

Currency translation effects

Net book value as at December 31

Total cost

Accumulated depreciation

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

10,734

2,364

1,065

14,163

3,192

1,994

1,328

6,514

2018

2017

(in USD ,000)

(in USD ,000)

323

105

(109)

–

319

600

(281)

121

272

(70)

–

323

495

(172)

Furniture, fixtures and equipment assets mainly consist of office furniture and leasehold improvements. 

8. Intangible assets 

Net book value as at January 1

Additions

Amortization charge

Currency translation effects

Net book value as at December 31

Total cost

Accumulated amortization

2018

2017

(in USD ,000)

(in USD ,000)

21,608

–

–

–

21,608

21,608

–

16,608

5,000

–

–

21,608

21,608

–

As at December 31, 2018, the Group holds a number of licenses to operate several biopharmaceutical product candidates, 
the value of which is recorded at USD 21.6 million (2017: USD 21.6 million). 

110 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
Merck Serono licenses 
On August 28, 2013, the Group in-licensed nolasiban for USD 4.9 million from Ares Trading S.A., an affiliate of Merck Sero-
no (“Merck Serono”). 

In June 2015, the Group acquired the in-license for OBE022 from Merck Serono for an amount of USD 2.4 million. 

Kissei license 
On November 19, 2015, the Group entered into an exclusive in-license and supply agreement with Kissei Pharmaceutical Co., 
Ltd. (“Kissei”) to acquire the product candidate linzagolix (formerly OBE2109) for which Kissei successfully completed a Phase 
2 trial in Japan. This in-license agreement grants the Group an exclusive license to use, develop and commercialize the prod-
uct candidate worldwide excluding certain Asian countries. This in-license was acquired for an upfront cash consideration of 
USD 10 million, with additional contingent payments upon occurrence of certain milestones (note 19). 

On April 25, 2017, the Group announced the initiation of its Phase 3 clinical program for linzagolix in uterine fibroids and 
related activation of sites and start of recruitment. This event triggered the recognition and payment of a USD 5.0 million 
milestone to Kissei during the second quarter of 2017, that was accounted for as an intangible asset.

The Group has concluded that the Merck Serono licenses and the Kissei license acquisitions do not qualify as business 
combinations per IFRS 3, as the Group did not acquire processes that are capable of producing outputs given the in-licensed 
compounds are very early-stage. 

Amortization and impairment 
The licenses are currently not amortized as no regulatory and marketing approvals were obtained. 

In accordance with IAS 38, the licenses have been reviewed for impairment by assessing the fair value less costs of disposal 
(“FVLCOD”). The valuation is considered to be Level 3 in the fair value hierarchy due to unobservable inputs used in the 
valuation. No impairment was identified. 

The key assumptions used in the valuation model (income approach) to determine the FVLCOD of the licenses are as follows: 

l 
l 
l 
l 
l 
l 

Expected research and development costs; 
Probabilities of achieving development milestones based on industry standards; 
Reported disease prevalence; 
Expected market share; 
Drug reimbursement, costs of goods and marketing expenses; and 
Expected patent life. 

The valuation model covers a 20-year period due to the length of the development cycle for assets of this nature. A discount 
factor of 15%, based on the assumed cost of capital for the Group, has been used over the forecast period. 

Based on sensitivity analysis performed, including changes in discount rates and peak sales assumptions, no reasonably possi-
ble change in assumption would cause the carrying value of the licenses to exceed their recoverable amount. 

ObsEva SA l Annual Report 2018 

111

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 9. Other long­term assets and liabilities

The Group’s other long-term assets mainly consist of security rental deposits for the Group’s offices.
The Group’s other long-term liabilities consist of long-term components of rent costs for ObsEva USA Inc.
10. Post-employment benefits 

In accordance with the mandatory Swiss pension fund law, all employees of the Company participate in a retirement defined 
benefit plan. Swiss based pension plans are governed by the Swiss Federal Law on Occupational Retirement, Survivors’ and 
Disability Pension Plans (the “LPP”), which stipulates that pension plans are to be managed by independent, legally autono-
mous units. Under the terms of the pension plan, participants are insured against the financial consequences of old age, dis-
ability and death. The various insurance benefits are governed by regulations, with the LPP specifying the minimum benefits 
that are to be provided. The employer and employees pay contributions to the pension plan. In the event the pension plan’s 
statutory funding falls below a certain level, various measures can be taken to increase funding above such level, such as 
increasing the current contribution, lowering the interest rate on the retirement account balances or reducing the additional 
prospective benefits. The employer can also make additional restructuring contributions. Since the risks of death and disability 
are fully reinsured by an insurance group, the savings plan must be qualified as a defined benefit plan. As required by IAS 19 
Employee Benefits, the projected unit credit method has been used in the calculation of present value of the benefit obliga-
tions and the related current service cost. 

The investment risk is borne by the insurer and the reinsurer respectively, and the investment decision is taken by the board 
of trustees of the collective insurance. 

In 2018, the pension fund changed the pension conversion rates, what has been considered as an amendment of the pen-
sion plan.

Change in defined benefit obligation

Defined benefit obligation at January 1,

Current service cost

Interest cost

Net benefits paid

Currency translation effects

Remeasurements:

Impact of plan amendment

Effect of changes in demographic assumptions

Effect of changes in financial assumptions

Effect in experience assumptions

Defined benefit obligation at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

(12,230)

(1,046)

(101)

(888)

137

172

–

96

(642)

(9,201)

(795)

(72)

(1,604)

(403)

–

–

155

(310)

(14,502)

(12,230)

112 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
Change in plan assets

Fair value of plan assets at January 1,

Interest income

Employer contributions

Employee contributions

Net benefits paid

Currency translation effects

Remeasurements: return on plan assets (excluding interest income)

Fair value of plan assets at December 31,

Components of defined benefit cost

Current service cost

Interest expense on defined benefit obligation

Interest income on plan assets

Employee contributions

Impact of plan amendment

Total included in staff costs (note 14)

Remeasurements recognized in other comprehensive loss

Effect of changes in demographic assumptions

Effect of changes in financial assumptions

Effect in experience assumptions

Return on plan assets (excluding interest income)

Total remeasurements recognized as other comprehensive loss

Cumulative amount of remeasurements immediately 
recognized in other comprehensive loss

2018

2017

(in USD ,000)

(in USD ,000)

9,131

80

479

479

888

(104)

2

10,955

6,369

55

403

403

1,604

284

13

9,131

Year ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

1,046

101

(80)

(479)

(172)

416

795

72

(55)

(403)

–

409

Year ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

–

96

(642)

2

(544)

–

155

(310)

13

(142)

(4,125)

(3,581)

ObsEva SA l Annual Report 2018 

113

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
 
 
 
Amounts recognized in the statement of financial position

Defined benefit obligation

Fair value of plan assets

Net liability

Change in defined benefit liability

Net defined benefit liability at January 1,

Defined benefit cost included in statement of comprehensive loss

Total remeasurements included in other comprehensive loss

Employer contributions

Currency translation effects

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

(14,502)

10,955

(3,547)

(12,230)

9,131

(3,099)

2018

2017

(in USD ,000)

(in USD ,000)

(3,099)

(2,832)

(416)

(544)

479

33

(409)

(142)

403

(119)

Net defined benefit liability at December 31,

(3,547)

(3,099)

As of the date of preparation of these consolidated financial statements, the annual report for 2018 of the pension fund has 
not yet been issued, and therefore the detailed structures and assets held at December 31, 2018, are not currently available 
for presentation. The detailed structures and assets held at December 31, 2017, are as follows: 

Plan assets

Cash

Bonds

Shares

Real estate

Mortgages

Alternative investments

Total

The principal actuarial assumptions used were as follows: 

Discount rate

Salary increase (including inflation)

Rate of pension increases

Post-employment mortality table

As at
December 31, 2017

2.2%

64.3%

9.3%

16.4%

7.7%

0.1%

100.0

2017

0.80%

1.00%

0.25%

2018

0.85%

1.00%

0.25%

LPP 2015 G

LPP 2015 G

114 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
 
 
Sensitivity analysis illustrates the sensitivity of the Group defined benefit obligation at December 31, 2018 by varying the 
discount rate and the salary increase rate by plus / minus 50 basis points: 

(in USD ,000)

Sensitivity analysis

Discount rate

Salary increase

Rate of pension increases

Discount
rate

Discount
rate

Salary
increase

Salary
increase

Rate of
pension
increase

Rate of
pension
increase

plus
50bps

1.35%

1.00%

0.25%

minus
50bps

0.35%

1.00%

0.25%

plus
50bps

0.85%

1.50%

0.25%

minus
50bps

0.85%

0.50%

0.25%

plus
25bps

0.85%

1.00%

0.50%

minus
25bps

0.85%

1.00%

0.00%

Defined benefit obligation

(13,238)

(15,986)

(14,611)

(14,398)

(14,885)

(14,139)

Average duration of the defined 
benefit obligation

Duration in years

2018

18.9

2017

18.8

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Expected contributions by the employer to be paid to the post-employment benefit plans during the annual period beginning 
after the end of the reporting period amount to approximately USD 531,000. 

11. Shareholders’ equity 

Number of shares

in USD ,000

Common
shares

Preferred
A shares

Preferred
B shares

Non­
voting
shares

Total
shares

Share
capital

Share
premium

Total

January 1, 2017

2,215,434

8,031,777 11,079,549

611,637 21,938,397

1,740

71,966

73,706

Conversion of preferred 
and non-voting shares

19,722,963 (8,031,777) (11,079,549)

(611,637)

–

Issuance of shares – IPO

6,450,000

Issuance of shares – PIPE

7,500,000

Issuance of shares – 
 Incentive Plan

Share issuance costs

454,548

–

December 31, 2017

36,342,945

–

–

–

–

–

–

–

–

–

–

–

–

–

–

6,450,000

7,500,000

454,548

–

–

496

592

36

–

–

96,254

59,408

–

96,750

60,000

3,671

3,707

(11,964)

(11,964)

– 36,342,945

2,864

219,335

222,199

ObsEva SA l Annual Report 2018 

115

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
January 1, 2018

Issuance of shares - Incentive Plan

Issuance of shares – June 2018 offering

Issuance of shares – ATM program

Share issuance costs

Exercise of stock-options

December 31, 2018

Number of 
 common shares

Share
capital

Share
premium

Total

(in USD ,000)

(in USD ,000)

(in USD ,000)

36,342,945

347,509

5,056,721

1,600,851

–

95,885

2,864

219,335

222,199

27

392

130

–

7

2,947

77,431

19,881

(6,160)

1,131

2,974

77,823

20,011

(6,160)

1,138

43,443,911

3,420

314,565

317,985

Share capital and share premium 
As at December 31, 2018, the total outstanding share capital of USD 3.4 million, fully paid, consists of 43,443,911 common 
shares, excluding 430,625 non-vested shares and 1,602,601 treasury shares. As at December 31, 2017, the total outstanding 
share capital of USD 2.9 million, fully paid, consisted of 36,342,945 common shares, excluding 778,134 non-vested shares 
and 10,183 treasury shares. All shares have a nominal value of 1/13 of a Swiss franc, translated into USD using historical 
rates at the issuance date. 

On January 30, 2017, the Company completed an IPO and issued 6,450,000 common shares at a subscription price of 
USD 15.00 per share and a par value of 1/13 of a Swiss franc per share. The gross proceeds of USD 96.8 million have been 
recorded in equity net of directly related share issuance costs of USD 8.2 million.

