Cosmo Pharmaceuticals N : ESG Report 2023

COSMO PHARMACEUTICALS

Environmental, Social and Governance Report 2023

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

We are committed to making a positive impact on society through our products and minimising the impact of our operations on the environment. We recognise the responsibilities we have to our employees, partners, other stakeholders and the communities in which we operate

Mission statement:

To improve peoples lives by developing products that address unmet medical needs in the fields of gastroenterology, dermatology and healthtech

Cosmo Pharmaceuticals ESG Report 1

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

Our strategy

In gastroenterology our focus is to improve the safety profile and efficacy of molecules that are already on the market

In dermatology we aim to develop novel therapies which have minimal side-effects

In healthtech we are developing cutting- edge intelligent medical devices to assist with clinical decision-making; our first device aids endoscopists in the detection of colonic mucosal lesions

We have a risk-averse financial approach and adequate cash reserves to execute our strategy.

Our overriding objective is to achieve superior long-term returns for shareholders while minimising risks.

Cosmo Pharmaceuticals ESG Report 2

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

Contents

1.	The Cosmo Group	4	4.	Human Resources	15	7.	Product Quality and Safety	29
1.1	About us	5	4.1	Our people strategy	16	7.1	Product safety	28
1.2	Our stakeholders	6	4.2	Our people	17	7.2	Product safety training	28
1.3	How we manage risk	7	4.3	Career management and remuneration	19	7.3	Public reporting and monitoring of product safety	29
			4.4	Our work environment	19	7.4	Incident investigation and corrective action	30
2. ESG Strategy and Governance	8	4.5	Employee training	20	7.5	Emergency response procedures	29
2.1	Cosmo's ESG commitment	9	4.6	Restructuring responsibly	20	7.6	Product safety objectives and targets	31
2.2	Board oversight of ESG and corporate sustainability	9				7.7	Product safety audits	30
			5.	Corporate Governance	21
3.	The Environment	10	5.1	Board of Directors	22	8.	Business Ethics	32
3.1	Environmental strategy	11	5.2	Audit and internal controls	23	8.1	Code of Conduct	33
3.2	Pollution prevention and control	11	5.3	Executive remuneration	24	8.2	Bribery and corruption	33
3.3	Water and wastewater	12	5.4	Protecting Company assets	24	8.3	Protecting fair competition	34
3.4	Energy	12				8.4	Responsible lobbying	34
3.5	Atmospheric emissions	12	6.	Our Clinical Trials	25	8.5	Fair treatment of suppliers	34
3.6	Use, disposal and transportation of products	13	6.1	Designing our clinical trial projects	26
3.7	Animal testing	13	6.2	Protecting our clinical trial research patients	26	9.	Our Community	35
3.8	United Nations Sustainable Development Goals	14	6.3	Safety monitoring	27	9.1	Our community	36
			6.4	Outsourcing monitoring activities	27

Some of the statements in this publication may be forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Cosmo does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will Cosmo and its affiliate companies be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages.

Cosmo Pharmaceuticals ESG Report 3

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

The Cosmo Group

1.	The Cosmo Group	4
1.1	About us	5
1.2	Our stakeholders	6
1.3	How we manage risk	7

Cosmo Pharmaceuticals ESG Report 4

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

1.1 About us

Our business model at a glance

Our business model is based on three pillars: the development and manufacturing of our own products, the distribution

of our products through selective partnerships, and drug development and manufacturing on behalf of third parties.

We are a business-to-business company; we do not directly commercialise and distribute our products and we do not have an internal sales force. Instead, once we develop a new product, we will typically licence it to commercial partners either immediately after receiving the relevant marketing authorisation ('MA') or before the start of phase III clinical trials. We retain the manufacturing and supply of our products and our commercial partners are responsible for the distribution of our products into the market place.

This model enables us to maintain a lean and simple cost base, focus on multiple research and development ('R&D') opportunities and increase profitability as new products generate revenues.

Our revenue streams typically include upfront payments, royalties and milestones, revenue from the supply of our products, and revenue from contract manufacturing.

Manufacturing

At our plant located in Lainate (Milan), Italy (the 'Plant'), we manufacture our own products and also operate as a contract development and manufacturing company, manufacturing products for third parties. We manufacture high quality products for both clinical and commercialisation purposes in compliance with good manufacturing practices ('GMP') standards. Active pharmaceutical ingredients ('API'), excipients and packaging materials are delivered by our suppliers directly to our Plant, and finished products are collected at our Plant by our partners. As a consequence, we do not manage the transportation of materials or finished products either to or from our Plant, thereby minimising our environmental impact.

Business relationships

We enter into business relationships mainly with two categories of partners, namely our selected suppliers and licensees. Operating in the highly regulated pharmaceutical industry, we rigorously select our suppliers of API, excipients and packaging materials. We generally transfer the MA of our products to our licensees, who then become responsible for pharmacovigilance and the management of product end-of-life.

