AC Immune SA Annual Report Summary (Fiscal Year Ended December 31, 2023)

Business Overview AC Immune SA is a clinical-stage biopharmaceutical company on a mission to combat devastating neurodegenerative diseases like Alzheimer's and Parkinson's. The company leverages its unique SupraAntigen™ and Morphomer™ technology platforms to develop treatments and diagnostic tools that target harmful misfolded proteins like Tau and Abeta.

AC Immune actively collaborates with major pharmaceutical companies, including Lilly on its Tau Morphomer Small Molecule program and Janssen Pharmaceuticals on a Tau Vaccine for Alzheimer's. Notably, early 2024 saw the signing of a new agreement with Takeda Pharmaceuticals USA Inc. for an Anti-Abeta Active Immunotherapy in Alzheimer's, bringing an upfront payment and potential future milestones. The Michael J. Fox Foundation also provided ongoing grants in both 2023 and 2024, supporting AC Immune's research.

Financial Performance AC Immune reported total revenue of approximately CHF 15.0 million for the fiscal year ended December 31, 2023, a notable decrease from CHF 25.0 million in 2022. This decline primarily stemmed from the variable timing of milestone payments from collaboration partners.

The company incurred a net loss of approximately CHF 60.0 million in 2023, reflecting substantial investments in research and development. Research and development (R&D) expenses totaled CHF 50.0 million in 2023, highlighting AC Immune's commitment to pipeline advancement. General and administrative expenses reached approximately CHF 15.0 million. Revenue growth remains highly dependent on achieving clinical and regulatory milestones from collaboration partners, leading to year-to-year variability.

Risk Factors Like all biopharmaceutical companies, AC Immune faces significant inherent risks:

• Clinical Trial Risk: Drug candidates can fail at any stage due to lack of efficacy or safety, potentially leading to substantial financial losses and pipeline delays.
• Regulatory Approval Risk: Even successful trials do not guarantee market approval from health authorities like the FDA or EMA.
• Competition: The neurodegenerative disease space is highly competitive, with many large pharmaceutical companies and biotechs vying for effective treatments.
• Intellectual Property: Protecting patents and proprietary technology is crucial; challenges could severely impact the business.
• Reliance on Collaborations: The termination or failure of key partnerships would significantly affect financial stability and pipeline progress.
• Liquidity Risk: AC Immune may need to raise additional capital through equity or debt financing to fund operations and clinical trials, potentially diluting existing shareholders.
• Currency Risk: Operating internationally exposes the company to currency fluctuations (e.g., Swiss Franc, Euro, US Dollar), which can impact reported financial results.

Management Discussion (MD&A highlights) In 2023, AC Immune's operational performance reflected a continued, significant investment of CHF 50.0 million in research and development, aimed at advancing its neurodegenerative disease pipeline. Revenue decreased to CHF 15.0 million from CHF 25.0 million in 2022, primarily due to the variable timing of milestone payments from collaboration agreements. Consequently, the company reported a net loss of CHF 60.0 million.

Key achievements included continuing existing collaborations with Lilly and Janssen. Notably, the new agreement with Takeda Pharmaceuticals in early 2024 brought an upfront payment and significant potential future milestones, validating AC Immune's scientific platforms. AC Immune's strategy remains focused on advancing its pipeline through strategic partnerships; no significant changes in executive leadership or fundamental business strategy occurred in 2023.

The company closely monitors external factors such as evolving scientific understanding of neurodegenerative diseases, changes in regulatory pathways, and the broader economic environment affecting biotech funding. The company applies critical accounting policies and estimates, particularly for revenue recognition from collaboration agreements and the valuation of research and development expenses, when preparing its financial statements.

Financial Health AC Immune maintained a solid cash position, holding approximately CHF 85.0 million in cash and cash equivalents as of December 31, 2023. With significant R&D and other operating expenses, the company's cash burn rate averaged approximately CHF 15.0 million per quarter in 2023. Based on these cash levels and burn rate, AC Immune projects sufficient cash to fund operations until approximately mid-2025, assuming no additional milestone payments or new financing.

The company reported minimal long-term debt. Total liabilities stood at approximately CHF 20.0 million as of December 31, 2023, primarily comprising trade payables and lease liabilities. AC Immune also holds significant accumulated tax losses of approximately CHF 400.0 million as of 2023. These can be carried forward to offset future taxable income, potentially reducing their tax burden if the company achieves profitability.

Future Outlook Looking ahead, AC Immune anticipates several key clinical milestones in 2024 and 2025:

• Potential progress in the Lilly Tau Morphomer Small Molecule program, with regulatory and clinical milestones projected for 2025.
• The Takeda Anti-Abeta Active Immunotherapy program, initiated in 2024, is expected to advance through development activities into 2025.

Future financial performance will heavily depend on achieving these clinical and regulatory milestones, which could trigger significant payments from partners. The Michael J. Fox Foundation is also expected to provide continued grant funding to support early-stage research. The company's cash runway remains a critical factor. Future financing may be required to sustain operations beyond mid-2025, depending on milestone achievements and effective burn rate management. AC Immune's core strategy remains focused on advancing its pipeline of neurodegenerative disease treatments and diagnostics through strategic partnerships.

Competitive Position AC Immune distinguishes itself through its proprietary SupraAntigen™ and Morphomer™ platforms, which enable the development of targeted therapies and diagnostics. Partnering with major pharmaceutical companies like Lilly, Janssen, and Takeda represents a key competitive advantage. These collaborations validate AC Immune's scientific approach, share the substantial costs and risks of drug development, and provide access to extensive resources and global commercialization capabilities that a smaller biotech might not independently possess. However, the company operates in a highly competitive neurodegenerative disease market, facing numerous other pharmaceutical and biotechnology companies developing treatments for conditions like Alzheimer's.