On October 13, 2017, the Company completed a private placement with institutional investors and issued 7,500,000 
common shares at a subscription price of USD 8.00 per share and a par value of 1/13 of a Swiss franc per share. The gross 
proceeds of USD 60.0 million have been recorded in equity net of directly related share issuance costs of USD 3.7 million.
On March 16, 2018, the Company issued 3,499,990 common shares at par value of 1/13 of a Swiss franc per share. The 
shares were subscribed by the Company and are held as treasury shares, hence the operation did not impact the share capi-
tal. Share issuance costs of USD 11 thousand related to the operation were recorded as a deduction in equity.

On May 17 and 25, 2018, the Company sold 1,000,851 and 600,000 treasury shares, respectively, at a price of USD 12.50 
per share, from its “at the market” (ATM) program, generating gross proceeds of USD 20.0 million. Directly related share 
issuance costs of USD 0.6 million were recorded as a deduction in equity. 

On June 22, 2018, the Company completed an underwritten public offering of 4,750,000 common shares at a price of USD 
15.39 per share, with an option to issue to an additional 712,500 common shares (the “follow-on offering”). The gross pro-
ceeds of USD 73.1 million resulting from this transaction have been recorded in equity net of directly related share issuance 
costs of USD 5.3 million. Subsequent to the initial closing of the follow-on offering, on July 19, 2018, the Company sold an 
additional 306,721 common shares for total gross proceeds of USD 4.7 million (USD 15.39 per share). These shares were sold 
pursuant to the 30-day option granted in connection with the follow-on offering to purchase up to an additional 712,500 
common shares. Directly related share issuance costs amounted to USD 0.3 million. 

116 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
Equity incentive plans
In 2018, the Company issued 347,509 common shares (2017: 454,548) under its 2013 EIP (see note 18). All shares issued 
under the 2013 EIP have a nominal value of 1/13 of a Swiss franc, translated into USD using historical rates at the issuance 
date.

Authorized share capital 
The authorized share capital that is not outstanding as at December 31, 2018 and December 31, 2017 is as follows: 

Number of shares

Authorized share capital

12. Revenue and other operating income 

As at December 31,

2018

15,565,620

2017

6

The Group currently derives no revenue from sales of its biopharmaceutical product candidates. 
Operating income other than revenue mainly relates to compensation received from the Swiss tax authorities as the Company 
acts as collecting agent of the withholding tax on salaries. 

13. Operating expenses by nature 

External research and development costs

Staff costs (note 14)

Professional fees

Rents

Travel expenses

Patent registration costs

Depreciation

Other

Total operating expenses by nature

Year ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

49,480

19,537

3,871

827

1,044

1,002

109

1,299

77,169

43,268

17,999

2,862

592

1,073

426

70

1,190

67,480

16,811

7,436

4,016

427

541

512

46

374

30,163

Due to the difficulty in assessing when research and development projects would generate revenue, the Group expenses all 
research and development costs on the consolidated statement of comprehensive loss. In 2018, research and development 
expenses amounted to USD 62.9 million (2017: USD 54.9 million, 2016: USD 23.7 million). 

ObsEva SA l Annual Report 2018 

117

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
The depreciation expense has been allocated as follows: 

Research and development expenses

General and administrative expenses

Total depreciation

14. Staff costs 

Wages and salaries

Social charges

Post-employment benefits expense

Share-based payments

Total staff costs

Year ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

63

46

109

44

26

70

35

11

46

Year ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

9,023

946

416

9,152

19,537

7,715

993

435

8,856

17,999

4,807

443

(51)

2,237

7,436

The Group employed on average 39.6 full-time equivalents (“FTE”) in 2018, compared to 32.3 FTE in 2017 and 22.4 FTE in 
2016, and 43.2 FTE as at December 31, 2018 compared to 37.7 FTE as at December 31, 2017 and 25.3 FTE as at December 
31, 2016. 

For the year ended December 31, 2018, the post-employment benefits line includes a gain of USD 162 thousand relating to 
the plan amendment enacted in 2018 (2017: nil, 2016: USD 512 thousand). 

15. Finance income and expense 

Finance income mainly relates to foreign exchange gains and interests on bank deposits. 

Finance expense mainly relates to foreign exchange losses and interest expense. 

118 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
16. Income taxes and deferred taxes 

The Group is subject to income taxes in Switzerland, Ireland and the United States.

The Company is subject in Switzerland to a municipal and cantonal income tax rate of 22.6% and to a federal tax rate of 
8.5% on its profits after tax. It is entitled to carry forward any loss incurred for a period of seven years and can offset such 
losses carried forward against future taxes. In 2015, the Company was granted by the State Council of the Canton of Geneva 
an exemption of income and capital tax at municipal and cantonal levels for the period from 2013 until 2022. Because of this 
exemption, and the fact that the Company has incurred net losses since its inception, no income tax expense at the munici-
pal, cantonal or federal levels was recorded in the Company for the years ended December 31, 2018 and 2017. Additionally, 
due to the uncertainty as to whether it will be able to use its net loss carryforwards for tax purposes in the future, no de-
ferred taxes have been recognized on the balance sheet of the Company as of December 31, 2018 and December 31, 2017.

The following table details the tax losses carry forwards of the Company and their respective expiring dates. 

Expiring tax losses 

2020

2021

2022

2023

2024

2025

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

2,896

11,473

16,093

28,349

58,019

67,403

2,925

11,587

16,253

28,631

58,596

–

Total unrecorded tax losses carry forwards

184,233

117,992

The Company’s Irish subsidiary has no activity, and, therefore, no income tax expense was recorded in such entity for the 
years ended December 31, 2018 and 2017.

The Company’s U.S. subsidiary, ObsEva USA Inc., is a service organization for the Group and is therefore subject to taxes on 
the revenues generated from its services to the Group that are charged based upon the U.S. subsidiary’s cost plus arrange-
ment with the Group. The profits of the U.S. subsidiary for the year ended December 31, 2018 and 2017 were subject to 
a total U.S. income tax rate of 27.3% and 39.3%, respectively based on both the U.S. federal and Massachusetts state tax 
rates. The decrease in U.S. tax rate is due to the recent tax reform, effective January 1, 2018. The income tax for the year 
ended December 31, 2018 and 2017 were USD (45) thousand and USD 51 thousand, respectively. Additionally, since ObsEva 
USA Inc. is totally dependent on ObsEva SA for revenue, there is uncertainty as to whether ObsEva USA Inc. will be able to 
use a deferred tax asset for tax purposes in the future, therefore, no deferred taxes have been recognized on the balance 
sheet of the Group as of December 31, 2018 and December 31, 2017.

ObsEva SA l Annual Report 2018 

119

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
The following elements explain the difference between the income tax expense at the applicable Group tax rate and the 
effective income tax expense:

Net loss before tax

Statutory tax rate (blended at Group level)

Income tax credit at statutory tax rates

Tax impact of permanent differences

Temporary differences not recognized as deferred tax assets

Adjustments for current tax of prior periods

Tax on losses not recognized as deferred tax assets

Effective income tax credit

Effective tax rate

Net loss before tax

Statutory tax rate (blended at Group level)

Income tax credit at statutory tax rates

Tax impact of permanent differences

Temporary differences not recognized as deferred tax assets

Tax on losses not recognized as deferred tax assets

Effective income tax expense

Effective tax rate

Year ended December 31, 2018 

ObsEva SA

ObsEva USA

Total Group

(in USD ,000)

(in USD ,000)

(in USD ,000)

(75,616)

7.8%

(5,898)

602

–

–

5,296

–

0%

(1,145)

27.3%

(313)

76

251

(59)

–

(45)

3.9%

(76,761)

8.1%

(6,211)

678

251

(59)

5,296

(45)

0.1%

Year ended December 31, 2017 

ObsEva SA

ObsEva USA

Total Group

(in USD ,000)

(in USD ,000)

(in USD ,000)

(65,397)

7.8%

(5,123)

577

–

4,546

–

0%

(1,478)

39.3%

(581)

225

407

–

51

3.5%

(66,875)

8.5%

(5,704)

802

407

4,546

51

0.1%

120 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
 
17. Loss per share 

As of December 31, 2018 and 2017, the Company has one category of shares, which are common shares. As of December 
31, 2016, the Company’s shares were comprised of ordinary shares, consisting of both common shares and non-voting 
shares, and series A and series B preferred shares. The Company’s non-voting shares and series A and series B preferred 
shares were converted into common shares upon the closing of the IPO on January 25, 2017.

For the year ended December 31, 2016, as the series A and series B preferred shares participated with ordinary shares in the 
profit or loss on a pro-rata basis, the net loss was allocated to each class pro-rata to their weighted average number of shares 
outstanding during the period.

The basic loss per share is calculated by dividing the loss of the period attributable to the ordinary shares by the weighted 
average number of ordinary shares (common and non-voting) outstanding during the period as follows: 

Net loss attributable to shareholders (in USD ,000)

Weighted average number of shares outstanding

Basic and diluted loss per share (in USD)

Net loss attributable to shareholders (in USD ,000)

Weighted average number of shares outstanding

Basic and diluted loss per share (in USD)

Net loss attributable to shareholders (in USD ,000)

Weighted average number of shares outstanding

Basic and diluted loss per share (in USD)

Preferred
B shares

(15,516)

11,079,549

(1.40)

Year ended December 31, 2018

Common shares

(76,716)

40,172,498

(1.91)

Year ended December 31, 2017

Common shares

(66,926)

29,799,047

(2.25)

Year ended December 31, 2016

Preferred
A shares

(10,910)

7,790,475

(1.40)

Common and
non­voting
shares

(3,776)

2,695,898

(1.40)

For the year ended December 31, 2018, 430,625 non-vested shares and 3,028,275 shares issuable upon the exercise of 
stock-options, which would have an anti-dilutive impact on the calculation of the diluted earnings per share, were excluded 
from the calculation. For the year ended December 31, 2017, 778,134 non-vested shares and 1,866,740 shares issuable 
upon the exercise of stock-options were excluded. For the year ended December 31, 2016, 1,237,662 non-vested shares and 
no shares issuable upon the exercise of stock-options were excluded.

ObsEva SA l Annual Report 2018 

121

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
 
 
 
 
18. Share­based compensation 

The total expenses arising from share-based payment transactions recognized during the period as part of staff costs were as 
follows: 

Employee 2013 EIP

Employee 2017 EIP

Total share­based compensation

Year ended December 31,

2018

2017

2016

(in USD ,000)

(in USD ,000)

(in USD ,000)

2,242

6,910

9,152

5,497

3,359

8,856

2,237

–

2,237

Employee equity incentive plan 2013
The Company established the 2013 EIP for employees, executives, directors and consultants (the “Beneficiaries”) of the 
Group. 

Upon enrollment in the 2013 EIP, Beneficiaries were granted a certain number of shares which they were entitled to acquire at 
a pre-determined price of 1/13 of a Swiss franc. The pre-determined price was generally paid by the Beneficiaries at the grant 
date and recognized as a pre-payment until the vesting period elapses resulting in the shares issuance being accounted for. 

The shares generally fully vest over a four-year vesting period, with 25% of the shares underlying the grant vesting after one 
year, and 1/48th of the shares underlying the grant vesting each month over a further period of three years. 

The Group has no present obligation to repurchase or settle the shares in cash. 

Number of shares issued under the 2013 EIP

Average grant date fair value (in USD)

Expense arising from the 2013 EIP (in USD ,000)

2018

347,509

–

2,242

2017

454,548

–

5,497

2016

264,524

11.37

2,237

The fair value of the shares was calculated using a combination of the discounted cash flow method, under the income 
approach, and the backsolve method. The income approach estimates value based on the expectation of future cash flows 
that the Company will generate, such as cash earnings, costs savings, tax deduction and the proceeds from disposition. These 
future cash flows were discounted to their present values using a discount rate derived based on an analysis of the cost of 
capital of comparable publicly traded companies in similar lines of business, as of each valuation date, and was adjusted to 
reflect the risks inherent in the Company’s cash flows. The backsolve method, a form of the market approach to valuation, 
derives the implied enterprise equity value and the fair value of the non-voting share from a recent and contemporaneous 
transaction involving the Company’s own securities, using the following assumptions: rights and preferences of the different 
categories of shares, probability of various liquidity event scenarios, expected timing of a liquidity event, volatility and expect-
ed value in a liquidity event. 