Development and

Distributed through

Drug development and

manufacturing of

our selective

manufacturing on behalf of

own products

strong partnerships

third parties

This enables Cosmo to

Bear no cost for		Have a				Increase profitability
		Focus on multiple		and EBITDA as new
a commercial		lean and simple
		R&D opportunities		products generate
infrastructure		cost base
				revenues

Cosmo Pharmaceuticals ESG Report 5

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

1.2 Our stakeholders

We understand that focusing on our stakeholders helps us to create long-term value.

We recognise that we have responsibilities to multiple stakeholders including employees, patients, business partners, regulatory bodies, healthcare professionals and communities. We are committed to growing and creating value in a responsible and sustainable manner, protecting the environment, providing a safe working environment for our employees and respecting the laws and regulations in the countries in which we operate, while developing products which improve the quality of peoples' lives.

We have identified our key stakeholders and we are committed to building solid and long-lasting relationships with them.

Our stakeholder engagement takes different forms, such as internal meetings with employees, meetings with financial analysts and shareholders, and meetings with regulatory bodies in relation to clinical trial design and the product approval process.

International and local organisations

Business	Local
partners	communities

Healthcare	Authorities
professionals

Patients

Media

EmployeesInvestors

Cosmo Pharmaceuticals ESG Report 6

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

1.3 How we manage risk

The Board of Directors of Cosmo (the 'Board') is responsible

for determining Cosmo's risk tolerance and for ensuring that risk management systems and internal controls are in place.

To this end, the Board has implemented a comprehensive risk management framework in order to ensure that internal controls are adequate, that financial reporting is reliable, that all laws and regulations are complied with, and that the assets of the Company are protected.

The Group's risk management framework is designed to identify, evaluate and mitigate risks, including ESG-related risks. Risks identified through our risk management framework are categorised, prioritised and assigned to a separate person who is required to continually monitor, evaluate and report on the risk(s) for which they are responsible.

Risks are classified into risks that can be managed by appropriate in-house action or risks that cannot be managed by internal action. All risks that cannot be met by internal action are then split into risks that can be insured and those that cannot be reasonably insured and must be borne as business risks.

Risk management structure

Board

Responsible for overseeing the Group risk management system, assessing the most significant risks and how these are managed.

Audit Committee

Assists the Board in executing

its duties in relation to risk management and oversight. Responsible for monitoring internal controls, overseeing financial controls and accounting policies.

Executive

Management

Updates the Board in relation to the main risks facing the Group and the mitigants in place to deal with such risks. Responsible for updating the risk register where impact and likelihood of risks are assessed.

Cosmo Pharmaceuticals ESG Report 7

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

ESG Strategy and Governance

2. ESG Strategy and Governance	8
2.1	Cosmo's ESG commitment	9
2.2	Board oversight of ESG and corporate sustainability	9

Cosmo Pharmaceuticals ESG Report 8

1. The Cosmo Group 2. ESG Strategy and Governance 3. The Environment 4. Human Resources 5. Corporate Governance 6. Our Clinical Trials 7. Product Quality and Safety 8. Business Ethics 9. Our Community

2.1 Cosmo's ESG commitment

At Cosmo we are committed to sustainability and the implementation of sustainable business practices across our operations.

Cosmo acts responsibly in its relationships with its employees, partners and communities.

We are committed to the highest ethical standards when conducting business, to acting in an environmentally responsible manner, to integrating climate change related risks into our business strategy, and to respecting the dignity of our employees, suppliers and partners. We maintain a safe and healthy work environment, and we have a Code of Conduct and an Anti-Bribery and Corruption Policy, both of which have been approved by the Board.

2.2 Board oversight of ESG and corporate sustainability

The Board has formed an Environmental, Social & Governance Committee (the 'ESG Committee'). The purpose of the ESG Committee is to further assist the Board in fulfilling its oversight responsibilities with regard to ESG matters. The ESG Committee must consist of at least three Directors; ESG Committee members must be appointed by the Board and may be removed by the Board. The ESG Committee has oversight over Company ESG matters.

ESG Committee members

David Maris (Chairman), Dieter A. Enkelmann, Kevin Donovan.

All the ESG Committee members have relevant ESG experience.

Primary responsibilities of the ESG Committee:

• Recommend to the Board an overall ESG strategy for the Company;
• Oversee the Company's ESG policies and procedures and performance;
• Oversee the Company's ESG reporting; and
• Report to the Board in relation to the activities of the ESG Committee.

A review of our ESG strategy and performance is carried out by the Board at least once per annum.

Our main focus areas

Communities

Environment

Patients

Acting

responsibly

People

Cosmo Pharmaceuticals ESG Report 9