The Group has stopped granting equity instruments under the 2013 EIP in 2016.

122 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
Employee equity incentive plan 2017
The Company established in 2017 the 2017 EIP for Beneficiaries of the Group, under which 1,317,420 and 1,866,740 
stock-options were granted during the year ended December 31, 2018 and 2017, respectively. The stock-options vest under 
a 3-year or 4-year vesting schedule, have a 10-year expiration term and have an exercise price equivalent to the share price at 
grant date.

Movements in the number of stock-options outstanding under the 2017 EIP were as follows:

Average exercise price

Number of options

Average exercise price

Number of options

(USD)

9.19

13.98

6.98

7.01

11.39

1,866,740

1,317,420

(60,000)

(95,885)

3,028,275

(USD)

–

9.19

–

–

9.19

–

1,866,740

–

–

1,866,740

At January 1,

Granted

Forfeited

Exercised

At December 31,

The weighted average share price at the date of exercise of options exercised during the year ended December 31, 2018 was 
USD 13.04.

The outstanding stock-options have the following range of exercise prices and remaining contractual life:

Range of exercise prices

USD 15.00 to USD 17.99

USD 12.00 to USD 14.99

USD 9.00 to USD 11.99

USD 6.00 to USD 8.99

Total outstanding options

out of which are exercisable

Weighted-average remaining contractual life (in years)

2018

361,500

1,109,370

1,185,905

371,500

3,028,275

447,538

9.2

As at December 31,

2017

136,500

31,950

1,173,290

525,000

1,866,740

46,708

9.7

The weighted average fair value of the stock-options granted during the years ended December 31, 2018 and 2017, deter-
mined using a Black-Scholes model was USD 13.98 and USD 6.98, respectively. The significant inputs to the model were:

Weighted average share price at grant date

Weighted average exercise price

Weighted average 10-year volatility

Dividend yield

Weighted average 10-year risk free rate

2018

USD 13.98

USD 13.98

65%

0%

3.06%

2017

USD 9.19

USD 9.19

58%

0%

2.35%

Since the Company has a short track record as a public company, expected volatility has been determined based on the his-

ObsEva SA l Annual Report 2018 

123

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
torical trend of an appropriate sample of public companies operating in the biotech and pharmaceutical industry.

19. Commitments and contingencies 

Operating lease commitments

Within 1 year

Later than 1 year and no later than 5 years

Later than 5 years

Total

As at December 31,

2018

2017

(in USD ,000)

(in USD ,000)

705

2,369

–

3,074

535

2,145

144

2,824

Operating lease commitments relate to the Group’s lease for its headquarters in Geneva, Switzerland and its subsidiary’s 
lease in Boston, Massachusetts, USA. 

Contingencies 
As a result of the licenses granted to the Group, the following contingencies are to be noted: 

Kissei license 
Under the terms of the license and supply agreement, the Group would be obligated to make milestone payments upon 
the achievement of specified regulatory milestones with respect to linzagolix. The total of all potential undiscounted future 
payments that the Group could be required to make under this arrangement ranges between USD 0 and USD 188 million, of 
which USD 5 million have already been paid. 

Pursuant to the Kissei license and supply agreement, the Group has agreed to exclusively purchase the active pharmaceutical 
ingredient for linzagolix from Kissei. During the development stage, the Group is obligated to pay Kissei a specified supply 
price. Following the first commercial sale of licensed product, the Group is obligated to pay Kissei a royalty payment in the 
low twenty percent range as a percentage of net sales, which includes payment for Kissei’s supply of the active pharmaceu-
tical ingredient until the latest of the date that the valid claim of a patent for the product has expired, the expiration of our 
regulatory exclusivity period or 15 years from the first commercial sale of such product on a country-by-country and prod-
uct-by-product basis. 

Merck Serono licenses 
Under the terms of the two license agreements with Merck Serono for nolasiban and OBE022, the Group would be obligated 
to pay Merck Serono a high-single digit and a mid-single digit royalty, respectively, of net sales generated by the Group, its 
affiliates or sub-licensees of any product containing the in-licensed compounds. 

124 

ObsEva SA l Annual Report 2018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
20. Related parties transactions 

As of December 31, 2018, the Group’s related parties include key management (Board of Directors and Executive Commit-
tee) and members of their immediate families. The following transactions were carried out with related parties: 

Key management remuneration
The Board of Directors is composed of 8 members, whereas the Executive Committee is composed of 7 members. The follow-
ing table sets forth the total remuneration recorded for members of the Board of Directors and Executive Committee: 

Short-term employee benefits (including base and variable cash remuneration)

Post-employment benefits

Share-based payments

Total

Year ended December 31,

2018

2017

(in USD ,000)

(in USD ,000)

4,150

117

6,125

10,392

3,403

135

6,451

9,989

Other transactions with related parties 
There were no other significant transactions with related parties during the years presented. 

21. Going concern 

The Group fulfills its obligations by the use of its cash reserves. The Board of Directors believes the Group will be able to meet 
all of its obligations for a further 12 months as they fall due and, hence, the consolidated financial statements have been 
prepared on a going concern basis. 

22. Events after the reporting period 

There were no material events after the balance sheet date.

ObsEva SA l Annual Report 2018 

125

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  
 
 
Report from 
the Auditor on 
the  Consolidated 
IFRS Financial 
Statements

REPORT FROM THE AUDITOR ON THE CONSOLIDATED IFRS FINANCIAL STATEMENTS

Report of the statutory auditor
to the General Meeting of ObsEva SA 
Plan-les-Ouates

Report on the audit of the consolidated financial statements

Opinion
We have audited the consolidated fi nancial statements of ObsEva SA and its subsidiaries (the Group), which comprise the 
consolidated balance sheet as at 31 December 2018 and the consolidated statement of comprehensive loss, consolidated 
statement of cash fl ows and consolidated statement of changes in equity for the year then ended, and notes to the consoli-
dated fi nancial statements, including a summary of signifi cant accounting policies.

In our opinion, the accompanying consolidated fi nancial statements give a true and fair view of the consolidated fi nancial 
position of the Group as at 31 December 2018 and its consolidated fi nancial performance and its consolidated cash fl ows for 
the year then ended in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Stan-
dards. Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the 
audit of the consolidated fi nancial statements” section of our report.

We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit 
profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfi lled our other ethical responsi-
bilities in accordance with these requirements. We believe that the audit evidence we have obtained is suffi cient and appro-
priate to provide a basis for our opinion.

Our audit approach

Overview

Overall Group materiality: USD 772,000

We performed full scope audit work at the Group’s Swiss entity, and 
specifi ed procedures at the Group’s entity in the Unites States of Amer-
ica. Our audit scope addressed 100% of the Group’s total operating 
expenses and total assets.

As a key audit matter the following area of focus has been identifi ed: 

Carrying value of intangible assets

ObsEva SA l Annual Report 2018 

127

Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated finan-
cial statements. In particular, we considered where subjective judgements were made; for example, in respect of significant 
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all 
of our audits, we also addressed the risk of management override of internal controls, including among other matters consid-
eration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated 
financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and 
the industry in which the Group operates.

The Group is comprised of three entities located in three different countries, namely Switzerland, the United States of 
America (US) and Ireland (inactive). The Group financial statements are a consolidation of these three entities, comprising the 
Group’s operating business and centralised functions. Based on the client’s operations we have performed full scope audit 
work on the Swiss entity, and specified procedures on the US entity.

Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assur-
ance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud 
or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the 
economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall 
Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with 
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit 
procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial 
statements as a whole.

Overall Group materiality

USD 772,000

How we determined it

1% of total expenses

Rationale for the materiality 
benchmark applied

Profit before tax is not considered an appropriate benchmark as the 
Group is a start-up still in the developmental phase, and has no recurring 
revenue. Based on the nature of the Group we determined total expenses 
as the most appropriate benchmark, applying a 1% rule of thumb.

We agreed with the Audit Committee that we would report to them misstatements above USD 77,000 identified during our 
audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consol-
idated financial statements of the current period. These matters were addressed in the context of our audit of the consolidat-
ed financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these 
matters.

128 

ObsEva SA l Annual Report 2018

REPORT FROM THE AUDITOR ON THE CONSOLIDATED IFRS FINANCIAL STATEMENTSCarrying value of intangible assets

Key audit matter

How our audit addressed the key audit matter

The Group has intangible assets totaling USD 21.6 
million at December 31, 2018 comprised of licenses to 
operate several biopharmaceutical product candidates. 
The Group is required to review its intangibles for im-
pairment whenever events or changes in circumstances 
indicate that their carrying amounts may not be recov-
erable, and at least annually. As part of such review, 
the Group did not identify any impairment.

We focused on the carrying value of intangible assets 
as these assets are significant to the Group and relate 
to licenses that haven’t yet received regulatory and 
marketing approvals. The assessment of the carrying 
value of intangible assets is dependent on future cash 
flows expected to be derived from the successful 
development and commercialization of the various 
biopharmaceutical product candidates. The assessment 
performed by the Group contains a number of signif-
icant judgments and estimates such as determining 
the probabilities of achieving development milestones 
based on industry standards, expected market share, 
life of the assets, and the discount rate, and contains 
risk of management bias.

Refer to Note 2 Accounting principles applied in the 
preparation of the consolidated financial statements 
(page 101) and Note 8 Intangible assets (page 110).

We assessed factors that could trigger indications 
that a potential impairment may exist by performing 
a review of the minutes of Management, Board of 
Directors and Board Committee meetings, inquiry with 
Management concerning the ongoing results of clinical 
trials, external communications, including press re-
leases and other public filings, public communications 
coming from direct competitors, and consideration of 
the results of subsequent event procedures performed.
We assessed the reasonableness of the valuation mod-
el used by management to determine the recoverable 
amounts of the intangible assets, and reviewed the 
consistency of the current-year’s significant assump-
tions with prior periods.

We assessed management’s sensitivity analysis around 
key estimates to quantify the changes in assumptions 
that could result in an impairment and the disclosures 
included in Note 8 Intangible assets (page 110) of the 
annual report.

We reviewed management’s assessment on each of 
the qualitative factors, including those associated with 
timely and successful completion of clinical trials and 
subsequent approval, and corroborated management’s 
explanation to the underlying documentation and 
market information.

On the basis of the above procedures performed 
we did not identify any triggering event that would 
potentially challenge the Group’s carrying value of 
intangible assets, nor did we identify any factors that 
would indicate any management bias existed in the 
significant assumptions used. As such, we found the 
assessment made by the Group, in its determination 
that no impairment existed in the carrying value of 
intangible assets, was based upon reasonable assump-
tions, consistently applied.

Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all in-
formation included in the annual report, but does not include the consolidated financial statements, the stand-alone financial 
statements and the remuneration report of ObsEva SA and our auditor’s reports thereon.

ObsEva SA l Annual Report 2018 

129

REPORT FROM THE AUDITOR ON THE CONSOLIDATED IFRS FINANCIAL STATEMENTSOur opinion on the consolidated financial statements does not cover the other information in the annual report and we do 
not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in 
the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated 
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on 
the work we have performed, we 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 for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair 
view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors deter-
mines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, 
whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to 
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis 
of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic 
alternative but to do so.

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

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

• 

• 

• 

• 

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud 
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient 
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from 
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, mis-
representations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap-
propriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s 
internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related 
disclosures made.
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based 
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast 
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty 
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated finan-
cial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit 
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group 
to cease to continue as a going concern.

130 

ObsEva SA l Annual Report 2018

REPORT FROM THE AUDITOR ON THE CONSOLIDATED IFRS FINANCIAL STATEMENTS• 

• 

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the 
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a 
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities 
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, 
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope 
and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify 
during our audit.

We also provide the Board of Directors or its relevant committee 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 or its relevant committee, we determine those matters that 
were of most significance in the audit of the consolidated financial statements of the current period and are therefore the 
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure 
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our 
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

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control 
system exists which has been designed for the preparation of consolidated financial statements according to the instructions 
of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

PricewaterhouseCoopers SA

Michael Foley 
Audit expert 
Auditor in charge

Genève, 5 March 2019

Filippos Mintiloglitis
Audit expert

Enclosure:
• 

Consolidated financial statements (consolidated balance sheet, consolidated statement of comprehensive loss, consol-
idated statement of cash flows, consolidated statement of changes in equity and notes to the consolidated financial 
statements)

ObsEva SA l Annual Report 2018 

131

REPORT FROM THE AUDITOR ON THE CONSOLIDATED IFRS FINANCIAL STATEMENTSStatutory  Financial 
Statements of 
ObsEva SA 

Statutory  Financial 

Statements of 

ObsEva SA 

Statutory Financial Statements of ObsEva SA 
for the year ended December 31, 2018

Balance Sheet as at December 31,

Notes

2018

(in USD)

2017

(in USD)

2018

(in CHF)

2017

(in CHF)

ASSETS

Current assets

Cash and cash equivalents

Other current receivables

Other current receivables – Group Comp.

138,237,935 

110,389,709

136,164,366 

107,663,084

879,225 

– 

782,795

4,657

866,038 

– 

763,460

4,542

Deferred costs and prepaid expenses

5,672,840 

1,480,917

5,587,747 

1,444,338

Total current assets

144,790,000 

112,658,078

142,618,151 

109,875,424

Non­current assets

Financial assets

Investments

Property, plant and equipment

Intangible assets

Total non­current assets

4

5

6

7

191,692 

109,168

188,816 

106,472

3 

3

3 

3

154,246 

114,927

151,932 

112,088

19,503,378 

19,503,378

19,210,827 

19,021,644

19,849,319 

19,727,476

19,551,578 

19,240,207

Total assets

164,639,319 

132,385,554

162,169,729 

129,115,631

LIABILITIES & SHAREHOLDERS’ EQUITY

Current liabilities

Trade payables

Other current liabilities

Other current liabilities - Group Comp.

Accrued expenses

Total current liabilities

Shareholders’ equity

Share capital

Treasury shares

2,350,655 

266,358 

235,370 

13,725,727 

16,578,110 

2,380,361

266,358

–

6,128,585

8,775,304

2,315,395 

262,363 

231,839 

13,519,841 

16,329,438 

2,321,566

259,779

–

5,977,209

8,558,554

3,586,269 

(130,584)

2,927,319

(967)

3,498,373 

(123,408)

2,856,251

(783)

Legal reserve from capital contribution

300,586,132 

208,769,597

296,136,491 

205,865,074

Accumulated deficit

(155,980,608)

(88,085,699)

(153,671,165)

(88,163,465)

Total shareholders’ equity

10

148,061,209 

123,610,250

145,840,291 

120,557,077

Total liabilities & shareholders’ equity

164,639,319 

132,385,554

162,169,729 

129,115,631

Plan les Ouates, March 5, 2019

The accompanying notes form an integral part of these financial statements.

ObsEva SA l Annual Report 2018 

133

Statement of Loss for the year ended December 31,

INCOME

Other income

Total income

OPERATING EXPENSES

Staff costs

2018

(in USD)

15,198 

15,198 

2017

(in USD)

15,978

15,978

2018

(in CHF)

14,862 

14,862 

2017

(in CHF)

15,733

15,733

(8,705,747)

(7,787,412)

(8,513,278)

(7,668,202)

External research and development costs

(49,480,468)

(43,267,909)

(48,386,537)

(42,605,563)

Patent costs

Professional fees

(1,002,140)

(3,442,277)

(426,432)

(979,984)

(2,682,615)

(3,366,174)

Professional fees – Group Companies

(2,973,751)

(2,045,379)

(2,908,007)

(419,904)

(2,641,550)

(2,014,068)

(469,659)

Facilities

Other operating expenses

Depreciation

Total operating expenses

OPERATING LOSS

Finance income

Finance expense

(567,361)

(476,960)

(554,817)

(2,036,147)

(2,023,048)

(1,991,131)

(1,992,080)

(60,725)

(51,219)

(59,382)

(50,435)

(68,268,616)

(58,760,974)

(66,759,311)

(57,861,461)

(68,253,418)

(58,744,996)

(66,744,449)

(57,845,728)

358,509 

–

708,869

(893)

350,583 

–

698,017

(879)

NET LOSS BEFORE TAX

(67,894,909)

(58,037,020)

(66,393,865)

(57,148,590)

Income tax expense

– 

–

–

–

NET LOSS FOR THE PERIOD

(67,894,909)

(58,037,020)

(66,393,865)

(57,148,590)

Plan les Ouates, March 5, 2019

The accompanying notes form an integral part of these financial statements.

134 

ObsEva SA l Annual Report 2018

STATUTORY FINANCIAL STATEMENTS OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018Notes to the Financial Statements 2018

1. General information

ObsEva Ltd was founded on November 14, 2012 in Geneva, Switzerland, and is domiciled 12 chemin des Aulx, 1228 Plan-
les-Ouates. The purpose of the Company is all activities and services in the domains of research, development, fabrication, 
registration, promotion and commercialization of biotechnological and pharmaceutical products.

2. Accounting principles applied in the preparation of the financial statements

These financial statements have been prepared in accordance with the provisions of commercial accounting as set out in 
the Swiss Code of Obligations (Art. 957 to 963b CO, effective since January 1, 2013). Significant balance sheet items are 
accounted for as follows:

l 

l 

l 

l 

Current assets
Other current receivables are carried at their nominal value. Impairment charges are calculated for these assets on an 
individual basis.

Non-current assets
Property, plant and equipment is carried at cost less depreciation. Depreciation is calculated using the straight-line 
method, on the basis of the following useful lives:
–   furniture 
–   hardware 
–   leasehold improvement  duration of lease
Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in 
circumstances indicate that their carrying amount may not be recoverable, on an individual basis. An impairment loss 
is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

5 years
3 years

Recognition of income
Income is recognised if its amount can be reliably measured and it is sufficiently probable that the economic benefits 
will flow to the company.

Foreign currencies
Monetary and non-monetary items in foreign currency are translated into the company functional currency as follows:
– 
– 

the exchange rates used for balance sheet items are the rates prevailing on 31 December;
the exchange rates used for transactions conducted during the course of the year and for items in the profit and 
loss statement are the exchange rates prevailing at the dates of the transactions or valuations where items are 
re-measured. 

ObsEva SA l Annual Report 2018 

135

 
 
 
 
 
The functional currency of ObsEva SA is the US dollar (USD). Values in Swiss franc presented in accordance with Art. 958d of 
the Swiss code of Obligations were converted from the functional currency as follows:

USD/CHF prevailing rate

USD/CHF rate used 
for year ended
December 31, 2018

USD/CHF rate used 
for year ended
December 31, 2017

Statement of loss

Shareholders’ equity

BNS average rate for the period

Historical rates

Balance sheet, other line items

BNS rate as of December 31

0.977892

–

0.985000

0.984692

–

0.975300

All resulting exchange differences were reported as currency translation differences in equity. 

3. Full­time positions

The company employed on average 33.3 full-time equivalents (FTE) in 2018 (2017: 28.7 FTE) and 37.2 FTE as at December 
31, 2018 (December 31, 2017: 31.7 FTE).

4. Pledges on assets to secure own liabilities

Escrow accounts

Total

December 31,

December 31,

2018

(in USD)

191,692

191,692

2017

(in USD)

109,168

109,168

2018

(in CHF)

188,816

188,816

2017

(in CHF)

106,472

106,472

As at December 31, 2018, USD 191,692 (CHF 188,816) were held on escrow accounts as security rental deposits (December 
31, 2017: USD 109,168 (CHF 106,472)).

5. Investments

ObsEva SA owned as at December 31, 2018: 

Company

Business

Capital

ObsEva Ireland Ltd, Cork, Ireland

Research and development

EUR 2.00

ObsEva USA Inc., New York, USA

Research and development

USD 0.50

Interest
in capital 

100%

100%

Voting
rights

100%

100%

136 

ObsEva SA l Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 2018Recognized in the balance sheet as follows:

Shareholding ObsEva Ireland Ltd

Shareholding ObsEva USA Inc

Total

6. Property, plant and equipment

Net book value as at 1st Jan. 18

Additions

Depreciation charge

Net book value as at 31 Dec. 18

Total cost

Accumulated depreciation

Net book value as at 1st Jan. 17

Additions

Depreciation charge

Net book value as at 31 Dec. 17

Total cost

Accumulated depreciation

2018

(in USD)

2

1

3

December 31,

2017

(in USD)

2

1

3

2018

(in CHF)

2

1

3

December 31,

2017

(in CHF)

2

1

3

Furniture

Hardware

Leasehold 
 improvement

(in USD)

(in USD)

(in USD)

45,183 

26,828 

(16,052)

55,959 

104,121 

(48,162)

29,806 

51,714 

(23,909)

57,611 

141,368 

(83,757)

39,938 

21,502 

(20,764)

40,676 

122,402 

(81,726)

Furniture

Hardware

Leasehold 
 improvement

(in USD)

(in USD)

(in USD)

43,802

15,256

(13,875)

45,183

77,293

(32,110)

29,080

18,175

(17,449)

29,806

89,654

(59,848)

48,285

11,548

(19,895)

39,938

100,900

(60,962)

Total

(in USD)

114,927 

100,044 

(60,725)

154,246

367,891 

(213,645)

Total

(in USD)

121,167

44,979

(51,219)

114,927

267,848

(152,921)

ObsEva SA l Annual Report 2018 

137

NOTES TO THE FINANCIAL STATEMENTS 2018Furniture

Hardware

Leasehold im­
provement

(in CHF)

(in CHF)

(in CHF)

44,066

26,235

515

(15,697)

55,119 

102,559 

(47,440)

29,070

50,571

486

(23,380)

56,747 

139,247 

(82,500)

38,952

21,026

393

(20,305)

40,066 

120,566 

(80,500)

Furniture

Hardware

Leasehold im­
provement

(in CHF)

(in CHF)

(in CHF)

44,503

15,022

(1,796)

(13,663)

44,066

75,383

(31,317)

29,545

17,897

(1,190)

(17,182)

29,070

87,440

(58,370)

49,058

11,371

(1,887)

(19,590)

38,952

98,408

(59,456)

Total

(in CHF)

112,088

97,832

1,394

(59,382)

151,932 

362,372 

(210,440)

Total

(in CHF)

123,106

44,290

(4,873)

(50,435)

112,088

261,231

(149,143)

Net book value as at 1st Jan. 18

Additions

Currency translation difference

Depreciation charge

Net book value as at 31 Dec. 18

Total cost

Accumulated depreciation

Net book value as at 1st Jan. 17

Additions

Currency translation difference

Depreciation charge

Net book value as at 31 Dec. 17

Total cost

Accumulated depreciation

7. Intangible assets

As at December 31, 2018 the company holds a number of licenses to operate several pharmaceutical compounds, which 
were acquired for USD 19,503,378 (CHF 19,210,827) (31 December 2017: USD 19,503,378 (CHF 19,021,645)).

On April 25, 2017, the company announced the initiation of a Phase 3 clinical trial for one of its development program, 
triggering, as part of its contractual obligations under the terms of a license agreement, the recognition and payment of a 
USD 5.0 million milestone to its licensor.

8. Amounts due to pension funds

As at December 31, 2018, amounts due to pension funds amounted to USD 256,944 (CHF 253,090) (December 31, 2017: 
USD 217,497 (CHF 212,125)).

138 

ObsEva SA l Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 20189. Lease commitments not reported in the balance sheet

Operating lease commitments (including rent costs)

December 31,

December 31,

2018

(in USD)

458,762

1,605,697

–

2,064,459

2017

(in USD)

292,730

1,169,205

144,053

1,605,988

2018

(in CHF)

451,881

1,581,611

–

2,033,492

2017

(in CHF)

285,499

1,140,325

140,495

1,566,319

Within 1 year

Later than 1 year and no later than 5 years

Later than 5 years

Total

10. Shareholders’ equity

Share
capital

(in USD)

Legal reserve 
from capital 
cont.

Accumulated 
deficit

Shareholders’ 
equity

(in USD)

(in USD)

(in USD)

January 1, 2018

2,926,352

208,769,597

(88,085,699)

123,610,250

Issuance of shares – Follow-on offering 

(incl. Green-shoe)

Issuance of shares – ATM offering

Costs of share issuance – Follow-on

Costs of share issuance – ATM

Stock-option exercise

Net loss for the year

December 31, 2018

391,601 

130,303 

–

–

7,429 

 –

77,431,335 

19,880,675 

(5,552,419)

(608,170)

665,114 

–

–

–

–

–

77,822,936 

20,010,978 

(5,552,419)

(608,170)

672,543 

– 

(67,894,909)

(67,894,909)

3,455,685 

300,586,132 

(155,980,608)

148,061,209 

Share
capital

(in USD)

Non­voting 
share capital

Legal reserve 
from capital 
cont.

Accumulated 
deficit

Shareholders’ 
equity

(in USD)

(in USD)

(in USD)

(in USD)

1,690,810

147,739

65,071,469

(30,048,679)

36,861,339

496,193

592,010

–

–

–

147,339

–

2,926,352

–

–

–

–

96,253,807

59,407,990

(8,221,149)

(3,742,520)

–

–

–

–

–

–

96,750,000

60,000,000

(8,221,149)

(3,742,520)

(400)

–

(58,037,020)

(58,037,020)

–

–

–

208,769,597

(88,085,699)

123,610,250

(400)

(147,339)

–

–

January 1, 2017

Issuance of shares – IPO

Issuance of shares – PIPE

Costs of share issuance – IPO

Costs of share issuance – PIPE

Repurchase of non-voting shares

Conversion of non-voting shares

Net loss for the year

December 31, 2017

ObsEva SA l Annual Report 2018 

139

NOTES TO THE FINANCIAL STATEMENTS 2018Share
capital

(in CHF)

Legal reserve 
from capital 
cont.

Accumulated 
deficit

Shareholders’ 
equity

(in CHF)

(in CHF)

(in CHF)

January 1, 2018

2,855,468

205,865,074

(88,163,465)

120,557,077

Issuance of shares – Follow-on offering 
(incl. Green-shoe)

Issuance of shares – ATM offering

Costs of share issuance – Follow-on

Costs of share issuance – ATM 

Stock-option exercise

Currency translation differences

Net loss for the year

December 31, 2018

388,979 

76,912,867 

123,143 

18,788,232 

–

–

7,375 

–

 –

(5,515,241)

(574,751)

660,310 

–

– 

–

–

–

–

–

886,165 

77,301,846 

18,911,375 

(5,515,241)

(574,751)

667,685 

886,165 

(66,393,865)

(66,393,865)

3,374,965 

296,136,491 

(153,671,165)

145,840,291 

Share
capital

(in CHF)

Non­voting 
share capital

Legal reserve 
from capital 
cont.

Accumulated 
deficit

Shareholders’ 
equity

(in CHF)

(in CHF)

(in CHF)

(in CHF)

1,640,520

142,254

63,592,444

(27,924,098)

37,451,120

January 1, 2017

Issuance of shares – IPO

Issuance of shares – PIPE

Costs of share issuance – IPO

Costs of share issuance – PIPE

Repurchase of non-voting shares

Currency translation differences

496,154

576,923

–

–

–

–

–

–

–

–

(383)

–

Conversion of non-voting shares

141,871

(141,871)

Net loss for the year

December 31, 2017

–

2,855,468

–

–

96,246,242

57,894,037

(8,220,503)

(3,647,146)

–

–

–

–

–

–

–

–

–

96,742,396

58,470,960

(8,220,503)

(3,647,146)

(383)

(3,090,777)

(3,090,777)

–

–

(57,148,590)

(57,148,590)

205,865,074

(88,163,465)

120,557,077

Outstanding Share Capital and Non-Voting Share Capital
As at December 31, 2018, the total outstanding share capital of USD 3,455,685 (CHF 3,374,965), fully paid, consists of 
45,477,137 common shares, less 1,602,601 shares held by the company as treasury shares. All shares have a nominal value 
of 1/13 of a Swiss franc.

As at December 31, 2017, the total outstanding share capital of USD 2,926,352 (CHF 2,855,468), fully paid, consists of 
37,131,262 common shares, less 10,183 shares held by the company as treasury shares. All shares have a nominal value of 
1/13 of a Swiss franc.

All company’s non-voting shares, series A preferred shares and series B preferred shares were converted into common shares 
upon the closing of the company’s initial public offering (IPO) in January 2017.

140 

ObsEva SA l Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 2018Significant Changes in Shareholders’ Equity
On January 30, 2017, the Company completed an IPO and issued 6,450,000 common shares at a subscription price 
of USD 15.00 per share and a par value of 1/13 of a Swiss franc per share. The gross proceeds of USD 96,750,000 
(CHF 96,742,396) have been recorded in equity net of directly related share issuance costs of USD 8,221,149 
(CHF 8,220,503). 

On October 13, 2017, the Company completed a private placement with institutional investors and issued 7,500,000 
common shares at a subscription price of USD 8.00 per share and a par value of 1/13 of a Swiss franc per share. The gross 
proceeds of USD 60,000,000 (CHF 58,470,960) have been recorded in equity net of directly related share issuance costs of 
USD 3,742,520 (CHF 3,647,146).

On March 16, 2018, the Company issued 3,499,990 common shares at par value of 1/13 of a Swiss franc per share. The 
shares were subscribed by the Company and are held as treasury shares, hence the operation did not impact the share capital. 

On May 17 and 25, 2018, the Company sold 1,000,851 and 600,000 treasury shares, respectively, at a price of USD 12.50 
per share, from its “at the market” (ATM) program, generating gross proceeds of USD 20,010,978 (CHF 18,911,375). Direct-
ly related share issuance costs of USD 608,170 (CHF 574,751) were recorded as a deduction in equity. 

On June 22, 2018, the Company completed an underwritten public offering of 4,750,000 common shares at a price of 
USD 15.39 per share, with an option to issue to an additional 712,500 common shares (the “follow-on offering”). The gross 
proceeds resulting from this transaction amounted to USD 73,102,500 (CHF 72,613,017). Subsequent to the initial closing of 
the follow-on offering, on July 19, 2018, the Company sold an additional 306,721 common shares for total gross proceeds 
of USD 4,720,436 (CHF 4,688,829). These shares were sold pursuant to the 30-day option granted in connection with the 
follow-on offering to purchase up to an additional 712,500 common shares (“green-shoe”). Directly related share issuance 
costs for the overall transaction (follow-on and green-shoe) amounted to USD 5,552,419 (CHF 5,515,241) and have been 
recorded as a deduction in equity

Treasury shares
The changes in the number of treasury shares owned by the company in 2018 and 2017 are as follows:

(number of treasury shares)

At January 1,

Sale of treasury shares

Purchase of treasury shares

At December 31,

2018

10,183

(1,907,572)

3,499,990

1,602,601

2017

5,200

–

4,983

10,183

ObsEva SA l Annual Report 2018 

141

NOTES TO THE FINANCIAL STATEMENTS 201811. Authorized capital and conditional capital

The authorized share capital and conditional share capital as at December 31, 2018 and December 31, 2017 are as follows:

Authorized share capital

Conditional share capital

12. Major shareholders

December 31, 2018

December 31, 2017

(CHF)

1,197,355

1,562,740

(CHF)

–

710,097

A list of our major shareholders is disclosed in the Corporate Governance section of this Annual Report (page 77).

13. Going concern

The company fulfills its obligations by the use of its cash reserves. The Board of Directors believes the company will be able to 
meet all of its obligations for a further 12 months as they fall due and, hence, the financial statements have been prepared 
on a going concern basis.

14. Events after the balance sheet date

There were no material events after the balance sheet date.

142 

ObsEva SA l Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 2018Report from the 
Auditor on the 
Statutory Financial 
Statements of 
ObsEva SA

REPORT FROM THE AUDITOR ON THE STATUTORY FINANCIAL STATEMENTS OF OBSEVA SA

Report of the statutory auditor
to the General Meeting of ObsEva SA 
Plan-les-Ouates

Report on the audit of the financial statements

Opinion
We have audited the fi nancial statements of ObsEva SA, which comprise the balance sheet as at 31 December 2018, state-
ment of loss and notes for the year then ended, including a summary of signifi cant accounting policies.

In our opinion, the accompanying fi nancial statements as at 31 December 2018 comply with Swiss law and the company’s 
articles of incorporation. 

Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provi-
sions and standards are further described in the “Auditor’s responsibilities for the audit of the fi nancial statements” section 
of our report.

We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit 
profession and we have fulfi lled our other ethical responsibilities in accordance with these requirements. We believe that the 
audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.

Our audit approach

Overview

Overall materiality: USD 683,000

We tailored the scope of our audit in order to perform suffi cient work to 
enable us to provide an opinion on the fi nancial statements as a whole, 
taking into account the structure of the entity, the accounting processes 
and controls, and the industry in which the entity operates.

As a key audit matter the following area of focus has been identifi ed: 

Carrying value of intangible assets

144 

ObsEva SA l Annual Report 2018

Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial state-
ments. In particular, we considered where subjective judgements were made; for example, in respect of significant account-
ing estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our 
audits, we also addressed the risk of management override of internal controls, including among other matters consideration 
of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable 
assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. 
They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic 
decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall ma-
teriality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, 
helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the 
effect of misstatements, both individually and in aggregate, on the financial statements as a whole.

Overall materiality

USD 683,000

How we determined it

1% of total expenses

Rationale for the materiality 
benchmark applied

Profit before tax is not considered an appropriate benchmark as the 
entity is a start-up, still in the developmental phase, and has no recurring 
revenue. Based on the nature of the entity we determined total expenses 
as the most appropriate benchmark, applying a 1% rule of thumb.

We agreed with the Audit Committee that we would report to them misstatements above USD 68,000 identified during our 
audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the finan-
cial statements of the current period. These matters were addressed in the context of our audit of the financial statements as 
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

ObsEva SA l Annual Report 2018 

145

REPORT FROM THE AUDITOR ON THE STATUTORY FINANCIAL STATEMENTS OF OBSEVA SACarrying value of intangible assets

Key audit matter

How our audit addressed the key audit matter

The entity has intangible assets totaling USD 21.6 
million at December 31, 2018 comprised of licenses to 
operate several biopharmaceutical product candidates. 
The entity is required to review its intangibles for im-
pairment whenever events or changes in circumstances 
indicate that their carrying amounts may not be recov-
erable, and at least annually. As part of such review, 
the entity did not identify any impairment.

We focused on the carrying value of intangible assets 
as these assets are significant to the entity and relate 
to licenses that haven’t yet received regulatory and 
marketing approvals. The assessment of the carrying 
value of intangible assets is dependent on future cash 
flows expected to be derived from the successful 
development and commercialization of the various 
biopharmaceutical product candidates. The assessment 
performed by the entity contains a number of signif-
icant judgments and estimates such as determining 
the probabilities of achieving development milestones 
based on industry standards, expected market share, 
life of the assets, and the discount rate, and contains 
risk of management bias.

Refer to Note 2 Accounting principles applied in the 
preparation of the financial statements (page 135) and 
Note 7 Intangible assets (page 138).

We assessed factors that could trigger indications 
that a potential impairment may exist by performing 
a review of the minutes of Management, Board of 
Directors and Board Committee meetings, inquiry with 
Management concerning the ongoing results of clinical 
trials, external communications, including press re-
leases and other public filings, public communications 
coming from direct competitors, and consideration of 
the results of subsequent event procedures performed.

We assessed the reasonableness of the valuation mod-
el used by management to determine the recoverable 
amounts of the intangible assets, and reviewed the 
consistency of the current-year’s significant assump-
tions with prior periods.

We assessed management’s sensitivity analysis around 
key estimates, to quantify the downside changes in 
assumptions that could result in an impairment.

We reviewed management’s assessment on each of 
the qualitative factors, including those associated with 
timely and successful completion of clinical trials and 
subsequent approval, and corroborated management’s 
explanation to the underlying documentation and 
market information.

On the basis of the above procedures performed we 
did not identify any triggering event that would poten-
tially challenge the entity’s carrying value of intangible 
assets, nor did we identify any factors that would 
indicate any management bias existed in the significant 
assumptions used. As such, we found the assessment 
made by the entity, in its determination that no impair-
ment existed in the carrying value of intangible assets, 
was based upon reasonable assumptions, consistently 
applied.

146 

ObsEva SA l Annual Report 2018

REPORT FROM THE AUDITOR ON THE STATUTORY FINANCIAL STATEMENTS OF OBSEVA SAResponsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of 
Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is 
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud 
or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a 
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting 
unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to 
do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material 
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assur-
ance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss 
Auditing Standards 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 financial statements.

As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment and main-
tain professional scepticism throughout the audit. We also:

• 

• 

• 

• 

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, de-
sign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher 
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or 
the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap-
propriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s 
internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related 
disclosures made.
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based 
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast 
significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty ex-
ists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, 
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained 
up to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue 
as a going concern.

ObsEva SA l Annual Report 2018 

147

REPORT FROM THE AUDITOR ON THE STATUTORY FINANCIAL STATEMENTS OF OBSEVA SAWe communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope 
and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify 
during our audit.

We also provide the Board of Directors or its relevant committee 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 or its relevant committee, we determine those matters that 
were of most significance in the audit of the financial statements of the current period and are therefore the key audit mat-
ters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter 
or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because 
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such com-
munication.

Report on other legal and regulatory requirements

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control 
system exists which has been designed for the preparation of financial statements according to the instructions of the Board 
of Directors.

Furthermore, we draw attention to the fact that half of the share capital and legal reserves is no longer covered (article 725 
para. 1 CO).

We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers SA

Michael Foley 
Audit expert 
Auditor in charge

Genève, 5 March 2019

Filippos Mintiloglitis
Audit expert

Enclosure:
• 

Financial statements (balance sheet, statement of loss and notes) 

148 

ObsEva SA l Annual Report 2018

REPORT FROM THE AUDITOR ON THE STATUTORY FINANCIAL STATEMENTS OF OBSEVA SACompensation
Report of
ObsEva SA

Compensation Report of ObsEva SA
for the year ended December 31, 2018

A – GUIDING PRINCIPLES

The Company’s articles of association (the “Articles”), organizational regulations and policies provide the basis for the prin-
ciples of compensation (the “Compensation Policy”). The Board of Directors (the “Board”) is responsible for establishing the 
Compensation Policy guidelines within the group.

The term “compensation” has the meaning set forth in Article 14 of the Ordinance, or any successor legislation, and in-
cludes, without limitation, salary, long-term incentives, bonuses, perquisites, equity incentives, severance arrangements (to 
the extent permitted by applicable law), retirement benefits and other related benefits and benefit plans.

The Company’s Compensation Policy is designed to attract, motivate, and retain well-qualified employees and gain new, 
highly skilled staff, in order to support the achievement of the Company’s strategic objectives. The compensation package 
must be fair and competitive, and the Company uses the services of a reputable, independent expert firm to assess the ap-
propriateness of its compensation level and structure for the members of its Board (the “Board Members”) and the members 
of its Executive Committee (the “Executive Officers”). The individual overall compensation takes into account the individual’s 
professional skills, engagement and personal performance. It is made up of short-term compensation components, which 
are generally paid in cash, and long-term compensation components, generally in the form of a participation to an equity 
incentive plan.

B – ORGANISATION AND COMPETENCIES

Subject to the powers of the general meeting of shareholders, the Board determines the compensation of its members and 
of the Executive Officers in accordance with the Company’s Compensation Policy, on the recommendation of the Com-
pensation, Nominating and Corporate Governance Committee (the “Committee”). The Committee is composed of two or 
more members of the Board who have been individually elected by the general meeting of shareholders, for a term of one 
year, until the end of the next annual general meeting. If the Committee is not complete, the Board nominates the missing 
members for the remaining period of office. The Board elects the chair from the members of the Committee. Members of the 
Committee are eligible for re-election indefinitely.

The Committee supports the Board in establishing and reviewing the Company’s compensation strategy, guidelines and the 
performance targets. The Committee may also submit proposals to the Board in other compensation-related issues. For a 
more detailed description of the Committee, please refer to section 3 of the Corporate Governance Report on page 88.

150 

ObsEva SA l Annual Report 2018

The Committee meets as often as necessary to fulfil its role, and at least once:

a) 

b) 

during the first semester of each business year, to review and make recommendations to the Board regarding the 
proposals to be made to the Annual General Meeting of Shareholders (“AGM”) of such year, as required under Swiss 
law, regarding the maximum aggregate compensation, on a prospective basis, for (i) the Board Members for the 
period from the AGM of such year until the AGM of the following year and (ii) the Executive Officers for the following 
business year; and

during the fourth quarter of each business year, to review and make recommendations to the Board, based on the 
maximum aggregate compensation approved by the shareholders, regarding (i) the fixed cash compensation to be 
paid to the Board Members for the period from the AGM of the following business year until the following AGM; (ii) 
the variable cash compensation to be paid to the Executive Officers for the current business year; (iii) the fixed cash 
compensation to be paid to the Executive Officers for the following business year; (iv) the grant of equity instruments 
to the Board Members for the current business year as part of their fixed non-cash compensation; and (v) the grant of 
equity instruments to the Executive Officers for the current business year as part of their variable non-cash compensa-
tion.

The Board generally resolves on the recommendations of the Committee during the meeting of the Board which immediately 
follows the meeting of the Committee during which a recommendations was made.

As a principle, the Chief Executive Officer (“CEO”) attends the meetings of the Committee and, as a Board Member, attends 
and votes during the meetings of the Board where the compensation of the Board Members and the compensation of the 
Executive Officers are discussed. However, discussions and decisions of the Board and of the Committee regarding the com-
pensation of the CEO are resolved in his absence. The other Executive Officers do not attend the meetings of the Committee 
nor the parts of the meetings of the Board, where the compensation of the Board Members or the compensation of the 
Executive Officers are discussed.

Board Members, who are not members of the Committee, do not attend the meetings of the Committee, but take part to 
the meetings of the Board during which are discussed the compensation of the Board Members and the compensation of the 
Executive Officers as well as the vote relating thereto.

Maximum Aggregate Compensation subject to Shareholders’ Approval
Based on the Committee’s recommendations, the Board submits two proposals for approval at the shareholders meeting: (i) 
the maximum aggregate compensation for the Board Members until the next annual general meeting; and (ii) the maximum 
aggregate compensation for the Executive Officers for the following business year. The approval of these proposals requires 
an absolute majority (50% plus one) of the vote cast at the shareholders meeting. Specific procedures in case a proposal is 
not approved or for new hires to the executive committee are described in the Articles and are set forth under the “Rules 
in the Articles regarding Compensation of the Board Members and of the Executive Officers” section of this Compensation 
Report.

ObsEva SA l Annual Report 2018 

151

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018C – COMPENSATION COMPONENTS

Compensation Review Process of the Committee and General Philosophy
In its review process, the Committee considers compensation packages of other companies in the biotech and pharmaceuti-
cal industry that are comparable to ObsEva, with respect to size, listing place or business model, the professional experience 
and areas of responsibility of the respective members. Such benchmark is conducted by a reputable, independent expert firm 
which has not been awarded additional mandates by the Company, and is used to assess the appropriateness of the Compa-
ny’s compensation level and structure.

For the business year 2018, the peer groups used for benchmark purposes were composed of:

l 

l 

20 US public biotech or pharmaceutical companies: Acceleron Pharma, Aimmune Therapeutics, Alder Biopharmaceu-
ticals, Ardelyx, Cara Therapeutics, Clearside Biomedical, Concert Pharmaceuticals, Corbus Pharmaceuticals, Epizyme, 
Global Blood Therapeutics, Intra-Cellular Therapies, Minerva Neurosciences, Myovant Sciences, Reata Pharmaceuticals, 
Revance Therapeutics, Savara, TG Therapeutics, Vital Therapies, XBiotech and Xencor; and
18 European public biotech or pharmaceutical companies: AC Immune, Adaptimmune Therapeutics, Argenx, Ascendis 
Pharma, Basilea Pharmaceutica, Cassiopea, CRISPR Therapeutics, DBV Technologies, Innate Pharma, Merus, Mithra 
Pharmaceuticals, Molecular Partners, Newron Pharmaceuticals, Nightstar Therapeutics, Nordic Nanovector, NuCana, 
UniQure and Zealand Pharma.

The Company is a leading biotech operating and listed in both Europe and the US and needs to attract and retain the best 
talents in order to ensure its strategic objectives. In this regard, the compensation philosophy is to target rewards approach-
ing the 75th European market percentile for the annual cash compensation of the Executive Officers based in Switzerland, 
and the 75th US market percentile for the annual cash compensation of the Executive Officers based in the US, the annual 
cash compensation of the Board Members and the value of equity instruments granted to the Board Members and the Exec-
utive Officers.

Board of Directors Members Annual Cash Compensation
Each member of the Board who is not also serving as an employee of the Company or/and of its affiliates, receives an annual 
fixed cash compensation, payable in quarterly installments, as determined under the review process of the Committee and 
approved by the Board, as set forth below:

1 -  

2 -  

3 -  

Chairman of the Board USD  70,000
All other eligible members of the Board USD  40,000

Annual Board service retainer:
a) 
b) 
Annual committee member service retainer:
a) 
b) 
Annual committee chair service retainer (in addition to committee member service retainer)
a) 
b) 

Chair of the Audit Committee USD  7,500
Chair of the Compensation, Nominating and Corporate Governance Committee USD  7,500

Member of the Audit Committee USD  7,500
Member of the Compensation, Nominating and Corporate Governance Committee USD  7,500

Social contributions, to the extent required by Swiss law, are accrued on the annual cash compensation of the Board and 
committee’s members.

152 

ObsEva SA l Annual Report 2018

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018 
 
 
 
 
 
In addition, the Company reimburses Board Members for out-of-pocket expenses incurred in relation to their services on an 
on-going basis upon presentation of the corresponding receipts. Expenses reimbursements are not part of the compensation.

Pursuant to organizational regulations of the Board, Board Members who are also serving as an employee of the Company 
or/and of its affiliates only receive compensation in their capacity as employees and do not receive additional compensation 
for their activities as members of the Board.

Executive Committee Members Annual Cash Compensation
The annual cash compensation of the Executive Officers consists of fixed and variable compensation elements.

Fixed compensation comprises the base salary and other compensation elements, as determined under the review process of 
the Committee and approved by the Board, and based on the position and level of responsibility of the recipient. 

Variable compensation comprises performance-related cash bonuses that are based on target bonuses which could be of 
30%, 35%, 40% or 50% of the base salary depending on the Executive Officer’s position and level of responsibility, and as 
determined under the review process of the Committee and approved by the Board. Actual amount of cash bonus awarded 
for a specific year to an Executive Officer ranges from 50% to 150% of the target bonus for such Executive Officer. Adjust-
ment rate applied to target bonus of an Executive Officer is determined at the end of every year based on the Company’s 
general performance and the Executive Officer individual performance for the such business year, which performance is being 
assessed based on annual corporate and individual objectives. The Company doesn’t use specific metrics to calculate the 
adjustment rates, which are determined at the sole and full discretion of the Committee and subject to Board approval. The 
average adjustment rate to target bonuses of Executive Officers was of 110% for the business year 2018 and of 112.5% for 
the business year 2017.

For both 2018 and 2017, on average, variable cash compensation represented 31% of the total cash compensation of the 
Executive Officers, or 45% of their fixed cash compensation.

Social contributions, to the extent required by Swiss law, are accrued on the annual cash compensation of the Executive 
Officers.

In addition, the Company reimburses the Executive Officers for out-of-pocket expenses incurred in relation to their services 
on an on-going basis upon presentation of the corresponding receipts. Expenses reimbursements are not part of the com-
pensation.

Equity incentive plans
The Company has established two equity incentive plans, in 2013 (the “2013 EIP”) and 2017 (the “2017 EIP”). 

The purpose of the Company’s 2013 EIP and 2017 EIP is to provide Board Members, Executive Officers, employees and 
certain consultants (the “Beneficiaries”) with an opportunity to benefit from the potential appreciation in the value of the 
Company’s shares, thus providing an increased incentive for participants to contribute to the future success and prosperity 
of the Company, enhancing the value of the shares for the benefit of the shareholders of the Company and increasing the 
ability of the Company to attract and retain individuals of exceptional skill. In addition, these plans provide the Company with 
a mechanism to engage services for non-cash consideration. 

ObsEva SA l Annual Report 2018 

153

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018Under 2013 EIP, the Company has granted the Beneficiaries non-voting shares that were converted into common shares 
upon completion of the Company’s IPO in January 2017. The Company has stopped granting equity instruments under the 
2013 EIP in 2016. Under 2017 EIP, the Company has been granting stock-options to the Beneficiaries.

The grant of equity instruments under 2013 EIP or 2017 EIP is at the discretion of the Board, which has delegated authority 
to the Committee and, collectively, the CEO and Chief Financial Officer (“CFO”) to grant equity instruments under certain 
circumstances to new joiners that are not Board Members or Executive Officers, and subject to semi-annual reporting to the 
Committee when grants are approved by the CEO and CFO. The Board, the Committee or the CEO and CFO, depending on 
the delegation of competences, determine grant, vesting, exercise and forfeiture conditions. In particular, they may provide 
for continuation, acceleration or removal of vesting and exercise conditions, for payment or grant of compensation based 
upon assumed target achievement, or for forfeiture, in each case in the event of pre-determined events such as a change-
of-control or termination of an employment or mandate agreement. Key factors considered by the Board when approving 
grants of equity instruments include the amount of outstanding authorized or conditional share capital approved by share-
holders. The Company may procure the required shares through purchases in the market, either directly or through compa-
nies controlled by it, or by issuing new shares. The Board has the authority to amend 2013 EIP and 2017 EIP.

Annual grants of equity instruments to Board Members represent a fixed part of their compensation, whose value is deter-
mined under the review process of the Committee, based on peers group benchmark, and approved by the Board. 

Annual grants of equity instruments to Executive Officers represent a variable part of their compensation, whose value is 
based on peers group benchmark as part of the review process of the Committee, subject to further adjustments based on 
individual performance of each Executive Officer. The Company doesn’t use specific metrics to calculate such adjustments, 
which are determined at the sole and full discretion of the Committee and subject to Board approval. Equity instruments 
granted to Executive Officers under 2017 EIP include accelerated vesting conditions for the full unvested portion of such 
instruments in case of change of control.

Value of equity instruments granted in 2018 and 2017 represented approximately 75% and 80%, respectively, of the total 
compensation of the Board Members and 67% and 62%, respectively, of the total compensation of the Executive Officers.

Indirect benefits
The Company contributes to pension contributions and maintains certain insurance for death and invalidity for its Executive 
Officers in accordance with the regulations applicable to the pension schemes in which the Company or any of its subsidiary 
participate.

Loans, credits and guarantees
Subject to vote of the general meeting of shareholders on compensation proposals, which is binding, the Company does not 
grant loans or credit facilities to Board Members or Executive Officers.

Rules in the Articles regarding Compensation of the Board Members and of the Executive Officers
The Articles set forth the following rules regarding the Compensation of the Board Members and of the Executive Officers.

Article 32: Compensation Principles
The Compensation of the Board Members consists of a fixed compensation and attendance allowances. Executive members 
of the Board can receive in addition compensation elements applicable to Executive Officers. 

154 

ObsEva SA l Annual Report 2018

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018The Compensation of the Executive Officers consists of fixed and variable compensation elements. Fixed compensation 
comprises the base salary. Variable compensation may comprise short-term and long-term compensation elements. Short-
term variable compensation elements shall be governed by performance metrics that take into account the performance of 
the Company and some or all of its subsidiaries, market performance, other companies or comparable benchmarks and/or 
individual quantitative and qualitative performance targets. Long-term variable compensation elements shall be governed by 
performance metrics that take into account strategic and/or financial objectives, as well as retention elements.

The determination of such performance metrics, the target levels as well as of their achievement is the responsibility of the 
Board or the Committee, to the extent delegated to it. The total compensation takes into account the position and level of 
responsibility of the Executive Officer.

Compensation may be paid in the form of cash or in the form of other types of benefits, including the grant of shares, 
stock options or other financial instruments. The Board or, to the extent delegated to it, the Committee have authority to 
determine grant, vesting, exercise and forfeiture conditions. In particular, they may provide for continuation, acceleration or 
removal of vesting and exercise conditions, for payment or grant of compensation based upon assumed target achievement, 
or for forfeiture, in each case in the event of pre-determined events such as a change-of-control or termination of an employ-
ment or mandate agreement. The Company may procure the required shares through purchases in the market, either directly 
or through companies controlled by it, or by issuing new shares.

Board Members and/or Executive Officers may participate in share purchase plans established by the Company or companies 
controlled by it, under the terms of which eligible employees may allocate a portion of their compensation to the purchase of 
shares of the Company at a discount to market price.

Compensation may be paid by the Company or companies controlled by it.

Reimbursement of expenses incurred by the Board Members and Executive Officers in their functions are not part of their 
compensation.

Article 33: Loans, credits and retirement benefits
Subject to other decision from the general meeting of shareholders, the Company is not allowed to grant loans or credit 
facilities to Board Members or Executive Officers.

Pension contributions and retirement benefits are made or provided in accordance with the regulations applicable to the 
pension schemes in which any Group company participates.

Article 34: Vote of the general meeting of shareholders on the compensation of the members of the Board and of the Exec-
utive Officers

Following a proposal by the Board, the general meeting of shareholders annually and separately approves (i) the aggregate 
compensation of the Board until the next AGM and (ii) the aggregate compensation of the Executive Officers for the fol-
lowing business year. The Board can also submit at its discretion compensation proposals for other periods or for only some 
individuals from the Board or the executive committee. The vote of the general meeting of shareholders on the compensation 
proposals is binding.

ObsEva SA l Annual Report 2018 

155

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018If the general meeting of shareholders does not approve a compensation proposal made by the Board, the Board has to con-
vene an extraordinary general meeting of shareholders. Compensation may be paid out prior to their approval by the general 
meeting of shareholders, subject to their subsequent approval by the general meeting of shareholders and, in the absence of 
such subsequent approval, to restitution to the Company.

If the maximum aggregate amount of compensation already approved by the general meeting of shareholders is not suffi-
cient to also cover the compensation of one or more persons who became members of the Executive Committee during a 
compensation period for which the general meeting of shareholders has already approved the compensation of the Exec-
utive Officers (new hire), the Company is authorized to pay an additional amount with respect to the compensation period 
already approved. Such additional amount cannot exceed (i) for the head of the Executive Committee (CEO), 140% of the 
total annual compensation of the former CEO and (ii) for any new hire other than the CEO, 140% of the highest total annual 
compensation of any member of the Executive Committee in office other than the CEO.

D – COMPENSATION FOR PERIODS UNDER REVIEW (audited)

The measurement basis for each component of compensation is as follows:

l 
l 

l 
l 

Cash based-compensation: accrual basis;
Social charges: accrual basis except for social charges on equity incentives which are estimated based on fair value at 
grant date;
Indirect benefits: accrual basis;
Equity incentives: total fair value at grant date as determined under IFRS 2.

Compensation of the Board Members for the financial years 2018 and 2017 

The following table sets forth the name, year joined the Board, position and directorship term, as well as committee member-
ships, of each member of the Board:

Name

Frank Verwiel

Ernest Loumaye

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

First 
Appointment

Elected until

2016

2012

2013

2016

2016

2013

2013

2013

2019

2019

2019

2019

2019

2019

2019

2019

Board

Chair

Member, CEO

Member

Member

Member

Member

Vice-Chair

Member

AC (1)

Member

–

–

Chair

Member

–

–

–

CNCGC (2)

–

–

Chair

–

–

Member

Member

–

(1) Audit Committee
(2) Compensation, Nominating and Corporate Governance Committee

156 

ObsEva SA l Annual Report 2018

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018The compensation received by the Board Members for the financial year 2018 in US dollars, and as converted in Swiss francs, 
was as follows:

Name

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

Total

Name

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

Total

76

54

54

47

47

47

39

27

22

25

25

25

25

24

364

173

–

–

–

–

–

–

–

–

240

240

240

240

240

240

240

343

316

319

312

312

312

303

1,680

2,217

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

78

55

55

48

48

48

40

28

22

26

26

26

26

25

372

179

–

–

–

–

–

–

–

–

245

245

245

245

245

245

245

351

322

326

319

319

319

310

1,715

2,266

(1) Include social charges on cash-based compensation and fair value of equity instruments granted
(2) Fair value of equity instruments granted during the period, as determined under IFRS2

The compensation received by the Board Members for the financial year 2017 in Swiss francs, and as converted in US dollars, 
was as follows:

Name

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

Total

76

54

54

47

47

26

39

34

26

48

43

43

29

32

343

255

–

–

–

–

–

–

–

–

296

235

480

433

433

301

310

406

315

582

523

523

356

381

2,488

3,086

ObsEva SA l Annual Report 2018 

157

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018Name

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers

Jim Healy

Rafaèle Tordjman

Jacky Vonderscher

Total

78

55

55

48

48

26

40

35

26

49

44

44

29

32

350

259

–

–

–

–

–

–

–

–

301

239

487

440

440

306

315

414

320

591

532

532

361

387

2,528

3,137

(1) Include social charges on cash-based compensation and fair value of equity instruments granted
(2) Fair value of equity instruments granted during the period, as determined under IFRS2

Ernest Loumaye, who serves as Chief Executive Officer, was employee during the financial years 2017 and 2018 and received 
no additional compensation for his services as member of the Board.

The compensation of USD 2.3 million received by the Board Members in business year 2018 was made of fixed elements, and 
decreased by USD 0.9 million compared to the business year 2017 mainly due to a one-off grant of stock-options made to 
the Board Members in January 2017 upon closing of the Company’s IPO.

The total compensation received by the Board Members during the period from the AGM 2017 until the AGM 2018 amount-
ed to CHF 1.7 million, and was within the maximum aggregate compensation of CHF 2.0 million approved for the period by 
the AGM 2017.

Compensation of the Executive Committee for the financial years 2018 and 2017

The following table sets forth the name, position and year of appointment, of each Executive Officer:

Name

Ernest Loumaye

Tim Adams

Function

Chief Executive Officer

Chief Financial Officer

Jean-Pierre Gotteland

Chief Scientific Officer and Head of R&D

Wim Souverijns

Elke Bestel

Ben T.G. Tan

Chief Commercial Officer

Chief Medical Officer

V.P. Commercial & B.D.

Fabien de Ladonchamps

V.P. Corporate Affairs & Finance

Appointment

2013

2017

2015

2018

2015

2014

2013

158 

ObsEva SA l Annual Report 2018

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018The compensation received by the Executive Officers for the financial year 2018 in US Dollars, and as converted in Swiss 
francs, was as follows:

Name

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

Ernest Loumaye

Other executives

Total

Name

Ernest Loumaye

Other executives

Total

824

2,201

3,025

288

640

928

22

107

129

2,961

5,375

8,336

4,095

8,323

12,418

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

843

2,251

3,094

295

653

948

22

111

133

3,028

5,496

8,524

4,188

8,511

12,699

(1) Include social charges on cash-based compensation and fair value of equity instruments granted
(2) Fair value of equity instruments granted during the period, as determined under IFRS2

The compensation received by the Executive Officers for the financial year 2017 in Swiss francs, and as converted in US Dol-
lars, was as follows:

Name

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

(in CHF ,000)

Ernest Loumaye

Other executives

Total

Name

Ernest Loumaye

Other executives

Total

794

2,089

2,883

221

584

805

23

109

132

1,741

4,413

6,154

2,779

7,195

9,974

Cash­based comp.

Social charges (1)

Pension contrib. Equity granted (2)

Total comp.

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

(in USD ,000)

806

2,121

2,927

224

593

817

23

111

134

1,768

4,482

6,250

2,821

7,307

10,128

(1) Include social charges on cash-based compensation and fair value of equity instruments granted
(2) Fair value of equity instruments granted during the period, as determined under IFRS2

The compensation of USD 12.7 million received by the Executive Officers in business year 2018 was made of approximately 
80% of variable elements and 20% of fixed elements, and increased by USD 2.6 million compared to business year 2017 
mainly due to the hiring of Wim Souverijns as new Executive Officer and the related grant of 200,000 stock-options made to 
him upon joining in November 2018, as well as an increased value of the equity granted based on the Committee’s review 
process of peers group benchmark.

The total compensation received by the Executive Officers for the year ended December 31, 2018 was within the maximum 
aggregate compensation of USD 13.0 million approved for the year by the AGM 2018.

ObsEva SA l Annual Report 2018 

159

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018E – SHARE OWNERSHIP INFORMATION (audited)

Board of Directors

The Board Members held the following equity instruments as of December 31, 2018 (1):

Name

Common Shares

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers (2)

Jim Healy (2)

Rafaèle Tordjman

Jacky Vonderscher

Total

Vested

26,000

83,958

–

4,586,563

4,749,623

–

30,442

9,476,586

Unvested

19,500

13,542

–

–

–

–

5,958

39,000

Total

45,500

97,500

–

4,586,563

4,749,623

–

36,400

Stock­options

Vested

Unvested

18,276

14,123

30,734

27,540

27,540

23,373

19,234

44,864

42,517

51,906

50,100

50,100

54,267

45,406

Total

63,140

56,640

82,640

77,640

77,640

77,640

64,640

9,515,586

160,820

339,160

499,980

(1) excluding Ernest Loumaye, CEO, whose holdings are listed under Executive Committee
(2) includes shares held directly and indirectly through vehicles controlled by the Director

The members of the Board held the following equity instruments as of December 31, 2017 (1):

Name

Frank Verwiel

Annette Clancy

Barbara Duncan

Ed Mathers (2)

Jim Healy (2)

Rafaèle Tordjman

Jacky Vonderscher

Total

Common Shares

Vested

Unvested

14,625

67,708

–

4,586,563

4,749,623

–

24,592

9,443,111

30,875

29,792

–

–

–

–

11,808

72,475

Total

45,500

97,500

–

4,586,563

4,749,623

–

36,400

Stock­options

Vested

Unvested

4,736

2,750

10,694

9,167

9,167

5,000

5,194

33,834

29,320

47,376

43,903

43,903

48,070

34,876

Total

38,570

32,070

58,070

53,070

53,070

53,070

40,070

9,515,586

46,708

281,282

327,990

(1) excluding Ernest Loumaye, CEO, whose holdings are listed under Executive Committee
(2) includes shares held directly and indirectly through vehicles controlled by the Director

160 

ObsEva SA l Annual Report 2018

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018Executive Committee

The Executive Officers held the following equity instruments as of December 31, 2018:

Name

Common Shares

Stock­options

Ernest Loumaye

Tim Adams

Jean-Pierre Gotteland

Wim Souverijns

Elke Bestel

Ben T.G. Tan

Fabien de Ladonchamps

Total

Vested

Unvested

Total

Vested

Unvested

2,930,703

132,395

3,063,098

106,458

91,542

1,600

88,021

80,238

105,923

–

44,958

–

41,979

33,312

30,577

106,458

136,500

1,600

130,000

113,550

136,500

66,818

27,782

20,795

–

13,370

7,575

13,370

504,462

314,620

180,955

200,000

71,130

42,095

75,650

Total

571,280

342,402

201,750

200,000

84,500

49,670

89,020

3,404,485

283,221

3,687,706

149,710

1,388,912

1,538,622

The members of the ExCom held the following equity instruments as of December 31, 2017:

Name

Common Shares

Stock­options

Vested

Unvested

Total

Vested

Unvested

Ernest Loumaye

Tim Adams

Jean-Pierre Gotteland

Elke Bestel

Ben T.G. Tan

Fabien de Ladonchamps

Total

2,888,920

227,879

3,116,799

25,000

57,417

55,521

82,470

79,924

–

79,083

74,479

70,280

56,576

25,000

136,500

130,000

152,750

136,500

3,189,252

508,297

3,697,549

–

–

–

–

–

–

–

267,270

321,960

83,180

53,480

30,300

53,480

Total

267,270

321,960

83,180

53,480

30,300

53,480

809,670

809,670

ObsEva SA l Annual Report 2018 

161

COMPENSATION REPORT OF OBSEVA SA FOR THE YEAR ENDED DECEMBER 31, 2018Report from the 
Auditor on the 
Compensation 
Report of 
ObsEva SA

Report of the statutory auditor
to the General Meeting of ObsEva SA
Plan-les-Ouates

We have audited the accompanying remuneration report of ObsEva SA for the year ended 31 December 2018. The audit was 
limited to the information according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange 
Listed Companies (Ordinance) contained in the sections labeled ‘audited’ on pages 156 to 161 of the remuneration report.

Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance 
with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The 
Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.

Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance 
with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the 
audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of 
the Ordinance.

An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with 
regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected 
depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration 
report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value 
components of remuneration, as well as assessing the overall presentation of the remuneration report.

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

Opinion
In our opinion, the remuneration report of ObsEva SA for the year ended 31 December 2018 complies with Swiss law and 
articles 14–16 of the Ordinance.

Filippos Mintiloglitis
Audit expert

PricewaterhouseCoopers SA

Michael Foley  
Audit expert  
Auditor in charge

Genève, 5 March 2019

Enclosure:
• 

Remuneration report

ObsEva SA l Annual Report 2018 

163

REPORT FROM THE AUDITOR ON THE COMPENSATION REPORT OF OBSEVA SAForward-Looking Statements

This Annual Report contains forward-looking statements that are based on our management’s beliefs and assumptions and 
on information currently available to our management. All statements other than present and historical facts and conditions 
contained in this Annual Report, including statements regarding our future results of operations and financial positions, busi-
ness strategy, plans and our objectives for future operations, are forward-looking statements. When used in this Annual Re-
port, the words “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “ongoing,” 
“objective,” “plan,” “potential,” “predict,” “should,” “will” and “would,” or the negative of these and similar expressions 
identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about: 
•  

the success, cost, timing and potential indications of our product candidates’ development activities and clinical trials, 
including our ongoing and future trials of linzagolix, nolasiban and OBE022; 
our ability to obtain and maintain regulatory approval of our product candidates, including linzagolix, nolasiban and 
OBE022, in any of the indications for which we plan to develop them, and any related restrictions, limitations or 
warnings in the label of an approved product; 
the results of ongoing or future clinical trials, including of linzagolix, nolasiban and OBE022; 
our ability to obtain funding for our operations, including funding necessary to complete the clinical trials of any of 
our product candidates, and the terms on which we are able to raise that additional capital; 
our plans to research, develop and commercialize our product candidates; 
the timing of our regulatory filings for our product candidates; 
the clinical utility of our product candidates; 
the size and growth potential of the markets for our product candidates; 
our commercialization, marketing and manufacturing capabilities and strategy; 
our expectations regarding our ability to obtain and maintain intellectual property protection for our product candi-
dates and our ability to operate our business without infringing on the intellectual property rights of others; 
the timing and amount of milestone and royalty payments we are required to make under our license agreements; 
our ability to attract and retain qualified employees and key personnel; 
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately; 
the activities of our competitors and the success of competing therapies that are or become available; 
our plans to in-license or acquire additional product candidates; 
how long we will qualify as an emerging growth company or a foreign private issuer; 
our estimates regarding future revenue, expenses and needs for additional financing; 
regulatory developments in the United States and foreign countries; and 
other risks and uncertainties, including those listed in this section of this Annual Report. 

• 

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•  

• 
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•  
• 
•  
•  

• 
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•  

We cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if 
our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertain-
ties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or 
any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obliga-
tion to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, 
except as required by law. 
You should read this Annual Report and the documents that we reference in this Annual Report completely and with the 
understanding that our actual future results may be materially different from what we expect. We qualify all of our for-
ward-looking statements by these cautionary statements. 
This Annual Report contains market data and industry forecasts that were obtained from industry publications. These data in-
volve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have 
not independently verified any third-party information. While we believe the market position, market opportunity and market 
size information included in this Annual Report is generally reliable, such information is inherently imprecise. 

164 

ObsEva SA l Annual Report 2018

 
Contact

Media Contact Switzerland and Europe:
Christophe Lamps
Dynamics Group
cla@dynamicsgroup.ch 
+41 22 308 6220 Office
+41 79 476 2687 Mobile

Media Contact U.S.:
Marion Janic
RooneyPartners LLC
mjanic@rooneyco.com
+1 212 223 4017 Office
+1 646 537 5649 Mobile

CEO Office Contact:
Shauna Dillon
Shauna.dillon@obseva.ch
+41 22 552 1550

Investor Contact:
Mario Corso
Senior Director, Investor Relations
mario.corso@obseva.com
+1 857 972 9347 Office
+1 781 366 5726 Mobile

ObsEva SA l Annual Report 2018 

165

www.obseva.com